Word of mouth (WOM) is one of the earliest and most primitive ways of communication and its importance is widely acknowledged. Research indicates that WOM communication has a significant effect on consumer decision-making (Bayus 1985; Herr, Kardes et al. 1991; Duan, Gu et al. 2008; Court, Elzinga et al. 2009). Specifically, Bughin, Doogan and Vetvik (2010) indicate that 20 to 50 percent of all purchasing decisions are influenced by WOM and that the influence
is greater when consumers are faced with an extended problem-solving situation. WOM can affect the overall consumer beliefs, preferences and habits for either a particular product category or for the selection of one brand over another (East, Hammond et al. 2008).
Originally WOM was used to describe oral communication, but now includes other types of human communication, such as e-mail and text messaging. With the increasing use of the Internet, WOM has become even more powerful. Consumers with tools such as Facebook, YouTube, MySpace, etc. can disseminate information easier, faster and on a much larger scale (Dellarocas 2003; Duan, Gu et al. 2008).
The importance of WOM appears to be higher in the marketing of services. In services, the decision making process is more complicated. Consumers have to evaluate both tangible and intangible dimensions (Gronroos 1984), so in order to reduce perceived risk and uncertainty, consumers rely more on WOM (Murray 1991). In the following sections, we will present a conceptual basis for understanding and measuring WOM along with the factors that trigger WOM.
3.5.1 Defining and Measuring Word-of-Mouth
There is agreement amongst researchers that WOM is an unpaid form of interpersonal communication. The American Marketing Association defines it as “sharing information about a product, promotion, etc. between a consumer and a friend, colleague or other acquaintance”. In this study, we define WOM
fundamentally using the perspective of East, Hammond and Lomax (2008). They defined WOM as an “informal advice passed between consumers. It is usually interactive, swift, and lacking in commercial bias”.
As we can see form the above definitions, WOM is used to describe advice from one consumer to another. So, WOM can be expressed as being either positive (PWOM) or negative (NWOM). Research indicates that for those brands that consumers are familiar with, PWOM is more common since it occurs approximately three times as often as NWOM and has a greater impact in the purchase decision than NWOM (East, Hammond et al. 2007; East and Uncles 2008). In the study conducted by East, Hammond and Wright (2007), it was found that respondents are more likely to provide PWOM for their main brand. Specifically, from the total WOM for their main brand 80% was PWOM and 20% NWOM. Furthermore, researchers consider PWOM as an indication of commitment and thus it is often used to measure brand loyalty (Zeithaml, Berry et al. 1996; Court, Elzinga et al. 2009).
The literature review revealed that the methods for measuring WOM could be based on recall or on introspection/intention. Specifically, there are four ways for measuring WOM: (a) asking respondents to recall the number of times they received a recommendation or advice from someone, (b) asking respondents to recall the number of times they gave a positive or a negative recommendation, (c) asking respondents to identify their intention to recommend or not to others, and (d) using multiple-item measures (East, Hammond et al. 2007). A major drawback of the recall method is that respondents might not be able to recall the
precise number of times they either received or gave a recommendation. Additionally, measurement might be biased towards PWOM (Mangold and Miller 1999; East, Hammond et al. 2007). East et al. (2008) found that respondents reporting on hypothetical WOM impact gave results that were broadly consistent with recalled impact.
In this study, the conditional intention to operationalize WOM is used. The WOM concept is well defined and easy to understand so a single-item measure is appropriate (East and Uncles 2008). That is, WOM is measured by asking respondents their intention to recommend the specific retailer to others. Since this measurement is not dependent on recall, it will not be affected by measurement bias (East, Hammond et al. 2007).
3.5.2 Determinants of Word-of-Mouth
The literature review revealed several factors that determine the intensity of WOM, its direction (positive or negative) as well as its impact. These are the perceptions of the consumption experience, the environment, the sender, the message, and the marketing activities (Bone 1992; East, Hammond et al. 2008; Bughin, Doogan et al. 2010).
The perceptions of the consumption experience mainly refer to such factors as satisfaction, perceived service quality, perceived novelty and trust. In this case, WOM is considered as an outcome of the consumption process, based on which consumers form their perceptions and therefore the corresponding direction of WOM. Many researchers consider customer satisfaction as the main
determinant of WOM. They declare that PWOM is stimulated by satisfaction and NWOM by dissatisfaction (Richins 1983; Zeithaml, Berry et al. 1996; Ranaweera and Prabhu 2003). According to Jones and Sasser (1995), customers at both ends of the satisfaction scale tend to have intense feelings and they tend to tell others; those who have strong positive feelings are the “apostles” while those with strong negative feelings are the “terrorists”. As far as perceived service
quality is concerned we find a positive and significant relationship between customers’ perceived service quality and their willingness to recommend the
company or the brand (Parasuraman, Zeithaml et al. 1988; Boulding, Kalra et al. 1993). Trust has also been found to determine WOM mostly through satisfaction (Ranaweera and Prabhu 2003). Furthermore, if the consumption experience is perceived as novel, consumers are more likely to allocate more attention and time, and thus become more susceptible to WOM practices (Bone 1992). Overall perception factors determine the intensity and the direction of WOM.
The power of the message that is transmitted through WOM and its impact are determined by: the environment under which the message is passed, the relationship between the sender and the receiver, and the message itself. Messages passed within small groups have a higher impact. This is possibly due to the strength of the relationships that can be developed within small groups. Also, the receiver must trust the sender: the source of the message must be trusted in order to be influential. Furthermore, the strength of the message and the way it is expressed might also affect the impact of WOM. The content of the message must address important product or service features for the receiver to
pay attention. For example, if the WOM message is about the receiver’s main
brand, PWOM is more acceptable than NWOM (Bone 1992; East, Hammond et al. 2008; Bughin, Doogan et al. 2010).
Marketing efforts can also determine WOM by stimulating PWOM or hindering NWOM. Other forms of communication, such as advertising and personal selling, can stimulate PWOM by triggering the need for more information or by encouraging existing customers to recommend the product or service (Bayus 1985).
The importance of WOM to the integrated marketing communications program as well as to the overall marketing program is undeniable. Consequently in managing WOM, it is essential for practitioners to understand the factors that initiate and trigger WOM, to enable them to raise the effectiveness and efficiency of their communication programs.