Word-of-mouth: a strategy or an outcome?


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Word-of-mouth: a strategy or an outcome?

  1. 1. Lancaster University • June 2007 Gabriel Borges and Peter Lenney © Gabriel Borges 2007 - Not to be copied or in any way reproduced without permission Positive word-of-mouth: a strategy or an outcome? Research on where efforts should be concentrated to trigger customer-to-customer profitable interactions
  2. 2. Source: DUNBAR (1996), British anthropologist or of people’s conversations concern social issues experiences 2 3
  3. 3. who is doing what with whom , and whether it’s a good or bad thing; who is in and who is out , and why. ‘ small talk ’
  4. 4. As follows, people effortlessly include conversations with reference to products, services and brands into such small talk. Individuals like to share their experiences with one another .
  5. 5. This oldest form of media can be found on the business and marketing realms labelled as word -of- mouth communications or simply word-of-mouth .
  6. 6. What is Word-of-mouth (WOM)? Sources: ARNDT (1967), WOMMA (2006), SOLOMON (2002) and WOJNICKI and JIA (2007) definition person-to-person communication between a receiver and a communicator whom the receiver perceives as non-commercial, concerning a brand, a product, or a service. is the act of consumers providing information to other consumers. the information transmitted by individual consumers on an informal basis. a variety of media can convey the message: face-to-face, phone, internet and others. format basis of solicitation solicited or unsolicited basis of WOM by the receiver of the information . valance raging from positive to negative WOM. valance of the message
  7. 7. Representation of the Communication Flow for WOM Sources: ARNDT (1967), WOMMA (2006), SOLOMON (2002) and WOJNICKI and JIA (2007) 50% of WOM communications are initiated by the disseminator and 50% is solicited by the receiver. solicited wom basis of solicitation unsolicited wom solicited wom unsolicited wom consumer (i) disseminator   consumer (ii) receiver    message ( brand / product related ) valance of the message positive positive negative negative
  8. 8. Throughout the literature exploring WOM, three waves of studies on the subject can be recognized.
  9. 9. recent correlation of the phenomenon of WOM and the communication theories relationship between customer satisfaction and WOM special focus on the correlation of dissatisfaction and negative WOM media cluttering: over and over, people are declining their attention and faith in traditional media. the internet has been changing the way consumers share their opinions , enlarging the playing field in which WOM operates 60 middle s ’ 80 early s ’
  10. 10. But what is the gist of all said about word-of-mouth in the academic studies and business literature ?
  11. 11. Word-of-mouth plays an important role in the process of shaping consumers’ behaviour.  expectation & motivation advertising wom past experience influencers
  12. 12. inform legitimize, evaluate influence opinion shape opinion Vs. unilateral interactive impersonal consented interruptive customized expensive cheap short-life span organic reduce choices increase amount of choices advertising wom
  13. 13. The power from each influencer varies according to the context However, estimates have maintained that as much as 80% of all buying decisions are influenced by an individual's direct recommendation. Source: KAMINS (1997) advertising wom past experience
  14. 14. WOM is more likely to effect consumption when… expectation & motivation   wom large amount of choices no past experience strong bound influence  high risks involved 
  15. 15. The power of WOM can effect not only consumers’ purchase, but also the growth of whole corporations.
  16. 16. Is word-of-mouth a strategy or an outcome ?
  17. 17. Why a consumer will bother to talk about your product or brand ?
  18. 18. a research opportunity to understand the motivations and social arrangement on which positive WOM is structured to undertake reflections about how managers can apply a powerful influence over what consumers talk about their brands to the people they relate
  19. 19. Research Approach wave one Narratives from Consumers Explore the social context of positive WOM spreading-out wave two Interviews with Consumers In-depth focus on the main issues emerged from the first wave wave three Focus Group with Marketers Create a framework to trigger and/or influence over what consumers talk about their products / brands to the people they relate
  20. 20. Working Plan literature review narratives analysis interviews analysis findings framework development company focus group may june july august 2007
  21. 21. Accreditions This project is being taken by Gabriel Borges as partial fulfillment of the requirements of the MSc in Advanced Marketing Management degree of Lancaster University, with supervision of Dr. Peter Lenney and support of AKQA. Gabriel Borges Gabriel has worked in Marketing for 9 years with experience across numerous disciplines. He led a team at Telemig Celular with responsibility for the management of strategies in the area of customer loyalty and retention. He was promoted internally from a position managing Value Added Services of SMS and WAP based technologies. Whilst working with Web developers Bhtec he constructed strategic plans for the implementation of online solutions for key accounts such as Fiat Auto, Alfa Romeo and GE. He has a bachelors degree in Communication Studies and more has recently undertaken a Masters in Advanced Marketing Management at Lancaster University; one of the World's premier Management Schools. Lancaster University Management School Lancaster University management school is the most consistently highly rated management school in the UK, performing as one of only two UK business schools to carry the coveted 6-star rating for consistent world-class research quality in business and management. The Department of Marketing was established at the University of Lancaster in 1965 with the first Professor of Marketing in a UK university and is largely accredited for its outstanding works on business research.
  22. 22. Thank you. Gabriel Borges [email_address] +44 789 541 9040