The Role of Marketing in Social Media: How Online Consumer Reviews Evolve

Abstract:     
Social media provide an unparalleled platform for consumers to publicize their personal evaluations of purchased products and thus facilitate word-of-mouth communication. This paper examines relationships between consumer posting behavior and marketing variables - such as product price and quality - and explores how these relationships evolve as the Internet and consumer review websites attract more universal acceptance. Based on automobile-model data from several leading online consumer review sources that were collected in 2001 and 2008, this study demonstrates that the relationships between marketing variables and consumer online-posting behavior are different at the early and mature stages of Internet usage. For instance, in the early stage of consumer Internet usage, price is negatively correlated with the propensity to post a review. As consumer Internet usage becomes prevalent, however, the relationship between price and the number of online consumer reviews shifts to a U-shape. In contrast, in the early years, price has a U-shaped relationship with overall consumer rating, but this correlation between price and overall rating becomes less significant in the later period. Such differences at the two different stages of Internet usage can be driven by different groups of consumers with different motivations for online review posting.

Number of Pages in PDF File: 32

Keywords: Word-of-Mouth, Online Community, Consumer Reviews, Social Media

JEL Classification: D83, L15, L86, M37

working papers series