Word of Mouth Communication

Introduction

Word-of-Mouth is somewhat of a phenomenon in marketing because it cannot be accurately predicted. However it can has major effects on sales. This paper will discuss what this phenomenon is, why people engage in it, its effects on advertising, and a few forms of online word-of-mouth communication.

What is Word-of-Mouth?

Word-of-Mouth (WOM) is person-to-person communication regarding a brand, product, or service (Lam and Mizerski). It is a powerful form of marketing communication that is sometimes undervalued. It is how consumers express their satisfaction, more than likely their dissatisfaction with a product. Complaining is a form of negative WOM and major way that people express how dissatisfied they are with a brand, product, or service (Smith and Vogt, 217). WOM has a significant influence on the product awareness, expectations, perceptions, attitudes, and purchase behaviors of consumers (Lam and Mizerski). According to Smith and Vogt, the markets that are affected most by WOM are movies, automobiles, travel and vacation destinations, and professional services.

Why Engage in Word-of-Mouth?

People engage in WOM for several reasons. Lam and Mizerski give four main motivating factors for engaging in WOM: decision support, decision justification, social status, and social power. An example of decision support and justification would be when after purchasing a product, a family member who has used the same product commends your purchases and comments on their experiences with the product. Your purchase has been supported and justified by that family member. Social status and power as motivating factors are evident in car purchases. People often talk about how people who drive BMWs and Mercedes-Benzes convey that they’re of high status. So after hearing people talk about how people with those types of cars are seen as top-class, consumers who can afford to buy one, and even those who can’t afford to buy one, will go out and buy one just to portray that status.

People often take part in WOM out of convenience. According to Lam and Mizerski, consumers aren’t able to process all the information that is available to them about various products or services, so WOM reduces the amount of information that they have to process before making a decision.

Word-of-mouth has a strong effect when a product or service is more risky or uncertain and if the involvement of the consumer will be high (Hogan, Lemon, and Libai). This is especially true in the service industry. “Forty-percent of American consumers seek the advice of family and friends when shopping for services such as doctors, lawyers, and auto mechanics,” (Hogan, Lemon, and Libai, 271). Hairdressers and barbers could also be added to that category.

The Effects of Word-of-Mouth on Advertising

Word-of-Mouth has positive and negative effects on advertising. WOM can complement and even extend the effects of advertising (Hogan, Lemon, and Libai). This can be seen in the movie industry. Studios spend millions in promoting a movie, and if the movie is good, people who saw it will tell others and reference the movie and the previews. The reverse is true too. If the movie is bad, people will tell their friends and say that they only good parts were in the previews.

According to Smith and Vogt, negative WOM reduces the credibility of advertising, and affects brand attitudes and purchase intentions (217). This is true in the auto industry. Ford Motor Company advertises its trucks as being tough and dependable. However someone whose Ford truck broke down frequently will tell others about their problems with Ford. That person’s experience changes the others’ attitude toward Ford. They’ll start to think that Ford trucks aren’t dependable, so they won’t buy one.

World Wide WOM: Online Word-of-Mouth

The Internet allows people to exchange