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Word of Mouth Marketing

Word of Mouth Marketing

Have you ever recommended a product to a friend? Or maybe your family has recommended a product to you. Although you might not notice, you have been participating in word-of-mouth marketing.

Word-of-mouth marketing can be direct (e.g., you advise your friend to purchase a new product and ask your mom for a good dentist recommendation) or indirect (e.g., a friend tells you about the cool features of his new phone or a colleague casually mentions the delicious pasta at her favorite restaurant).

While word-of-mouth has been around for centuries, using it effectively to promote your brand is not easy. That said, there are some techniques you can use to maximize the impact of word-of-mouth communications. Read along to find out more.

Word-of-Mouth Marketing Definition

We are exposed to word-of-mouth marketing when we learn about a new product or brand through a friend, family, or our social networks. This information transfer can be organic (word-of-mouth) or encouraged by a company or brand (word-of-mouth marketing). Here are the complete definitions of both:

Word-of-mouth (WOM) is the organic transfer of information about a product or brand between a customer to another customer.

Word-of-mouth marketing is tactic companies use to encourage the communication of (preferably positive) information between customers.

However, most often, there is a thin line between organic word-of-mouth and word-of-mouth marketing. Since word-of-mouth often occurs when customers are satisfied with the product or service, which happens only after they have made a purchase.

Word-of-mouth is the result of a positive experience during the buyer journey.

Marketers spend millions of dollars on advertising products to raise brand awareness and communicate customer value. They also use various sales promotion tools and pricing strategies to encourage purchase. Through digital technologies, companies are also able to start conversations and build long-term relationships with customers. All these marketing activities leave an impact on the customers and can turn them into an enemy or an advocate for a brand. This eventually leads to negative or positive word-of-mouth.

Another thing to note is that word-of-mouth does not only include oral communication. It can also take place through e-mail, direct mails, phone calls, text messages, blogs, social media, and other websites.1

Types of Word of Mouth Marketing

There are four different types of word-of-mouth in marketing: positive (PWOM), negative (NWOM), traditional (TWOM), and electronic (EWOM). All these four types of word-of-mouth have different impacts on a company or brand.

Positive vs. negative word-of-mouth marketing

Let's first examine the differences and effects of positive and negative word-of-mouth:

Positive word-of-mouth (PWOM) is a positive sentiment towards a product or a brand. It occurs when a customer is satisfied with a product and recommends or champions it to others.

Negative word-of-mouth (NWOM) is the opposite - a negative sentiment towards a product or brand. It occurs when a customer is dissatisfied and thus criticizes or attacks the brand.

As a result, positive word-of-mouth may increase customers' purchase probability and attitude towards a brand, whereas negative word-of-mouth might decrease it.

It is important to note that some word-of-mouth may be neutral - neither positive nor negative.

Word-of-mouth is particularly important in service marketing, where a product cannot be physically tested, as it may reduce perceived risk.1

Imagine you have just moved to a new city and are looking for a new hairdresser. Knowing how well the new hairdresser styles your hair is impossible unless you personally test it. As a result, the perceived risk of going to that hairdresser is high as they might be terrible, and you value your hair a lot. However, suppose a friend recommends the hairdresser or you Google the hair salon to find thousands of positive reviews, your perception of risk decreases. In that case, you are more likely to opt for the hairdresser due to positive word-of-mouth.

But why do marketers adopt word-of-mouth tactics at all? According to East et al. (2021), there are four motives to engage in WOM:

  • Frequency and weight of purchase - Customers who purchase larger quantities of a product often are more likely to engage in word-of-mouth.

  • Personality - Certain personality traits like extraversion or agreeableness are more likely to lead to WOM distribution.

  • Brand attitudes - If a customer has a strong attitude toward a product or brand, they are more likely to spread word-of-mouth. Bear in mind that brand attitudes are not always positive. A customer with a strong negative attitude towards the brand is also more likely to engage in word-of-mouth (NWOM).

  • Brand recruitment - Customers who were recommended a particular product or brand by others through word-of-mouth are also more likely to recommend the brand to others through word-of-mouth (PWOM).

Through word-of-mouth marketing, marketers can create positive brand attitudes and strengthen brand relationships with customers. This will translate to more sales and profits for the company.

Positive vs. Negative WOM

In a study conducted by East, Hammond, and Wright (2007), the researchers concluded that more positive word-of-mouth is generated than negative.2 One of the explanations as to why this occurs could be that PWOM creates more utility. By reading and engaging in NWOM, customers gain less benefit as it does not help them make a choice. It helps them eliminate an option but does not help them choose between the remainder of the brands or products they are considering.

Traditional vs. Electronic Word-of-Mouth Marketing

Let's now also take a brief look at the traditional and electronic word of mouth:

Traditional word-of-mouth (TWOM) is word-of-mouth generated through oral communication.

Electronic word-of-mouth (EWOM) is word-of-mouth generated through electronic, often online, settings.

The widespread usage of digital tools means that companies need to pay more attention to electronic word-of-mouth. Brands should be present in online communities and provide consumers with relevant information about their brand and product value.3

Electronic word-of-mouth allows companies to explore consumer behavior and motivations. It also helps mitigate negative word-of-mouth and, if done right, can encourage a more positive information exchange experience. For example, companies can use EWOM to prompt meaningful conversations on social networks or collect customer feedback.

Both positive and negative EWOM can help companies to adjust and adapt their marketing strategies. Positive EWOM shows what they are doing well and should capitalize on, and negative EWOM points out areas that need improving. Overall, electronic platforms provide an overview of customer perceptions of a brand (compared to TWOM). How companies react to these perceptions and improve them will affect their profit returns in the long run.4

Benefits of Word of Mouth Marketing

Now that we understand what word-of-mouth marketing means let's examine some of its benefits. Why would companies attempt word-of-mouth? Here are several major benefits of initiating a word-of-mouth marketing campaign 1 :

  • Customer interest: Most consumers who spread word-of-mouth don't have any commercial interest in the company. Instead, they just want to share their positive experience with the brand (or negative reviews if the service is downright bad). Thus, word-of-mouth is the most authentic form of promotion. Investing in word-of-mouth marketing not only helps the company arouse people's interest but also builds brand authenticity.

  • Customer loyalty: Word-of-mouth marketing amplifies the brand message, which results in more brand loyalty. Brand loyalty can lead to more sales for the company as loyal customers are more likely to recommend the brand to their networks and leave positive reviews. Positive word-of-mouth can sometimes make people switch from a competitor to your brand.

  • Conversation: Word-of-mouth is an interactive form of marketing. It involves a dialogue between the two groups. In word-of-mouth marketing, the receiver often asks many questions about the brand to collect as much information as possible. This can improve brand awareness and help turn "strangers" into prospective customers.

  • Customer relationships: Word-of-mouth marketing is also an effective method for building customer relationships which leads to repeat purchases and more product recommendations.

Word-of-Mouth Marketing Disadvantages

That said, there are some disadvantages of word-of-mouth marketing that marketers should be aware of:

  • Implementation: Word-of-mouth strategies are difficult to execute as companies pursuing this strategy tend to be viewed as inauthentic in the eyes of customers. A subtle and genuine approach should be adopted for word-of-mouth marketing to succeed.

  • Targeting: Word-of-mouth marketing might not directly impact your target customers. This is because you can't control the audience who are exposed to word-of-mouth messages. A customer may talk about your product to a friend or family member who is not interested in the product or service that your company is selling. Thus, even if it's a positive message, it won't do your brand any good.

  • Feedback: It is challenging to collect feedback and measure the success of a word-of-mouth campaign, especially if traditional word-of-mouth is used.

  • Negative impact: Negative word-of-mouth can have a detrimental impact on brand perceptions. Dissatisfied customers (even when your company is not at fault) can spread negative word-of-mouth that deters potential customers from purchasing a product. NWOM also hampers the brand's revenues and existing customer relationships.

Word-of-Mouth Marketing Examples

So how can marketers use word-of-mouth to their advantage? What are some of the marketing techniques that encourage customers to speak about a product or brand? Let's take a look at some examples.

Word-of-mouth marketing: Viral marketing

Viral marketing is one of the methods to generate word-of-mouth communications. Viral marketing is effective at creating word-of-mouth due to the nature of the content being published. The nature of viral messages is often humorous or may involve a shock factor or call to action, leading consumers to spread the message to their friends or family, usually through a social network platform (e.g., Instagram or Facebook).

To learn more about this marketing technique, check out our explanation of Viral Marketing.

In 2019, Popeyes launched its new version of a chicken sandwich which customers immediately compared to competitor Chick-fil-A's chicken sandwich. This led to wide discussions on social media platforms like Twitter between customers about the similarities between the two sandwiches. The company also took to Twitter to encourage discussions with customers and debate the status of the sandwich. Due to the campaign's virality and the vast word-of-mouth surrounding it, the sandwich was sold out for two months.5

Word of mouth marketing Word of mouth marketing example StudySmarterFig. 2. Popeyes Louisiana Kitchen Example

Word of Mouth Marketing: Text Mining

Another example of how companies can use word-of-mouth in their marketing efforts is through text mining.

Text mining is a form of market research that aims to gather valuable information from unstructured text.

Text mining allows marketers to analyze a vast number of customer reviews and social media posts about their products or brand. Using text analysis methods, marketers can examine the impacts of word-of-mouth on their brand. It can also help them discover patterns and trends in customer wants and needs.

Word of Mouth Marketing - Key takeaways

  • Word-of-mouth (WOM) is the organic transfer of information about a product or brand between a customer to another customer.
  • Word-of-mouth marketing is tactic companies use to encourage the communication of (preferably positive) information between customers.
  • Positive word-of-mouth (PWOM) is a positive sentiment towards a product or a brand. It occurs when a customer is satisfied with a product and recommends or champions it to others. Negative word-of-mouth (NWOM) is the opposite.
  • Electronic word-of-mouth (EWOM) is word-of-mouth generated through electronic, often online, settings.
  • WOM marketing can increase customer loyalty, strengthen customer relationships, and can lead to higher revenues.
  • WOM marketing, however, is difficult to implement and target, challenging to measure, and NWOM may tarnish customer perceptions.

References

  1. East, Robert, Jaywant Singh, Malcolm Wright, and Marc Vanhuele. Consumer behaviour: Applications in marketing. Sage. 2021.
  2. East, Robert, Kathy Hammond, and Malcolm Wright. The relative incidence of positive and negative word of mouth: A multi-category study. International journal of research in marketing 24, no. 2 (2007): 175-184.
  3. Jalilvand, Mohammad Reza, Sharif Shekarchizadeh Esfahani, and Neda Samiei. Electronic word-of-mouth: Challenges and opportunities. Procedia Computer Science 3 (2011): 42-46.
  4. Huete-Alcocer, Nuria. A literature review of word of mouth and electronic word of mouth: Implications for consumer behavior. Frontiers in psychology 8 (2017): 1256.
  5. Kristen Baker. The Ultimate Guide to Viral Campaigns. 2022. https://blog.hubspot.com/marketing/viral-campaigns

Frequently Asked Questions about Word of Mouth Marketing

Word-of-mouth (WOM) is the organic transfer of information about a product or brand between a customer to another customer. Word-of-mouth marketing is a tactic companies use to encourage the communication of (preferably positive) information between customers. 

An example of word-of-mouth advertising can be observed through viral marketing. In 2019, Popeyes launched its new version of a chicken sandwich which customers immediately compared to competitor Chick-fil-A's chicken sandwich. This led to wide discussions on social media platforms like Twitter between customers about the similarities between the two sandwiches. Due to the virality of the campaign and the vast word-of-mouth surrounding it, the sandwich was sold out for two months.

Word-of-mouth is important in marketing as it can increase customer interest in a product, customer loyalty, and strengthen customer relationships. Word-of-mouth is more like a conversation; thus, it may come across as more authentic to customers.

The advantages of word-of-mouth include its ability to strengthen customer relationships, increase brand loyalty, start conversations with customers, and come across as more authentic than other promotional strategies. The disadvantages of word-of-mouth include its difficult implementation, lack of targeting, possible negative impact, and lack of adequate analysis possibilities. 

Word-of-mouth marketing is important as it can help shape customer attitudes towards a brand, encourage brand loyalty, and build long-term relationships between customers and brands. 

Final Word of Mouth Marketing Quiz

Question

__________ is the organic transfer of information about a product or brand between a customer to another customer. 

Show answer

Answer

word-of-mouth

Show question

Question

___________ is a tactic companies use to encourage the communication of (preferably positive) information between customers. 

Show answer

Answer

Word-of-mouth marketing

Show question

Question

According to consumer behavior, word-of-mouth often takes place due to __________.

Show answer

Answer

customer satisfaction

Show question

Question

Word-of-mouth only occurs through oral communication.

Show answer

Answer

False

Show question

Question

What are some of the channels through which word-of-mouth can take place?

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Answer

Although word-of-mouth can be received face-to-face, it can also take place through e-mail, mail, phone calls, text messages, blogs, social media, and other websites.

Show question

Question

____________ is a positive sentiment towards a product or a brand. It occurs when a customer is satisfied with a product and recommends or champions it to others. 

Show answer

Answer

Positive word-of-mouth (PWOM)

Show question

Question

___________ is a negative sentiment towards a product or brand. It occurs when a customer is dissatisfied and thus criticizes or attacks the brand. 

Show answer

Answer

Negative word-of-mouth (NWOM)

Show question

Question

________ may increase customers' purchase probability and attitude towards a brand, whereas _______ might decrease it. 

Show answer

Answer

PWOM, NWOM

Show question

Question

Word-of-mouth is particularly important in service marketing, where a product cannot be physically tested.

Show answer

Answer

True

Show question

Question

Customers who purchase larger quantities of a product often are less likely to engage in word-of-mouth.

Show answer

Answer

True

Show question

Question

Certain personality traits like ________ or agreeableness are more likely to lead to WOM distribution. 

Show answer

Answer

introversion

Show question

Question

If a customer has a strong attitude toward a product or brand, they are more likely to spread word-of-mouth.

Show answer

Answer

True

Show question

Question

Customers who were recommended a particular product or brand by others through word-of-mouth are also more likely to recommend the brand to others through word-of-mouth (PWOM). 

Show answer

Answer

True

Show question

Question

Overall, more _____ is generated.

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Answer

PWOM

Show question

Question

_________  is word-of-mouth generated through oral communication. 

Show answer

Answer

Traditional word-of-mouth (TWOM)

Show question

Question

__________ is word-of-mouth generated through electronic, often online, settings. 

Show answer

Answer

Electronic word-of-mouth (EWOM)

Show question

Question

What are the advantages of word-of-mouth strategies?

Show answer

Answer

The advantages of word-of-mouth include its ability to strengthen customer relationships, increase brand loyalty, start conversations with customers, and come across as more authentic than other promotional strategies

Show question

Question

What are the disadvantages of word-of-mouth?

Show answer

Answer

The disadvantages of word-of-mouth include its difficult implementation, lack of targeting, possible negative impact, and lack of adequate analysis possibilities. 

Show question

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