Amit Joshi, IMD Professor of AI, Analytics and Marketing Strategy has been selected along with his co-authors, as finalists for the prestigious Sheth Foundation Journal of Marketing (JM) Award.
The Award recognizes the best article published in the JM as measured by its long-term contributions to the field of marketing. The criteria for selection include the quality of the article’s contribution to theory and practice, its originality, its technical competence and overall impact.
“At IMD, we believe in real impact,” said Joshi, “so it’s an honor to be nominated for an award in this flagship journal that recognizes long-term, real-world impact.”
Joshi’s paper, “A Meta-analysis of Electronic Word-of-mouth Elasticity”, explores the field of eWOM metrics. eWOM – short for electronic word-of-mouth – is widely considered one of the most influential forms of casual media. It encompasses online opinions and ratings and provides a valuable look into consumer behavior.
Earlier individual studies examining the effects of volume and valence (meaning the positive or negative rating) of eWOM metrics found inconsistent effects of these metrics on sales. Professor Joshi and his co-authors synthesized these studies to estimate the metrics’ common effects on sales and to identify contextual factors to explain any variations.
The paper has been cited over 275 times on Google Scholar, and is required reading in the marketing PhD seminars for several top universities. In addition to the Sheth foundation JM Award, this research also received the 2015 Marketing Science Institute H. Paul Root Award for the JM paper that makes the most impact on practice.
A deeper look: contributions to marketing theory
By synthesizing research on eWOM volume and valence elasticities, this research sheds light on whether, how and under what conditions eWOM works.
The study made three key contributions. First, the findings showed that eWOM valence elasticities matter more than eWOM volume elasticities. In fact, these valence elasticities are among the highest of any marketing mix elasticities. In layman’s terms, many positive online reviews cannot overcome the damage done by even relatively few negative reviews for a product or service.
The second key contribution was to resolve existing conflicts on the effectiveness of eWOM valence and volume metrics by creating a framework that identified product, industry and platform characteristics as factors that influence eWOM elasticity. As an example, the study found that valence elasticities are lower for publicly consumed goods that are rated on retailer sites.
The third and final contribution of this study was that it guided future research by systematically identifying voids in marketing knowledge in the eWOM domain.
Effects on practice
The study’s theoretical framework and its accompanying findings can help managers make the right digital decisions. The first finding mentioned earlier — that eWOM elasticities are among the highest of any marketing mix elasticity — allows marketers to make key resource allocation decisions.
Second, the effect of contextual factors on eWOM elasticities also provides insights on how social media can be managed depending on the context of the focal company.
Finally, this research stresses the perils of managers ignoring negative consumer reviews.
