focus on facilitating and observing, not manipulating

1. BSI The Psychology of Word of Mouth
Marketing 2.0 Conference, Amsterdam 2007

2. Join the conversation
MARKETING 2.0 CONFERENCE
www.marketing2conference.com

3. THE PSYCHOLOGY OF
WORD OF MOUTH
dr. ir. Peeter Verlegh
Department of Marketing Management
RSM Erasmus University
pverlegh@rsm.nl - 010-4082732

4. WORD OF MOUTH
“an almost mysterious force, with its effects taken for granted” (Arndt, JMR 1967)
CONSUMER CONSUMER
C-2-C COMMUNICATION
“Informal, interpersonal communication about a brand,
product, organisation or service, between a recipient and a
sender who is seen as non-commercial”
(Arndt 1967, Harrison-Walker, 2001; cf. Brown et al. 2005)

5. CONSUMER CONSUMER
About what do we recommend others?
(current research at RSM Erasmus University)
For services:
(free choice of service)
• “extraordinary” experiences
• helpful, empathic, friendly, pro-active, expert
• quality of experience (ambiance / “gezellig”)
• price (cheap / value-for-money)
• speed and/or convenience

6. CONSUMER CONSUMER
About what do we recommend others?
(current research at RSM Erasmus University, with BUZZER)
For new products:
(Knorr Vie, Tea-pads, iPod, TomTom)
• product advantage
• innovativeness
• demonstrability / visibility
• compatibility
NOT: trialability, ease-of-use, image

7. CONSUMER CONSUMER
why do people make referrals
- Current research at RSM Erasmus University,
- Based on qualitative research & survey with BUZZERs)
• altruism: help other consumers feel better / make better decisions
• sharing enthusiasm / positive feelings
• helping the company / reciprocity: “they deserved it”
• self-related: attention / recognition / appreciation by others

8. CONSUMER CONSUMER
People are influenced by WOM
(Frenzen & Nakamoto 1993; Herr e.a. 1991, Reingen e.a. 1986,87,90 Cowley & Rossiter 2005)
• vivid /accessible in memory
• interactive
• high message involvement
• tailor to situation

9. CONSUMER CONSUMER
People are influenced by WOM
(Frenzen & Nakamoto 1993; Herr e.a. 1991, Reingen e.a. 1986,87,90 Cowley & Rossiter 2005)
• relevance: timing, audience, structure & content of message
• reliable:
• strong social ties (extra persuasive!)
• receiver – initiated / sought (“permission marketing ;-))
• no commercial motivation

10. MANAGING C-2-C
CONSUMER CONSUMER
MARKETER
Word-of-mouth promotion has become an increasingly potent force, capable
of catapulting products from obscurity into runaway commercial success
(Dye, HBR 2000)
Referrals: the one number you need to grow (Reicheld, HBR 2003)
Buzz Marketing:
A set of techniques that may be used to stimulate, harness, and accelerate
the word-of-mouth phenomenon, to positive marketing effect
(The Anatomy of Buzz, Rosen, 2000)

11. BUZZ: managing C2C interactions
marketer marketer
4 3
Consumer Consumer
1
marketer
marketer
marketer 2

12. 1. observe
Consumer Consumer
marketer
• Strategy: measure and observe C2C as a source of customer intel
• facilitated online (automated)
– monitor chatrooms, communities, review sites
– benchmark / compare with competitors

13. 2. facilitate
• Strategy: facilitate C2C (by review site, forum or VC)
• availability of relevant information for consumers
• BUT: difficult to control: wrong / negative information (seeding!)
Consumer Consumer
marketer

14. 3. moderate
marketer
Consumer Consumer
• Strategy: influence content / frequency / targeting of C2C
• C2C as part of marcoms:
– design campaigns that stimulate BUZZ – Who ? How?
– what is the effect on buzz ?
– what is the effect on reputation of company and consumers ?

15. 4. participate
marketer
Consumer Consumer
• Strategy: actively participate in “C2C”
• pro-active: provide expert / inside information (more informed discussion)
• reactive: respond to criticisms, answer questions
• openness (avoid reputation damage for marketer and medium

16. MANAGING WOM: STIMULATE WITH INCENTIVES?
Ryu & Feick (2007)
“would you advise product X to consumer Y?” (scenario study –
MP3)
⇒ higher likelihood with “strong ties”
⇒ higher likleihood with higher rewards (20% vs. 10% of price)
⇒ reward especially influences likelihood of weak-tie referrals

17. BUT:
WOM occurs
“between perceived non-commercial sources” (Brown et al. 2005)
“by individuals not actively engaged in selling the product” (Godes et al. 2005)
“The power and the significance of everyday word of mouth lie mainly in the
speaker’s lack of material interest” (Dichter 1966)
“...persuasion levels should be higher when the source is perceived to not
have a vested interest...” (Bristor 1990)

18. A CAUTIONARY STUDY
(research with Mirjam Tuk)
Incentives stimulate WOM, but:
If behavior is in line with self-interest, consumers are likely to attribute
this behavior to ulterior motives (e.g., Vonk 1998, 2002)
If UM become more accesible, consumers get suspicious, and
categorize behavior as a persuasion attempt (rather than “help” or
“advice”)
⇒ reduces effectiveness
⇒ elicits resistance / defenses
⇒ negatively affects evaluation of sender
(Campbell & Kirmani 2000)

19. word-of-mouth without incentive: sender is...
friendly, helpful, sociable, enthusiastic, nice, up-to-date

20. word-of-mouth without incentive: sender is...
friendly, helpful, sociable, enthusiastic, nice, up-to-date
but WITH incentive, he is...
Pushy, suspicious, weird, a salesperson, unfair, unreliable, sneaky, and…

21. word-of-mouth without incentive: sender is...
friendly, helpful, sociable, enthusiastic, nice, up-to-date
but WITH incentive, he is...
Pushy, suspicious, weird, a salesperson, unfair, unreliable, sneaky, and…
a republican (“VVD-er”)

22. BUZZ:
A useful instrument, but effect greatly reduces when UM are perceived
Likelihood of perceiving UM:
- is larger for strangers than for friends
- is smaller if WOM is initiated by receiver
SO: BUZZ CAREFULLY (respect unique C2C characteristics)
- rely on strong ties
- use “natural” friendly interactions (“help a friend” – not “make a profit”)