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Is Online Word of Mouth Higher for New Models or Redesigns? An Investigation of the Automobile Industry

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  • Feng, Jie
  • Papatla, Purushottam

Abstract

Changing consumer preferences, entry of new competitors with better products, and product improvements by existing competitors make new products a necessary investment for most companies. In addition to the investments in R&D and production of new products, firms also need to invest in advertising to promote them. The growing use of social media by consumers therefore makes online consumer conversations an attractive additional format for firms to promote products at a lower cost. This is particularly so in the automobile industry where advertising costs are very high. Whether consumers discuss a newly introduced product, and help to promote it, however, may depend on how new the product is. This is the question that we investigate in the context of the automobile category. Specifically, we examine whether online consumer conversations are more likely for new models (e.g., Chevy Volt introduced in 2010) or redesigns of existing models (e.g., the redesign of Chevy Impala in 2010). We use data from two online sites where consumers discuss automobiles – consumerreports.org and edmunds.com – for our analysis. Our empirical investigation also accounts for the effects of sales on word of mouth and the simultaneity between sales and word of mouth. Additionally, we also consider the effect of satisfaction on word of mouth and the endogeneity of satisfaction. Our results across two datasets suggest that redesigns stimulate significantly more conversations than new models. Managerial and research implications of the findings are discussed.

Suggested Citation

  • Feng, Jie & Papatla, Purushottam, 2012. "Is Online Word of Mouth Higher for New Models or Redesigns? An Investigation of the Automobile Industry," Journal of Interactive Marketing, Elsevier, vol. 26(2), pages 92-101.
  • Handle: RePEc:eee:joinma:v:26:y:2012:i:2:p:92-101
    DOI: 10.1016/j.intmar.2012.01.001
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    References listed on IDEAS

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    1. Chen, Yubo & Fay, Scott & Wang, Qi, 2011. "The Role of Marketing in Social Media: How Online Consumer Reviews Evolve," Journal of Interactive Marketing, Elsevier, vol. 25(2), pages 85-94.
    2. Derbaix, Christian & Vanhamme, Joelle, 2003. "Inducing word-of-mouth by eliciting surprise - a pilot investigation," Journal of Economic Psychology, Elsevier, vol. 24(1), pages 99-116, February.
    3. Eugene W. Anderson & Mary W. Sullivan, 1993. "The Antecedents and Consequences of Customer Satisfaction for Firms," Marketing Science, INFORMS, vol. 12(2), pages 125-143.
    4. Phelps, Joseph E. & Lewis, Regina & Mobilio, Lynne & Perry, David & Raman, Niranjan, 2004. "Viral Marketing or Electronic Word-of-Mouth Advertising: Examining Consumer Responses and Motivations to Pass Along Email," Journal of Advertising Research, Cambridge University Press, vol. 44(4), pages 333-348, December.
    5. Feng, Jie & Papatla, Purushottam, 2011. "Advertising: Stimulant or Suppressant of Online Word of Mouth?," Journal of Interactive Marketing, Elsevier, vol. 25(2), pages 75-84.
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    2. Pettifor, H. & Wilson, C. & Axsen, J. & Abrahamse, W. & Anable, J., 2017. "Social influence in the global diffusion of alternative fuel vehicles – A meta-analysis," Journal of Transport Geography, Elsevier, vol. 62(C), pages 247-261.

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