Written by Nancy Kurdieh
In today’s market, ‘Consumers are no longer merely passive recipients in the marketing exchange process. Today, they are taking an increasingly active role in co-creating everything from product design to promotional messages’ as indicated by Berthon, Pitt, McCarthy, & Kates (in Hanna et al. 2011). The new revolutionized model web 2.0 turned the traditional one-way communication (web 1.0) into a highly interactive interface, that lead to the propagation of different kinds of data among internet users including electronic word of mouth (e-WOM) by sharing their positive, as well as, negative personal experiences and opinions about corporations and brands, in which the later can gain access to an infinite pool of costumers’ insights (Hanna et al. 2011).
As consumers using Web 2.0 are allowed to post messages whether they are in the form of texts, pictures or videos, etc, they became able to communicate and relay their own thinking with many others across the globe. They talk about brands, their products and their own experiences. ‘The networked market knows more than companies do about their own products. And whether the news is good or bad, they tell everyone’ (Levine et al., 2001 in George Christodoulides, 2009). As a result, they started to depend on one another to get their needs, rather than the companies. Hence, the balance of power started to shift from firms to consumers, according to Bernoff and Li (in George Christodoulides, 2009).
Users began to rely on other web users’ reviews before committing an actual purchase. Positive e-WOM was proven by many studies that it can improve the branding position of a company and generate sales profits; however, little, if any, articles address the negative e-WOM and its implications on brand value, even though ‘Previous studies simply confirmed that negative messages were more influential than positive ones.’ (Doh, S. & Hwang, J., 2009). So, two case studies were presented to tackle this issue and research if a non-favored viral WOM can affect a company’s image and position in the market place and what could the consequences be.
BRANDING & E-WOM
‘The brand is a complex symbol, and the challenge of branding is to develop a set of meanings or associations for the brand that can resonate with the variety of different perspectives that consumers might adopt in formulating a brand image’ (Jennifer Rowley, 2004). The challenge for managers to create a brand linked with certain attributes is way harder than the old times, since consumers became harder to reach via traditional social media. After all, people from all ages are spending more time on the web than watching Television or listening to the radio, etc.
In this virtual world, users communicate with other users in a social setting, where they can easily get in touch and exchange conversations for all sort of reasons. They blog, tweet, etc to stay in touch with their friends or meet new ones, to be updated with the latest news and trends, to find their soul mates or to build another image for themselves (Kietzmann et al. 2011). Moreover, they seek information and opinions of trustworthy sources on products and services prior purchasing, which could be a friend, a family member, a professional, or even a total stranger who had a similar situation (Russell S. Winer, 2009).
‘In e-WOM consumer reviews, consumers need only to interact with their computers to post their product reviews. Their opinions are widely and easily accessible to other consumers.’ (Cheung et al. 2009). This e-WOM is acknowledged to be a powerful force in the consumer marketplace, since it can be the most believable form of advertising (Cheung et al. 2009).
The change that came with the interactive Web 2.0 resulted in establishing a new business model that replaced the old one-way communication between the firm and the users’ model (fig. 1 (a)) by a multi-channels communication between the company and the users and between the users themselves (fig. 1 (b)); as illustrated in fig. 1.
This business model represents the opportunities for a company to make use of the multiple communication channels to improve their brand value but it also displays the threats that can encounter a company due to this uncontrolled communication.
NEGATIVE E-WOM THREATS
This powerful tool (e-WOM) creates challenges for brands to protect their image and set of values. And any brand can be threatened by negative e-WOM for many reasons, as people love drama or simply because it’s entertaining, etc but there are mainly three reasons that make companies shiver in fear:
Credibility issues: E-WOM is dangerous because the firms’ claims aren’t as credible as friends’ and family’s comments. ‘Consumers turn to those they trust, more often friends and family, and purchases are consummated with the help of "what so-and-so said”’ (Joseph T. Plummer, 2007).
Loss of brand control: TV, print, outdoor, and radio represents the one-way communication with the customers, which gave the managers the ability to control the message they want to convey in the media. Unlike the web that allows everyone to say their mind, whether it’s a positive or a negative point of view and when it comes to brands, managers have no control on what people write and post online on blogs and social networking sites (Russell S. Winer, 2009).
Fast and broad propagation: Most online messages are not restricted to one area or one country and could be viewed in the worldwide web. ‘It is the engine that helps drive WOM, a virtual world that transcends geographic and social bounds’ (Joseph T. Plummer, 2007). This can hurt even the big international corporations if a complaint was to be posted on the web.
1st Case Study - United Airline
The musician Dave Carroll watched helplessly from inside the plane as his Taylor’s guitar was damaged by United Airlines employees at Chicago’s O’hare airport during transfer from one air plane to another, in 2008.
After 9 months of numerous fruitless struggles to have United accept responsibility for the $1,200 damage, the musician became enraged and warned the airline that he will write three songs about this incident. The first song described his ordeal and condemned United Airline for the situation.
“You broke it, you should fix it. You’re liable, just admit it, I should’ve flown with someone else. Or gone by car, ‘Cause United breaks guitars! ” Carroll sings.
So, what happened is that in less than a month, the video which demonstrates the bad customer service United was responsible for, has been seen by more than 4 million people. The negative e-WOM spread insanely on the web and people started talking about it and on top of that they posted their own stories too. As a consequence, United suffered more than just reputation damage; it cost the company tens of millions of dollars, according to Chris Ayers of The Times Online in the United Kingdom. The airlines’ stock prices plunged by 10 percent, costing shareholders $180 million (www.Businessnewsdaily.com). Today, the video has been watched by almost 13 million viewers.
2nd Case Study - America Online
In 2006, Vincent Ferrari called in to cancel his AOL account, but his simple request resulted in 21 minutes of nonsense as the CSR tried everything in his power to keep Ferrari as a customer. Cleverly, Vincent decided to tape his call, after hearing numerous horror stories about how hard it is to close an AOL account.
A Part of the conversation was as follows:
Ferrari: I want to cancel my account.
AOL: OK, I mean, is there any problem with the software itself?
Ferrari: No. I don’t use it. I don’t need it. I don’t want it.
AOL: last year, last month it was 545 hours of usage.
Ferrari: I don’t know how to make it any clearer. So, I’m just gonna say it one last time. Cancel the account.
AOL: Well, explain to me what is wrong.
Ferrari: I’m not explaining anything to you. Cancel the account.
Ferrari posted the video on his blog and it immediately went viral, landing Ferrari on the “Today Show” and in the New York Times and prompting AOL to publicly apologize. His story was moved from one website to another. AOL was bombarded with countless angry comments that criticized the company and its service, and similar stories started to pop out everywhere on the web, talking about how they were badly treated by the “same AOL bastard” (www.dailytech.com).
‘The internet has created an empowered consumer through greater information access, instant publishing power and a participatory audience. This allows socially sensitive, ethical and expert consumers to launch meaningful anti-consumption campaigns that have visible market impact.’ (Krishnamurthy S., & Kucuk Umit S., 2009). They keep quite no more. Whatever bad incident they went through with a certain company, they announce it to the whole world. The mistreated customers blogged and posted their complaints online and, in a matter of days, millions of viewers watched their videos. The United Airlines and AOL didn’t know what hit them. People got triggered by these videos to support the victims and even share their own experiences. As a result, the consequences were dire. The companies’ image and reputation were shaken and their stocks went down costing them millions of dollars. Even websites were created to allow consumers to write their complaints, even according to a company’s name, for example ‘http://aol.pissedconsumer.com/’ and http://united-airlines.pissedconsumer.com/. The worldwide web proves to be a hazardous place for brands and makes it difficult for branding.
The balance of power is leaning toward the customers’ side after becoming empowered by the interactive web 2.0. They post, they chat and they comment on whatever concerns a brand. Nothing can be hidden from the eyes of the public. E-WOM can enhance the brand’s value, reputation, and recognition, but there is no guarantee that the users’ comments will be favorable. ‘Positive WOM enhances brand value, but negative WOM can cause serious, even irreversible, damage to a brand’s reputation and sales.’ (Armelini, G. & Vilanueva, J., 2011).
Also, Users’ words are far more credible than a company’s message. ‘Consumers trust other consumers’ opinions more than they do traditional advertising, and that such e-WOM is thus more effective in influencing consumer behavior.’(Armelini, G. & Vilanueva, J. 2011). In addition, companies have no control over users’ messages and what makes things worse for brands is that ‘past research has shown that people tend to weight negative information more than positive information during evaluation. (Sen, S. & Lerman, D. 2007). Moreover, this virtual world is way too fast and expansive in spreading a message throughout the globe. Posts which reveal the mischief of corporations will get the whole world to know about it and generate angry comments and/or encourage others to share their own stories as well; consequently, the problem will wind up snowballing and the brands in question would find it difficult to try to undo the consequences or fix the crisis and go back to the way they used to be.
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