Analyzing the Effect of Perceived Risk and Information Diagnosticity on Word-of-Mouth and Viral Marketing

Abstract

This study investigates the moderating effect of perceived risk and information diagnosticity on the relationship between brand loyalty and word-of-mouth (WOM) as well as viral marketing activities (VMA) in e-retailer websites. Although extant research in marketing suggests that brand loyalty leads to positive WOM, this study examines the moderating effect of the consumer's perceived risk on this relationship in the context of e-retailer websites where customers repeatedly encounter new and uncertain situations every time they visit the e-retailer. This study also examines the moderating effect of information diagnosticity on the interaction relationship stated earlier. Findings reveal that risk perception negatively moderates the impact of brand loyalty on WOM and VMA and information diagnosticity of online reviews can help reduce the negative perceptions caused by risk factors.