ELECTRONIC WORD-OF-MOUTH IN SOCIAL MEDIA: IT HELPS OR CONFUSES?

Mina Seraj Boazii University Iktisadi ve Idari Bilimler Fakltesi letme Blm Bebek, Istanbul 34341 mina.seraj@boun.edu.tr Abstract The importance of word-of-mouth marketing has further increased as more consumers started to use social media platforms to provide and utilize online reviews and referrals for their buying decisions. The high accessibility and the reduced cost of acquiring opinions online triggered the co-prosumption of a bulk of electronic content on social media, and while it has become a critical source of information, it also became confusing for consumers to detect the most genuine and thorough reviews available. As a result, while electronic word-of-mouth has become an indispensible source for consumers, the perplexity due to online content overload deters their enthusiasm to buy a product or at least prolongs their decision making time. This paper provides a conceptual model regarding how electronic word-of-mouth affects the buying decisions of consumers and discusses how companies and social media providers can become more proactive in the process of online information co-creation to alleviate the confusion or delay in buying decisions. Key Words: electronic word-of-mouth, social media marketing, information processing

1. INTRODUCTION Man receives continual information input from his environment and processes this information as an integral part of making choices (Bettman and Jones, 1972, p. 545) Internet has brought significant changes to how we operate today. One of these changes is the moving of the classical word-of-mouth (WOM) to the electronic platform. Face-to-face interactions are leaving their place to the virtual environment. Today many people write their opinions and reviews about almost anything through forums, blogs, company web pages, emails, etc. The amount of information created online by consumers is enormous today. One can type any product category, brand, key term to a search engine and find an unlimited number of reviews about it. These reviews are generated by firms themselves or consumers. The web has become an irreplaceable source for internet users to read about electronic word-of-mouth (eWOM) messages before making any purchase decisions about a product or a service. However, as much as it helps, does the information load on the Internet created through eWOM also confuse consumers? The aim of this paper is to understand the answers to this question. In order to do so, WOM and information processing issues will be discussed to come up with a conceptual model of buying decisions influenced by eWOM. The initial question is why people engage in eWOM if there is a potential for being more confused. Hennig-Thurau and Walsh (2003) have listed the reasons for eWOM engagement as risk reduction, reduction of search time, learning how to consume a product, dissonance reduction, determination of social position, belonging to a virtual community, remuneration, and learning what products are new in 1

the marketplace. One of the main reasons of information search is to reduce uncertainty. Urbany et al. (1989) consider uncertainty as a composite of two factors: knowledge uncertainty, which is related to knowledge on alternatives, and choice uncertainty regarding what choice to make. The authors argue that while choice uncertainty increases information search, knowledge uncertainty reduces it. Especially uncertainty about existence and importance about product features turn out to be important regarding decision making. In addition, Smith and Bristor (1994) came up with a model for external information search based on uncertainty orientation as well. According to them, uncertainty orientation, which is how a consumer deals with uncertain events, together with market maven role and purchase involvement is the main determinants of external information search. Schmidt and Spreng (1996), on the other hand, classify the reasons for engaging in external information search under the headings of motivational, economic and info processing. The motivation to search is affected by the constructs of perceived benefits and costs of search as well as enduring involvement, need for cognition, and shopping enthusiasm. Together with perceived ability to search, all these factors determine the external information search activity of consumers. The economic costs deteriorate the search motives of consumers (Bettman, 1979); however together with the Internet, these costs have diminished and the motivation to search online has increased. That is why eWOM has become a major decision tool today. 2. WOM and eWOM WOM is about personal influence of others in decision making and people tend to gather opinions from sources they find credible or knowledgeable (Haywood, 1989). The WOM literature has been the focus of interest since 1960s. The main research questions related to WOM have been about motivators and consequents of WOM; WOM as an outcome and as a driver of consumer behavior; roles of consumers and firms in WOM; how WOM affects buying decisions; the interaction of WOM with other marketing mix topics; effect of WOM in company financials and customer life-time value; electronic WOM and WOM in the new era of virtual environment. The earlier research is mostly about the place of WOM in diffusion of innovation (Arndt, 1967; Sheth, 1971). The main research questions are generally related to innovation acceptance, and classification of those influenced by dissemination of novelties. WOM usually flows from buyers to non-buyers (Arndt, 1967). Consequently, the two segments of interest were those who sought referrals and those who did not (Sheth, 1971). Many decision makers actively seek information (Haywood, 1989) and interpersonal sources are one of the most critical aspects for marketplace decisions and choices (Feick and Price, 1987). That is why most of the previous research was about influencers rather than the receivers of influence (Arndt, 1967). Katz and Lazarsfeld (1955) defined the sources or influencers in decision making as opinion leaders. Opinion leaders and early adopters influenced others through their knowledge about products and prior expertise. Feick and Price (1987) argued that the reason for opinion leaders to disseminate information about products was their involvement in the product. They proposed another source of influence, market mavens as a more important supply of information as they were involved in the market place and the purchasing act rather than the product. Their experience is not only product specific, compared to opinion leaders and they have information about prices, most advantageous places to buy, advertising, and couponing (Feick and Price, 1987). Even though, earlier research was mostly involved in the aforementioned topics, WOM became one of the most frequently studied topics as it is an influential factor in buying decisions, sometimes even more influential than other promotional methods (Bayus, 1985). It is especially a critical input for services marketing and services buying decisions (File et al, 1998). Katz and Lazarsfeld (1955) also state that 2

personal influence has more effect than media since it consists of active communication rather than one way as in other kinds of promotion. For instance, it is claimed that WOM has seven times the influence of print advertising, four times the effect of personal selling, and twice that of radio advertising (Katz and Lazarsfeld, 1955). Engel et al. (1969) summarizes this phenomenon by quoting your best salesman is a satisfied customer (Engel et al., 1969, p.15). The significance of WOM brings the question of why consumers engage in referral activities, in terms of both giving and receiving. A comprehensive list from Hennig-Thurau and Walsh (2003) was discussed before. In addition, reasons may be that consumers see it as a way of seeking social support for adoption or risk reduction by group action (Arndt, 1967). Dichter (1966) discusses consumer involvement as one of the major factors of creating WOM and categorizes it in terms of product involvement, which is related to how important the product is for the consumer; self-involvement, which helps satisfy certain personal needs such as building status and superiority; other involvement, related to concern for others; and message involvement stimulated by commercial activities. Sundaram et al. (1998) add altruism (both PWOM and NWOM), helping the company and vengeance to the list of possible antecedents of engaging in WOM. Wetzer et al. (2007) also explain that people engage in NWOM in order to express their anger and take revenge, or because they regret their purchasing decisions and want to be involved in social bonding to warn others. Patti and Chen (2009, p.358) summarize the reasons for engaging in WOM for the services very clearly: When consumers cannot evaluate the service quality, value, or capability of service providers, word-of-mouth communication (WOMC) becomes a credible, reliable, and cost-effective alternative medium to acquire subjective service evaluation and insightful information from other experienced customers within a short period of time. Regarding the influence of WOM on consumers, another issue discussed frequently is the effects of positive WOM (PWOM) and negative WOM (NWOM). Arndt (1967) states that PWOM is more frequent compared to NWOM and consumers are eight times likely to receive favorable WOM vs. unfavorable WOM. However, regardless of its frequency, many authors have claimed that NWOM can be more influential than PWOM (Bayus, 1985). Through a detailed literature review, Breazeale (2008) has reached the same conclusion that NWOM is more powerful on consumers due to the fact that dissatisfied customers disseminate their experience and feelings more frequently than those who are satisfied. Many alternative definitions of WOM have been offered by various authors such as grassroots marketing, viral marketing, and buzz marketing (Brown et al, 2005). As mentioned before, there have been a lot of studies regarding various topics in WOM. Electronic WOM (eWOM) is another sub-stream of WOM that is studied widely by academia. Even though most of the WOM conversation still takes place offline, the online platform has become an important alternative for exchange of opinions and diffusion of information (Hennig-Thurau et al., 2004; Gruen et al., 2006; Brown et al., 2007; Edwards et al., 2010). Zhu and Zhang (2010) quote a marketing research which reveals that twenty four percent of Internet users access online reviews before paying for a service delivered offline. They also state that most consumers review online content for their offline purchases. This ratio is expected to grow for all kinds of services as Internet becomes an irreplaceable part of our lives. Keeping this in mind, the similarities and differences between WOM and eWOM need to be considered in order to better capture the antecedents of eWOM effectiveness with respect to buying decisions. Considering these two platforms, similar to WOM, eWOM has higher credibility, reliability, empathy and relevance to customers compared to firm created sources of information (Gruen et al., 2006). Both environments are more objective compared to commercial pleads. Secondly, Hennig-Thurau et al. (2004) 3

state that consumers engage in eWOM due to social benefits, economic incentives, concern for others, and self-enhancement, which are very similar to the motivators of WOM as discussed before. Through eWOM, consumers goad both social and economic value (Balasubramanian and Mahajan, 2001) just as they do through WOM. Finally, Hennig-Thurau and Walsh (2003) have revealed that consumers read online comments in order to save decision-making time and enable better buying decisions, which is again parallel to WOM activities offline, but eWOM is usually more goal-directed while WOM may be spontaneous. Despite the fact that many authors interested in eWOM have been inspired by offline WOM models to explain the eWOM concept, Brown et al. (2007) states that the existing theories may not always be adequate to explain eWOM. The communication factors of the two WOM environments are very different from each other. First of all, the nature of WOM is described as fleeting since it vanishes when it is spoken; however, eWOM does not disappear as it is written. eWOM is not as spontaneous as WOM (Breazeale, 2008) and is usually goal-directed since it takes effort to both create it and search for it. Secondly, eWOM is technology-facilitated transmission of opinions and experiences among acquaintances or strangers (Sun et al., 2006). As the exchanging parties are mostly strangers to each other, it is the credibility and homophily of the website rather than the individuals that share eWOM (Brown et al., 2007) that is influential in decision making. Furthermore, because of the relative speed, convenience, breadth of reach, and lack of face-to-face social pressure, eWOM has become more advantageous than traditional WOM in its influence on information and decision-making processes (Edwards et al., 2010). Considering these advantages of eWOM, the effect of eWOM on buying decisions is hypothesized to be dependent on three main factors: consumer characteristics, content characteristics and product characteristics, which will be discussed in detail in the coming sections. 2.1. Consumer Characteristics Consumer characteristics are the major and most complicated dependent variable related to the effects of eWOM on buying decisions. It is not unfair to make this claim as most of the literature is about consumer related issues and how they affect WOM. The main consumer characteristics that affect eWOM performance may be listed as prior knowledge and experience, ability to use internet, involvement, riskperception, confusion proneness, culture and gender. All of these are in parallel to WOM except for the ability to use internet. P1: eWOM effect on buying decisions is dependent on receivers consumer characteristics regarding: a) b) c) d) e) f) g) Prior experience and knowledge Perception of risk Involvement type and level Confusion proneness Culture Gender Locus of control

Prior experience and knowledge of consumers become an important factor in information processing and decision making (Asugman, 1998; Doh and Hwang; 2009; Zhu and Zhang, 2010). According to Bettman and Park (1980), those consumers with moderate prior experience and knowledge are more involved in currently available information compared to those consumers with high or low prior experience and knowledge. The low groups usually ignore new information processing opportunities since they do not have prior knowledge and this affects their ability to process new information. High groups, on the other 4

hand, do not feel the need for further information. Those consumers in the high group tend to differentiate between offerings based on brands, whereas those in the low group, tend to use attribute based processing. In terms of the phase of choice process, the earlier stages of processing are more involved with comparing objects to standards, while later stages are mostly comparing and eliminating alternatives. In addition, Zhu and Zhang (2010) talk about internet experience as an antecedent of consumer reliance on online reviews. Consumers with higher Internet experience can easily find reviews from multiple sources. Hu et al. (2007) define this concept as self-efficacy related to the search complexity of the issue in hand and claim that the more self-efficacy a consumer feels the more motivation will be present to search for information. Therefore, it can be concluded that internet experience affects the ability of searching online, and as Bettman (1979) states the ability to search also derives the motivation to search more resources. Perception of risk is another consumer characteristic that determines the eWOM effect on a buyers decision making. According to Arndt (1967), the two main risk components are importance and uncertainty. Furthermore, consumers may be categorized as high, medium, or low in tendency to perceive risk. The high-risk perceivers usually make more effort to seek word-of-mouth information and the effect of WOM is higher on them especially if it is NWOM. Compared with low-risk perceivers, the high-risk perceivers are less likely to buy the new product but are more affected by the information received. Therefore, companies need to segment their customers based on their risk-perception and provide information accordingly in order to quench their need to understand the risk about their offerings. Involvement is one of the main constructs that determines buying behavior (Dichter, 1969; Zaichkowsky, 1986; Doh and Hwang, 2009). Zaichkowsky (1986) argues that involvement with the product and the purchase decision will affect the importance level of the offering, the amount of information search, and time spent for decision making. Dichter (1969) analyzes the impact of involvement on WOM providers and WOM receivers. Accordingly, WOM providers are affected by product involvement; selfinvolvement, which is about self-confirmation, status, and affirmation; other involvement, which is related to care for others; and message-involvement, which is related to the entertaining part of the disseminated opinion. Receivers of WOM, on the other hand, care more about the message and speaker fit. Arndt (1967) depicts the same issue more simply on an inner-other directedness axis, where inner directedness concerns self-involvement and other-directedness involves concern for others. Asugman (1998) also includes the involvement aspects as motivators of NWOM along with intentions of users as mediators of WOM. Intentions are not included as a separate dimension in personal characteristics due to the fact that the involvement type of the consumer determines whether the intentions are implicit and explicit. For instance, consumers with the intention of altruism are show other-involvement, whereas those who engage in eWOM due to status and prestige are self-involved. In short, it is the involvement of the consumer with the product or the purchasing action that has an effect on how the eWOM reviews will be evaluated. Confusion proneness is an important construct in information processing as it shape how people decipher the incoming information. Confusion proneness is how easily or often consumers experience this state of confusion when processing similar, too much or ambiguous information (Walsh et al., 2007) and it may negatively affect the process since it is likely to lead to a delay or abandonment of decision making (Walsh and Mitchell, 2010). Among the three types of confusion discussed, overload confusion proneness is especially related to the topic at hand. Consumers have limited cognitive abilities and once the amount of stimuli passes a certain threshold, it overloads and confuses consumers (e.g., Jacoby, Speller, and Kohn, 1974). Overload confusion proneness is defined as the consumers difficulty when confronted with more product information and alternatives than they can process. Awareness and knowledge of consumer confusion is relevant to successful marketing because confused consumers are less likely to make rational buying decisions and to choose products offering the best quality or best value for money, which will bring companies that can reduce confusion proneness competitive advantage (Walsh et al., 2007). 5

The culture that influences the consumer also affects how dependent the person will be to WOM referrals or how these referrals are interpreted (Money et al., 1998; Lam et al., 2009). Hofstedes cultural dimensions, namely individualism, masculinity, uncertainty avoidance, and power distance along with their effects on WOM engagement have been studied. As a result of empirical studies, Lam et al. (2009) have claimed that more individualistic consumers (vs. collectivists) welcome referrals from people outside their close circle of acquaintances. Consumers that value high power distance prefer engaging in WOM with their in-groups that are personally close to them. Research has also shown differences between genders related to WOM performance. Awad and Ragowsky (2008) have found that eWOM quality affects online trust differently across genders. Men being more pragmatic and women more emotive consumers, womens communication style is more network-oriented and related to supporting others while sharing opinions. In addition, trust has a more significant role in intention to shop online for women than for men and that eWOM quality is an antecedent of online trust. Finally, certain personality factors also affect the interpretation of eWOM as well. Lam and Mizerski (2005) discuss the significant effects of locus of control on an individuals word-of-mouth and behavior. Internal locus of control is related to being in control of ones life and events while external locus of control is about believing in uncontrollable external variables, luck and faith. Their research showed that individuals with high internal locus of control were more likely to engage in word-of-mouth communication with their out-groups, which are the people they do not have close ties with. In addition, individuals who scored high on their external locus of control were more likely to engage in word-ofmouth communication with their in-group, which is made up of people close to them such as family and friends. These findings are influential to design marketing programs. Having discussed these dimensions of consumer characteristics, the following is hypothesized regarding the role of consumer characteristics on eWOM effects: 2.2. Content Characteristics As expected, exposure to favorable WOM increases the probability of purchase and exposure to unfavorable WOM decreases this probability (Arndt, 1967). The second eWOM variable that is expected to impact buying decisions is how eWOM content is organized. The main content characteristics that need to be discussed are the format of the message, clarity and credibility of the content, amount of information, positive or negative direction of the overall message content (Asugman, 1998; Doh and Hwang, 2007). Format and organization of the message is especially a critical factor in the processing stage. (Bettman, 1977). It should be congruent with the processing models used by consumers and it is the concreteness of the message, which is the explicit display that makes it useful in decision making. Vividly presented information is interesting, draws attention, provokes thinking and makes the message more easily accessible (Herr et al., 1991). Consequently, the better the presentation of messages, the more impact they will create. In terms of increasing this impact, matrix displays and comparative tables are helpful in easing the information processing activities of consumers. Replacing some of the computation and processing with automated decision making systems and providing people with values and decisions of others help information processing (Payne et al, 1992): P2a: eWOM effect on buying decisions is positive in case of organized and vivid display of messages. In addition to the format and display, the content itself is also very crucial. Chevalier and Mayzlin (2006) have studied the book market and revealed that online consumer ratings significantly influence product 6

sales. Customers actually read review text and do not limit themselves to the reviews summary statistics while making buying decisions. The clarity of the message content should especially be taken into consideration. Consumers face uncertainty (Arndt, 1967) while making decisions and the clarity of the message is a significant factor in overcoming this uncertainty. Credibility of the eWOM content, needless to say, is another aspect that determines the quality of the written content. Brown et al. (2007) claim that a message source is perceived to be more credible when it has expertise and is less prone to bias. The expertise depends on the knowledge of the source and it is usually hard to determine the level of expertise during online information sharing. There are usually cues about this from the general message structures of the resources; however, it is mostly the credibility of the website that determines the credibility of the messages in it: P2b: eWOM effect on buying decisions is positive in case of the clarity and credibility of the message contents. Finally, the direction of the content needs to be discussed as the positive or negative overall message about an offering determines the actions of its consumers. The receivers of information adapt their attitudes and intentions toward the review and the reviewer based on the ratio of negative versus positive information. Customers are more likely to rely on eWOM messages when the directions of the messages are congruent with each other (Doh and Hwang, 2009). This direction consensus in eWOM shows that consumers have similar reactions to a product, which affects the credibility and power of the content as well. In addition to the direction of messages, Sen and Lerman (2007) argue that to an observer (reader), negative reviews have more value compared to the more expected positive information. Doh and Hwang (2009), on the other hand, state that some amount of negative messages can be helpful in creating credibility for the Web site and eWOM messages, which is logical since all positive messages about a topic may cause suspicion on whether the content is user generated or firm generated. It is also important to note here that PWOM is more common compared to NWOM (East et al., 2007). This is due to more people producing PWOM and to the fact that those individuals who produce PWOM do so more frequently than those producing NWOM. East et al. (2007) state that the incidence ratio is around 3 PWOM for every 1 NWOM. Therefore, the amount of PWOM and the effects of NWOM need to be put in a scale to understand the final outcomes regarding buying decisions: P2c: eWOM effect on buying decisions is positive if overall direction of the message contents is positive and negative if overall direction of the message contents is negative. 2.3. Product Characteristics The third issue that determines the effects of eWOM is product characteristics. The type of the product and product popularity are the main factors to be considered in evaluating eWOM effects. Lam et al. (2009) argue that the type of the product influences the frequency and intensity of related WOM. For instance, consumers interested in purchasing services are especially dependent on WOM due to the intangibility and inseparability properties of services and the best evidence regarding service quality is the referral of others (Haywood, 1989). P3a: Positive or negative effect of eWOM on service buyers are higher than on tangible product buyers. Another product typology may be based on utilitarian and hedonic product in terms of WOM effectiveness. It is proposed that consumers are likely to consider NWOM more useful compared to PWOM for utilitarian products rather than for hedonic products. This negativity bias, which is the tendency to look for NWOM, will determine how consumers process reviews. For hedonic products on 7

the other hand, consumers become more committed and they discount NWOM accordingly (Sen and Lerman, 2007). Similar to utilitarian and hedonic differentiation, Zhang et al. (2010), comment on the consumption goal the product evokes for a consumer. When evaluating products closely associated with promotion consumption goals, consumers tend to perceive PWOM more persuasive, whereas in evaluating products related with a prevention consumption goal, consumers again have the negativity bias. P3b: NWOM bias is higher for utilitarian products than for hedonic products. P3c: PWOM bias is higher for hedonic products than for utilitarian products. Product popularity is the second product related factor that influences the relationship between eWOM evaluation and product characteristics. According to Zhu and Zhang (2010), popular products receive more reviews, and the amount of review on a product make the overall judgment from online reviews more trustworthy. However, the authors also talk about the opposite scenario that more popular product reviews are less sought for since they already have a reputation. Consumers usually look for online reviews for less known products since it is more difficult to get offline WOM about them. Therefore literature shows that product popularity has an ambiguous effect on eWOM. More popular product reviews are trustworthy whereas less popular product reviews are less frequent and therefore may again have value for the consumers seeking them. For this paper it is hypothesized that less popular products are more dependent on eWOM since popular products have the chance to influence consumers through other methods easily. P3d: Buying decisions for less popular products are more prone to eWOM than popular products. Having discussed the three main variables that influence how eWOM infleunces buying decisions, the next sections will discuss the main moderators of these relations, namely company strategies, eWOM environment and information overload. 2.4. Company Strategy A companys way of managing its functions and its marketing activities have an impact on the level of WOM created and the way it is deciphered. Bayus (1985) states that there are direct, indirect, and reciprocal links between sales and WOM. This relationship can be influenced through marketing activities. Companies can affect WOM, by giving bonuses for referral, advertising to motivate seeking for product, blocking or responding to rumors and complaints. Haywood (1989) even goes further and argues that the internal communications regarding a firms processes and the formal external communications are the two phases that drive WOM and affect patronage. WOM should be integrated to the overall performance of the company and total commitment to the process is a fundamental necessity (Haywood, 1989). Cengiz and Yahya (2007) also state that WOM is dependent on how the company chooses to apply the marketing mix to its operations. Product, promotion, service quality and after-sales services are the main factors of the marketing mix that can have an effect on WOM (Cengiz and Yahya, 2007; Haywood, 1989). Therefore, companies have to think of the whole value chain and all of the actors in their value creation network and work together with opinion leaders, suppliers, competitors, other third parties in order to have control over WOM. Not only does company strategy affect WOM accumulation in the market, but the reciprocal influence is also an important case. Trusov et al. (2009) discuss the fact that traditional marketing increases WOM, which brings more consumers to the customer base. As more customers sign-up for the offerings of the company, in the long run, it needs to adjust its strategy according to the demand. Thus, it can be deduced that WOM and marketing strategy are actually integrated processes that affect each other continuously. 8

Nevertheless, Villanueva et al. (2008) argue that marketing programs and WOM can be opponent strategies. In terms of consumer acquisitions, marketing programs are fast but expensive methods, whereas WOM acquisition is slow but cheap. Quick acquisition of customers through high marketing budgets brings new need for higher budgets to retain these customers. As a result, if firms can afford to build a customer base organically (i.e., through WOM) have the chance to achieve higher long-term profitability and can avoid big budgets for customer retention (Villanueva et al., 2008). Consequently, more successful companies tend to use WOM proactively and it is an effective marketing tool for turbulent environments, which we face frequently today (Mason, 2008). Having discussed the reciprocal effects of company strategy and WOM on each other, the specific literature on promotion and WOM needs to be scrutinized as well. Comprehensive literature is available related to the issue of how advertising affects interpretation of WOM (Arndt, 1967; Day, 1972; Smith and Vogt, 1995; Graham and Havlena, 2007). Arndt (1967) supports WOM as a method with much greater impact than media communications on those who are exposed. This is mainly due to three reasons. First of all, WOM creates a two or multi-way communication whereas other promotional programs are usually just declarations to the consumer without any opportunity for feedback or clarification. Secondly, WOM is more reliable and trustworthy since it is coming from more objective sources that have experience with the offerings of a company. Lastly, personal contacts engaging in WOM can provide social support and encouragement (Arndt, 1967). As a support for these arguments, Bayus (1985) states that with a lower advertising budget, a company can create more effect through WOM. Despite the fact that WOM can have many advantages compared to promotional activities, advertising is essential for new product acceptance and creating the word-of-mouth (Day, 1972). WOM is actually a desired output of successful advertising that targets opinion leaders and followers. These receivers of advertising messages in return influence the target markets of firms (Bayus, 1985). In addition, advertising can compensate for NWOM, because without any advertising there is nothing to offset the negative referrals from customers (Smith & Vogt, 1995). Graham and Havlena (2007) argue that there is actually a missing link between advertising and WOM and they defend the idea that companies need to take this into consideration and ensure that online and offline advertising strategies are established together as they both motivate online search and eWOM. In short, the alignment between company strategies and eWOM outputs are crucial for the successful results. Incongruence between firm generated promotions and eWOM outputs only confuse customers and decrease the intention to buy. Therefore, it is hypothesized that company strategies moderate all the other factors that affect eWOM effectiveness: P4: Corporate strategies have a moderating effect on how a) Consumer characteristics b) Content characteristics c) Product characteristics impact eWOM effectiveness. 2.5. eWOM Environment According to Buttle (1998), WOM communication among consumers is affected by external factors including social network structures and business climates or competition. Online social networks are one of the major platforms of eWOM accepted by internet users (HennigThurau and Walsh, 2003). Kozinets (1999) has called this new phenomenon of online socialization the retribalization of the society into clusters of affiliation. Rheingold (1993, p.5) defined these new tribes or 9

virtual communities as social aggregations that emerge from the Net when enough people carry on those public discussions long enough, with sufficient human feeling, to form webs of personal relationships in cyberspace. Balasubramanian and Mahajan (2001) emphasize this idea as they regard virtual communities as an aggregation of people, who are rational utility maximizers without any physical collocation, engaged in mutual production and consumption with a well-understood focus. Social networks may include all kinds of platforms for online social gatherings such as chat rooms, newsgroups, e-mail forums, web-based forums, etc. (Hagel and Armstrong, 1997). All of these platforms act as virtual glue for post-modern consumers that want to preserve their individualism but at the same time feel the necessity to belong to a group (Simmons, 2008). Therefore, social networks essentially represent WOM networks, where like-minded individuals interact to get or give information or advice (Hoffman & Novak, 1996; Kozinets, 1999; Dellarocas, 2003), and it is critical to understand how they affect decisions of members. Social networks are capable of influencing decisions of their members through the ties that are formed between those who exchange information. These ties may be categorized according to the closeness of the relationship between exchange parties, and tie strength determines the level and type of exchange to take place between them (Granovetter, 1973). It can be assumed that consumers would disseminate more WOM through strong ties than weak ones (Granovetter, 1973; Brown et al., 2007). However, the exchange of information does occur through social networks even if there is a lack of tie strength between individuals. Brown & Reingen (1987) studied tie strengths and reached the conclusion that weak ties had an important bridging function and facilitated information to travel from one subgroup to another. At the micro level; however, strong ties were more likely to be used for referral purposes as they were more influential than weak ties. Duhan et al. (1997), on the other hand, argue that consumers may prefer weak ties when they need more subjective knowledge or opinion. As discussed in personal characteristics, the referral preferences of individuals may change based on their locus of control and some may prefer strong ties whereas others weak ties depending on personal differences. Another determinant of the eWOM environment is the competitive factors. Having realized the tendency of consumers to consult with eWOM, companies themselves have started to generate eWOM and manipulate the environment themselves (Dellarocas, 2003). Firms create buzz marketing, which is WOM disseminated through agents or volunteers that work for the specific firm (Carl, 2006). The easiest way to do buzz marketing is to anonymously post online reviews praising own products while creating NWOM for competitors. These approaches raise ethical issues due to nondisclosure of eWOM providers and create the possibility that eWOM may lose its genuineness. However, Carl (2008) found that the outcomes were not affected even if the identity of the buzz marketers were revealed. Still, it would be better for the business environment and society if a possibility for manipulation did not exist at all (Chevalier and Mayzlin, 2006). Along with these arguments, it is proposed that: P5a: Tie strength in social networks moderates how consumers evaluate eWOM messages for their buying decisions. P5b: The existence of buzz marketing moderates how consumers evaluate eWOM messages for their buying decisions. Another outcome of eWOM environment is information overload and it is the main topic of this conceptual framework as it is believed to moderate all the factors that influence the buying decisions of eWOM receivers. It is the number of competitors and the social networks that actually increase the amount of online referrals available to consumers. Therefore, the competitive environment is also seen as an antecedent of information overload. 10

2.6. Information Overload Consumers cannot process all available information to make purchase decisions. They need simplifying information searching methods and WOM is a widely used strategy (Duhan et al., 1997). Today eWOM is even a better strategy since it decreases search costs enormously (Patti and Chen, 2009). Nevertheless, consumers onsumers experience cognitive incongruence due to conflicting information from various sources. sources In order to reduce this incongruence, the consumer seeks for unbiased information from virtual platforms (Hennig-Thurau Thurau and Walsh, 2003). 2003 Even though they are supposed to be unbiased, which is not the case due to buzz marketing, it does not mean that eWOM through these platforms will help consumers make their buying decisions more easily. As mentioned in the beginning, the very purpose of this paper is that eWOM may confuse more than it helps due to all the factors discussed above and the role of information informati overload on the Net. Information overload emerges when consumers are provided with too much information exceeding their processing limits. Once the ability of human beings to assimilate and process information at a certain point in time is surpassed, people eople tend to become confused and dysfunctional (Jacoby, Speller, Khon, 1974). Therefore, information overload may lead to inefficient decisions. Lee and Lee (2004) state that researchers came up with contradictory findings regarding the effect of information informat overload on choice accuracy; however, during their own study they found out that people make less efficient choices while they do appreciate more information. The increasing amount of information may end up increasing the perceived risk for consumers and delaying buying decisions. It is hypothesized that as overload confusion proneness increases, decision postponement increases increases (Walsh et al., 2007, p. 704). As mentioned above, all kinds of incongruities regarding information processing leads to issues with buying decisions; therefore, it is proposed that: P6a: eWOM environment determines the degree of information overload the consumers face. P6b: Information overload moderates how consumer, content and product characteristics affect buying decisions based on eWOM. eWOM The propositions made in this paper lead to the following overall model related to the eWOM effect on buying decisions: Certain relationships have been hypothesized to be positive or negative while some will be revealed once the model is tested through empirical research. To sum up, the interest of this paper is to understand how eWOM created in social media affects buying decisions. decision The dependent variable eWOM effect on consumers buying decisions is based on three main constructs: consumer characteri characteristics, content characteristics, product characteristics. Other than these main factors, the literature review revealed other elements that are
Figure 1: : How Information Overload in Social Media Affects Buying Decisions

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influential on how eWOM will guide buying decisions. Company strategy is expected to turn out as a major moderator of the three causal relationships since consumer attitudes. Not only the company strategy but also the strategy of all competitors and disseminators of eWOM determines these relationships as well. Under the heading of eWOM, the competitive buzz marketing and the effect of social networks and their ties also need to be considered as moderating factors. Finally, how the existence of information overload, due to exponentially growing eWOM activities in social media, is included as a moderator for the model. This information overload is proposed to be caused by the eWOM environment, which is another relationship included in the model. 3. MANAGERIAL IMPLICATIONS The eWOM effect on buying decisions model exposes strategic action items for companies and agencies that use or build social media platforms. For companies, it is crucial to align their strategies with the eWOM results they want to create, focus more on their internet presence and advertising, monitor eWOM regularly, analyze unstructured social media data to segment and approach customers based on certain characteristics, and build social networks around their own brands. It is fundamental to set social media strategies and use analytical tools to organize and measure effects of eWOM messages to further enhance the message contents, monitor and regulate buzz marketing activities that may confuse consumers. The most crucial point for businesses is that they have to align their marketing strategies with what kind of WOM or eWOM they desire to create. As mentioned before, Haywood (1989) claimed that this philosophy should be integrated in all processes of the firm. This is especially related to sustaining product and service quality as those are the main areas that consumers base their reviews on. If a company is committed to quality, then it is much easier to derive PWOM from its customers. Otherwise, users of the company products disseminate their dissatisfaction in many platforms of eWOM in order to take vengeance or warn others. Secondly, as Graham and Havlena (2007) mentioned the missing link between online advertising strategies and eWOM, companies need to focus on both online and offline promotional programs. eWOM readers that base their decision making on online referrals are usually Internet-literate consumers. Before looking for eWOM, it is only natural to try to gather information about company products from the companys website. If companies can provide clear messages about the attributes of their products, they can convince their customers before they engage in eWOM search. In that case, eWOM will merely be a method to validate the impressions customers get from the company website rather than an exploratory method to form initial notions about a product or a service. In short, the message content and clarity of product attributes on company websites are crucial as an initial step for eWOM search. Monitoring eWOM has almost become a necessity for companies. It is important to track the satisfaction levels and feedbacks of consumers. Some companies even hire specifically for such a position. eWOM is actually an invaluable resource for companies as most customers prefer to utter their complaints somewhere else rather than to the company representatives themselves. As a response to these feedbacks, company representatives can actually contact these consumers and show that they are interested in providing solutions to their issues. The usage of eWOM environment wisely is a must for companies. Those social media environments that customers depend on for information, for instance widely known technical sites related to topics, social networking sites such as Facebook and Twitter, topic based community sites are all major resources to provide correct information. Companies can establish their own social networking or brand community sites, which can help maintain their control levels on eWOM by acting quickly based on what is written. It may serve as a platform to disseminate internet advertising, newsletters or company stories that may be influential in decision making. 12

Social media agencies can influence how messages are displayed on their websites in order to assist their users with deciphering messages more easily without giving way to confusion. Summary ratings and full text reviews should go hand in hand to satisfy different types of consumers. The more socially active and more vivid the online social network site is, the more active will be the review and feedback of consumers. This will also be an attraction point for new members to join and enrich the eWOM content of the site. Finally, buzz marketing is an issue that threatens genuine content online. It is not possible to differentiate easily between firm-generated and consumer-generated reviews. When a consumer reads eWOM, very positive comments usually look very suspicious and this diminishes the overall trust the consumer has for the social network site as well. As mentioned, consumers rather consider the credibility of the website than the reviewers while making conclusions about the reviews (Brown et al., 2007). Therefore, it may be better to fabricate policies that allow firms to express themselves openly on these sites rather than create unauthentic, financially driven messages. 4. CONCLUSION The next step that needs to be taken related to this conceptual model is empirical research to verify the propositions of this paper. That is how it can be exposed that the information overload construct has a diminishing effect on buying decisions. eWOM is an exponentially developing resource that influences the buying decisions of consumers. However, together with its development, the information overload on the Internet also grows. That is why we plead that eWOM confuses more than it helps. It is mainly due to the information bulk created by eWOM generating consumers, buzz marketing and social networks. Businesses can use this model in order to come up with better eWOM strategies as well as be cautioned about the major traps eWOM can create. After all, in the era of Internet marketing, this is an essential resource for both companies and consumers to use, and making it an effective tool rather than a bewildering mass. BIBLIOGRAPHY Arndt, J. (1967), Role of Product-Related Conversations in the Diffusion of a New Product, Journal of Marketing Research, 4, 291-295. Asugman, G. (1998), An Evaluation of Negative Word-of-Mouth Research for New Extensions, European Advances in Consumer Research, 3, 70-75. Awad, N.F. and Ragowsky, A. (2008), Establishing Trust in Electronic Commerce Through Online Word of Mouth: An Examination Across Genders, Journal of Management Information Systems, 24, 4, 101-121. Balasubramanian, S. and Mahajan, V. (2001), The Economic Leverage of the Virtual Community, International Journal of Electronic Commerce, 5, 3, 103-138. Bayus, B.L. (1985), Word of Mouth: The Indirect Effects of Marketing Efforts, Journal of Advertising Research, 25, 3, 31-39. Bettman, J.R. and Park, C.W. (1980), Effects of Prior Knowledge and Experience and Phase of the Choice Process on Consumer Decision Processes: A Protocol Analysis, Journal of Consumer Research, 7, 3, 234-248. Bettman, J.R. (1979), An Information Processing Theory of Consumer Choice, Reading, MA: AddisonWesley.

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