Positive Effects of Negative Publicity: When Negative Reviews Increase Sales

Marketing Research Report 1

"Positive Effects of Negative Publicity: When Negative Reviews Increase Sales"

I chose to write a synopsis from an article titled the "Positive Effects of Negative Publicity: When Negative Reviews Increase Sales". This article was featured in Volume 29 of the September-October, 2010 issue of Marketing Science, one of the top four marketing journals. The authors of this article included Jonah Berger, Alan T. Sorensen, and Scott Rasmussen.

In the research article entitled the "Positive Effects of Negative Publicity: When Negative Reviews Increase Sales", the researchers Jonah Berger of Wharton School of the University of Pennsylvania, Alan T. Sorensen of Stanford Graduate School of Business, and Scott J. Rasmussen of Stanford University conduct three experiments to delineate circumstances under which adverse publicity for a product will have beneficial rather than adverse effects. Particularly, Berger, Sorensen and Rasmussen hypothesize that negative publicity can increase purchase likelihood and sales by boosting product awareness. Thus, they argue, negative publicity should have contrasting results on established known products versus unknown products.

Berger, Sorensen, and Rasmussen administer three studies that support their hypothesis that negative publicity may have progressive consequences by increasing product awareness. Specifically, the authors propose that whether adverse publicity has positive or negative effects on a product will hinge on that product's extant awareness and ease of access. As a result, when a product has high existing awareness, negative publicity should hurt that product's sales. Conversely, when a product has low existing product awareness or ease of access, negative publicity may increase sales. In other words, by increasing the awareness of a product with low prevailing familiarity, negative publicity may increase that product's sales. Accordingly, Berger, Sorensen and Rasmussen claim that any publicity, whether positive or negative, should increase a relatively unfamiliar product's awareness.

The first study, Berger, Sorensen, and Rasmussen analyzed 244 fictional books that were published from 2001 to 2003 and reviewed by the New York Times to assess the effect of publicity valence and product familiarity on actual book sales. They hypothesized that positive publicity or reviews should increase sales for all types of authors. However, they also contended that the effect of negative publicity or reviews will hinge on subsisting product awareness. Specifically, Berger, Sorensen and Rasmussen predicted that negative publicity should adversely harm book sales of established or well known authors but increase sales of relatively unknown authors. To measure their hypothesis, the researchers classified the reviews as positive or negative and evaluated the influence of reviews among three groups of authors: (1) authors that had published less than two books prior to the book in question, (2) authors who had published more than two but less than nine books and (3) authors who had published more than nine books. Results of this study were consistent with Berger, Sorensen, and Rasmussen's hypothesis. Thus, books that were positively reviewed had substantial increases in sales, regardless of whether the book was composed by a new or well known author. Contrarily, negative reviews for books written by well known authors led to a 15% decline in sales whereas negative reviews for books written by relatively new authors increased sales by 45%. In essence, the results of this study demonstrated that positive book reviews always increased sales. The impact of negative reviews, however, was contingent on whether the authors were new or well known authors.

In the second study, Berger, Sorensen and Rasmussen analyze the significance of time. They examine whether the valence of publicity for unknown products may be dissociated over time, causing positive and negative reviews have a similar effect. To test this contingency, Berger, Sorensen, and Rasmussen controlled whether people declared purchase likelihood without delay immediately following reading a product review or after a delay. In this study, they hypothesized that review valence should impact purchase likelihood for products with high awareness regardless of whether there was any time delay. Accordingly, a positive review should induce increased purchase likelihood. Conversely, the effect of review valence on purchase

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