What Marketers Misunderstand about Online Reviews

Opinion Based MarketingA Harvard Business Review Article

By Nived R Nambiar

What is meant by Influence Mix ?

Influence Mix

“How People’s decisions are affected.”

It depends on 3 factors.

Prior Preference and Experience PInformation from Marketers MConsumer Reviews O

Influence Mix

The greater one source is relied upon, the lesser the effect of other sources.

FOR EXAMPLEIf a person is more interested in opinion of others

for a product, the marketing and product preference hold a lighter weight in decision

making.

Power of Consumer Reviews

Consumer Reviews

The rise of online reviews and other sources of peer-to-peer information & expert opinions

communication has changed the way people make buying decisions.

A time has come for marketers to rethink their

Strategies.

Consumer Reviews

To account for the rising power exerted on future customers by the opinions of

existing customers.

Two tools have been Developed

Influence Mix & O-Continuum

Understanding Your Influence Mix

Understand Your Influence Mix

Over the years the weight of has been

increasing.

A situation has reached where,Market can be classified as

O-Dependant & O-Independant.

O

Understand Your Influence Mix

O-Dependant Products

Usually made when Customers can’t test the product themselves

Understand Your Influence Mix

O-Independant Products

Mostly includes luxury products and everyday essentials

Understand Your Influence Mix

How Much does Opinion Matter?

O-Continuum

The 4Strategic

Implications

It has now become necessary for marketers to realise where their product lies on the O-Continuum.

There are mainly four strategic implications to be considered

Competitive Position Communication

Market Research Product Segmentation

Strategic Implications

1 . Competitive Position

With more customers depend on “O”

● Branding takes on less importance.eg: Rise of independent restaurants.

● Easier entry for newcomers into the market.eg: Oneplus, Xiaomi

● Companies can diversify more easily.eg: Samsung, LG

1 . Competitive Position

Market Share volatility increases in such Markets.eg: Swift decline of Nokia and Blackberry

Conversely, ● Brand equity and Loyalty.● Brands with prestige and emotional ties.can protect established companies.

2 . Communication

The current situation has become such that,

● Celebrity endorsements are less effective.eg: Nikon, Canon etc.

● Banner ads used to create brand awareness has become less effective.

2 . Communication

On the other hand,

People don’t depend on “O” for personal products.

They are affected by persuasive ads and eye-catching store displays.

eg: P&G.

3 . Market Research

Main aim of market research is to measure the effect of “P” on people.

eg:

Market research on iPhone concluded that it wouldn’t be successful. But as soon as it hit market it got influenced by “O”.

3 . Market Research

Main aim of market research is to measure the effect of “P” on people. But now output cannot be solely predicted based on market research.

eg:

Market research on iPhone concluded that it wouldn’t be successful. But as soon as it hit the market it got influenced by “O”.

3 . Market Research

So what should be the direction of research ?

Systematic Coding,Tracking and Quantifying of info from forums and review sites.

Measuring individual preferences, satisfaction and loyalty.

4 . Product SegmentationProducts location on the O-Continuum varies,

● Across consumer segments● From country to country.● Might be dependant on situational factors.

eg: A customer dependant on “O” may come underM’s influence on Black Friday. Mostly used by ecommerce companies like Flipkart, Myntra etc.Black Friday - One day only discount sales, Mega offer day etc.

Hence it has become necessary for companies to understand their

target audience and choose their

influence mix appropriately.

How much can we depend on “O” ?

Growing Suspicions One of the growing concerns is the credibility of the

reviews.

Marketers believe that reliance on “O” will decline as more consumers become wary of deceptive reviews.

Well ! That won’t be the case.

Current Situation Consumers are developing a better sense of which

sites they can trust.eg: Sites like Amazon, Tripadvisor have made ways to certify

reviews.

Information Seeking has become deeply ingrained in many consumers and a scenario of them turning to

information from traditional marketing is highly unlikely.

Predicting the future ?

Sources of “O” changes rapidly.

As influence mix evolves success will come to those who track the the sources of information

their consumers turn to and hence find a suitable communication mix best suited to the

ways consumers decide.

Choosing the right Influence Mix& With the right Communication Mix

companies can succeed in

effectively marketing their product.

Recap

● What is influence Mix ?

● Power of Consumer Reviews

● Understanding Your Influence Mix

● The 4 strategic Implications

● How much can we depend on “O” ?

Thank You

Disclaimer

Created by Nived R Nambiar, MEC Cochin, during an internship by Prof. Sameer Mathur, IIM Lucknow.

www.IIMInternship.com