THE IMPACT OF ONLINE WORD-OF-MOUSE - Sales of New Products at Amazon.Com

Geng Cui, Xiaoning Guo

Abstract

Online word-of-mouth (WOM) has become a major information source for consumers planning to purchase new products. This study examines the effect of online consumer reviews on the sales of new products. Using the data collected from Amazon.com over a period of nine months, we find that while the effect of valence of online reviews is greater than that of volume, negative consumer reviews affect new product sales more than positive reviews, but not in a negative way. Volume and valence of online reviews have greater impact on experience products than on search products. Moreover, the volume of consumer reviews has a greater effect on new product sales in the later stage of product life cycle (PLC). Thus, online WOM gains momentum over time and significantly affects the sales of new products beyond the initial period. Marketers need to pay greater attention to online WOM and promote consumer reviews when launching new products.

References

  1. Bass, F.M., 1969. A new product growth model for consumer durables. Management Science, 15(5), 215- 227.
  2. Brown, J., Broderick, J.A., and Lee, N. 2007. Word of mouth communication within online communities: conceptualizing the online social network. Journal of Interactive Marketing, 21(3), 2-10.
  3. Brown, J.J and Reingen, P.H. 1987. Social ties and wordof-mouth referral behavior. Journal of Consumer Research, 14(3), 350-362.
  4. Chevalier, J.A. and Mayzlin, D. 2006. The effect of word of mouth on sales: online book reviews. Journal of Marketing Research, XLIII, 345-354
  5. Dellarocas, C. 2003. The digitization of word of mouth: Promise and challenges of online feedback mechanisms. Management Science, 49(10), 1407- 1424.
  6. Dellarocas, C., Zhang, X. and Neveen, F.A. 2007. Exploring the value of online product reviews in forecasting sales: The case of motion pictures. Journal of Interactive Marketing, 21(4), 23-45.
  7. DoubleClick. 2004. DoubleClick's Touchpoints II: The Changing Purchase Process. March.
  8. Duan, W., Gu, B., and Whinston, A.B. 2008. Do online reviews matter? - An empirical investigation of panel data. Decision Support Systems, 45(4), 1007-1016.
  9. Godes, D. and Mayzlin, D. 2004. Using online conversation to study word-of-mouth communication. Marketing Science, 23(4), 545-561.
  10. Herr, P.M., Kardes, F.R., and Kim, J. 1991. Effects of word-of-mouth and product-attribute information on persuasion: An accessibility-diagnosticity perspective. Journal of Consumer Research, 17(4), 454-462.
  11. Kanouse, D.E. and Hanson, L.R. 1972. Negativity in evaluations. In E. E. Jones et al. (Eds.), Attribution: Perceiving the Causes of behavior. Morristown, NJ: General Learning Press.
  12. King, M.F., and Balasubramanian, S.K. 1994. The effects of expertise, end goal, and product type on adoption of preference formation strategy. Journal of the Academy of Marketing Science, 22(2), 146-159.
  13. Liu, Y. 2006. Word of Mouth for movies: Its dynamics and impact on box office revenue. Journal of Marketing, 70, 74-89.
  14. McGuire, W.J. 1961. The effectiveness of supportive and refutation defenses in immunizing defenses. Sociometry, 24, 184-197.
  15. Reingen, P., Foster, B., Brown, J.J., and Seidman, S. 1984. Brand congruence in interpersonal relations: A social network analysis. Journal of Consumer Research, 11, 1-26.
  16. Rogers, E.M. 2003. The Diffusions of Innovations, 5th ed., New York: The Free Press.
  17. Van den Bulte, C. and Lilien, G. 2001. Medical Innovation revisited: Social contagion versus marketing effort. The American Journal of Sociology, 106(5), 1409- 1436.
  18. Weathers, D., Sharma, S., and Wood, L.S. 2007. Effects of online communication practices on consumer perceptions of performance uncertainty for search and experience goods. Journal of Retailing, 83(4), 393-401.
Download


Paper Citation


in Harvard Style

Cui G. and Guo X. (2009). THE IMPACT OF ONLINE WORD-OF-MOUSE - Sales of New Products at Amazon.Com . In Proceedings of the International Conference on e-Business - Volume 1: ICE-B, (ICETE 2009) ISBN 978-989-674-006-1, pages 143-150. DOI: 10.5220/0002178101430150


in Bibtex Style

@conference{ice-b09,
author={Geng Cui and Xiaoning Guo},
title={THE IMPACT OF ONLINE WORD-OF-MOUSE - Sales of New Products at Amazon.Com},
booktitle={Proceedings of the International Conference on e-Business - Volume 1: ICE-B, (ICETE 2009)},
year={2009},
pages={143-150},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0002178101430150},
isbn={978-989-674-006-1},
}


in EndNote Style

TY - CONF
JO - Proceedings of the International Conference on e-Business - Volume 1: ICE-B, (ICETE 2009)
TI - THE IMPACT OF ONLINE WORD-OF-MOUSE - Sales of New Products at Amazon.Com
SN - 978-989-674-006-1
AU - Cui G.
AU - Guo X.
PY - 2009
SP - 143
EP - 150
DO - 10.5220/0002178101430150