You are on page 1of 20

WORD OF MOUTH

Question 1 Reading Assignment about WOM: Definition Arndt defines WOM as "... oral person-to-person communication between a receiver and a communicator whom the receiver perceives as non-commercial, regarding a brand, product or service." (1967, p. 291) However, it is important to point out that WOM need not necessarily be brand, product or service-focused. It may also be organisation-focused. Neither need WOM be face-to-face, direct, oral or ephemeral. The electronic community, for example, generates virtual WOM which is not face-to-face, not direct, not oral, and not ephemeral (Buttle, 1998). Scope and Significance One of the most widely accepted notions in consumer behaviour is that WOM plays an important role in shaping consumers' attitudes and behaviours. In an early study, Whyte (1954) investigated the diffusion of air conditioners in a Philadelphia suburb. He concluded, on the basis of anecdotal evidence, that the pattern of ownership could be explained only be the presence of a vast and powerful network consisting of neighbours exchanging product information. In a more formal study, Katz and Lazarsfeld (1955) found that WOM was the most important source of influence in the purchase of household goods and food products. It was twice effective as radio advertising, four times as effective as personal selling, and seven times as effective as newspapers and magazines. Subsequent investigations of the WOM phenomenon have confirmed the dominance of personal influence in choice decisions. Engel et al. (1969), for example, found that almost 60 percent of consumers cited WOM as the most influential factor regarding their adoption of an automotive diagnostic centre. Similarly, Arndt (1967) showed that respondents who received positive WOM about a new food product were three times more likely to purchase it as those who received negative WOM. More recent research is provided by Herr et al. (1991). They
1

observed that WOM communication had a much stronger impact on brand evaluations than information from neutral sources such as the 'Consumer Reports' magazine. The power of WOM communication stems from various factors. First, consumer recommendations are usually perceived as being more credible and trustworthy than commercial sources of information (Day, 1971). It is common to assume that another consumer has no commercially motivated reasons for sharing information (Engel et al., 1993). Also the discussions with either friends or family tend to be friendly and can offer support for trying certain behaviours. Second, the WOM channel is immediately bi-directional and interactive which allows for a 'tailored' flow of information to the information seeker (Gilly et al., 1998). The third strength of consumer WOM comes from its 'vicarious trial' attributes. Potential consumers of a product, for example, can gain some of the product experience by asking somebody who has an actual experience with the product. WOM is of particular importance to the services sector. The typical characteristics of services such as intangibility, simultaneous production and consumption, perishability, heterogeneity and the need for the consumer participation results in the fact that suppliers are not able to present the product in advance of the purchase (Helm and Schlei, 1998; Zeithaml and Bitner, 1996). Services, therefore, are high in experience and credence properties which the consumer can only ascertain after purchase and use (Zeithaml and Bitner, 1996). As a consequence, consumers of services rely to a large extent on personal communication and the exchange of experiences with other customers since their experiences of serve as a 'vicarious trial' (Engel et al., 1993). Empirical support for the importance of WOM when purchasing services is provided by Murray (1991) who found that services consumers prefer to seek information from family, friends and peers rather than sponsored promotional sources. Characteristics of WOM According to Buttle (1998), WOM can be characterised by valence, focus, timing, solicitation, and intervention. Valence. From a marketing point of view, WOM can be negative as well as positive. In the case of negative WOM, consumers convey information on poor performance, lack of service, high prices or rude sales personnel. Positive WOM is the mirror image. Assael (1992) notes that
2

dissatisfied consumers complain to approximately three times as many friends and relatives as when they are satisfied. Additionally, Mizerski (1982) indicates that a consumer is more likely to pay attention to negative than to positive information. A study by Heath (1996), however, shows that people do not display a simple preference for bad news. Instead, they pass along information that matches the emotional valence of the conversation topic. According to File et al. (1994), valence and volume of post-purchase WOM can be influenced by management policy. More specifically, they cite work that provides evidence for the contention that the handling of the complaints process, services recovery programmes and unconditional service guarantees influence the frequency and direction of WOM. Richins (1983), for example, shows that if complaints are encouraged, the retailer has the chance to remedy legitimate complaints and win back a customer who may also make positive reports to others, enhancing goodwill. Focus. WOM activity is not only limited to consumers. In fact, the extent of WOM activity can be seen as a function of the following: the people with whom the company and its employees come into contact (customers, suppliers, agents, competitors, the general public, and other stakeholders); its communications; and the inherent interest in the company as a result of its actions (Haywood, 1989). Similarly, the S.C.O.P.E. model (suppliers, customers, owners or investors, partners and employees) of relationship marketing indicates that WOM is not only restricted to consumers. WOM, for example, is an important source of information in the recruitment of employees (Buttle, 1998). However, the majority of management writings on WOM is that of the satisfied customer communication with a prospect. The assumption is that positive WOM draws customers on the loyalty ladder (figure 2), thereby converting a prospect into a customer (Christopher et al., 1991 quoted in Buttle, 1998). Timing. WOM may be uttered at different stages of the decision-making process; i.e. before or after a purchase. WOM that operates as an important source of pre-purchase information is referred to as input WOM. Output WOM, on the other hand, is uttered after the purchase or the consumption experience (Buttle, 1998). Solicitation. Not all WOM communication is customer-initiated. WOM may be offered with or without solicitation; it may be offered even though it is not sought. If authoritative information is thought, however, the consumer may see the input of an influential or opinion leader (Buttle, 1998).
3

Intervention. The power of WOM has not gone unnoticed. An increasing number of companies are proactively intervening in an effort to stimulate and manage WOM activity. Some even consider customer WOM as the most effective marketing tool and also the one with the lowest cost (Wilson, 1994). Specifically, marketers seek to influence opinion leaders directly, stimulate WOM communication in advertising, simulate WOM communication through advertising and/or portray communications form opinion leaders. Additionally, marketers try to curb, channel and control negative communications (Assael, 1992, Engel et al., 1993, Buttle, 1998; Haywood, 1989). Types Richins and Root-Shaffer (1987), in a study on personal influence in buying cars, identified three basic types of WOM communications: product news, advice giving and personal experience. Product news is information about the product such as features or performance attributes. Advice giving relates to expressions of opinions about a product. Personal experience involves comments about product attributes or reasons for buying the product. These categorisation implies that WOM serves two functions, to inform and to influence. Whereas product news informs consumers, advice and personal experience are likely to influence consumer decisions. This, in turn, suggests that each of these types of communication is probably most important in different stages of the decision-making process. Product news, for example, is important in creating awareness about a product and its features. Hearing about product experiences from a friend or relative support the consumer in the evaluation of the relative merits of one brand or another. Finally, through the opinion of 'relevant others', advice giving is important in making the purchase decision stage. Process Until the 1940s, marketers assumed that communication was a one-way process flowing from the marketer to consumers. This view, however, was challenged by Lazarsfeld et al. (1948). Their study of voting behaviour indicated that mass media messages were intercepted and distributed by so-called opinion leaders. This two-step flow hypothesis suggests that marketercontrolled mediated communication flows to opinion leaders who in turn communicate it through WOM to their peers and thereby exercising influence. In this theory, opinion leaders are
4

distributed in all levels and groupings of society and may be influential on just one of several topics (Buttle, 1998). A study by Katz and Lazarsfeld (1955), for example, found that opinion leadership is product specific. They profiled different attributes for fashion opinion leaders, food opinion leaders, public affairs opinion leaders and movie-going opinion leaders. However, a study by Rogers (1962) claimed to have identified three traits which broadly define an opinion leader: social status, social participation and cosmopolitanism. Robertson, (1971) on the other hand, found that opinion leaders tend to be more gregarious, more innovative and knowledgeable than followers. As far as cosmopolitanism is concerned, Robertson (1971) could not distinguish followers from opinion leaders. A set of demographic characteristics of influential [Engel et al. (1993) prefer to talk of influential rather than opinion leaders] is provided by Engel et al. (1993). They note that influentials are active information searchers, more innovative, more gregarious, and more socially active, more fashion conscious and independent. The two-step flow hypothesis and the associated concept of opinion leadership have been criticised on a number of grounds. First, the follower is not passive. He/she may well request information as well as listen to unsolicited opinions of others. Second, those who transmit information are also likely to receive it; that is opinion leaders are also followers and vice versa. Third, the opinion leader is not the only one to receive information from the mass media. Followers are also influenced by advertising (Assael,1992; Engel et al., 1993). Katz and Lazarsfeld (1955) also realised that there may be a 'gatekeeper'. This gatekeeper may be distinct from the opinion leader; he/she may introduce ideas and information to the group but may not influence it. Because of these limitations in the concept of a two-step flow, a multi-step flow model (figure 3) of WOM communication came into broader acceptance. Gatekeepers Mass Media Opinion Leaders Followers

Figure 1: Multi-step flow model [Source: Assael, 1992, p. 430] In this model the mass media can reach the gatekeeper, opinion leader, or follower directly but are less likely to reach the follower (indicated by the dotted line). The gatekeeper
5

represents a source of information to both opinion leaders and followers. However, the dissemination of information to opinion leaders is more likely. Furthermore, WOM communication between opinion leaders and followers is represented as a bi-directional flow, as opinion leaders may seek information from followers, and followers may solicit information form opinion leaders (Assael, 1992; Engel et al., 1993). The recognition in the multi-step model that opinion leaders and followers both may transmit and receive information leads to four possibilities (Reynolds and Darden, 1971).
INFORMATION SEEKING

Socially Integrated (32%) High

Socially Independent (18%) Low

OPINION LEADEERSHIP High Socially Dependent (18%) Socially Isolated (32%)

Figure 2: A categorisation of consumers by opinion leadership and information seeking for clothing decision [Source: Reynolds and Darden, 1971, p. 451]
Low

Consumers who score high on both opinion leadership and information seeking are classed as socially integrated consumers. Those who score high on influencing others, but low on being influenced themselves, are classed as socially independent consumers. Socially dependent consumers, on the other hand, are those who score low on influencing other but high on being influenced by others. Finally, socially isolated consumers are those who score low on both opinion leadership and information seeking (Reynolds and Darden, 1971). More recently, the concepts of the 'market maven' emerged. Market mavens are defined as individuals having information about many kinds of products, places to shop, and other facets of markets, which initiate discussions with consumers and respond to their request for market information (Feick and Price, 1987). Other than the finding that market mavens are morel likely to be women, there is no clear demographic or psychological profile identified yet for these
6

influencers (Slama and Williams, 1990; Higie et al., 1987; Bayus et al., 1985). Gelb and Johnson (1995; quoted by Buttle, 1998) note that not only does the market maven prompt WOM, but those with links to such individuals are disproportionately likely to act on what they are told.

Question 2 Why societies like to narrate dissatisfy compared to satisfaction to a product to others? 1. Nothing to do Customer will not submit complain, but practical them will not buy or use again pertinent company service or product (because they switch to service or product competitor).

2. Submitting complain There are some factor influencing do a disgruntled customer will submit sigh or not, that is: a. Degree of importance of done consumption This matter relate to important degree of consumed product him and its price to consumer b. Level of customer satisfaction Progressively dissatisfy a customer, hence is ever greater possibility of customer submitted complain into society c. Obtained benefit If obtained benefit from forwarding of big sigh, hence ever greater also possibility of customer will do it. d. Knowledge and Experience This Matter cover the amount of previous purchasing, understanding of product, perception to ability as consumer and experience of previous complain.

3. Level of difficulty to get an indemnation This factor includes; cover required time, trouble to routine activity which run, and expense of required to submit sigh. If high difficulty storey; level, hence customer tend to will not submit sigh but spreader of the sigh to society.

4. Customer attitude to complain or sigh Customer behaving positive to forwarding of sigh usually often submit its sigh because sure benefit will be positive will accept.

Question 3 Way of to build a WOM: The Basic Model of Communication by Belch and Belch in Advertising and Promotion: An Integrated Marketing Communications Perspective, 2004. The major theoretical model that has been chosen is the Basic Model of Communication, which is shown in Figure under (Belch and Belch, 2004, p.139). This model is the most appropriate due to the fact that WOMC fit under its scope.

The Basic Model of Communication This model provides the basic model of communication where the source or sender encodes the information or message based on senders field of experience. Then message is sent through channel. After that, the message will be decoded by receiver based on receivers field of experience. The communication process after the receiver received and understood the message, he or she wills response and giving feedback to the source. At any process of communication noise would become the barrier and distort the process (Belch and Belch, 2004).

10

In order for the communication process to be effective, the message decoding process of the receiver must match the encoding of the sender (Belch and Belch, 2004, p.141). The basic model describes all forms of communication including traditional advertising and consumer-controlled advertising, which is WOMC. However, it is the differences between these two forms of promotion which are essential to the success of each. In terms of the basic communications model, there are certain areas of the actual process which are applicable to both WOMC and traditional advertising. These applicable pieces of the promotion process are the sender, the message, the channel, and the receiver. In addition, noise and fields of experience also influence the process. The communication process for WOMC is fundamentally different from traditional advertising. The most basic difference is in the sender. In the case of WOMC, the information begins with the agent of WOMC, who is the original sender. A message is encoded and then sent into channels for exposure to the recipients. However, once the recipients receive the message, the marketer is eliminated from the communications process. The receiver becomes the sender and diffuses information to many other consumers. The three key characteristics of the sender (credibility, attractiveness, and power) still apply, however they are applicable to the consumers as they send and receive the information amongst themselves. The most important part of the WOMC model is the sender. The message is delivered to the receiver by a friend or trusted source. (Belch and Belch, 2004, p.143) In the traditional advertising model, the marketer maintains control of the message at all times. This results in a consistent advertisement that is delivered to all consumers, no matter if they are or are not paying attention. However, in the WOMC (Amplified WOMC) approach, the agent of WOMC has control over the first diffusion of the message. (Belch and Belch, 2004, p.141-142) Instead, conversations form the channel in which the information is transmitted. The conversations are classified as personal channels, meaning that the receiver knows the person who is sending him the information (Belch and Belch, 2004, p.143). This distinct channel is the dominant difference between WOMC and other forms of promotion or advertising. Because the

11

channel is a conversation between two people, the brand advocation has no limits. Also, it breaks through the clutter more effectively because it is more difficult to ignore a brand advocation from someone with whom you are speaking. A sender can utilize a conversation (in the offline or online world) to send product information to a receiver. Upon decoding the information, the receiver can then become a sender and open another channel of communication with a new receiver. Usually in buzz marketing (WOMC) the receivers field of experience directly overlaps with the senders field of experience. This makes the problem of noise less applicable because it is easier for the receiver to pay attention to the senders message. However, there are significantly more elements in the receivers environment which can influence his interpretation of the message. In the case of word of mouth communications, a receiver can be influenced by the body language of the person with whom he is conversing. This is not likely to occur in traditional mass-media advertising. (Belch and Belch, 2004, p.95)

Word of Mouth Communication Model Theory by Chen (2006)

The conceptual model of effectiveness of WOMC spreading in educational services (The model was developed in WOMC research for Asian international students searching for Australian higher education services) The WOMC spreading effectiveness model explained the factors that could establish the positive WOMC spread effectively in educational services. The factors which are WOMC senders
12

attitude and willingness, interactive information delivery approach, the quality of WOMC message content, and accumulative contact intensity and numbers would lead to positive WOMC spreading effectively (Chen, 2006,).

13

Question 4 The two of example marketing WOM:

1. Michelin Michelin is a premium brand whose tires typically stop sooner, last longer and get better gas mileage. But Michelin had stagnating market share as consumers believe tires to be a commodity, a misperception reinforced by seemingly similar options and big price swings across brands. Michelin needed to reframe the conversation, build brand affinity and justify its price premium in order to get back on track. The program started by engaging 10,000 targeted consumers from BzzAgents community of highly influential consumers, specifically those concerned with tire safety, car enthusiasts and those on the cusp of a tire purchase. We designed this campaign to educate these consumers about tires, tire maintenance and its importance to automotive safety. Then we layered in information about specific Michelin initiatives and a new tire model launch. Campaign materials included:

A physical mailing that included educational literature, a tire pressure gauge and a tread depth indicator to get people thinking about tire safety and the brand

A campaign page on BzzAgent.com with weekly activities designed to spark UGC creation, drive traffic to Michelin web properties, and meet other brand objectives

Weekly drawings and contests to increase campaign participation and reward top performers

Objective: Increase Advocacy Within a week of launch the campaign had a significant impact on the amount of online buzz about Michelin. Participants created thousands of posts on Facebook, Twitter, and other social sites including:

Over 3,000 Facebook updates and peer-to-peer conversations


14

4,231 BzzReports of conversations 2,608 product reviews of Michelin tires 260+ photos and videos 100+ product reviews written on key influencer sites (tirerack.com,

consumerreports.com) Participants created videos which are available on YouTube and on the campaign homepage. Participants also took photos of themselves with the Michelin Man.The campaign is also responsible for driving 2,500 new likes to the Michelin Man Fan Page on Facebook within 2 weeks. (It had previously taken Michelin one year to get 5,000 fans). Without prompting, these new fans have posted comments and pictures on the Michelin page. There has also been noticeable lift in traffic to the Michelin site The overwhelmingly positive response to the campaign demonstrates that even mature brands with low-involvement products can amplify brand presence on the social web by targeting high-value consumers and providing them compelling brand experiences. 2. Philips The Sonicare Campaign drove over 1 million conversations and influenced 40,000 purchases. The Philips marketing team was looking for ways to advance the promotion of its Sonicare electric toothbrush. Knowing that sales were frequently driven by word of mouth, whether through recommendations from dentists or conversations with family and friends, they thought that supplementing their traditional media buy with a BzzAgent WOM campaign would be an effective way to continue to drive advocacy and sales for the brand. BzzAgent engaged 30,000 Agents across the US and provided them with a comprehensive BzzKit which included:

A Sonicare Essence toothbrush (a $90 value) Five $10 mail-in rebates for additional toothbrushes to give to others Online product information and suggestions on who and where to Bzz

Objective: Generate Mass Reach and Trial


15

Campaign generated total reach of 1.2 million consumers Virtually all Agents used the toothbrush during the campaign and 95% felt that Sonicare performance exceeded that of their old toothbrush

Objective: Increase Positive Opinions and Boost Consumer Advocacy

95% of Agents ended the campaign with a positive opinion of Sonicare nearly doubling pre-campaign levels

Net Promoter Score of 80 (more than 2 times the BzzAgent median) indicates strong consumer advocacy of the Sonicare product

Objective: Increase Sales Results and ROI

Both Agents and BzzRecipients reported high purchase and purchase intent of the Sonicare product, resulting in over 40,000 units sold

Based on sales analysis conducted by Philips, friend and family recommendations drove 18% more sales in 2006

This increase in sales resulted in an approximately 100% Return on Investment for the Sonicare BzzCampaign

16

Question 5 The reason of why customer more affect to WOM compared to by company promotion? There are three reasons people want to talk about your product or company. They like you or your product, they feel happy and proud to recommend you, and after they recommended it feel to be a part of a large family of products the same user. Word of Mouth that success must meet these three things. One of the marketing strategies which always become interesting phenomenon to be discussed by Word Mouth of or habit referred as with promotion of mouth to mouth. Some marketers have skeptics view and place in the background promotion a kind of this, because often times this promotion requires leaders opinion which is difficult to be met. Besides WOM tend to more is difficult controlled. Though WOM it is possible that more compared to effective advertisement. Some successful company use WOM is Jco Donut, Google or of You Tube and almost two per three from overall of sale that happened in America influenced by promotion of WOM either through direct or not, according to Kinsey in Mulyadi ( 2007). Study by Roper ASW also indicating that around 10 percentage of American resident have strength and can influence habit from 90 [gratuity/ %] of other party. While effectiveness of promotion of WOM have mounted and spring up equal to one semi times; rill meanly since year 1977 ( Mulyadi, 2007). Former research indicate that consumer satisfied will advise to 3 or 5 others about its experience ( Et al Heskett, 1997), while disgruntled consumer will advise to 10 until 11 people ( Harrison- Walker, 2001). This matter shows that consumer a more regular narrate dissatisfaction to a service or goods compared to its satisfaction. So that marketer requires paying attention negative WOM of its company which is on finally will influence company image. One among ten Americans tell a story to its nine others whereof which must buy, where place eat delicious, where better have the day off etcetera. Promotion most effective exactly mouth of word. Left nothing to be desired customer will become your product mouthpiece more effective and assure compared to any type advertisement. Impossible such satisfaction happened without prima service.

17

According to Ghozali (2006), not only audience of Indonesia avoiding television advertisement, but pursuant to researching into which is done to beholder of television in United States, expressed that responder which always avoid to display noted commercial advertisement. In Indonesia, usage of WOM more done by company of scale small, like restaurant, car showroom, doctor and others ( Mulyadi, 2007). From some research in Indonesia have been done by research about WOM at restaurant ( Baskoro, 2007), GPRS IM3 Smart future ( Righteous, 2003), College Of Private sector ( Djati and of Darmawan, 2004). Till now there is no research about WOM [at] industry of otomotif, so that in this research chosen car workshop as object research.

18

Question 6 Why customer hard to submit its sigh to company if them feel dissatisfaction?

Earnings of company come from customer. Your Company will not be long lived if you dont look after customer of you. In marketing and service of customer is often said that by customer, its blood of company. Conceiving our body without blood. So also with to company, your customer determine to take place life your company. Therefore ought you to comprehend customer of you. Unsuccessful companies, if searched by its cause are because they do not comprehend its customer. If you do not comprehend customer of you, last how do you serve and gratify customer of you. 1. Nothing to do Customer will not submit complain, but practical them will not buy or use again pertinent company service or product (because they switch to service or product competitor). 2. Submitting complain There are some factor influencing do a disgruntled customer will submit sigh or not, that is: a. Degree of importance of done consumption This matter relate to important degree of consumed product him and its price to consumer b. Level of customer satisfaction Progressively dissatisfy a customer, hence is ever greater possibility of customer submitted complain into society c. Obtained benefit If obtained benefit from forwarding of big sigh, hence ever greater also possibility of customer will do it. d. Knowledge and Experience This Matter cover the amount of previous purchasing, understanding of product, perception to ability as consumer and experience of previous complain.

19

3. Level of difficulty to get an indemnation This factor includes; cover required time, trouble to routine activity which run, and expense of required to submit sigh. If high difficulty storey; level, hence customer tend to will not submit sigh but spreader of the sigh to society. 4. Customer attitude to complain or sigh Customer behaving positive to forwarding of sigh usually often submit its sigh because sure benefit will be positive will accept.

20