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29 Sep 2015

Customer reaction and Market identity

This article, written by Tao Wang, Filippo Carlo Wezel and Bernard Forgues, examines the conditions under which organizations publicly respond to unfavorable consumer evaluations that challenge their market identity. This study relies on an analyse of a dataset of London hoteliers' responses to online reviews posted on TripAdvisor during the period 2002-2012.

Consumers’ devaluation = Identity Threat

The potential impact of consumers’ evaluations and their active role on shaping a market identity is increasing with the Internet. Because organizations’ market identities are certified by expert evaluations, consumers’ devaluations that challenge these expert evaluations represent an identity threat.

How to respond ?

Organizations do not always react to consumers’ devaluations because of the risks associated to public responses. Hence, they first predict that organizations are more likely to respond to severe devaluations than to weaker ones; second, they propose that organizations, when faced with severe devaluations, are more likely to craft responses that justify their actions and behaviors. They further contend that, for any market identity under consideration, an organization’s reputation amplifies these relationships.

4 Questions to Tao Wang, assistant professor at Grenoble Ecole de Management

Can you briefly present yourself and your role in the Business Models and Strategy Research team of Grenoble Ecole de Management?

I am an assistant professor in DFR MTS since September 2014. My research interest lies in social valuation and evaluation, in other words, how organizations are assessed and judged by different audience groups and how the assessment affects organizational behavior and performance.

How did you find the idea of this subject? Does it refer to a personal experience?

Indeed, it was the empirical phenomenon that drew my attention. I was consulting TripAdvisor for a hotel and then got interested in the interactions between consumers and hoteliers. I was lucky that some researchers have been doing similar theoretical and empirical work, based on which I could develop the research idea.  

Nowadays TripAdvisor and all evaluation websites are distorted by fake feedbacks (family, friends, fake profiles, etc). Do you think we can still trust those websites?

There have been many discussions about the validity of online reviews. While the Internet can be misused, I do believe that websites such as TripAdvisor have their virtues and values. It gives ordinary people the opportunity to express their preferences, pleasures or frustrations, which constitute a sort of monitoring of organizations, and the personal and individual flavor also enriches information cues available for different kinds of consumers.
Of course, distortion and fake reviews are problematic. Yet, I believe that such websites are trying to deal with this problem from what I know. In addition, I think consumers could detect and sense the sincerity and logic behind many reviews before making decisions.

Your study is based on a 10-years period, what could you say about the evolution between 2002 and 2012?

What I observed during the 10 years is an increasing trend of both reviews and organizational responses on TripAdvisor, at least in London. I think similar trends can also be observed overall. It seems to suggest that consumers are willing to publicize their voices and becoming a strong force in making the market. Accordingly, organizations are becoming more attentive to consumers by listening to and reacting to them.

Contacts
Tao Wang