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Examining Consumers' Responses to Negative Electronic Word-Of-Mouth

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Examining Consumers' Responses to Negative Electronic Word-Of-Mouth Examining Consumers’ Responses to Negative Electronic Word-of-Mouth on Social Media: The Effect of Perceived Credibility on Brand Attitude and Purchase Intention XIE Minghua Student No. 15250962 Bachelor of social science (Honors) in Communication -- Public Relations and Advertising Major Abstract Consumers nowadays are increasingly engaging in electronic word-of-mouth communication to share their experience with brands or engage in the pre-purchase information search process. Such communication online shows a significant influence on consumers’ purchase decision making. As consumers tend to trust other consumers more than companies, eWOM is always considered to be more credible as compared to other paid media. Therefore, the perceived credibility of eWOM is always regarded as a key driver of the unignorable impact of eWOM. Moreover, negative word-of-mouth is found out to be more influential than the positive or neutral ones, as they are perceived to be more informative and diagnostic. Therefore, this research aimed at investigating the impact of perceived credibility of negative eWOM on observing consumers’ reactions, with regard to their post-message brand attitudes and purchase intentions. In addition, the researcher also paid attention to whether such impact would be affected by consumers’ prior brand attitudes and company’s eWOM intervening strategy (i.e., webcare). The results indicated that high perceived credibility of negative eWOM negatively affects consumers’ post-message brand attitudes and purchase intentions. And companies’ use of accommodative webcare diminishes such negative impact. TABLE OF CONTENTS 1. INTRODUCTION .................................................................................................................. 1 2. LITERATURE REVIEW ..................................................................................................... 3 2.1. WOM AND PERCEIVED CREDIBILITY .............................................................................. 3 2.1.1. Electronic Negative Word-of-mouth .............................................................................. 3 2.1.2. Social Word-of-mouth and the circumstance in China .................................................. 5 2.1.3. Perceived Credibility and Electronic Word-of-mouth ................................................... 7 2.2. CONSUMERS’ REACTIONS ................................................................................................ 9 2.2.1 Brand Attitude and Purchase Intention .......................................................................... 9 2.2.2 Prior Brand Attitude and Perceived Credibility of eWOM ........................................... 10 2.3. CORPORATE RESPONSES ................................................................................................ 12 2.3.1. Webcare and Electronic Negative Word-of-mouth ...................................................... 12 3. METHODOLOGY .............................................................................................................. 14 3.1 PRE-TEST .............................................................................................................................. 15 3.2 MAIN SURVEY ...................................................................................................................... 16 3.3 MEASURES ............................................................................................................................ 18 3.4 PARTICIPANTS ...................................................................................................................... 22 4. RESULTS ............................................................................................................................. 25 5. DISCUSSION ....................................................................................................................... 31 6. IMPLICATIONS ................................................................................................................. 36 6.1 THEORETICAL IMPLICATIONS ............................................................................................... 36 6.2 PRACTICAL IMPLICATIONS ................................................................................................... 37 7. LIMITATIONS AND FURTHER RESEARCH ............................................................... 39 8. REFERENCES ..................................................................................................................... 40 9. APPENDICES ...................................................................................................................... 50 9.1 APPENDIX A ......................................................................................................................... 50 9.2 APPENDIX B ......................................................................................................................... 53 1. INTRODUCTION Consumers nowadays actively engag in online word-of-mouth communication to share their opinions about various products and services offered by different brands. They are transmitting the roles from passive “read-only” observers to active participants involving in public participation culture (Jenkins, 2006). As such, electronic word-of- mouth (referred to as eWOM hereafter) has played an increasingly significant role in consumer behaviors, from initial product awareness to buying decision making, and to post-purchase evaluations (Riegner, 2007; Reingen, 1987). Word-of-mouth (referred to as WOM hereafter) can be divided into the forms of positive WOM (i.e., PWOM) and negative WOM (i.e., NWOM) based on the valence of information contained (Luo, 2009). Yet, negative WOM with unfavorable reviews tends to be weighted more heavily than the positive ones and thus exerts adverse influence on sales, consumer loyalty, overall brand loyalty and even company image (Daugherty & Hoffman, 2013). In fact, it is the advent of social media that provides customers with crucial channels of online information exchange, thus flourishing eWOM engagement (De Vries et al., 2012). Generally, most customers perceive eWOM as a credible and authentic assessment (Dellarocas, 2003). According to Chu and Kim (2011), the perceived credibility, in turn, makes eWOM transmit faster and reach a larger range of audience, thus driving the unignorable influence (Newman,2003). However, such perceived credibility of eWOM can be plagued by several issues online nowadays, including the anonymous identity of reviewer (Sen & Lerman, 2007) and inserted promotional messages. In addition, the electronic mediated context of WOM provides new contextual cues for recipients to infer 1 different credibility judgments toward a specific eWOM information, such as source power and information quality. Besides the eWOM factors, consumers’ internal prior brand attitude also plays a significant role in consumers’ processing of eWOM information. Lee (2011) found that the congruence between prior brand attitude and eWOM valance would produce positive feelings toward the eWOM received. Even though more control is shifting from companies to consumers, marketers are sparing no effort to intervene with negative eWOM through strategies like webcare to reduce the potential detrimental effects. Over the past few years, researchers have paid increasing attentions to various aspects of eWOM on social media, including consumers’ motivations for engagement (Henning-Thurau et al., 2004; Goldsmith & Horowitz, 2006), general impact on recipient and organizations, as well as its overall structure (Daugherty & Hoffman, 2013). Nevertheless, there is still a lack of attention to customers’ responses toward different types of eWOM considering discrepancy in valences. In addition, recent researches have investigated a number of elements that affect consumers’ credibility judgments toward messages within eWOM communication (Gvili et al., 2018; Chang, 2011; Cheung et al., 2009). However, what role perceived credibility plays in consumers’ responses to eWOM on social media is still less explored. Based on the consideration that negative eWOM has larger impact than positive eWOM, the main objective of this project is to examine consumers’ responses toward negative eWOM with different levels of perceived credibility, with regards to their brand attitudes and purchase intentions. What is more, this study also aims to explore the impact of consumers’ prior 2 brand attitudes and brands’ webcare strategy on consumers’ reactions toward negative eWOM. In sum, this paper will focus on addressing the following research questions: 1) How does consumers’ perceived credibility towards negative eWOM influence their brand attitudes and purchase intentions? 2) How does consumers’ prior brand attitude affect the effect of perceived credibility? 3) How does the use of webcare strategy affect the effect of perceived credibility? 2. LITERATURE REVIEW 2.1. WOM and Perceived Credibility 2.1.1. Electronic Negative Word-of-mouth Traditional WOM is regarded as a person-to-person communication tool for exchanging information perceived to be non-commercial about a brand, product or service between a communicator and a receiver (Arndt, 1967). On the digital platforms, eWOM is defined as the online evaluative statements addressed to consumers about a product or company (Henning-Thurau, 2004; Litvin et al., 2008). With the emergence of new information and communication technology, eWOM breaks through the spatial and temporal limitations of traditional
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