In the early years of the Internet, online reviews of new automobiles primarily were provided by innovators and early adopters who were demonstrating their expertise and aptitude for making intelligent purchases.
As online forums became more mainstream, they attracted a more heterogenous group of posters who were sharing their excitement when they were delighted by their purchases and venting when they encountered poor quality or overpriced products.
Online word-of-mouth is growing in magnitude and influence, remaining a reliable source of information, but increasingly containing expressions of negative sentiment.
As online word-of-mouth’s influence on consumer decision-making has increased, it is important to understand how marketing factors, such as price, quality, and product design, affect which types of customers share their experiences, how much information is generated, and whether reviews of products tend to be positive or negative.
We focus on the market for new automobiles in the years 2001 and 2008. For each time period, using reputable sources such as Consumer Reports and J.D. Power and Associates, we collected data on the unit sales, prices, and objective quality of all major car models (across all automobile categories). In addition, we measured the number of postings and average ratings for each model on a variety of online forums that were most commonly consulted by new car buyers during each particular time period (e.g., Epinions, Car & Driver, Autobytel, Yahoo, and MSN).
Consumers tend to post on online forums in order to showcase their own expertise, help others make more informed decisions, express their satisfaction with a product, or vent about a poor experience. However, these underlying motivations have changed substantially over time. During the early years of the Internet, most posts on online forums came from relatively sophisticated consumers who wanted to demonstrate their own abilities. As a result, a relatively large amount of word-of-mouth was generated for luxury and other high-quality automobile models. There was also significant attention given to models that offered low prices relative to their quality (which allowed posters to demonstrate their aptitude for making good purchase decisions). Therefore, during this early time period, a vast majority of word-of-mouth was positive.
In contrast, as time passed, the Internet’s popularity grew and a much broader mix of consumers became comfortable sharing their opinions on online forums. Many of these customers used the online forums to share their experiences of either being highly satisfied or highly dissatisfied with a product. As a result, posting was highest for automobile brands on the extremes (i.e., those with a very low price or quality and those with a very high price or quality). Thus, in addition to there being much positive content shared, there was also a large amount of negative content communicated.
Professor, Whitman School of Management, Syracuse University
To learn more, read:
The Role of Marketing in Social Media: How Online Consumer Reviews Evolve (2011). Yubo Chen, Scott Fay, and Qi Wang. Journal of Interactive Marketing 25.2 (May): pp. 85-94.