POWER IN THE CLICK OF THE BEHOLDER: THE INFLUENCE OF ELECTRONIC NEGATIVE WORD-OF-MOUTH ON BRAND MANAGEMENT

Abstract

Ever since the creation of Web 2.0, there has been a seismic shift in how businesses advertise and promote their brands. Social media has birthed a new platform for people and organizations to interact with each other to pass information and opinions or accounts of experiences with products or services. As more consumers gravitate towards social media, firms are leveraging this sensation to engage and forge relationships with individuals which in most cases positively influence consumers’ purchase decisions. However, when some customers are dissatisfied with services or products, they engage in social media negative word-of-mouth (NWOM) which could impact a brand’s reputation, the consumer’s purchase intention and ultimately the firm’s bottom line. In the first study, 118 undergraduate students were surveyed, and empirical evidence was found to support mediating effects of brand reputation on the relationship between social media and purchase intention and moderating effects of brand engagement on the relationship between social media NWOM and brand reputation. In the second study, scenarios were presented to undergraduate students to investigate the impact of social media NWOM on small/local businesses vs. large chain businesses, the difficulty of recovery for small/local businesses, the NWOM correlation of switching behavior after product/service failure, and responses from a firm after a product/service failure. The third study replicated the findings from study two using a more diverse sample instead of students. The study expanded and explored why trust and recovery levels differ in large chain versus small/local businesses. Results indicated that small businesses suffered more from the failure in service/product but made a larger surge in trust than large chain businesses. Keywords: Negative-word-of-mouth, social media, brand engagement, business failure recovery, brand trust, switching behavior