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"the science of buzz"

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  1. 1. Vanaf heden te bekijken op dr. ir. Peeter Verlegh RSM Erasmus University 18 juni 2008 [email_address] THE SCIENCE OF BUZZ
  2. 2. <ul><li>an almost mysterious force, with its effects taken for granted </li></ul><ul><li>Arndt - JMR 1967 </li></ul><ul><li>capable of catapulting products from obscurity into runaway commercial success </li></ul><ul><li>Dye - HBR 2000 </li></ul><ul><li>referrals: the one number you need to grow </li></ul><ul><li>Reicheld - HBR 2003 </li></ul><ul><li>the value of a customer’s referrals dwarfs the average CLV </li></ul><ul><li>Kumar, Petersen & Leone, HBR 2007 </li></ul><ul><li>contrary to popular belief: </li></ul><ul><li>positive WOM is far more common than negative WOM: ratio = 3:1 </li></ul><ul><li>15 studies, 4500 responses,20+ categories, data from UK, USA, China </li></ul><ul><li>East, Hammond & Wright – IJRM 2007 </li></ul>THE POWER OF WORD OF MOUTH
  3. 3. <ul><li>WHO sends word of mouth? </li></ul><ul><li>4 “types” of wommers </li></ul><ul><li>ABOUT WHAT do they send word of mouth? </li></ul><ul><li>attributes that trigger WOM for products & services </li></ul><ul><li>WHY do they send word of mouth? </li></ul><ul><li>4 different motives for talking about products </li></ul>OVERVIEW CONSUMER CONSUMER YOU
  4. 4. <ul><li>WHY are they influenced by word of mouth? </li></ul><ul><li>factors that determine the impact of WOM on consumers </li></ul>OVERVIEW CONSUMER CONSUMER YOU
  5. 5. <ul><li>HOW can you manage word of mouth? </li></ul><ul><li>strategies to manage WOM & impact on effectiveness </li></ul>OVERVIEW CONSUMER CONSUMER YOU
  6. 6. <ul><li>Opinion Leaders </li></ul><ul><li>concept out of traditional two-step flow communication theory </li></ul><ul><li>product expertise/involvement & connections to others </li></ul><ul><li>Experts / innovators </li></ul><ul><li>- Consumers with high product involvement & expertise </li></ul><ul><li>Connectors </li></ul><ul><li>- socially active consumers, who are able to spread info to many others </li></ul><ul><li>Market Mavens </li></ul><ul><li>- consumers who like to collect and distribute market information </li></ul>WHO SENDS? CONSUMER CONSUMER
  7. 7. <ul><li>About what do we recommend others? </li></ul><ul><li>(study in 2007 at RSM Erasmus University, with BUZZER) </li></ul><ul><li>For new products (Knorr Vie, Tea-pads, iPod, TomTom) </li></ul><ul><li>product advantage </li></ul><ul><li>innovativeness </li></ul><ul><li>demonstrability / visibility </li></ul><ul><li>compatibility </li></ul><ul><li>NOT: trialability, ease-of-use, image </li></ul>WHAT DO THEY SEND? CONSUMER CONSUMER
  8. 8. <ul><li>About what do we recommend others? </li></ul><ul><li>(208 consumers, open interviews) </li></ul><ul><li>For services (last recommended*) </li></ul><ul><li>ambiance (nice,relaxing,“gezellig”) 21 % </li></ul><ul><li>responsiveness (fast,adequate) 17% </li></ul><ul><li>price / value for money 20 % </li></ul><ul><li>employee behavior 41 % </li></ul><ul><ul><li>friendly / helpful (24%) </li></ul></ul><ul><ul><li>expertise (17%) </li></ul></ul>WHAT DO THEY SEND? CONSUMER CONSUMER
  9. 9. <ul><li>Product involvement: </li></ul><ul><li>gratifying / delighting experiences with a product or service </li></ul><ul><li>Self-involvement: </li></ul><ul><li>getting attention, confirm (expert) status </li></ul><ul><li>Other-involvement </li></ul><ul><li>need and intent to help others </li></ul><ul><li>Company involvement </li></ul><ul><li>reciprocate kindness of employees </li></ul><ul><li>feel commitment / identification with brand or company </li></ul><ul><li>Dichter (1966) revised by Sundaram et al. (1998) </li></ul>WHY DO THEY SEND? – MOTIVES Ia CONSUMER CONSUMER
  10. 10. <ul><li>N = 200 Dutch consumers; open interviews – pick any service </li></ul><ul><li>Product enthusiasm 26% (S: 33%) </li></ul><ul><li>- superior experiences </li></ul><ul><li>Self- enhancement 16% (S: 20%) </li></ul><ul><li>Company involvement 20% (S: 18%) </li></ul><ul><li>Helping other consumers 38% (S: 29%) </li></ul><ul><li>- inform about deals & excellence </li></ul><ul><li>S: 363 positive WOM episodes - US consumers </li></ul>WHY DO THEY SEND? – MOTIVES Ib CONSUMER CONSUMER
  11. 11. <ul><li>Survey with multi-item scale: “pick any product” (N=702 buzzers) </li></ul><ul><li>Product enthusiasm M=5.89 (1.43) </li></ul><ul><li>“ The product exceeded my expectations” </li></ul><ul><li>Self-enhancement M=3.96 (1.47) </li></ul><ul><li>“ I wanted to show that I know a lot about this product” </li></ul><ul><li>Company involvement M=4.01 (1.50) </li></ul><ul><li>“ I would like to see this company to get more customers” </li></ul><ul><li>Helping others M=5.44 (1.20) </li></ul><ul><li>“ I wanted to help the other to make a good choice” </li></ul>WHY DO THEY SEND? – MOTIVES IIa CONSUMER CONSUMER
  12. 12. <ul><li>Further analyses: effects of motives & personality on WOM </li></ul><ul><li>Impact of referral affected by : </li></ul><ul><ul><li>product enthusiasm +++ </li></ul></ul><ul><ul><li>motivation to help ++ </li></ul></ul><ul><ul><li>self-enhancement - </li></ul></ul><ul><li>Reach affected by: </li></ul><ul><ul><li>opinion leadership +++ </li></ul></ul><ul><ul><li>product enthusiasm + </li></ul></ul><ul><ul><li>company involvement + </li></ul></ul>WHY DO THEY SEND? – MOTIVES IIc CONSUMER CONSUMER
  13. 13. <ul><li>Recent replications with WOM intention as DV: </li></ul><ul><li>High tech products: MP3, DVD, Wii (Netherlands, N = 212) </li></ul><ul><ul><li>same motivational structure </li></ul></ul><ul><ul><li>product enthusiasm most important; other 3 factors about equal </li></ul></ul><ul><li>Luxury fashion goods (urban China; N = 118) </li></ul><ul><ul><li>same motivational structure </li></ul></ul><ul><ul><li>self-enhancement & product enthusiasm most important </li></ul></ul>WHY DO THEY SEND? – MOTIVES III CONSUMER CONSUMER
  14. 14. <ul><li>content / informational value </li></ul><ul><ul><li>“ WOM is the closest thing to actual product experience” </li></ul></ul><ul><li>reliable : </li></ul><ul><ul><li>often from strong social ties </li></ul></ul><ul><ul><li>source lacks ulterior motives </li></ul></ul><ul><li>welcomed by receivers </li></ul><ul><ul><li>received when relevant </li></ul></ul><ul><ul><li>often receiver-initiated </li></ul></ul><ul><ul><li>less defensive / critical processing </li></ul></ul><ul><li>flexible </li></ul><ul><ul><li>in wording, structure and content </li></ul></ul><ul><ul><li>tailored to person and situation </li></ul></ul><ul><li>vivid /accessible in memory </li></ul><ul><li>Frenzen & Nakamoto 1993; Herr et al. 1991; Reingen et al. ’86,’87,’90; Cowley & Rossiter 2005 </li></ul>Why are they INFLUENCED? CONSUMER CONSUMER
  15. 15. 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) How can you MANAGE word of mouth? CONSUMER CONSUMER YOU
  16. 16. Consumer Consumer 1 marketer 4 3 marketer marketer marketer 4 ways to MANAGE word of mouth marketer 2
  17. 17. Consumer Consumer OBSERVE <ul><li>observe & measure WOM as source of customer info </li></ul><ul><li>facilitated online (automated) </li></ul><ul><ul><li>monitor chatrooms, communities, review sites </li></ul></ul><ul><ul><li>benchmark / compare with competitors </li></ul></ul>marketer
  18. 18. Consumer Consumer FACILITATE marketer <ul><li>Provide ways to WOM (e.g., reviews, forums, VCs) </li></ul><ul><li>makes relevant information available for consumers </li></ul><ul><li>BUT: difficult to control negative WOM </li></ul>
  19. 19. MODERATE Consumer Consumer marketer <ul><li>Influence WOM content, frequency & targeting </li></ul><ul><li>WOM as part of MARCOMS </li></ul><ul><ul><li>design campaigns to stimulate buzz </li></ul></ul><ul><ul><li>what is the effect on WOM? </li></ul></ul><ul><ul><li>effect on company & customer reputation </li></ul></ul>
  20. 20. Consumer Consumer PARTICIPATE marketer <ul><li>Participate in WOM </li></ul><ul><li>pro-active: inform discussion (expertise, news) </li></ul><ul><li>reactive: respond to criticisms </li></ul><ul><li>BE OPEN : don’t hurt yourself or the image of WOM! </li></ul>
  21. 21. <ul><li>Ryu & Feick (2007) </li></ul><ul><li>“ would you advise product X to consumer Y?” </li></ul><ul><ul><li>higher likelihood with “strong ties” </li></ul></ul><ul><ul><li>higher likelihood with higher rewards (20% vs. 10% of price) </li></ul></ul><ul><ul><li>reward especially increases likelihood of weak-tie referrals </li></ul></ul>STIMULATING WOM WITH REWARDS?
  22. 22. WOM is defined as interactions.. - “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) => What about incentives / rewards for WOM ??? STIMULATED WOM: ULTERIOR MOTIVE
  23. 23. behavior that is congruent with self-interest leads to inferences about the presence of ulterior motives (UM) (Vonk 1998. Friestad & Wright 1994) When UM are more accessible, consumers become suspicious, and it becomes more likely that consumers categorize agent behavior as a persuasion attempt (rather than a “normal” social interaction) => decreased effectiveness of the referral => decreased liking (perceived sincerity) of the target (Campbell & Kirmani 2000) P1: The impact of WOM decreases when rewards are given ULTERIOR MOTIVES
  24. 24. Without rewards, Frank is seen as…. friendly, helpful, social, enthusiastic, nice, price conscious, reliable With rewards, Frank is seen as…. pushy, suspicious, hidden agenda, salesperson, insincere, calculating, weird, dishonest, sneaky, VVD-er (!) some thoughts (for sake of illustration)
  25. 25. <ul><li>P2: </li></ul><ul><li>Tie strength moderates the negative effect of UM on impact of WOM </li></ul><ul><li>strong ties relationships are more credible and characterized by intimacy, support and trust (Brown & Reingen 1987, Frenzen & Davis 1990, Levin & Cross 2004) </li></ul><ul><li>we are less likely to infer UM from the behavior of strong ties </li></ul><ul><li>impact of WOM is reduced by rewards, but less if sender is a strong tie </li></ul>INTERACTION I: STRENGTH OF SOCIAL TIE
  26. 26. <ul><li>158 consumers from the Netherlands </li></ul><ul><li>Product: mobile phone provider </li></ul><ul><li>2 x 2 between-Ss: Tie Strength (weak / strong) * Reward (no / yes) </li></ul><ul><li>MEASURES : </li></ul><ul><li>thought listing – coded for UM thoughts </li></ul><ul><li>ratings (on 7-point likert-scales) of evaluation of brand & sender </li></ul>STUDY 1
  27. 27. UM THOUGHTS
  29. 29. <ul><li>Rewards reduce the impact of WOM on consumers: </li></ul><ul><li>increase in perceived ulterior motives (“he’s in it for the money”) </li></ul><ul><li>less favorable evaluation of sender </li></ul><ul><li>less likely to comply with offer </li></ul><ul><li>BUT: only when tie-strength is weak. </li></ul><ul><li>Effects do not occur when WOM is between strong ties </li></ul>CONCLUSION I
  30. 30. P3: SYMBOLIC rewards (e.g., donation to charity on behalf of sender) do not benefit the sender. Therefore: they evoke less UM, and leave the impact of WOM intact. INTERACTION II: TYPE OF REWARD
  31. 31. 120 students from S. Korea Product: English Language institute 3 x 2 between Ss: Tie Strength * Reward (no / monetary / symbolic) Tie strength: Identify “ close friend ” or “ casual acquaintance ” (initials) Reward: 30,000 KWON as gift voucher for sender or donation to charity MEASURES : ratings of: Product & sender evaluation & perceived UM (similar to study 1) STUDY 2
  32. 32. BRAND EVALUATION (similar results for source evaluations)
  33. 33. <ul><li>Negative effect of rewards are reduced or even disappear when sender is not benefiting on the expense of the receiver: </li></ul><ul><li>- reduces perceived ulterior motives (“I don’t think he’s in it for the money”) </li></ul><ul><li>evaluation of sender and product are not affected </li></ul><ul><li>Study 2 replicates effect of tie strength in S. Korea </li></ul>CONCLUSION II
  34. 34. P4: initiative taking moderates the negative effect of UM salience on impact of WOM we are more likely to suspect UM if WOM is a spontaneous action of the sender. On the other hand, if WOM is actively sought, we have less reason to doubt the sincerity of the sender (Gatignon & Robertson 1985; Kirmani & Campbell 2004, Mazzarol et al. 2007) INTERACTION III: INITIATIVE
  35. 35. <ul><li>117 students from USA </li></ul><ul><li>Product: mobile phone provider </li></ul><ul><li>Sender: “Kim, who you just met at a party” </li></ul><ul><li>2 x 2 between Ss: Initiative (sender / receiver)* Reward (no / yes) </li></ul><ul><li>Initiative in scenario: </li></ul><ul><li>“ she mentions cell phone cost, and tells about her new provider” (sender) or “you mention… and she tells about her new provider (receiver) </li></ul><ul><li>Reward: $20 gift voucher for sender </li></ul><ul><li>Ratings of: </li></ul><ul><li>Participation : “likely to give e-mail ?” (7-point likert scale ) </li></ul><ul><ul><li>WOM sender ; Perceived UM (similar to study 1 & 2) </li></ul></ul>STUDY 3
  36. 36. BRAND EVALUATION (similar results for source evaluations)
  37. 37. <ul><li>Negative effects of rewards are reduced or even disappear when WOM is initiated by the receiver: </li></ul><ul><li>- Increases relevance & reduces likelihood of ulterior motives </li></ul><ul><li>evaluation of sender and product are not affected </li></ul>CONCLUSION III
  38. 38. <ul><li>Rewards may reduced sender integrity & WOM impact </li></ul><ul><li>- more so for strangers than for friends </li></ul><ul><li>- less so if WOM is initiated by receiver </li></ul><ul><li>- less so if rewards are symbolic (donations to charities) </li></ul><ul><li>SO: BUZZ CAREFULLY (respect unique C2C characteristics) </li></ul><ul><li>- rely on strong ties </li></ul><ul><li>- use “natural” interactions </li></ul><ul><li>Dilemma: rewards stimulate weak-tie, sender-initiated WOM… </li></ul><ul><li>=> Net effect may depend on specifics of the context </li></ul>REWARD, BUT CAREFULLY
  39. 39. <ul><li>1. SENDERS talk when you give them something to talk about: </li></ul><ul><li>superior, innovative & relevant products with benefits that are easy to communicate </li></ul><ul><li>emotions and social relationships </li></ul><ul><li>low prices / value for money “smart shopper feelings” </li></ul>FOUR “RULES OF WOM”
  40. 40. <ul><li>2. SENDERS talk because they feel like it: </li></ul><ul><li>Being delighted </li></ul><ul><li>Presenting themselves (attention, status, image) </li></ul><ul><li>Helping you (“if you’re worth it”) </li></ul><ul><li>Helping other consumers </li></ul><ul><li>=> Product enthusiasm is most important </li></ul>
  41. 41. <ul><li>3. RECEIVERS are influenced because they get information that is: </li></ul><ul><li>relevant (substitute for own experience) </li></ul><ul><li>reliable (strong ties, no strings attached) </li></ul><ul><li>Customized (timing, content, amount, tone) </li></ul><ul><li>And because they remember WOM better than other media! </li></ul>
  42. 42. <ul><li>4. WORD OF MOUTH can be managed </li></ul><ul><li>observe & measure, facilitate, moderate, participate </li></ul><ul><li>Make sure that your WOM is still </li></ul><ul><li>“ social sharing of relevant information among friends” </li></ul><ul><li>Be open about your activity and ask your customers to do the same </li></ul>
  43. 43. DUS: