Determinants and consequences of trust in online environment

Thesis (S.M.)--Massachusetts Institute of Technology, Sloan School of Management, 2002.Includes bibliographical references (leaves 205-214).The fundamental role of trust in numerous business transactions, and especially in customer relationship management, has been widely acknowledged by both industry and academia. The establishment of trust is a necessary condition for the long-term success of any business enterprise. This is particularly true in the Internet environment, where rapid technological advances accompany the rise and fall of many companies in a relatively short period of time. Previous studies have emphasized the significance of trust in Internet strategies; virtual experiences created by online systems eliminate or minimize face-to-face contact, but human trust is still essential for the experience to be effective. However, while the importance of trust in online environments is recognized, the determinants and consequences of customer trust have not been systematically investigated across a variety of industries, particularly in B2C context. This research is designed to investigate consumer perceptions of trust and the role of trust in consumer behavior in e-Business environments. It examines the following key research questions: What exactly is online customer trust? How is online trust different from offline trust? How does online trust affect customer behavior on a website? What are the antecedents and consequences of online trust? To address these questions, a model is developed that links consumer perceptions of website characteristics to perceptions of overall trust in a website, and perceptions of trust to consumer behavior related to the website. The proposed model identifies a number of factors that drive online trust, shows how website cues and online trust shape customer decision process, and identifies special role of online trust as a mediator in the link between website characteristics and consumer behavior. A large-scale empirical study is presented that applies this model across a variety of websites in various industries, using a structural equation modeling approach (LISREL), coupled with application of moderator/mediator analysis techniques. A holdout sample is utilized to test the validity of the model. Managerial implications for successful Internet strategies, incorporating appropriate usage of different website trust cues for different categories of customers, are presented.by Yakov Bart.S.M

Spillover Effects in Seeded Word-of-Mouth Marketing Campaigns

Seeded marketing campaigns (SMCs) involve firms sending product samples to selected customers and encouraging them to spread word of mouth (WOM). Prior research has examined certain aspects of this increasingly popular form of marketing communication, such as seeding strategies and their immediate efficacy. Building on that research, this study investigates the effects of SMCs extending beyond the generation of WOM for a campaign’s focal product by considering how seeding can affect WOM spillover effects at the brand and category levels. The authors introduce a framework of SMC-related spillover effects, and then empirically estimate these with a unique dataset covering 390 SMCs for products from 192 different cosmetics brands. Multiple spillover effects are found, suggesting that while SMCs can indeed be used primarily to stimulate WOM for a focal product, marketers must also account for brand- and category-level WOM spillover effects. Specifically, product seeding increases conversations about that product among non-seed consumers, and, interestingly, decreases WOM about other products from the same brand and about competitors’ products in the same category as the focal product. These findings indicate that marketers can use SMCs to focus online WOM on a particular product by drawing consumers away from talking about other related, but off-topic, products

COVID-19 Demand Shocks Revisited: Did Advertising Technology Help Mitigate Adverse Consequences for Small and Midsize Businesses?

Research has investigated the impact of the COVID-19 pandemic on business performance and survival, indicating particularly adverse effects for small and midsize businesses (SMBs). Yet only limited work has examined whether and how online advertising technology may have helped shape these outcomes, particularly for SMBs. The aim of this study is to address this gap. By constructing and analyzing a novel data set of more than 60,000 businesses in 49 countries, we examine the impact of government lockdowns on business survival. Using discrete-time survival models with instrumental variables and staggered difference-in-differences estimators, we find that government lockdowns increased the likelihood of SMB closure around the world but that use of online advertising technology attenuates this adverse effect. The findings show heterogeneity in country, industry, and business size, consistent with theoretical expectations

Are the drivers and role of online trust the same for all web sites and consumers? A large-scale exploratory empirical study

The authors develop a conceptual model that links Web site and consumer characteristics, online trust, and behavioral intent. They estimate this model on data from 6831 consumers across 25 sites from eight Web site categories, using structural equation analysis with a priori and post hoc segmentation. The results show that the influences of the determinants of online trust are different across site categories and consumers. Privacy and order fulfillment are the most influential determinants of trust for sites in which both information risk and involvement are high, such as travel sites. Navigation is strongest for information-intensive sites, such as sports, portal, and community sites. Brand strength is critical for high-involvement categories, such as automobile and financial services sites. Online trust partially mediates the relationships between Web site and consumer characteristics and behavioral intent, and this mediation is strongest (weakest) for sites oriented toward infrequently (frequently) purchased, highinvolvement items, such as computers (financial services). Yakov Bart is a doctoral student

A New Method of Measuring Online Media Advertising Effectiveness: Prospective Meta-Analysis in Marketing

The authors introduce a new method, prospective meta-analysis in marketing (PMM), to estimate consumer response to online advertising on a large and adaptive scale. They illustrate their approach in a field study in the U.S., China and the Netherlands, covering equivalent ad content on social media, online video, display banner, and search engines. The authors tested a conceptual framework based on attention and engagement using a technological solution that allow them to observe participants browsing and clicking activity in depth from their own residences, offices, or places of choice to use the tested media platforms, e.g., Facebook, Weibo, Google, Baidu and others. The authors show how consumers respond differently to the same ad depending on how distant they are from purchase, and uncover which channels are most appropriate to which user at different stages of the funnel. They also show how engagement and attention strengthen consumer response to advertising. The authors show how PMM produces exploratory findings, confirmatory findings, and replications by systematically organizing the incremental exploration of complex phenomena with cycles of discovery and validation

Customer Engagement in a Big Data World

Purpose: This paper aims to propose that the literature on customer engagement has emphasized the benefits of customer engagement to the firm and, to a large extent, ignored the customers\u2019 perspective. By drawing upon co-creation and other literature, this paper attempts to alleviate this gap by proposing a strategic framework that aligns both the customer and firm perspectives in successfully creating engagement that generates value for both the customer and the bottom line. Design/methodology/approach: A strategic framework is proposed that includes the necessary firm resources, data, process, timeline and goals for engagement, and captures customers\u2019 motives, situational factors and preferred engagement styles. Findings: The authors argue that sustainability of data-driven customer engagement requires a dynamic and iterative value generation process involving customers recognizing the value of engagement behaviours and firm\u2019s ability to capture and passing value back to customers. Originality/value: This paper proposes a dynamic strategic value-creation framework that comprehensively captures both the customer and firm perspectives to data-driven customer engagement

Consumer Connectivity in a Complex, Technology-Enabled, and Mobile-Oriented World with Smart Products

Today’s consumers are immersed in a vast and complex array of networks. Each network features an interconnected mesh of people and firms, and now, with the rise of the Internet of Things (IoT), also objects. Technology (particularly mobile devices) enables such connections, and facilitates many kinds of interactions in these networks - from transactions, to social information sharing, to people interfacing with connected devices (e.g., wearable technology). We introduce the POP-framework, discuss how People, Objects and the Physical world interconnect with each other and how it results in an increasing amount of connected data, and briefly summarize existing knowledge on these inter-connections. We also provide an agenda for future research focused on examining potential impact of IoT and smart products on consumer behavior and firm strategies

Product Seeding: Word-of-Mouth Effects For and Beyond the Focal Product

In a classic seeded WOM marketing campaign, a company sends product samples to a selected group of influencers, and encourages them share the product information and their own opinions with other consumers. Positive effects include more WOM for the focal product in the target segment, but also in additional segments. But there are additional spillover effects on the brand and the product category level and they are negative. More conversations about the focal product reduced the “off-topic” conversations about other brands in the same category as well as other products of the same brand. These negative brand and category spillover effects are stronger when the focal product is of a more functional nature. Marketers tend to consider only positive spillovers to be beneficial for a company, but negative spillovers should not be immediately classified as “bad news.” There are upsides to this effect that managers can use in their favor