Overview
Overview
Online opinion forums are large-scale Internet-based "word-of-mouse"
communities where individuals share opinions on companies, products, services,
and even world events. In the past few years, these forums have been steadily
growing in popularity and have become an indispensable component of chat rooms,
web logs, portals (e.g. Yahoo Movies), recommendation sites (e.g.
CNET, Epinions,
Citysearch, Moviefone), and customer review sections of online retailer websites
(e.g. Amazon, Circuit
City).
There is growing evidence that consumers consult (and are influenced by) online forums before making a variety of purchase decisions. In view of this, companies are beginning to react to their existence in various ways. The following facts are early examples of a growing trend:
- As part of their campaign to promote new albums, the music industry often hires professional "posters" who surf various online chat rooms and fan sites in order to post positive opinions on behalf of the new album.
- An increasing number of companies frequently visit online forums, such as Epinions.com, in order to identify prominent reviewers. They then send them free products and try to engage them in various ways in the hope of obtaining positive "word of mouse".
- Amazon.com has eliminated its entire budget for television and general-purpose print advertising for the year 2003, because they believe that they are better served by word-of-mouth.
No proven strategies for dealing with online forums have yet emerged. Despite a growing amount of popular press coverage and the fact that companies urgently need to understand how to respond to this new phenomenon, so far there has been very little systematic research of this topic. Among other things, such research should seek to provide answers to the following questions:
- How should firms adapt their marketing strategies to react to the growing popularity of online opinion forums?
- How will the informativeness of online forums be affected by promotional chat and other intentional manipulation activities?
- In a competitive setting, who wins and who loses from the introduction of such systems?
My work in this area attempts to fill this gap by offering theoretical and empirical analyses of the impact of online opinion forums on competition and marketing strategies.
Working Papers| [PDF] |
The Impact of Online Opinion Forums on Competition and Marketing
Strategies.
This paper analyzes the consequences of introducing an online opinion forum in a duopoly setting where firms compete by persuasive advertising and forum manipulation.
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Research Collaborators
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