Word of Mouth Marketing Its Impact

- Swetha Chavali and C Kedarini

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 No. of

 Purchase respondents
More than 2 years 30
Between 1 and 2 year 30
Year 18
Between 3 and 6 8
Months
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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