Electronic Word-of-Mouth, Consumer Decision Making And New Product Sales

Word-of-Mouth(WOM)communication is the oldest way of interpersonal communication and information consumption for human beings.With the rapid development of Internet and E-commerce,electronic Word-of-Mouth(EWOM)is playing a more and more important role,e.g.people may visit the Dianping.com when booking meals for meeting friends,consult the movie.douban.com before going to the cinema,and read the product reviews when going shopping online.In the context of informatization of mass consumption and popularization of information consumption,as an vital information resources and information consumption channels in the age of big data,Word-of-mouth is becoming more and more important for individuals,enterprises and the market and it also creates new opportunities and raises challenges for enterprises to deal with the manipulation and marketing of Word-of-Mouth.During the past ten years,more enhanced researches have been carried out in the field of EWOM,with fruitful research outcomes and more cross-discipline approaches.Meanwhile,issues like theoretical bases and research paradigm still need to be further developed and integrated.The research on electronic Word-of-Mouth starts late in China but develops rapidly,with some high-quality research outcomes published in top international journals,indicating that there are many opportunities and great potential for relevant research.The paper,with the above mentioned practical and theoretical issues as the context and based on systematic review and analysis of huge literature in the field of EWOM,focuses the research on how the EWOM impacts on consumer decision making and the sales of new products.The research has its theoretical and practical significance in terms of in-depth analysis of the impact mechanism of EWOM,consumers' online behavior as well as enterprises' marketing strategies,and can also direct consumers' online behavior and provide practical suggestions for the manipulation and marketing of Word-of-Mouth of the enterprises.The paper includes four parts,with the first part(Chapter 2)as literature review-a systematic analysis of research issues and hot topics in the field of EWOM;the second part(Chapter 3)as theoretical verification-constructing the theoretical base and research framework for the empirical study;the third part(Chapter 4 and 5)as key part of the paper,empirical study-systematically analyzes the impact mechanism between EWOM and the consumer decision making as well as the sales of new products;the fourth part(Chapter 6)as the part of suggestions-exploring the manipulation of Word-of-Mouth and its application in marketing.The research contents and structure of the paper is coming as follows.Chapter 1 is an introduction,firstly presenting the background,objectives and the significance of the research;secondly analyzing the research objects and defining relevant concepts to identify the range of research;further to that,the research methods are proposed and the research contents are clarified.Logically,this chapter aims to identify the research objects and research questions.Chapter 2 tries to lay a solid theoretical foundation for the following empirical study by sorting,analyzing and summarizing the current research progress and relevant literature in the field of EWOM.Relevant literature is systematically reviewed at two levels,firstly analyzing the consumers' motivation and antecedents of Word-of-mouth Generation and Consumption by taking EWOM as the outcome variable;secondly,taking EWOM as the antecedents variable and analyzing how it impacts on individuals,products and market.The literature review was done by a variables-driving approach,systematically presenting the current research progress,research trends and the hot research topics.This is the part of literature review.Chapter 3 constructs the theoretical base and research framework for the empirical study,starting from the analysis of multidimensional information attribute of EWOM and the consumers' needs in information of different goods(Search goods VS.Experience goods),and then construct the research framework based on involvement theory and Elaboration Likelihood Model(ELM).This chapter is the part of theoretical research.Chapter 4 and 5 is the part for empirical study,mainly exploring how the EWOM impacts on consumers' decision making and the enterprises' product sales.Chapter 4 focuses on the impacts of EWOM on consumer purchase intention,by developing a 2×2×2 full factorial design and collecting data by questionnaire survey,and then conducting a hypothesis testing by analysis of covariance.Chapter 5,selecting film industry as the research object,investigates the dynamic changes of Word-of-Mouth and its impacts on box office revenue,and conducts a hypothesis testing by multiple regression analysis.This is the part of empirical study.Chapter 6 looks into the manipulation of WOM and WOM marketing of enterprises.Viral marketing is the typical application of Word-of-Mouth in marketing strategies of enterprises.This chapter focuses on the management of viral marketing and how the enterprises conduct viral marketing campaign planning.Meanwhile,it has a case study in Word-of-Mouth marketing in film industry.Chapter 7 is the conclusion of the paper,to make a complete summary,analyze the main contributions of the research and the limitations of the study,and propose new research directions as well as the follow-up research topics.The research has come to basic conclusions as follows with systematic Theoretical verification and empirical study.Electronic Word-of-Mouth is the inheritance and development of traditional Word-of-Mouth.In the era of Web2.0 and big data,the connotation and extension of Word-of-Mouth has undergone profound changes.Consumer online reviews are the most important EWOM and it is the main information source for the Word-of-Mouth communication.The current literature does not have agreed definition of EWOM,and it is helpful to have an in-depth understanding of its generation,consumption and impact mechanisms by applying the research framework of social interaction.Electronic Word-of-Mouth has multidimensional information attribute.It is not only a kind of information determinants but also normative determinants.An on-line consumer review has a dual role,functioning both as informant and as recommender,and it has functions of awareness effect and persuasive effect in the consumers' decision making.The empirical study of the impact of EWOM on individual decision making shows that the volume of Word-of-Mouth makes a significant positive effect on consumers' purchase intention but the quality of Word-of-Mouth does not have significant influence.Meanwhile,the degree of involvement has a moderating effect on the impact of information quantity to purchase intention,and the quality of Word-of-Mouth has significant effect on purchase intention in the case of high degree of involvement,which implicates that the highly involved consumers prefer to deal with the information from Word-of-Mouth through the central route of ELM.The research also shows that there is no significant interaction effect between the degree of involvement and the volume of reviews,which is different from the conclusion drawn by the traditional ELM.This shows that the highly involved consumers value not only the quality but also the quantity of information.Film is typical experience goods of short life cycle and the WOM communication during the initial stage of its life cycle plays a decisive role in raising the weekly box office revenue and the total.Before and after the film publicly screened,the valence and volume of reviews have dynamic changes,and the valence of reviews is decreasing quickly,which to some degree verify the Expectation-Disconfirmation theory;also,A dynamic carryover effect exists between WOM activities in adjacent weeks during the life cycle of a film.The volume but not the valence of reviews has significant impact on the weekly box office revenue and the total,which shows that the awareness effect related to volume of reviews makes the film widely known,but the persuasive effect related to the valence of reviews does not have significant effect on consumer decision making.It is very hard and uncertain to predict the box office revenue before a film released,but it may enhance the prediction if integrating the Word-of-Mouth as a variable into the prediction model.The empirical study of the research shows that the volume of WOM plays an important role in the consumers decision making and the sales of products,which implicates that the volume of WOM not only has the function of recommendation but also awareness effect.This is the functioning of both the informational determinants and normative determinants,and it will lead to the bandwagon effects on consumers' behavior.Therefore,the enterprises should highly value the buzz effect of Word-of-Mouth,and be thoroughly aware of the diversified effects of Word-of-Mouth during the different stages of the life cycle of goods.The third-party online information represented by the EWOM has brought new opportunities as well as challenges for the marketing strategies of enterprises.The enterprises should positively transfer from observer to participant in manipulation of Word-of-Mouth.The enterprises should consider the impact of price of goods on its reviews,e.g.during the initial stage of a new product coming into the market,the enterprises can increase the valence of reviews by a marketing strategy of lowering the price.Meanwhile,through lowering price can help avoid some sensitive issues related to business ethics.The key for the successful viral marketing is the viral product design and the viral marketing instruments,as well as the application of seeding strategies.Film WOM marketing has become a vital factor in box office revenue.The key strategies and measures for film WOM marketing including:publicity through WOM in advance and keeping the WOM communication active during the whole life cycle of the film;in-depth investigation of the features of the film to reveal the outstanding attributes in popularity and vogue;integrating various social network applications and relevant instruments.The enterprises should realize that WOM marketing is a multidimensional task,and they should maintain the reputation all the time in order to create a positive atmosphere for better WOM marketing.The contributions of the research mainly lie in two aspects coming as:In theoretical research,the paper has raised the point that EWOM has multidimensional information attribute and it is a kind of important social interaction.EWOM is not only information determinants but also normative determinants.From the perspective of increase in value,EWOM is a kind of value-added information.The idea of dimensional information attribute of EWOM raised and developed by this paper is significant for the theoretical integration and development in this field.In empirical study,the research has applied various methods of quantitative empirical study(e.g.factorial design,analysis of covariance,multiple regression analysis,etc.),to systematically investigate the impact mechanism of EWOM on consumer decision making and the sales of new products,and specifically analyze the dynamic changes of Word-of-Mouth and its impacts on the marketing of the film which is a kind of typical experience goods with short life cycle.The research shows that the volume of EWOM has both informational determinants and normative determinants,which supports the idea that EWOM processes multidimensional information attribute.As there are few academic researches on films in China,this research may have some functions of direction and consultation.With the improvement of the mechanism for the enclosure of box office revenue in China,it would be a potential research direction to explore the different impact mechanism of WOM communication against domestic box office and overseas box office by applying cross cultural research methods.In addition,as both box office revenue and WOM are high-frequency data,a follow-up research can be done to investigate the dynamic interaction mechanism between the WOM and box office revenue,by analyzing data of the box office revenue and WOM during a shorter time span(e.g.one day).