WHAT MARKETERS MISUNDERSTANDABOUT ONLINE REVIEWS

RohitNSIT Delhi

When Jonney Shih,Asustek’s chairman toldhis colleagues that heWanted his contract-manufacturing firm todevelop and sell laptopsunder its own brandname, Asus most of themthought he was nuts.

RATINGS

By 2012 Asus was the world’s fifth-best-selling brand of PC,and by early 2013 its tablet were the third-best-selling brand.

Shih ignored the doubters, and in 2007 an Asus-brandedproduct, the Eee PC, got stellar reviews and became a hit.

With the growing availability of opinions fromexperts and users,

the importance of a brand name had diminished.

BUYERSTHEN

&NOW

Buyers Then• Made relative comparison (“Is Brand A

better than Brand B?”)• Went by the maxim “You get what you

pay for”• Were dependent on information

provided by manufacturers in the form of marketing

• User generated reviews• Expert opinions• Consult social media

friends• Peer to peer

information

Buyers Now

Companies need to dramaticallyshift their marketing strategiesto account for the rising powerexerted on future customers bythe opinions of existing customers.

TWO TOOLSTO HELP

MANAGERS

Prior preferences , beliefs and experiences

Information from marketers

Input from other people and from information services

P

M

O

1.Influence Mix

Influence mix is azero-sum gameThe greater the reliance on one source,the lower the need for others.If the impact of O on a purchase decisiongoes up, the influence of M or P, or bothgoes down.

Habitual purchases (such as milk) tend to be dominated by P

Someone shopping for a toothbrush is mostlikely to be swayed by packaging, brand, pricingand point of purchase messages all-componentsof M

2. O continuum

The closer your product is to the O‑dependentend, the greater the shift in how consumersgather and evaluate information about it.

The power of other people’s view varies fromone product category to another

STRATEGICIMPLICATION

IN FOURREALMS

COMPETITIVE POSITION

In domains, where customer dependmainly on O, branding takes on lessimportance and newcomers findrelatively low barriers to entryas a result-as Jonney Shih’s story shows

Research by Michael Luca, of Harvard Business School,suggests that in cities where large number on diner relyon Yelp reviews, independent restaurants tend tobenefit while chains and franchises often see theirrevenues decline.

Brand Equity and loyalty can protectEstablished players in O-independentdomains

Clorox and Bud Light, influencedPrimarily by P and M, enjoyrelative stability

COMMUNICATION

In recent years many camera buyers have turned toratings and user reviews as their main source ofinformation. This means that celebrity endorsementare less effective than they once wereBanner ads intended to create or reinforce brandawareness are not very successful either

Companies such as Nikonand Canon should focus ongenerating user interest inparticular products andpromoting an ongoing flowof authentic content fromO on internet retail sites.

MARKET RESEARCH

Market research usually aims to measure Pit tries to predict the kinds of productsconsumers will like by assessing theirpreference in the past. But as purchase decisionbecome more reliant on O, rooting around inconsumer’s psyches to understand P yields lower returns.

A market research study conductedin early 2007—before the release of the first iPhone concluded thatU.S. consumer would not be interested in a “convergent device”that combined the functionality ofof a cell phone, MP3 player and a camera.

The study had measured P but,as soon as the iPhone hit themarket and early adopters began gushing over it, peoplebecame influenced by O

What went wrong?

What should be done?

Instead of measuring individualconsumer’s preference, satisfaction,and loyalty marketers shouldredirect resources to the systematictracking, coding, and quantifying ofinformation from review sites, userforums, and other social media.

MARKET SEGMENTATION

A products location on the O continuumoften varies across customer segments andfrom country to country. One group ofconsumer might rely primarily on O, while another might be more attunedto M.

Some distribution channelsare less conductive thanothers to O.shoppers in brick-and-mortarstore are often moresusceptible to M than onlineshoppers are, for instance

Situational factors

Marketers should also bear inmind that the degree to whicha particular customer relieson O might vary withsituational factors

Some of the people who take fulladvantage of O while shopping forelectronics online may come underM’s influence on Black Friday,when ads touting deep one-day-onlydiscounts abound. With not muchtime to decide or to consult reviews,they may pick up products impulsively,in the belief that “if it’s on sale onBlack Friday, it must be a good deal.”

Consumer who use smartphoneApps such as ShopSavvy toCompare prices can minimizeThe weight of M on their decisionsEven on Black Friday

NO GOINGBACK

When we talk with companies aboutshifting their marketing mix in recognitionof the rising power of O, we hear oneconsistent objection: Growing suspicion(and in some cases, proof) that onlineReviews are subject to manipulationand fraud.

Yelp, TripAdvisor, and others are becoming increasinglysophisticated at weeding out fake reviews, and consumersare developing a better sense of which sites (and whichindividual reviewers) they can trust.

30% of U.S. consumers saythey begin their onlinepurchase research bygoing to for product information andreviews.

have found that shoppers consult 10.4 sourcesof information, on average, before making apurchase.

Some example from Indianmarkets which showshow reviews can dowonders…

Xiaomi is one of the largest mobile sellingbrands in India presently

• Xiaomi hosted two online sales in two weeks on Flipkart and saw over 100,000 people register for the sale.

• No advertisement or conventional marketing

• User reviews are the prime source of company’s increasing market value.

Browse through user reviews on Zomato todecide where you want to eat

• Zomato is an online restaurant search and discover service providing information on home delivery, dining-out, cafes and nightlife in cities of India and 21 other countries.

• Reviews at Zomato decrease barriers for new comers.

The reviews available onretailer’s website primarilybuilds the image of productwhether they buy it onlineor from stores

will come to companies that can closely trackthe sources of information their customersturn to and find the combination of marketingchannels and tools best suited to the waysthose consumers decide.

Presentation created by-ROHIT, NSIT Delhi

During an internship by-Prof. Sameer Mathur, IIM Lucknow

www.IIMInternship.com