The 4th V? The effect of word of mouth volatility on product performance

Abstract

This study investigates how word-of-mouth (WOM) volatility, a new WOM variable that measures the fluctuation over time in the WOM volume, affects product performance. Two conflicting forces of WOM volatility (i.e., positive effects on awareness and negative effects on preference and credibility) leave as an empirical question. We also investigate the moderating effects of WOM volatility on the relationship between existing WOM variables (i.e., volume, valence, and variance) and product performance. Cross-sectional regression analysis was conducted, using online WOM data in Korea movie industry. The results show that WOM volatility negatively affects the product performance only when consumers rely more on WOM information. Highly volatile WOMs weaken the positive effects of WOM volume and valence and the negative effects of WOM variance. This study suggested WOM volatility as a new characteristic of WOM. This study examined WOM volatility interacts with existing WOM variables. Managerial and academic implications are discussed.