Fashion Blogging - the Impact on Sales

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Consumer Behavior

Fashion blogging – the impact on sales

Abstract

The recent growth of consumer generated media (CGM), also known as “new” media, has changed the nature of interaction between consumers and firms from unidirectional to bidirectional. This research addresses two key issues - does CGM affect consumer behavior and market outcomes and, is there any relationship between managerial communication and CGM?

The most prevalent form of new media is blogs. Thus, we first investigate whether blogging activity leads to (differential) market outcomes. We then examine whether managerial communication (magazines advertising) and blogging are synergistic.

We assemble a unique data set from fashion containing market outcomes (sales), new media (blogs) and traditional media (magazines advertising) for a brand of clothing, and a brand of shoes. Each category has at least one product launch during the duration of our sample periods.

We specify a simultaneous equation log-linear system for market outcomes and the volume of blogs. Our results suggest that blogs are predictive of market outcomes, new and traditional media act synergistically, pre-launch magazines advertising spurs blogging activity but become less effective post-launch and that market outcomes have some effect on blogging. We find detailed support for some of these findings via a unique and novel text mining analysis. We discuss the managerial implications of our findings.

I-Introduction

Consumer generated media (CGM) such as blogs (a contraction of the term “Web logs”) have witnessed explosive growth in the last few years. For example, the number of blogs worldwide is estimated to be 184 millions with a readership of 346 million (March 2010). In contrast, in March 2003, the number of blogs was essentially zero. Other types of CGM have also seen similar growth patterns, e.g., Facebook, which started in February 2004, now has about 400 million members worldwide (February 2011). There are also indications that blogs are now being seen as similar to mainstream media sites – the number of blog sites in the top 100 most popular sites (blogs and mainstream media) worldwide was twenty-two in 2008 and blogs were being viewed by consumers as “sites for news, information, gossip etc.” (2008). In 2010, four of the top ten entertainment sites were blogs (March 2010).

It is clear from these statistics that there is considerable activity (multi- media posting, blogging, visits, traffic etc.) on the part of consumers. However, an important question, from a managerial perspective, is whether this activity leads to (differential) business outcomes such as sales or profits. In addition, little is known about the relationship between traditional or old media (where the company creates content and delivers it to consumers) and consumer generated, or new, media (where consumers create content and there in an exchange of this content between other consumers and potentially, the company). That is, are there any synergies between new media and old media? In this research, we take the first step towards answering these questions.

Blogging is perhaps the most established and largest form of consumer generated media at this point in time. The total worldwide viewership of blogs is estimated to be about 346 million (March 2010). Wikipedia defines as a blog as “a Web site, usually maintained by an individual with regular entries of commentary, descriptions of events, or other material such as graphics or video. Entries are commonly displayed in reverse-chronological order.” Blogging is a worldwide phenomenon with the two biggest blogging markets being the United States and Japan. The number of blogs in the United States is about 23 million (about 12% of all US Internet users) and about 8 million in Japan (about 5% of all Japanese Internet users) in 2009. However, if one examines the total number of posts by language, Japanese language posts account for 37% of...
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