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Word of Mouth Marketing Its Impact

- TN Karthik and Ashlesha


Institute of Public Enterprise, Hyderabad

Abstract

Word-of-Mouth (WOM) communication has become one of the most important channels to share
information about products and services. With todays rapid technological advancements, it
becomes imperative to analyse the impact of Technical Savvy and its role in the creation and
consumption of word-of-mouth. In this paper, we have taken analysis on the inter-linkages between
WOM creation, opinion on how people influenced by word of mouth and consumption in the market
by taking the reviews from leadership based on existing literature. We have introduced a new
element Technical Impact among the prevailing inter-linkages and have evaluated its influence on
WOM creation and consumption. Using a survey administered on a availability of sample of mobile
phone users, we have been able to draw some insights on the correlations between technical
impact, opinion leadership traits specific to mobile phones. The results show that there is a
correlation between opinion leaders who spread WOM through social media and tech impact.
Among the non-opinion leaders, it is significant to note that the level of tech impact depends upon
the consumption of information from friends, co-workers or colleagues. Non opinion leaders also
show a correlation between tech savvy and tendency towards creation of codified buzz. The analysis
also reveals that non-opinion leaders are less likely to be opinion seeking. It also shows that tech
savvy is correlated with both information consumption and information creation from both friends
and social media.

Keywords : Word of Mouth , WOM Impact, Measurement scale, Research Design


Introduction

Word-of-mouth (WOM) communication has become a critical information-sharing medium which


can influence consumers buying decisions and attitudes towards product categories and brands. In
this paper, we study the tendencies towards WOM and how they vary between people who are
having technically strong and are having acumen over technology and people who are not. Buzz or
word-of-mouth marketing (one consumer sharing information/his excitement with another and the
phenomenon taking a viral effect) is one of the topical strategies in marketing.

With the Indian emerging markets reflecting proliferation of mobile phone consumers (one of the
markets where mobile services have grown rapidly with about 500 million consumers within a short
period of time), there were several research perspectives that could be investigated among the
users of mobile phones. This paper addresses word of mouth (WOM) and its implications for the
strategy of brands in the Indian mobile market. It was felt by the authors that word of mouth is an
area that is important from the viewpoint of marketers of mobile phones as consumers tend to use
mobile phones both for functional and symbolic purposes. This aspect of consumer buying makes a
mobile a good product to investigate using WOM dimensions that may matter to consumers. Being a
lifestyle-based gadget and also sold in varying price ranges with several brands in the competitive
fray, we feel that consumers curiosity would engage them in WOM conversations about the
category in general and brands in particular.

WOM is also becoming a powerful tool in the present day context, either having tremendous
potential to create a brand or to ruin a brand. In studies that Dr East conducted in several categories
of products including mobile phones, he found that 30% of WOM was about brands that have never
been owned by people who owned them (Rosen, 2010). WOM can have an impact on the power of
the collective (Evans, 2010), the way in which the social web is organized. WOM can also have an
impact on the hype cycle (Jackie and Rasikino, 2008) which is associated with the initial hype and
hope associated with the launch of new or innovative offerings. Both the power of the collective and
the hype cycle are important in the Indian context where around 60% of the population is below the
age of 25 years. The convergence technologies with the arrival of 3G technologies are likely to
provide a greater fillip to WOM among the young population.

For marketers of products like mobile phones it therefore becomes attractive to market their new
products and features through word-of-mouth marketing. Consumers who are tech savvy usually
relate easily to the new features and capabilities of mobile phones or other similar products. Brands
have been able to reach such consumers by highlighting the product features and benefits by
exploiting the word-of-mouth communication. In the case of non-tech-savvy consumers, enabling
such word-of-mouth or buzz creation is a key challenge to brands since the expectations of such
consumers are not just linked to innovative product features or benefits. As mobile phone brands
are trying to reach out to all kinds of consumers in India, it is imperative to understand the
behavioural differences in order to highlight the appropriate messaging in their communications.

The key objectives of this paper on word-of-mouth communication are as follows:


1. To explore the various dimensions of WOM communication
2. To identify and analysis the key influencing factors related to WOM creation an consumption
3. To understand the influences of opinion leadership characteristics towards WOM creation
and consumption
4. To outline a conceptual framework to analyse the inter-linkages between WOM creation,
WOM consumption, opinion leadership and technical acumen.
To accomplish the objectives set, we have followed an approach as outlined below:

Conduct a literature survey


a. Analyse different WOM dimensions based on earlier research
b. Understand general opinion leadership characteristics.
Create and administer a survey to gather specific characteristic traits of WOM creators,
WOM consumers, general opinion leaders and tech-savvy consumers.
Analyse the results to evaluate the inter-linkages across these different groups of
consumers.

Literature Review

To understand the motivation behind talking about a product or a service, The effects of four
different involvement levels such as Product involvement, Self involvement, Other involvement and
Message involvement. If the consumer had distinctly pleasurable or unpleasant experiences with a
product or a service, there seems to be a tendency to call for mental replication through speech.
This helps to dispose of the excitement aroused by the use of the product. A self-involved speaker
gets hurt when his/her opinion is rejected by others. Rejection is more when another speaker's
opinion has prevailed. On the other hand, speaker uses WOM as a medium to express his need to
help and to share his joy or frustrations in using a product with others.

Word of mouth can either be initiated by the consumer or the firm that sells the product or the
service. In the paper Building the buzz in the hive mind by Thomas (2004), buzz marketing is
defined as the amplification of initial marketing efforts by third parties through their passive or
active influence. Buzz can either be un codified or codified. When individuals come across new
information related to a product or a service, they pass the information on to their social network
voluntarily. This process leads to creation of un codified buzz. As messages are exchanged within the
social network, there is an implicit level of trust and credibility to the information.

The reward has to be significant enough for the customer to make referrals. Testimonials and
endorsements are given by people who are the key influencers or change agents in the respective
product sectors. Their experience with the product helps in creating codified buzz, thereby
increasing the credibility levels. Customer product ratings are collected from individuals who have
purchased a product and are willing to share their experiences. Prospective consumers can get to
know the product ratings from the collective knowledge thats being built from the customers of the
product. Gift certificates are another means of creating codified buzz. By providing a gift coupon to a
customer, new prospective customers can be attracted through WOM.

A single unit of WOM is used in the study which is defined as a specific incident in which WOM is
given. Based on a focused group research, the authors find that there are two key WOM themes
richness of message and strength of advocacy. The authors further discuss triggers of WOM which
are instrumental in its occurrence. Some of the triggers could be the necessity of the receiver,
serendipity and promotion. In addition to triggers there are also conditions which enhance the
incidence of WOM given its existence. The main conditions were found to be a tendency to act as an
advocate of the organization, closeness of the giver and the receiver, risk associated with the
communication and the self-confidence of the giver.
The listener's motivation is influenced by the following groups of people whose opinions are
considered trustworthy and credible:
Commercial authorities
Celebrities
Connoisseurs
Sharers of Interests
Intimates
Bearers of tangible evidence
Once there is enough motivation on the listeners side, the level of influence such motivation can
have and can lead to purchase decisions depends on multiple factors. Social ties seem to play a
significant role in taking the motivation levels to influence actions.

Lyons and Henderson (2005) attempt to capture the characteristics of online opinion leaders.
Opinion leaders are considered to have an enduring involvement in the product category, exhibit a
self-perceived product knowledge, exploratory behaviour and innovativeness. An empirical study
conducted reaffirms that these characteristics of opinion leaders is also valid for online opinion
leaders. It also goes on to show that knowledge of computers strongly influences opinion leadership.
This study focuses on the relationships between opinion leadership on exploratory behaviour as well
as innovativeness. Market mavens are differentiated from opinion leaders on three dimensions:
Market mavens are more useful when information regarding changes in the marketing mix
are involved.
Market mavens have general market knowledge whereas opinion leaders tend to be product
category specific.
Motives underlying mavenship and opinion leadership are different.

How word-of-mouth (WOM) works

Word-of-mouth communications have received extensive attention from both academics and
practitioners for decades. Since the early 1950s, researchers have demonstrated that personal
conversations and informal exchange of information among acquaintances not only influence
consumers' choices and purchase decisions , but also shape consumer expectations , pre-usage
attitudes , and even post-usage perceptions of a product or service . Some research has reported
WOM influence as greater than print ads, personal selling, and radio advertising.

Despite this rich literature, we actually know very little about how WOM communications works,
which can be attributed to four factors. First, as Bristor (1990) notes, most past research focuses on
successful WOM communications; in other words, the research reports only on communications that
have actually influenced the decision maker.

Impact of Word of Mouth on Mobile Phone Users

To study the impact of word of mouth, different dimensions of word of mouth to be analysed were
identified as follows:
a. Information consumption from friends and co-workers.
b. Information consumption from social media such as blogs, Twitter and Facebook.
c. Information creation or creation of un-codified buzz.
d. Information creation or willingness to participate in codified buzz.
e. Opinion leadership - general characteristics.
f. Opinion seeking.
g. Opinion leadership traits specific to mobile phones.
h. Tech savvy.
Various aspects to evaluate these dimensions were formulated using a Likert scale approach. A
survey was designed to measure the ratings across these various dimensions. General demographic
attributes such as age range, gender and occupation were also added as part of this survey.

Measurement Scales

A 5-point Likert scale was used for measuring the different aspects of WOM-related dimensions.
The scale provided to the respondents was
1. Strongly disagree (Value = 1)
2. Disagree (Value = 2)
3. Neutral (Value = 3)
4. Agree (Value = 4)
5. Strongly agree (Value = 5).
The demographic attributes like age, gender and occupation were obtained by providing the
respondents with a fixed set of predefined choices to choose from.

Sample characteristics

The data collection approach adopted was based on a convenient sampling technique. The
responses were collected from 102 respondents; 79% of them were male and 21% of them were
female. In terms of the age range, 58% of them belonged to the age range of 2630 years; 22%
belonged to the range of 3135 years;13% belonged to the range of 2125 years and the remaining
7% belonged to the range of 3640 years. With respect to occupation, 90% of them belonged to the
working professional (IT) category. Seven responses were discarded since these respondents used
only a company-provided mobile. These respondents continued to use the company-provided
mobiles despite their own preferences

Time Since Purchase No. of respondents


More than 2 years 30
Between 1 and 2 year 30
Year 18
Between 3 and 6 Months 8
Less than 3 months 9

Hypothesis

Early studies on WOM have shown that it has an important impact on customer decisions, and helps
to present a good post-purchase wakefulness. Word-of-Mouth might have different kinds of special
effects in the present world. Initially, it could be optimistic or unconstructive effects. Secondly, it
could have an effect on the product, the brand, the service or even the employees' performance
within the company. Word-of-Mouth's effects might have dissimilar targets. A successful product
sharing could be affected by positive word of mouth and lack of negative word of mouth. An
additional target could be the entrance of a brand in a fresh market. If the brand has not a good
representation by the Word-of-Mouth distribution, it will be really hard for the company to set off
its products and services in this fresh market.

In the earlier period, online shopping has crossed the space to become primarily well-known,
particularly among the little and wealthy. Nonetheless, due to the quality concerns and other
customer supposed risks, the challenges of e-shopping, mostly with respect to awareness and doubt,
have begun to surface. Consumers who want to purchase products from online markets, they need
positive, dependable, and honest evaluation about products. Online systems and electronic-Word-
of-Mouth (e-WOM) help customers make such up to date decisions.

At present new technologies are all over the place around us. These new technologies altered our
way to communicate and to interconnect with people. People now use more technology platforms
such as email, chitchat, phone or social networking websites than previous to, when they used face-
to-face communication or mails. Usability of these technologies makes them more eye-catching and
facilitates people's communication. The communication's technology, which is the most motivating
for Word-of-Mouth, is the social networking websites in World Wide Web. These kinds of websites
could be finding in the form of blogs, forums or personal pages such as Facebook or MySpace. They
are typically created by some people who broaden the site to their own personal networks and
steadily the number of people following and concerned in this site grows up. They accomplished in
the importance of this technology to share out an idea from individual to individual and then from
this individual to one more individual. Furthermore they ended that someone with few friends will
have a better impact on his friends when he will pass on a message than someone with a lot of
friends.

In corporation, a significant effect of Word-of-Mouth is the customer purchase. From short-range


effect to lasting effect, Word-of-Mouth communication is a good way for enterprises to catch the
attention of new customers. It is achievable to measure it thanks to Word-of-Mouth referrals and to
the sign-up processes. If customers never heard about a brand or if they never thought to buy a
product or a service by this brand, the actuality that some connections suggest this brand to them
will most likely affect their behaviour and guide them to choose this brand over another one. A lot of
people seek out recommendation from other people before buying something. The first persons that
you will talk with are family members, and then you will give more response to someone with
experience and information in this field. The persons most affected by this are people in towering
uncertainty-avoidance culture (Osmonbekov.et. al. 2010), who need to be more at easiness and who
will ask advice from their dependable relatives.

One of the strongest networks of communication in the market is word of mouth. Word-of-Mouth
has a dissimilar impacting people that are without a fundamental knowledge of this part of business.
When you do not have any experience in a part of business you will be more biased by someone
who will tell you something positive or negative about a picky brand. (Goldsmith, R. E., & Horowitz,
D 2006).Alternatively if you have your own standard brand you will be less tempted by another
brand that a comparative advises you to purchase. Though Word-of-Mouth communication about
the brand that you are usually using is negative you will be perhaps extra affected.

Hypothesis 1: Customer perceived belief, power; inspiration in their links is absolutely associated to
their engagement in WOM behaviours in making decision on the basis of marketing

Hypothesis 2: The self-expression of WOM message has a straight positive outcome on the
possibility that the message will be mutual with others.

Hypothesis 3: High (versus low) perceived WOM interactivity will give way further positive attitudes
to the online marketing i.e. website, impressions of the applicant, and voting intentions.

Hypothesis 4: The need to belong will positively affect the forwarding of Contents through all
possible means of communications i.e. electronic media, print media, social media etc.

Hypothesis 5: Word of mouth positively affects the purchasing decision and standard marketing.
Research design

Impact of word of mouth on purchasing behaviour of communities will be seen in this research. And
for that descriptive study will be done on consume attitudes and behaviours in relation to shopping,
personal productivity, advertising, and entertainment.

Population and sampling

To confirm that the sample selected is representative of the population, stratified sampling will be
used in this research where the population will be broken down into categories, and a random
sample will be taken from each category. For this study, a well-designed questionnaire will be
exercised. The questionnaires will direct to 150 respondents constituting the sample size.

Data collection

Data will be collected through the use of primary or secondary sources. Primary research design will
be included both quantitate and qualitative method i.e structured questionnaire and unstructured
interview will be conducted. Questionnaire will help to view the public opinion more broadly.
Interview will give an excellent result due to respondents expertise experiences. Secondary data will
be included help taken from articles, research papers, blogs, etc. related to word of mouth impact
on purchasing behaviour of online communities.

Procedures and measures

The questionnaire will be circulated to different respondent. The respondents will be from two
different ecommerce websites. The interview questions would be like marketing behaviour of
company, word of mouth impact on overall marketing, changes in marketing due to awareness of
internet. Questionnaires would be like how customer responds to changes of new product/services.
The second questions would be like customers are satisfied from marketing purchasing experience,
the last part would be like how customer perceive word of mouth, and they can give any additional
comment regarding word of mouth online purchasing behaviour. Responses will be used to test the
hypothesis. The respondents will be given four options to choose one from four ordinal scale will be
used and Likert scale will be used whether they agree or disagree with the statements.

Conclusion

Impact of word of mouth on marketing arises due to social media where people see comments of
the people who did shopping from such places. They see whether or not it would be effective for
them to buy such things or not.so marketers become aware of people choices now and they try to
improve or produce better quality, due to customers loyalty.

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