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eWOM and Product Sales

Electronic word-of-mouth can be a powerful tool to influence consumer preferences, but research linking eWOM and product sales have offered conflicting findings. In an award-winning article, Ya You, Gautham Vadakkepatt, and Amit Joshi undertake a meta-analytic review of 51 studies to shed light on whether, how, and under what conditions eWOM works. (From Empirical Generalizations about Marketing Impact, 2nd. ed.)

Electronic word-of-mouth elasticity

Electronic word-of-mouth (from sources such as blogs, forums, social networking sites, and online product reviews) volume elasticity averages .236 and valence elasticity averages .417. The volume and valence elasticities are higher for privately consumed (volume = 1.036, valence = 1.205), low-trialability products (volume = .618, valence = 1.235) that operate in less competitive industries (volume = .71, valence = .733) and whose reviews are carried on independent review sites (volume = .91, valence = .602). Furthermore, volume elasticities are higher for durable goods (volume = 1.32) and for reviews on specialized review sites (volume = 2.94), whereas valence elasticities are greater for community-based sites (valence = 1.4).

Evidence base

A meta-analysis of 51 studies involving 339 volume and 271 valence elasticities

Managerial implications

1. Managers of durable, low-triability, privately consumed products can benefit more from electronic word-of-mouth (eWOM), so they should actively monitor social media metrics.

2. Managers in industries in which competitive pressures are intense should be wary of relying on eWOM alone for generating sales and rely more on traditional means of advertising and promotion.

3. The type of platform that carries the information affects eWOM elasticities, which demonstrates that not all social media and eWOM are created equal. Managers should carefully consider the type of social media platforms to deliver brand and product information.

4. Ignoring consumer complaints on the Internet can be a risky proposition. This not only explains the growing roles of “social media managers” or “online community managers” in organizations, but also prompts laggard firms to pay special attention to this aspect of firm-related consumer-to-consumer communications.

Contributors

Ya You, College of Charleston, Gautham G. Vadakkepatt, George Mason University, and Amit M. Joshi, University of Central Florida

Reference

You, Ya, Gautham G. Vadakkepatt, and Amit M. Joshi (2015), “A Meta-Analysis of Electronic Word-of-Mouth Elasticity.” Journal of Marketing 79 (2), 19−39

Related link

2015 MSI H. Paul Root Award Winner

Empirical Generalizations about Marketing Impact
Dominique Hanssens (2015) [Webinar]

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