reading 7

Question 1

objective of the study (does online word of mouth increase demand)

Answer 1

the study aims to determine whether online word of mouth, particularly product reviews and ratings, directly influences consumer demand. Moreover, it seeks to clarify how online WOM impactts sales – is it by providing better product information or simply by increasing awareness

Question 2

The role of WOM
Information vs awareness

Answer 2

the article explores two main ways online revies can affect demand:

Information: reviews provide details about the quality and features of a product, which can reduce uncertainty for customers

Awareness: positive reviews can increase a products visibility, making it more likely that customers will notice and consider purchasing it

Question 3

Does online WOM increase demand

Answer 3

the study confirms that online WOM does increase product demand. Products that lost their reviews saw a decrease in sales, suggesting that customer reviews positively affect demand

Question 4

How does online WOM increase demand

Answer 4

the data shows that WOM works primarily through the information channel, rather than awareness. Reviews help consumers make informed choices, particularly for products taht have more complex or uncertain attributes. This reduction is uncertainty makes consumers more comfortable making a purchase

Question 5

Heterogeneous effects WOM

Answer 5

the impact of WOM varies across different products. For example, products that are more unfamiliar to customers or have less-established brands benefit more form customer reviews than well-known products. Additionally, high-priced and complex items are more influence d by reviews.

Question 6

Practical implications for retailers and marketers (online WOM)

Answer 6

for retailers: the findings suggest that retailers should prioritize encouraging customer revies, especially for new or less-known products. Reveiws help alleciate customer concerns and a strong review presence can drive sales

For marketers: marekters should focus on facilitating the spread of detailed and informative reviews, as this can provide a competitive edge in the marketplace, espeically for products with higher preceived risk or complexity

Question 7

Do live streams increase sales?

Answer 7

yes twich streams do promote sales: when an influencer streams a game, there is often a noticeable increase in the games sales, especially when the influencer has a large and engaged audience

Question 8

Engagment is crucial (twitch article)

Answer 8

the level of engagement between the influencer and the audience plays a significant role in driving sales. Influencers who are highly interactive with their audience (responding to chats, giving opinions on the game, etc) generate more sales than those who are less interactive

Question 9

Follower count and influence (twitch)

Answer 9

influencers with larger follower bases tend to have a more significant promootional effect. However, smaller influencers can still drive sales if they have strong engagement with their audiencess

Question 10

Does game genre matter (twich article)

Answer 10

some game genres benefit more from twitch promotions than others. Multiplayer and competitive games see higher sales boosts compared to single player games, likely because these games are more entertaining to watch and provide a social experience for viewers

Question 11

Timing of promotion

Answer 11

the timing of the stream in relation to the games release is important. Streams that occur closer to the games launch tend to have a larger effect on sales. Streams that happen too long after a games release might not have the same promotional impact

Question 12

Direct purchasing influence of twitch

Answer 12

Twitch streams have a direct influence on viewers purchasing decisions. Viewers often make purchase decisions based on the influencers live demonstration and feedback about the game. This is similar to how traditional product endorsements work, but the real-time interaction and demo aspect make it more immediate and persuasive

Question 13

Mechanisms of influence (twitch)

Answer 13

authenticity and trust : viewers tend to trust influencers because of the authenticity of live streams. unlike edited video content, live streams offer real time, unscripted experience with the product, making endorsements feel more genuine

Social proof: seeing many viewers enjoying a stream can create social proof, where viewers feel encouraged to buy a game because its popular among others in the community

Parasocial relationships: Twitch influencers often develop parasocial relationships with their viewers, where fans feel apersonal conection with the streamer. This connection can make product recommendations more persuasive

Question 14

twich implications for marketers, game developers and twitch influencers

Answer 14

for marketers: companies can use twitch as a valuable platform for promoting their games. By partnering with popular and highly interactive twitch influencers, they can reach a large engaged audience

For game devs: devs should focus on working with influencers who have a high engagement levels, even if they dont have the largest follower counts. The quality of interaction is often more important than sheer follower numbers

For twich streamers: influencers should prioritize building strong, interactive relationships with their audience. high engagement leads to more influence over purchasing decisions

Question 15

social media advertising:

Answer 15

social media influencers are content creators who have large followings and often promote products or services to their audience

Influencer marketing involves influencers endorsing products in exchange for compensation (money, gifts, or free products)

Advertising disclosure regulations require influencers to disclose when a post is sponsored or part of a paid partnership to make the nature of the content transparent to viewers

Question 16

Advertising disclosure regulations

Answer 16

these regulations, typically mandated by authorities like the FTC require influencers to clearly disclose sponsored content using tags like #sponsored

The goal of these regulations is to protect consumers by ensuring that they can distinguish between authentic content and paid promotions

Question 17

Does disclosure reduce engagement

Answer 17

posts labeled as ads or sponsored typically see lower engagement rates (fewer likes and comments) compared to non disclosed posts. consumers tend to perceive disclosed content as less authentic or more commercial which reduces their interest

Question 18

Impact on consumer trust

Answer 18

positive impact on trust: disclosure increase transparency which can boost trust among some consumers. Consumers appreciate knowing when content is paid, and this honesty can foster a stronger relationship between influencers and their followers

Negative impact on perceived authenticity:
however, disclosed posts are often seen as less genuine, which can hurt the influencers perceived authenticity - a key factor in influencer marketing

Question 19

effectiveness of influencer marketing

Answer 19

disclosed ads are less effective in driving immediate purchases. The commercial nature of the post is more obvious, which makes users more cautious and less likely to act on the influencers recommendation

large influencers (those with millions of followers) are less affected by disclosure regulations because their audience is already aware that tehy work with brands regularly. For micro-influencers (wit hsmaller followings), the impact of disclosures is more pronounced as their followers expect more authentic personal content

Question 20

Adaptation by influencers

Answer 20

influencers have developed strategies to minimize the negative effects of disclosures. Some use subtle placements of disclosure tags or creative storytelling to integrate the sponsored content more naturally

Engagement tactics: many influencers use additional engagement tactics like contests, giveaways, or personal stories to counteract the potential loss in engagement caused by disclosure labels

Question 21

Adaptation by brands

Answer 21

brands are also adapting by being more selective about which influencers they work with, focuson on those who maintaing high engagement despite using disclosures

Some brands emphasize long term partnerships with influencers to build more authentic relationships which can help mitigate the negative effects of one off sponsored posts

Question 22

Implications for influencers and brands

Answer 22

influencers should be strategic about how they incorporate disclosure tags into their content . They need to maintain authenticity while complying with regulations. engaging storytelling and maintainging genuine connections with their audience can help offset the negative effects of disclosure

For brands: brands need to carefully choose influencers who align with their values and have a loyal, engaged follwing. They should consider long-term partnerships rather than one off sponsored posts to build more credible associations.

brands should also explore creative ways to promote products through influencers wihtout making the content feel overly commercial

Question 23

influencer marketing

Answer 23

influencer marketing involves collaborating with social media personalities (influencers) to promote products or services to their followers

influencers are classified based on their number of followers:

mega influencers have millions while micro influencers have smaller but often more engaged audience

Question 24

Follower elasticity

Answer 24

is the responsiveness of marketing outcomes (like engagement clicks or purchases) to an increase in the number of followers

it measures how much additional value (e.g. engagment or sales) a brand gains from working wit han influencers as their follower count grows

Question 25

Mega vs micro: no one size fits all

Answer 25

follower count is not the only determinant of an influencers value. While mega influencers reach a larger audience they dont necessarily provide a proportional increase in engagement or sales

micro-influencers often have a higher engagement rate relative to their follower count, which can make them more effective for certain brands or campaigns

brands should not automatically assume that bigger influencers will generate more value; instead, they need to consider follower elasticity to make informed decisions

Question 26

Follower elasticity varies by influencer and industry:

Answer 26

follower elasticity differs across ifnluencers and industries: some influencers with modest follower counts can deliver strong marketing results while others with large audiences may not provide as much incremental value

Industries taht focus on niche markets (e.g. luxury products or specialized hobbies) tend to benefit more from micro-influencers, where follower elasticity is higher due to stronger connections between influencers and their followers

In contrast, industries taht rely on mass-market appeal (e.g. fast fashion or consumer goods) may benefit more form mega influencers

Question 27

Platform matters

Answer 27

platform type also affects follower elasticity. influencers on platforms like instagram and tiktok, where negagement is high, tend to have better follower elasticity compared to those on more passive platforms like youtube, where consumption is less interactive

brands should adjust their influencer strategy based on the platform, favoring micro-influencers for engagement-driven platforms and mega influencers for platforms where reach is the primary goalO

Question 28

Optimal influencer selection strategy

Answer 28

the study provies a decisional framework that allows brands to identify when they should opt for a mega influencer vs a micro influencer based on the influencers follower elasticity

Brands with a goal of maximizing reach and visibility in a short time period may still prefer mega influencers, while brands seeking deep engagement, loyalty, or conversion may be better off working with micro influencers

Balance and diversification: many brands beenfit from a mixed approach using a combination of mega and micro influencers depending on campaign objectives and stages (e.g. mega- influencers for launch visibility, micro-ifnluencers for long-term engagement

Question 29

mechanisms of influence (reach vs engagment)

Answer 29

mega influencers deliver a wide reach but may not generate the same level of engagement or authenticity as micro influencers. Micro influencers tend to have more personalized interactions with their followers, leading to higher engagement and trust

Question 30

Mechanisms of influencer FOllower trust and intimacy

Answer 30

Micro influencers are often seen as more authentic and relatable, which leads to stronger parasocial relationships with their followers. This makes their endorsements more persuasive, especially in niche markets or for high involvement products

Question 31

Mechanisms of influence: diminishing returns of follower growth

Answer 31

there is often a diminishing return on follower growth for mega influencers. as an influencers follower count increases, the incremental impact on engagement or sales decreases. This diminishing return highlights the importance of using follower elasticity as a guiding metric