Slideshare Agnes Jumah, Word Of Mouth Marketing


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Slideshare Agnes Jumah, Word Of Mouth Marketing

  1. 1. Agnes Jumah – MA Strategic Marketing Management – Buyer Behaviour Assignment “Word-of-mouth communication is the most powerful force for change but the least accessible”. Discuss this. What do we know about the patterns of word-of-mouth that helps us use it? What do we need to know still? INTRODUCTION Word of mouth (WOM) communication is unique, complex and multifaceted. WOM according to Wikipedia is defined as a reference to the passing of information from person to person. Originally the term referred specifically to oral communication (literally words from the mouth), but now includes any type of human communication, such as face to face, telephone, email, and text messaging. This paper will discuss and examine different theories in relation to key actors within networks: opinion leaders, influentials and hubs and how they influence change. In addition, some thoughts on how WOM communications can be inaccessible to marketers will be put forward. WORD OF MOUTH COMMUNICATIONS AND THE KEY PLAYERS Much research has been carried out on what drives change within WOM communications. To understand the drives, it is worth mentioning the Multi-step Flow of Communications – see figure 1. Figure 1 – Multi-Step Flow of Communications The Multi-Step Flow model builds on both the One-Step model and the Two-Step model by Katz and Lazarsfeld (1955) and is considered the way in which communications flow takes place where there are many intermediaries. So within communications, what is the importance of opinion leaders and influentials within a social network and in driving change? In reading some of the current literature, it was found that many theories existed. The three theories examined in this paper are: 1. The Influentials Hypothesis 2. The Everyone Hypothesis* 3. The Hub Hypothesis* The Influentials Hypothesis – Focus on the Individual. This theory suggests that a few key individuals (opinion leaders or influentials) influence the decisions of less active others. It has been 1
  2. 2. Agnes Jumah – MA Strategic Marketing Management – Buyer Behaviour Assignment theorised that, Influentials act as intermediaries between the media and others in their social network determining the rate and direction of change. Lazarsfeld et al (1944) cited by Rogers *Title created for categorisation purposes of this paper only. (1995), in their seminal work, analysed a presidential election and were able to highlight the role that opinion leaders played in influencing the voting decisions of others. Rogers (1995, p300) puts forward the argument that opinion leaders are “individuals who lead in influencing others’ opinions”. Rogers goes further to state that opinion leaders are key to the rate at which innovation adoption occurs and that once opinion leaders have adopted an innovation and discuss this with others in their network, the rate at which adoption take place grows exponentially. This “influentials hypothesis” was also supported by Katz and Lazarsfeld (1955). This thinking has been developed. It is hard to conceive that WOM communications is as rigid as the Influentials Hypothesis followers may have us believe. The Influentials Hypothesis suggests that only a select number of actors assume a very distinct opinion leader role. The Everyone Hypothesis – Focus on Everyone. Influence can be considered broader than the Influentials Hypothesis suggests, with different participants taking on different roles depending on the situation. More recent studies seem to advocate this. Balter and Butman (2005) cited in Word of Mouth Research: Principles and Applications follow this argument. They stated that: “WOM is not about identifying a small subgroup of highly influential or well-connected people to talk about a product of service. It’s not about mavens or bees or celebrities or people with specialist knowledge. It’s about everybody”. Allsop, Bassett and Hoskins (2007) also support this thinking: that everyone can adopt different roles at different times. They have suggested that at different times and in different environments, an individual consumer can assume any role: opinion leader, former or follower. Their paper was a useful summation of WOM principles; unfortunately much of it is theoretical, with general commentary and a large focus on their own branded WOM simulation system. Despite this some useful points can be drawn. Fill (1995) also argues that opinion leaders and members of the target audience all have an effect on each other. Keller and Fay (2006) pioneers in the field of WOM measurement, state that “everyone plays the role of the “sender” and “receiver” in conversations about brands.” Watts and Dodds (2007) propose that opinion leaders are not the drivers of innovation and additionally, state “most social change is driven not by influentials, but by easily influenced individuals influencing other easily influenced individuals”. The Hub Hypothesis – Focus on Connections. There is another school of thought on what drives change within network that focuses on hubs or those that are “well connected” i.e. with several social ties or relationships, within a social network. In his empirical study on married, female students living in the same apartment block, Arndt (1967, p293) found that initially, wives that were “well integrated into the social structures were more likely to adopt a new product than were the isolated ones”. The gap between these two audiences did however narrow over time. Though responses were low (only 332 comments were received) this study yielded insightful findings that support the Hub Hypothesis. Arndt’s findings are to some degree generalisable but some caution must be exercised as it has been suggested that genders perform differently in WOM communications depending on the product category (Allsop, Bassett and Hoskins, 2007, p 401 and Keller Fay Group Whitepaper, 2006, p4). Field experiments such as Arndt’s are probably 2
  3. 3. Agnes Jumah – MA Strategic Marketing Management – Buyer Behaviour Assignment the best way to measure hub activity accurately but as this was a small sample it would be beneficially to have these results extrapolated or repeated on a larger scale for better accuracy of offline hub activity. One of the latest pieces of research on hubs has been put forward by Goldenberg, Lehmann and Hong (2009). In their study that examined the adoption of new applications on a social networking website, Goldenberg et al researched the difference well- connected individuals make on the overall course of diffusion. They go further and categorise hubs into two types: 1) Innovator Hub and 2) Follower Hub. This is interesting concept as it highlights further implications for the marketer: not only is there a need to locate the hub within a network; according to Goldenberg et al, it then needs to be determined whether or not the hub is the type that adopts innovations faster than others (Innovator Hub) or the type that adopts early because they are in a position that exposes them to other adopters (Follower Hub). In addition to the above finding, this broad study also suggests that generally hubs:  adopt earlier as a results of degree (number of connections) and not their own innovativeness  control innovation adoption speeds and therefore market growth rates (specifically Innovator Hubs) because without them and their subsequent connections, many within the network simply would not be aware of the innovation.  when analysed can to, some degree, indicate whether a product has any chance in the market. The Goldenberg et al research provides some interesting thinking into how hubs control innovation diffusion; however it would be beneficial to repeat the experiment taking into consideration the following thinking. Are their findings applicable to all markets – it can be argued that it is not. Indeed, the authors of the research themselves highlight that it may be unrealistic to assume that all organisations would have “access to such (complete) data” as they did. Additionally, the context of the research raises some questions. The research examines online activity. This allows for accurate measurement however according to Keller and Fay (2009), 90% of WOM communications is offline so how does this research relate to offline WOM communications and how can the learning be applied to face-to-face WOM? The sample of the research must also be taken into consideration. In an online, social networking environment, hubs could be well connected not as a result of their nature but as a result of the length of time that they have been members of the site – the authors allude to this by indicating hub status is positively correlated with the membership term. Finally, the research also states that there is a higher probability of the hubs being male. Some caution as already stated, is required as genders can act differently in WOM communications. From looking at these different theories, reality is likely to resemble a combination of all three hypotheses. Research has shown hubs exist. Opinions leaders have been supported by leading thinkers. It has also been shown that everyone at different times both gives and receives WOM within their network. The key for marketers is to know exactly how these actors influence change within their own relevant networks, whether it worth investing in these types of influentials and how best to implement WOM plans. There is still no universal formula. WOM can be sent and received in numerous ways – even within the same network – which makes it hard to track and therefore calculate the impact of these actors. More empirical research is required to determine this. 3
  4. 4. Agnes Jumah – MA Strategic Marketing Management – Buyer Behaviour Assignment Having examined some of the hypotheses surrounding the different types of influentials, their role in networks and how they drive change, the next section will briefly discuss why WOM can be considered the least accessible form of communication. HOW WOM CAN BE CONSIDERED INACCESIBLE. WOM communications or marketing can be inaccessible for a number of reasons, a few of which are listed below. For clarity, “inaccessible” in this context is defined as: WOM being difficult to recall, difficult to mimic for experimental reasons and therefore difficult to measure accurately. Offline WOM and the effects that it exacts on the recipient are hard to measure. In A Holistic Examination of Net Promoter (2007), the authors cite the work of Rust et al (2000) that notes: “the effect of [word of mouth] is notoriously hard to measure but it is frequently significantly large”. WOM communications take place everywhere and anywhere; can be positive, negative or neutral; a referral or recommendation. Keller and Fay (2006) have suggested other reasons unique to WOM that make it difficult to measure: 1. Conversations and their subject matter are consumer-driven and diverse 2. WOM can be generated as a result of other actions including marketing (e.g. advertising, websites, sales promotions) and normal business activity (e.g. customer service) 3. WOM can be “highly ephemeral” with exchanges between consumers being random and hard to predict How can accurate measurement and useful results be made accessible to marketers? Godes and Mayzlin (2004) state that surveys are the “most popular” way of measuring WOM conversations. Another method is consumer diaries. Both methods are acceptable however the issue with each is that they rely on consumer recall. East et al (2008, p246) suggests reports gathered in this way “may be systematically distorted by recall bias”. Being dependent on the memory of consumers through surveys and diaries will not ensure 100% accurate recordings but appears to be the most realistic way of collecting information. Perhaps the key is asking specific questions to ensure the data collected is as accurate is it can be. Field experiments can be carried out – one of the most cited being Arndt’s (1967) work with student housewives - these however are often focused on small samples. WOM role play has also been used in the past. This method is not a realistic enactment of WOM as it asks the sample what they would do in a particular circumstance. Asking a consumer, what they would do in theory, can be very different to what they would actually do in reality. As East et al, (2008, p245) state: “...there is no guarantee that they would do as they claim”. In examining the results from this sort of experiment, a marketer would be reliant on what a consumer says they may do. This may provide a good indication of what may happen, but compared to spends on other media that are stringently measured, it is difficult to justify WOM within the marketing budget when its research may be based on theoretically scenarios. With most forms of marketing communications media and vehicles, marketers are aware of what they will receive in return for their investment: £X advertising rate, in X space, for X time period equals X number of enquiries or X unit sales, for example. This does not exist for traditional forms of WOM marketing. It is 4
  5. 5. Agnes Jumah – MA Strategic Marketing Management – Buyer Behaviour Assignment therefore hard to guarantee what the return on marketing investment will be with a WOM campaign. Some online WOM communications are easier to track as they are automatically recorded, i.e. are not reliant on the consumers’ recollection. Despite this, the measurement of online WOM is not without its own distinct challenges. Some online conversations can be followed through consumer generated content such as chatrooms or blog threads however these then need to be sorted. Was the post positive, negative or neutral? How many people read the post? Was it passed on and if so, how many read it? And what of emails and texts – how can marketers know the content of these conversations? Many questions as to the best way of tracking WOM still exist; some theories and suggestions on improving methods and areas of further research are outlined in the final section. AREAS FOR FURTHER RESEARCH OR DISCUSSION Many questions have been raised in this paper with regards to influentials and the inaccessibility of WOM. There are still several gaps in our knowledge. Before any further research is carried out, it would be useful to have clarity on some of the titles relating to influentials. In examining research papers, it was often found that the terms Influencer, Hub and Opinion Leader were substituted for each other or interchanged. Keller and Fay (2009) have alone documented five types of influential: Formal Position of Authority; Institutional Experts; Media Elites; Cultural Elite and The Socially Connected. See Appendix 1. With so many categories and definitions being used and interchanged, and without agreed sector-wide definitions, it will be difficult to conduct research that benefits all players within WOM marketing. Regardless of their label, there are always going to be some that talk more than others and with more connections than others. In an email exchange (November 2009), with Emanuel Rosen, author of The Anatomy of Buzz Revisited (see Appendix 2), he stated: “We still have many questions about hubs: Who exactly are those people who talk more than others and how can they help a marketer spread the word? Are they less important today as some argue, or are they more important in a connected world?” Rosen is correct. There are still many questions surrounding hubs and how marketers can identify them. However, Rosen omits a key point in his email: the hubs that need to be identified, engaged with and utilised are those that don’t just help a marketer spread the word but help spread the word profitably. Some work has been done in identifying how WOM can predict or influence profitability e.g. Incorporating Word-of-mouth Effects in Estimating Customer Lifetime Value – again more research is needed. A comparative review of the existing research on online and offline hubs would also be useful. There may be some learning from both sides that furthers current thinking. In addition to hubs, more research is needed on the networks in which they operate and how social ties affect communications. Homophilic networks have been shown to inhibit the overall diffusion of innovation and information. Goldenberg et al (2009) have suggested that although 5
  6. 6. Agnes Jumah – MA Strategic Marketing Management – Buyer Behaviour Assignment network homophily can be a “barrier to innovation when different groups are involved”, where groups are the same, homophily can increase diffusion. This is supported by Rosen (2009, p112- 113) and Rogers (2003, p305). This makes ties between actors in a network very important. There is limited work in this area. The panacea for marketers would be a measurement system for WOM that grades each influence by importance depending on the market and the number of consumers that are sent an initial message, email, text or promotion: For each person, you send your message to, they will communicate with approximately X number of people about your message, for example. This WOM “message calculator” is a long way off and would require a unified effort from all those operating in WOM marketing. Keller and Fay (2006) state the “industry has lacked information on the totality of word of mouth” – this is often the case for media that are either new or hard to measure. An excellent example of how a new collection of media were classified for the benefit of marketers and media planners/buyers can be seen in Ambient media: advertising's new media opportunity? See Appendix 3. When WOM is classified in a suitable system, measurement tools that work for marketers can be created and used effectively within the marketing and media plan. 6
  7. 7. Agnes Jumah – MA Strategic Marketing Management – Buyer Behaviour Assignment Bibliography East, R., White, M and Vanhuele, M. (2008) Consumer Behaviour, Applications in Marketing. London: Sage Publications Ltd Fill, C. (2009) Marketing Communications, Interactivity, Communities and Content. Hemel Hempstead: Prentice Hall Fill, C. (1995) Marketing Communications, Frameworks, Theories and Applications. Hemel Hempstead: Prentice Hall Paul Peter, J., Olson, C. J. and Grunert, K.G. (1999) Consumer Behaviour and Marketing Strategy – European Edition. London: McGraw Hill Ridley, D. (2008) The Literature Review. A Step-by-Step Guide for Students. London: Sage Publications Ltd Rogers. E. M. (2003) Diffusion of Innovations. USA: Free Press Rosen, E. (2008) The Anatomy of Buzz Revisited. Real-life Lessons in Word-of-Mouth Marketing. New York: Doubleday Publishing Group References Allsop, D.T., Bassett, B.R. and Hoskins, J.A. (2007) Word of Mouth Research: Principles and Applications. Journal of Advertising Research, December 398-411 Arndt, J. (1967) Role of product-related conversations in the diffusion of a new product Journal of Marketing Research Aug 4, 291-295 Bayus, B.L. (1985) Word-of-mouth: the indirect effects of marketing efforts. Journal of Advertising Research 25, 31–9. Brooks, Steve. (2006) How to Build Buzz: the New Rules of Word-of-Mouth Marketing. Restaurant Business November. 30-38. Buttle, Francis A. (1998) Word of Mouth: Understanding and Managing Referral Marketing. Journal of Strategic Marketing 6: 241-254. Carl, W. (2009) Is Talking Getting You Anywhere? Measuring WOM Marketing. Admap, Issue 504, April, Dichter, E. (1966) How Word-of-Mouth Advertising Works. Harvard Business Review, Vol. 44, (November-December), 147-166. East, R., Hammond, K. and Wright M. (2007) The Relative Incidence of Positive and Negative Word of Mouth: a multi-category study. International Journal of Research in Marketing, 24 (2), 175-184. Frenzen, J, and Nakamoto, K. (1993) Structure, Cooperation, and the Flow of Market Information. The Journal of Consumer Research 20 360-375. 7
  8. 8. Agnes Jumah – MA Strategic Marketing Management – Buyer Behaviour Assignment Godes, D and Mayzlin, D. (2004) Using Online Conversation to Study Word-of-Mouth Communication. Marketing Science, Vol 23, No.4, Fall 2004, 545-560. Goldenberg, J, Han, S., Lehmann D. R., and Hong, J. W. (2009) The Role of Hubs in the Adoption Process. Journal of Marketing, Vol. 73, March, 1–13. Gray, G. (2009) Word-of -Mouth Marketing Needs More than Lip Service. Admap, Issue 504, April, Kamins, M. A., Folkes, V. A., and Perner, L. (1997) Consumer Responses to Rumors: Good News, Bad News. Journal of Consumer Psychology 6.2: 165-187. Keiningham, T.L., Askoy, L., Cooil, B., Andreassen, T.W. and Williamson, L. (2008) A Holistic Examination of Net Promoter. Database Marketing & Customer Strategy Management, Vol 15, 2, 79-90 Keller, E and Fay, B. (2009) Influencers are essential in driving WOM and affinity with the brand. Admap, April, 20-22 Keller, E and Fay, B. (2006) Single-Source WOM Measurement. Bringing Together Senders and Receivers: Input and Outputs. Keller Fay Group White Paper Lee, J., Lee, J. and Feick, L. (2006) Incorporating Word-of-mouth Effects in Estimating Customer Lifetime Value. Database Marketing & Customer Strategy Management. Vol. 14, 1, 29-39 Lee, M. and Youn, S. (2009) Electronic Word of Mouth (eWOM): How eWOM Platforms Influence Consumer Product Judgement. International Journal of Advertising, Vol 28, No.3. Reingen, P. H., and Kernan J. B. (1986) Analysis of Referral Networks in Marketing: Methods and Illustration. Journal of Marketing Research 23 370-378. Reynolds, F. F., and Darden, W. R. (1971) Mutually Adaptive Effects of Interpersonal Communication. Journal of Marketing Research 8.4 449-454. Stern, B. (1994) A revised model for advertising: multiple dimensions of the source, the message, and the recipient. Journal of Advertising 23(2), 5–16. Watts, D. J., and Dodds, P. S. (2007) Influentials, Networks, and Public Opinion Formation. Journal of Consumer Research, Vol. 34, December, 4, Williams, M. (Undated) Word-of-Mouth. A definition of communication. 8
  9. 9. Agnes Jumah – MA Strategic Marketing Management – Buyer Behaviour Assignment Appendices 1 Keller and Fay Table 2 Emanuel Rosen Email 3 Ambient media: advertising's new media opportunity? WARC Paper Appendix 1 - Keller and Fay Table _______________________________________________________________________________ Appendix 2 - Emanuel Rosen Email _______________________________________________________________________________________ Appendix 3 - Ambient media: advertising's new media opportunity? WARC Paper Separate document. 9