Word of Mouth

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MARKETING TERM PAPER

The positive effect of "WORD OF MOUTH MARKETING "(WOM)

Submitted by :

LIBNI MARY JACOB

Roll No. - P14256

PGDM C

Rajagiri Centre for Business Studies

Executive Summary Advertising and personal selling are by no means the only sources from which consumers receive information regarding products. Powerful "networks of interpersonal relations" existing within the consumer market are also utilized for this purpose. This "networks of interpersonal relations" can be termed as "Word of mouth". In marketing, word-of-mouth communication (WOM) involves the passing of information between a non-commercial communicator (i.e. someone who is not rewarded) and a receiver concerning a brand, a product, or a service. In this article we shall discuss the various word of mouth techniques (WOM) which have been found through research, and consider their significance in relation to marketing activities. This paper will also shine light on the positive effects of WOM in marketing.. Introduction Word of mouth is the passing of information between parties via oral communication. It is also known as viva voce. A major example of word of mouth communication is storytelling where one person tells others a story about a real event or about some hypothetical event. Oral tradition refers to culture and traditions passed down through generations by word of mouth. Storytelling and oral tradition play important roles in folklore and mythology. Another example of oral communication is oral history which is the process of recording, preservation and

interpretation of historical information, based on the personal experiences and opinions of the narrator. In marketing, word-of-mouth communication (WOM) involves the passing of information between a non-commercial communicator (i.e. someone who is not rewarded) and a receiver concerning a brand, a product, or a service. Electronic word of mouth (eWoM) refers to any statement consumers share via the Internet (e.g., web sites, social networks, instant messages, news feeds) about a product, service, brand, or company i.e., when WOM is mediated through electronic means. If the sender of word-of-mouth communication is rewarded then this process is referred to as word-of-mouth marketing, which acts as an added credibility of person-to-person communication, as it is treated as a personal recommendation.[4] Using WOM as an opposing force to commercially motivated word-of-mouth marketing has been coined Proconsumer WOM.[5] Researchers have generated a series of recommendations for how nonprofits and public sector organizations can utilize Proconsumer WOM effectively. Researches on word of mouth has been carried out extensively and as a result much is known about what drives WOM (e.g. customer satisfaction, trust and brand commitment) and its farreaching consequences (e.g. affective/emotional, cognitive, and behavioral) for both consumers and organizations. Other various forms of word of mouth marketing involves through social media, buzz and viral marketing, opinion leaders etc. Social media are a means for consumers to share texts, images, audio, and video information with each other and with companies and vice versa. Social media allow marketers to establish a public voice and presence on the Web and reinforce other communication activities. Because of their day-to-day immediacy ,they can also encourage companies to stay innovative and relevant. There are three main platforms for social media:

1) Online communities and forums 2) Blogs 3) Social networks(like Facebook, Twitter and YouTube). Some marketers highlight two particular forms of word of mouth-buzz and viral marketing. Buzz marketing generates excitement, creates publicity, and conveys new relevant brand-related information through unexpected or even outrageous means. Viral marketing is another form of word of mouth, or "word of mouse' that encourages consumers to pass along company-developed products and services or audio ,video ,or written information to others online. The customers easily fall prey to this kind of marketing because usually it comes in the form of entertainment (like Gangnam Style) or is informative about a specific issue (Kony 2012). The concept of Buzz Marketing uses high-profile entertainment (celebrities, events, etc.) or news to get people to talk about a brand. An endorsement is expensive but it can have a longlasting effect, for example just take a look at Grand Slam winner Maria Sharapova and her brand Sugarpova. Tennis and candies have no connection altogether but when you're a superstar like her, it doesn't matter. It is all about the appeal which further creates the influence. Cause or 'Charity' marketing is when a brand or a company support social causes to earn respect and support from people who feel strongly about the cause. An example of this was the Hong Kong Dog Rescue (HKDR) event sponsored by Disney. The following of Disney was the best exposure HKDR could ask for. Interesting or fun advertising, catchy phrases, emails, entertainment, or promotions that are designed to start word of mouth activity fall under the category of Conversation Marketing. It is a form of relationship marketing for the social media age. Conversations are usually ongoing and

evolving and require both sides to participate. The presidential election of Barack Obama is a great example of Conversation Marketing. Community Marketing supports niche communities with similar interests about the brand and providing them with tools, content, and information. E.g. Fan clubs, groups and forums. A best example of this is the Google+ Communities. Evangelism marketing is when customers trusts your brand so much that they will happily promote your products to others to buy and use it. Apple Inc. even after Steve Jobs' passing, the giant company continues to make products that even the most ardent 'hater' wants to use.

Grassroot Marketing by definition means organizing and motivating volunteers to engage in personal or local outreach. An example of this is the Anna Hazare Support Movement where messages were passed through social media seeking support for Anna Hazare.

Last but not the least is Influencer Marketing where opinion leaders were identified i.e., selected people who could influence the decision of others. Communication researchers propose a socialstructure view of interpersonal communication. They see society as consisting of cliques, small groups whose members interact frequently. Clique members are similar, and their closeness facilitates effective communication but also insulates the clique from new ideas. The challenge is to create more openness so cliques exchange information with others in society. This openness is helped along by people who function as liaisons and connect two or more cliques without belonging to either, and by bridges, people who belong to one clique and are linked to a person in another. WOMM has to be credible, respectful, measurable, repeatable and most importantly, sociable.

The positive effect of Word of Mouth Marketing(WOM)

Companies use word of mouth to talk about dozens of brands each day, from media and entertainment products such as movies, TV shows, and publications to food products, travel services, and retail stores.

Companies are acutely aware of the power of word of mouth. Hush Puppies shoes, the blockbuster movie The Passion of the Christ, and, more recently Crocs shoes have been built through strong word of mouth, as were companies such as The Body Shop, Red Bull, Starbucks, and Amazon.com. Positive word of mouth sometimes happens organically with little advertising, but it can also be managed and facilitated. It is particularly effective for smaller businesses, with whom customers may feel a more personal relationship.

With the better understanding of the increased effect of WOM , marketers sometimes distinguish paid media from earned or free media. Although different points of view prevail, paid media results from press coverage of company-generated advertising, publicity ,or other promotional efforts. Earned media-sometimes called free media-is all the PR benefits a firm receives without having directly paid for anything-all the news stories, blogs, social network conversations that

deal with a brand. Earned media isn't literally free-the company has to invest in products, services and their marketing to some degree to get people to pay attention and write and talk about them, but the expenses are not devoted to eliciting a media response.

Personal Word of Mouth (pWOM) communication involves the exchange of information between people, typically through conversation, and often between people who know each other. For example, Arndt (1967) found that exposure to favorable comments on a new product from other residents in an apartment complex increased the probability of adoption. Moreover, relative to company-sponsored communication, such as advertising and sales, pWOM has a greater impact on consumer purchase behavior (Katz and Lazarsfeld,1955).In addition, consumers tend to be more sensitive to negative than to positive pWOM (Richins, 1983).

Electronic Word of Mouth (vWOM) refers to user-generated content on the Internet. Recent research has addressed the role of vWOM, which we define as virtual communication between consumers who have never met in real life (Gruen et al., 2006; Park and Lee, 2009).As Internet use has expanded, the importance of vWOM has increased with the rapid proliferation of Web sites offering consumer reviews of products and online forums featuring discussions of product use. Hennig-Thurau et al. (2004) identified three characteristics that distinguish vWOM from pWOM:

(1) vWOM is typically anonymous,

(2) the same message can be received by many individuals, and

(3) the same message can be accessed by different consumers at different points in time.

Many small businesses are investing in various forms of social media at the expense of newspapers, radio and Yellow Pages to get the word out. Southern Jewels, a boutique started by a recent college grad, found sales doubling over six months after it began to actively use Facebook, Twitter and e-commerce software.

Online communities and forums come in all shapes and sizes. A key success of online communities is to create individual and group activities that help form bonds among community members. The Idea Center at Kodak Gallery is an online community for exchanging ideas about how to use Kodak products to create personalized gifts and other creative products using digital photos. Kodak has found that peer to peer recommendations within the community led to more frequent, larger purchases. Apple hosts a large number of discussion groups organized by product lines and also by consumer versus professional use. These groups are customers primary source of product information after warranties expire. When GlaxoSmithKline prepared to launch its first weight-loss drug, Alli, it sponsored a weight loss community. The firm felt that feedback it gained was more valuable than what it could have received from traditional focus groups.

Social networks have become an important force in both business to consumer and business to business marketing. Like any individual, companies can also join the social groups and actively participate. Having a facebook page has become a virtual pre requisite for many companies. Twitter can benefit even the smallest firm. To create interest in its products and the events it hosted, small San Francisco bakery Mission Pie began to send tweet alerts, quickly gaining 1,000 followers and a sizable up-tick in business."Follow me on Twitter" signs are appearing on doors and windows of more small shops.

Buzz and viral marketing both try to create a splash in the marketplace to showcase a brand and its noteworthy features. Some believe these influences are driven more by the rules of entertainment than the rules of selling. Consider these examples: Quicksilver puts out surfing videos and surf culture books for teens, Johnson & Johnson and pampers both have popular websites with parenting advice for babies; Walmart places videos with money saving tips on YouTube; Grey Goose vodka has an entire entertainment division; Mountain dew has a record label; and Hasbro is joining forces with Discovery to create a TV channel. Contrary to popular opinion, products don't have to be outrageous or edgy to generate buzz. Companies can help to create buzz; and media or advertising are not always necessary for buzz to occur. Some agencies are solely created to help clients create buzz. P&G has 225,000 teens enlisted in Tremor and 600,000 mothers enrolled in vocalpoint. Both groups are built on the premise that certain individuals want to learn about products, receive samples and coupons, share their opinions with companies, and, of course ,talk up their experiences with others. P&G chooses well-connected people-the Vocalpoint moms have big social networks and generally speak to 25 to 30 other women during the day, compared to an average of 5 for other moms-and their messages carry a strong reason to share product information with a friend.

The below table lists the product classifications that are inherently likely to generate buzz, and some examples of the types of products that fall in each classification.

The figure below portrays the pathway of Buzz marketing:

Ultimately, the success of any buzz campaign depends on the willingness of consumers to talk to other consumers.

Conclusion

Even though the interpersonal-influence network among consumers is an extremely powerful and relevant factor in the market diffusion of a number of different types of products, there are

many other types of products for which such a network does not exist. Furthermore, even in the case of the products discussed above, it has been recognized that a substantial proportion of the market is not integrated into the interpersonal networks which have been found. Thus, "word of mouth" is a key factor in the marketing of some products for part of their market, and is therefore of great importance. For those consumers who are "two- way independents" (who in general are neither influenced by anyone else, nor do they influence anyone), advertising and personal selling remain the primary means by which the firm can attempt to sell. Such cases exist, not only for those not integrated into an existing network, but also where, either because of the nature of the product or because of the nature of the group, no network has been developed. Whyte found the "web of word of mouth" only among the "buy- ingest blocks," and explained its existence on the basis of the characteristics of the groups which lived there. In the case of a more individualistic community—or even a more traditionalistic community—such a network might well not exist at all. Another case where the firm must appeal directly to the individual, exists when the relevant interpersonal network is inaccessible. Farmers who are not members of neighborhood communities have fewer opportunities for localized contacts, and, in contrast to other farmers, depend heavily on information communicated through the mass media.

To conclude, I would say that researches shine light on how mass media advertising of the brand can best be combined with "word-of-mouth" advertising of the product to maximize sales volume for the company. Such a study would indicate the best way to coordinate brand promotion to the market development pattern of the product. The cases reported above are of considerable significance, for they have shown that interpersonal consumer networks can be highly influential in building the market for new or improved products. They have also shown

that it is possible, through appropriate research, to learn of the existence and characteristics of specific networks.

References

1) 'WORD-OF-MOUTH" advertising in selling new products, Robert c. Brooks Jr. (Journal of Marketing). 2) Allsop, D. T., B. R. Bassett, and J. A. Hoskins. 2007. Word-of-mouth research: Principles and applications. Journal of Advertising Research 47 (4): 398–411. 3) Personal Word of Mouth, Virtual Word of Mouth, and Innovation Use* Tomoko Kawakami, Kazuhiro Kishiya, and Mark E. Parry. 4) Investigating Electronic Word-of-Mouth Effects on Online Discussion Forums: The Role of Perceived Positive Electronic Word-of-Mouth Review Credibility by Wen-Hai Chih, PhD, 1 Kai-Yu Wang, PhD,2 Li-Chun Hsu, PhD,3 and Su-Chen Huang, MBA1. 5) Dichter E. How word-of-mouth advertising works. Harvard Business Review 1966; 44:147–66.

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