How Bad News Can Be Good for Sales

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stochastic excursion
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Re: Bad News Impact
stochastic excursion   6/23/2011 11:24:45 AM
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A lot of the advertising of prodects is short on perceived authenticity.  People are more comfortable with a product profile that puts it somewhere on the bell curve.  If the ratings by a particular source put it in the top .01%, that can be a drawback because there's nothing "normal" to compare it to.

Mr. Roques
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re:
Mr. Roques   6/22/2011 8:13:37 PM
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Good point, I thought the same. I can see how this could work with particular products. The sales guy can let you know about the cons and that creates a better "trust" relationship.

hwong
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Re: Bad News Impact
hwong   6/22/2011 3:22:02 PM
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Agreed with your points. If people are happy or complacent with their own place, then they are not going to strive to work better. Without being better, then they'll let other companies steal market share. 

Jennifer Baljko
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Bad News Impact
Jennifer Baljko   6/22/2011 9:17:07 AM
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Thank you everyone for the discussion. All good points and questions. I, too, have some concerns about the study's methodology and the results, but I can't speak on the details, parameters, or intentions.

That said, following the whole thread here, I think what's compelling is to tie together some of the points raised by all of you. Here's what I mean.

eemom, TaimoorZ shared opinions about how bad news may divide potential consumers. Some may opt out of a purchase, or others may take a risk and buy it anyway. I think the important question is what is the weight of the bad news? How bad is it, will it sway end-user perception?

This goes to Hospice_Houngbo's and jacob's points about critical thinking and reviews. Although I disagree that a lot of critical thinking goes into consumer device purchases (I think there is quite a bit of compulsive, word-of-mouth buying sprees after a very brief market analysis), I do think reading bad news or negative reviews spark critical thinking among consumers (a desired reaction, I would add). But, like jaybond mentioned "I think more people have concerns over getting the best product for their money as opposed to negative press."

So if negative reviews spur critical thinking, and critical thinking has the potential to sway potential buyers one way or another and people really just want bang for the buck, the next test will depend on the user's perception of the company's brand. How much does an end-user trust the company that's making the product he's interested in buying?

Trust comes in a few flavors, as we know and talked about here. Apple has leveraged its brand to create a hard-to-replicate user experience and Toyota and Lexus has gone well beyond normal expectations to regain trust when products fail.

Tvotapka and Flyingscot nail it. Flyingscot says "I firmly believe that customers do not mind product issues (too much) provided these issues are dealt with professionally and quickly to their full satisfaction."

And, Tvotapka brings it full circle. After negative PR, "The ones that came through stronger were those that stuck to their core principles."

Arguably, core principles are tested by how well operating, engineering, supply chain, and financial practices are aligned to these driving principles.  How well these strategic and functional practices hold up involving vigorously testing them against survival rules like those Tvotapka provided. (BTW Tvotapka - do you know the original source to that list. It's a good one, and should get a credit)

Still with me? See how a study like this - or at least the concept behind it - ripples back to companies' supply chains? If a company doesn't know how to align its practices to its core principles, how to course-correct in a way that stays true to those principles, or how build trust among partners and consumers, no amount of news - good or bad - is going to make the company successful over time.

Jay_Bond
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Jay_Bond   6/22/2011 7:09:28 AM
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This is an interesting theory. I can see how it might work out for individual products, but hard to see how this could be applied to an entire company or supply chain. This study also fails to mention how many people participated and under what conditions. It would seem like anybody who researches a product before making a purchase would have a sense of how the product performs or lasts. I think more people have concerns over getting the best product for their money as opposed to negative press that might have been caused by something going on overseas.

FLYINGSCOT
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Confusing article
FLYINGSCOT   6/22/2011 4:29:09 AM
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I am not sure I understand fully the data behind this story.  I believe negative news can be used to the benefit of a company if the news is handled correctly.  Toyota and Lexus seem to handle bad news well by going overboard with recalls and compensation etc. which effectively reinforces their strong commitment to product quality and customer satisfaction.  Short term blips in sales are then followed by longer term growth as customers buy into the quality story.   I firmly believe that customers do not mind product issues (too much) provided these issues are dealt with professionally and quickly to their full satisfaction. 

Jacob
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Re: I'm not buying it!
Jacob   6/22/2011 1:50:58 AM
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Normally, for any products most of the peoples may Google to find reviews about the product, before going for purchase. So if most of the reviews are negative, then I think may not suggest for that product. In my case, if had a plan for new product purchase, first I will do the google to read reviews and if more than 70% of reviews are positive, then I may walked to the store for a real look or demo. But 30% negative reviews don’t drop my plans, unless and unless it’s negligible.

TaimoorZ
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Re: I'm not buying it!
TaimoorZ   6/21/2011 6:48:47 PM
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Well there can be a case where the customer is not currently using your product but is aware of it and has a positive image about it. He buys the product (perhaps out of sheer curiosity) to see if the bad news about it is true or not. This can result in increased sales. I am not really sure how significant the volume may be.

eemom
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Re: I'm not buying it!
eemom   6/21/2011 6:20:33 PM
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I still don't get it.  If a consumer hears bad news about a product they are using there are two possible outcomes, 1) they continue using the product and ignore the news or 2) stop using the product until more positive news is released.  If you assume half will do #1 and the other will follow #2, then the logical conclusion is that the company may lose half their customers due to bad press.  The company now has to work harder to re-earn the trust of these customers they lost once the problem is fixed.  I'm sorry, but I just can't come up with a logical conclusion as to why a company's sales would benefit from bad news.

TaimoorZ
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Re: I'm not buying it!
TaimoorZ   6/21/2011 6:13:44 PM
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I think the only logical explanation I can come up with for the 'bad news' effect is that once a bad news is spread and people already have a positive opinion about a product or a service, the bad news might seem as a shock and they would want to try the product or service once again to confirm the news. The effect might be true for consumer goods (the ones used in the research), but I am not sure if the same can be said for companies selling IT services or catering towards enterprise solutions.

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