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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 dene 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) identied 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 communityor even a more traditionalistic communitysuch 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): 398411.
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;
44:14766.