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Word-of-mouth marketing

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Word-of-mouth marketing

Word-of-mouth marketing (WOMM, WOM marketing), also called word of mouth advertising, differs from naturally occurring WOM, in that it is actively influenced or encouraged by organisations (e.g. 'seeding' a message in a network, rewarding regular consumers to engage in WOM, employing WOM 'agents'). While it is difficult to truly control WOM, research [1] has shown that there are three generic avenues to 'manage' WOM for the purpose of WOMM: 1) Build a strong WOM foundation (e.g. sufficient levels of satisfaction, trust and commitment), 2) Indirect WOMM management which implies that managers only have a moderate amount of control (e.g. controversial advertising, teaser campaigns, customer membership clubs), 3) Direct WOMM management, which has higher levels of control (e.g. paid WOM 'agents', "friend get friend" schemes). Proconsumer WOM has been suggested as a counterweight to commercially motivated word of mouth.[2]

Contents

  • History 1
  • Concepts 2
    • Buzz 2.1
    • Viral effects 2.2
    • Analyzing WOM 2.3
  • See also 3
  • References 4

History

George Silverman, a psychologist, pioneered word-of-mouth marketing when he created what he called "teleconferenced peer influence groups" in order to engage physicians in dialogue about new pharmaceutical products. Silverman noticed an interesting phenomenon while conducting focus groups with physicians in the early 1970s. "One or two physicians who were having good experiences with a drug would sway an entire group of skeptics. They would even sway a dissatisfied group of ex-prescribers who had had negative experiences!"[3]

With the emergence of Web 2.0, many web start-ups like Facebook, YouTube, MySpace, and Digg have used buzz marketing by merging it with the social networks that they have developed. With the increasing use of the Internet as a research and communications platform, word of mouth has become an even more powerful and useful resource for consumers and marketers.

In October 2005, the advertising watchdog group Commercial Alert petitioned the United States FTC to issue guidelines requiring paid word-of-mouth marketers to disclose their relationship and related compensation with the company whose product they are marketing.[4] The United States FTC stated that it would investigate situations in which the relationship between the word-of-mouth marketer of a product and the seller is not revealed and could influence the endorsement. The FTC stated that it would pursue violators on a case-by-case basis. Consequences for violators may include cease-and-desist orders, fines or civil penalties.[5]

The Word of Mouth Marketing Association, a US American trade group that represents hundreds of companies, has adopted an ethics code stating that manufacturers should not pay cash to consumers in return for recommendations or endorsements.[6]

Research firm PQ Media estimated that in 2008, companies spent $1.54 billion on word-of-mouth marketing. While spending on traditional advertising channels was slowing, spending on word-of-mouth marketing grew 14.2 percent in 2008, 30 percent of that for food and drink brands.[7]

Word of mouth marketing today is both online and through face-to-face interaction. The Ehrenberg-Bass Institute for Marketing Science has shown that to achieve growth, brands must create word of mouth beyond core fan groups - meaning marketers should not focus solely on communities such as Facebook. According to Deloite further research has shown that 'most advocacy takes place offline' - instead it happens in person. According to the Journal of Advertising Research, 75% of all consumer conversations about brands happen face-to-face, 15% happen over the phone and just 10% online. On the other hand, some see social media interaction as being inextricably tied to word of mouth marketing [8]

Concepts

Buzz

Marketing buzz or simply "buzz" is a term used in word-of-mouth marketing—the interaction of consumers and users of a product or service serve to amplify the original marketing message.[9] Some describe buzz as a form of hype among consumers,[10] a vague but positive association, excitement, or anticipation about a product or service. Positive "buzz" is often a goal of viral marketing, public relations, and of advertising on Web 2.0 media. The term refers both to the execution of the marketing technique, and the resulting goodwill that is created. Examples of products with strong marketing buzz upon introduction were Harry Potter, the Volkswagen New Beetle, Pokémon, Beanie Babies, and the Blair Witch Project.[10]

Viral effects

Viral marketing and viral advertising are buzzwords referring to marketing techniques that use pre-existing social networks to produce increases in brand awareness or to achieve other marketing objectives (such as product sales) through self-replicating viral processes, analogous to the spread of virus or computer viruses. It can be word-of-mouth delivered or enhanced by the network effects of the Internet.[11] Viral promotions may take the form of video clips, interactive Flash games, advergames, ebooks, brandable software, images, or even text messages. The goal of marketers interested in creating successful viral marketing programs is to identify individuals with high Social Networking Potential (SNP) — and have a high probability of being taken by another competitor — and create viral messages that appeal to this segment of the population. The term "viral marketing" has also been used pejoratively to refer to stealth marketing campaigns—the unscrupulous use of astroturfing on-line combined with undermarket advertising in shopping centers to create the impression of spontaneous word-of-mouth enthusiasm.[12]

Analyzing WOM

Consumers may promote brands by word-of-mouth due to social, functional, and emotional factors.[13] Research has identified thirteen brand characteristics that stimulate WOM, namely: [14]

  1. age of the brand in the marketplace
  2. type of good
  3. complexity
  4. knowledge about a brand
  5. differentiation
  6. relevance of a brand to a broad audience
  7. quality - esteem given to a brand
  8. premium
  9. visibility
  10. excitement
  11. satisfaction
  12. perceived risk
  13. involvement

This research also found that while social and functional drivers are the most important for promotion via WOM online, the emotional driver predominates offline.

See also

References

  1. ^
  2. ^
  3. ^ http://www.thefreelibrary.com/The+history+of+word+of+mouth+marketing.-a0134908667
  4. ^
  5. ^
  6. ^
  7. ^ http://www.brandweek.com/bw/content_display/news-and-features/direct/e3ida92fc8ee6e8266300bfc3a21f882935
  8. ^
  9. ^
  10. ^ a b
  11. ^ June 23, 2005, 2005
  12. ^ May 8, 2007
  13. ^
  14. ^
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