Term Paper on "Ewom Communication and Brand Trust"

Term Paper 66 pages (18230 words) Sources: 1+

[EXCERPT] . . . .

EWOM Communication and Brand Trust

Brand Trust and Customer Equity

EWOM Communication and Customer Equity

Brand Equity Drivers and Customer Equity

Relationship of Equity Drivers on Customer Equity

Value Equity Drivers

Brand-Related, Relationship-Related and Value-Related Drivers

Developing eWOM Campaigns

Things Not to Do with eWOM

Considerations for Consumer Online Reviews

Comparison of WOM Campaigns

Customer Equity (Villanueva, Yoo & Hanssens 2006, Introduction Section, ¶ 1).

CLV: Consumers' lifetime value (Villanueva, Yoo & Hanssens 2006, Introduction, ¶ 1).

UGC: User-Generated Content (Cheong & Morrison 2008, ¶ 1).

HOW ELECTRONIC WORD-of-MOUTH (EWOM)

AFFECTS BRAND TRUST and CUSTOMER EQUITY

CHAPTER II

LITERATURE REVIEW

"…[C]onsumer reviews and ratings are the most accessible and prevalent form of eWOM"

(Hopken, Gretzel, & Law 2009, p. 38).

eWOM

In the literal world, word of mouth (WOM) proves pervasive as well as reportedly more persuasive than offline written information. In the book, Consumer Behavior, Wayne D. Hoyer, director of the Center for Customer Insight in the McCombs School of Business at the University of Texas at Austin, and Deborah J. Macinnis (2008), professor of Marketing at the University of Southern California in Los Angeles assert that word-of-mouth can and regularly does dramatically affect the consumer's perceptions of products as well as the performance of the marketplace offering the product. One study found WOM "seven times more effective than print media, twice as effective as broadcast media, and four times more effective than salespeople in affecting brand switching" (Hoyer & Macinnis, p. 408). WOM has also been shown to depict the primary source affecting consumer decisions regarding food and household products they purchase.

Through electronic word of mouth (eWOM), by just clicking a mouse, consumers can inform even more individuals online of their positive or negative experiences than literal WOM could ever do (Ibid.). During the literature review, a formal survey of professional literature, the researcher examines a number of literary sources to depict a comprehensive description of the research relating to how eWOM affects brand trust and customer equity. Ultimately, the researcher uses this information from the literature with data retrieved by other research tools to test and explain the effect of customer generated online reviews on the mediating role of brand trust, and the three factors that constitute customer equity and contribute to shareholder value. These factors include:

1. Relationship Drivers,

2. brand drivers, and

3. value drivers.

This literature review for the study focusing on components of eWOM as well as factors that contribute to ways eWOM affects brand trust and customer equity, like any successful literature review, began with the researcher's interest and inquiry. The researcher then began to relate his idea and inquiry to the investigation of a particular problem or issue, eWOM. In the book, the Literature Review: Six Steps to Success," Lawrence a. Machi and Brenda T. McEvoy state that literature review proffers the most relevant, significant sources the reader needs to understand the research. Machi and McEvoy state that after the researcher decides what topic (specific problem or issue) to investigate, the following six successive steps can serve to guide the researcher in writing the literature review:

1. Explore available literature for related, credible information;

2. develop the argument for the study;

3. review the literature;

4. evaluate the literature to determine relevant information to include;

5. create the literature review (Machi & McEvoy 2008).

Karen Smith, Malcolm Todd, and Julia Waldman (2009) explain in the book, Doing Your Social Science Dissertation: A Practical Guide for Undergraduates, that the researcher typically uses one of three common approaches to develop his literature review: 1) a chronologically organized review; 2) a thematically organized literature review; 3) the methodologically organized review. For the current study which spotlights eWOM, the researcher utilizes the thematic design to simultaneously relate findings other researchers have discovered and address the study's seven research questions presented in the study's introduction. To organize the literature review, the researcher developed the following seven themes which evolved from the study's research questions to depict the literature review's subsections.

1. eWOM Communication and Brand Trust

2. Brand Trust and Customer Equity

3. Ewom Communication and Customer Equity

4. Brand Equity Drivers and Customer Equity

5. Relationship of Equity Drivers on Customer Equity

6. Value Equity Drivers

7. Brand-Related, Relationship-Related and Value-Related Drivers

eWOM Communication and Brand Trust

Numerous forms of contemporary information technology, particularly internet websites, present new opportunities for consumers to communicate how they rank or grade products and services. Yubo Chen, Eller College of Management, University of Arizona, and Jinhong Xie Warrington (2008), College of Business, University of Florida, assert in the journal publication, "Online Consumer Review: Word-of-Mouth as a New Element of Marketing Communication Mix," that Amazon.com initially offered consumers the opportunity to post their comments regarding products on its website in 1995. According to the New York Times report in 2004: Amazon.com had approximately "10 million consumer reviews on all its product categories, [with] these reviews…regarded as one of the most popular and successful features of Amazon" (New York Times as cited in Chen & Xie 2008, p. 477). In time, other companies like circuitcity.com, GameStop.com and wine.com, followed in Amazon's footsteps and have allowed consumers to communicate online comments relating to the quality of products, customer service, and personal shopping experiences.

Some companies allow third party corporations, such as Epinion.com, to post consumers' feeling regarding personal shopping experiences and evaluations on their websites. Chen and Xie (2008) explain that "online consumer reviews are common for many product categories such as books, electronics, games, videos, music, beverages, and wine. Recent evidence suggests that consumer reviews have become very important for consumer purchase decisions and product sales" (p. 477). A study Forrester Research conducted found that comments consumers posted strongly influenced the decisions of half of the consumers who assessed and read them as to whether or not to purchase certain products.

Chen and Xie (2008) also report that a number of experienced researchers including Dellarocas, Wilson and Sherrel, have examined consumer information posted on corporations websites to evaluate and analyze the credibility of the information consumers post and numerous studies conducted by experienced researchers, "Consumer-created information is likely to be more credible than seller-created information because credibility of information is often positively related to the trustworthiness of the information source" (Dellarocas, Wilson & Sherrell as cited in Chen & Xie 2008, p. 479). Mayzlin also conducted a study relating to credibility of promo messages posted in chat rooms online as well as to whether the messages pitched affected the company's profits. A 2007 study Fay, Xie, Xie and Gestner conducted found that information consumers create online may or may not prove to be credible, but that it may, when credible, allow a corporation to develop and achieve specific marketing strategies, including probabilistic selling. Studies such as these prove profitable as they enhance not only consumers' understanding but also the corporations' perceptions.

Communications consumers create and convey, including online reviews, may prove more pertinent to consumers than messages the corporation selling products develop and post. Information the seller creates may be more product associated, often because the seller describes in detail certain attributes of a product such as technical specifications, standards and product performance. "The consumer-created product information is, by definition, user oriented. It often describes product attributes in terms of usage situations and measures product performance from a user's perspective" (Bickart & Schindler as cited in Chen & Xie 2008, p. 481). Because consumers possess varying capabilities and understanding regarding certain product information, depending on their expertise, product information the corporation or seller creates may prove more useful to consumers more knowledgeable of particular products. On the other hand, for consumers without technical terminology understanding or knowledge regarding a certain product, information other consumers post may prove more beneficial and help them choose a product to best match their needs.

Some corporations are often thankful for consumers who post communications of product information as they perceive them as free "sales assistants" for their corporation. Chen and Xie (2008) explain that these free "sales assistants," albeit, may not necessarily come without cost to the corporation or seller. "By allowing consumers to post their own product evaluations, the seller creates a new information channel for consumers, which eliminates the seller's capability to control the supply of product information" (Chen & Xie 2008, p. 489). Table 1 presents several critical considerations for corporations or sellers regarding decisions relating to online postings by consumers.

Table 1: Considerations for Consumer Online Reviews (adated from Chen & Xie 2008).

Consumer Reviews

A type of independent information regarding a product may affect marketing strategies, especially from third-party reviews of a product. The corporation or seller should create strategic responses to contend with information consumers provide.

Seller Response to Consumer Reviews

A corporation or seller response may vary for different products.

For example, to gain a greater consumer review, the seller might highly promote lower cost products and emphasize those products' attributes. In regards to higher priced products, the seller may decrease the consumer reviews.

Seller Response to… READ MORE

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