Mary the Queen College Quezon City

“A Study on Relationship between Advertising, Word of Mouth and Experiential

Perspective with Respect to Purchase Intent”

For Marketing Research Presenting

the Faculty of Business Administration

Submitted To:

Ursua, Djonito

Submitted By:

Cañete, Kristine Joy P.

Cipriano, Daryl Bruce S.
Milos, Merly Mei A.
Abstract

Title: “A Study on Relationship between Advertising, Word of Mouth and

Experiential Perspective with Respect to Purchase Intent”

Research: Cañete, Kristine Joy P.

Cipriano, Daryl Bruce S.

Milos, Merly Mei A.

Course: Bachelor of Science in Business Administration Major in

Marketing Management

Year: 2022

Adviser: Dr. Djonito Ursua

CHAPTER 1

Introduction

Restaurants with limited promotion budgets depend mostly on positive word-

of-mouth (PWOM). PWOM seems particularly important to the marketing of

services (Mangold et al. 1999). This is because services are experiential in

nature and difficult to evaluate before purchase (Wirtz and Chew, 2002). In the

restaurant context there is little research, with the notable exception of a paper
presented by Babin et al. (2005), which explores word-of-mouth (WOM) in a

survey of restaurant patrons in South Korea.

Many marketers would consider positive word-of-mouth (WOM) as

perhaps one of the oldest forms of marketing communication, whether from the

vendor (or representative), from experts or from social acquaintances including

friends and family. In many circumstances, it may also be one of the most

powerful and particularly so if the provider of WOM is someone known and

trusted (family, social acquaintances). Like any form of communication, the value

of WOM will vary across product, market and organizational contexts, but might

be expected to be most powerful in the presence of products which have a

predominance of experience and credentials and for products for which the

perceived risk associated with purchase is high. Not surprisingly then, WOM has

received particular attention from a services perspective, but the research to date

has been dominated by a customer focus. The majority of researchers have

focused either on why some individuals provide WOM and why and how others

use it. Because WOM is formally outside the control of the product provider,

there have been few attempts to examine the role of WOM (whether from

customers or any other group) within marketing strategies. Building on and

extending the work of Helm and Schlei, (1988), this paper aims to explore the

relationship between product, market and organizational characteristics and the

role of WOM within an organization’s marketing strategy.

 Owing to this paucity of research, practitioners rely on PWOM

investigations in other service environments or the advice of expert consultants.

This paper will attempt to contribute in filling this research gap by examining two

practical issues related to PWOM in restaurants. The first one explores what

aspects of the meal experience are significant for PWOM. The second one

concentrates on specific tactics to encourage PWOM.

This examination includes but is not restricted to consumer referral

campaigns. Furthermore, while recognizing the potential importance of informal

WOM which might originate from present or past employees, the current study

focuses only on customer generated WOM. Given their specific characteristics,

financial services were selected as the context for empirical work and data were

collected in India. The Indian financial services sector is undergoing a process of

liberalization and is characterized by a mix of public and private organizations,

indigenous firms and overseas entrants. Like many western financial services

sectors, it is highly competitive but the developing country environment and the

growth potential within the sector provide an interesting context in which to study

word-of-mouth.

Background of the Study

The term WOM is used to describe verbal communications (either positive or

negative) of this network to aid in their purchasing processes. This behavior

highlights that the sharing of consumer-to-consumer experiences is essential to

the contemporary purchase decision-making journey. It is this journey from

novice to expert consumer which drives the cycle of influence of e-WOM

communications. Peer-to-peer e-WOM is supported through numerous online

platforms where consumers converge for topical, commercial, or social purposes.

One type of such platform is the social networking site (SNS). (Facebook and

Google+ are well known SNS examples). Not surprisingly, as customers flocked

to these sites, creating profiles, interacting with “friends” and sharing updates,

brands reacted in the hope of developing engagement relationships with their

customers. The marketers expect that through this heightened engagement,

customers will share branded information among their online interpersonal

networks, exposing a brand to a vast new network of prospective customers and,

thereby, significantly expanding the reach of the brand. While other online

consumer forums—for example, discussion boards or review Websites—allow

contributors to post anonymously as unknown avatars, SNS encourage users to

use their own identities (i.e., Google Real User Policy); thus SNS-based

connections primarily are known to the user through prior offline relationships

(Chatterjee, 2011). For many users SNS connections simply replicate one’s

offline friendship links in an online world (Godes and Mayzlin, 2004). This leads

to the enhanced credibility of the e-WOM messages shared through SNS as the

receivers of such communication are able to weigh the credibility of known

sources and their levels of expertise.

 Regardless of the precautions set forth to ensure proper service delivery,

even firms that typically display exceptional service are prone to some degree of

service failure. Service failures may refer to some consumer-perceived

breakdown in a firm’s system (e.g., flight delays, underprepared food, incorrect

account balances, etc.). These failures can prove extremely costly for firms, as

customers often switch providers after such experiences (Folkes, 1984; Folkes

and Kotsos, 1986). Given that it costs up to five times as much to recruit new

customers than it does to keep current customers happy (Hart et al., 1990),

customer retention becomes critical for many firms. One method of enhancing a

firm’s customer retention involves properly responding to service failures

(Webster and Sundaram,1998). However, despite the cost and profitability

benefits of retaining current customers, very little research has been conducted

on the topic of recovering from service failures (Kelley and Davis, 1994; Smith et

al., 1998). Such attempts by firms to rectify some consumer-perceived service

failure (e.g., faulty service, discourteous employees, etc.) are often termed

‘‘service recoveries.’’

The purpose of this paper is to examine the effects of different levels of

service recovery on consumer perceptions of satisfaction, purchase intentions,

and positive WOM. The paper first reviews the literature that provides the

hypotheses for the research. Then, two studies, one an experiment and the other

a field study, are conducted to test the hypotheses. The results are subsequently

presented and a discussion with implications is also presented.

Statement of the Problem

This study intends to investigate the relationship between purchase intention and

advertising, word-of-mouth, and experiential perspectives. Specifically, it intends

to answer the following questions:

1.) What is the demographic profile of the respondents?

1.1 Age

1.2 Gender

1.3 Religion

1.4 Marital Status

1.5 Income

1.6. Employment

2.) What is the relationship of advertising about word of mouth?

2.1. Audience Impact

2.2. Customer Attraction

2.3. Brand Reputation

3.) What is the relationship of Advertising,Word of Mouth an

Experimental Perspective with respect to purchase item?

4.) What is the Objective of word of mouth to boost sales, promote

products credibility and foster customer loyalty?
The following hypotheses will be tested in the study:

Ho (1) there is a significant difference in the relationship of advertising and WON.

Ho (2) there is no significant difference in the relationship of WOM and

Experiential Perspective with Respect to Purchase Intent in terms of

Income,Reliability,and Appearance.

The success of your company on establishing client reliability in your brand. This

increases their self-assurance when they do business with you.

People buy from people they like. Nothing you do will ever shake the trust that

has been bestowed upon many satisfied customers. What they say is what

people believe.

Employees can also support this marketing trend by talking about your

leadership style. Treat them with respect and righteousness as valued members

of your team,demonstrating their unique ability to get things done.

A major advantage of word of mouth marketing is that it can drive traffic to your

business and help you grow faster. This depends on the activity of the

customer,but at the shortest they will complete it.

Significance of the Study

The Consumers ' daily conversations reveal their level of interest in a

company's goods or services.

The Advertisement or promotion brought on by positive client experiences,

which frequently go above and beyond what they had anticipated is very helpful

to make the company acknowledge the quality of their service.

The Company promotes word-of-mouth advertising by exceeding

customer expectations with a product, offering superior customer service, and

supplying consumers with insider knowledge.

Scope and Delimitations

The study aims for the different views and sentiments through the response

of the participants. These views and sentiments could be advantageous or

disadvantageous towards Entrepreneurs or Consumers. The researchers would

gather credible data through questionnaires, physical or electronic surveys and

evaluate the center of the study with the data gathered. The study focuses on

selected small business establishments on their approach towards attracting the

potential market. The researchers will conduct the survey to different service

providers and product sellers on the type of approach entrepreneurs take to

attract the potential market. The researcher would be able to identify the

significant details as understanding the trends towards the potential market and
the response of the entrepreneurs decision on selecting the design of

advertising. The researchers had decided on the study being relevant among

beginning and small business establishments but not among conglomerates or

organizations, also the respondents with businesses would be studied within the

area of NCR.

Definition and Terms

Avatars - A graphical representation of a user or the user's character or persona.

Consumer-Perceived - Opinions, feelings, and beliefs customers have about

your brand.

Contemporary - Belonging to or occurring in the present.

Experiential - Involving or based on experience and observation.

Entrants - A person or group that enters, joins, or takes part in something.

E-WOM - consumer-generated, consumption-related communication that

employs digital tools and is directed primarily to other consumers.

Interpersonal Networks - all connections in which an individual has a direct

relationship.

Marketing Communication - the messages and media that marketers use to

communicate with target markets.

Paucity - the presence of something only in small or insufficient quantities or

amounts; scarcity.

Rectify - Put right; correct.

Word-Of-Mouth - Spoken language; informal or unofficial discourse.