Word-of-mouth Communication

Literature Review Sample- Steve Alvarado

 

Companies heavily rely on advertisements to promote their products. An organization may spend millions of dollars to promote features of one or more of their products. Advertisements can make or break a product. But advertising is not the only method that can help businesses effectively sell their products to customers. Word-of-mouth dissemination of positive and negative information among potential customers can also lead to a dramatic increase or decrease in product sales. A review of the literature on word-of-mouth communication exposes three fundamental concerns of researchers who currently investigate this phenomenon: 1) the frequency and types of word-of-mouth behavior, 2) the effects of word-of-mouth behavior on product evaluation and 3) the impact of word-of-mouth information on social relationships. All of the articles reviewed link word-of-mouth communication to company product assessments by customers.

 

First, in a study by Feick, Higie and Price (1987), the researchers investigate the frequency with which companies furnish information that is significant to customersí judgements of retailers as expressed to other customers. The researchers are also interested in finding any distinctions in frequency in the type of word-of-mouth information provided by different kinds of businesses. Prior research had shown that customers discuss some salient features (like product availability, staff friendliness, etc.) as well as certain types of retailers (like department stores, grocery stores, etc.) more than others.

 

To obtain data, the researchers conducted telephone interviews with one hundred fifty residents of a metropolitan county in the northeast area of the United States. The results indicated that there are certain characteristics of retailers including product availability that are more likely to be circulated by customers. The study also reports that, contrary to previous findings, there is not a variance of discussion of the types of retailers. Feick, Higie and Price (1987) also found that the class of customers described as "marker mavens" (individuals who have information about numerous products and locations and that motivate dialogue with other customers) voluntarily divulge more information about retailers than do other customers. The researchers pose methods for retailers to propagate information to "market mavens" (like sending free samples of products).

 

Next, Giese and Spangenberg (1997) are less interested in the frequency and types of word-of-mouth communication and, instead, concentrate on the effects of word-of-mouth behavior on product evaluation. Previous research had illustrated that negative information may or may not give potential customers more familiarity with product brands but does indeed sabotage the image of the product for the individuals who are already cognizant of the product. Giese and Spangenberg suggest four hypotheses related to these findings. In order to test the hypotheses, the researchers conduct and experiment using undergraduate students attending an introductory marketing course at a large Midwestern university. The students were asked to view a video and decide if the person making recommendations of a product on the video was credible. The researchers found the most fascinating aspects of the study to be the occurrence of negative word-of-mouth lessening familiarity with the product instead of increasing it. Negative word-of-mouth information is apparently more influential on customers who are already familiar and involved with a product. Conversely, the researchers found that positive information does not enhance familiarity with a product.

 

Herr, Karders and Kim (1997) seemed to find similar results related to word-of-mouth information and product evaluation. Among other things, they found that negative word-of-mouth information does indeed decrease familiarity with a product. Their research concentrates on the method in which the message is delivered (vividly vs. pallidly) and the type of information that is given (anecdotal vs. attribute information). The researchers present three hypotheses that extend over two experiments. In the first experiment, eighty-four college undergraduates were used to determine if word-of-mouth information is more potent than pallid printed information. Information about a particular item (in this case a computer) was presented to the undergraduates through word-of-mouth and print. The results indicated that word-of-mouth communication is more potent and more important in consumer judgement of a product than less vivid printed information.

 

In the second experiment, Herr, Kardes and Kim (1997) used one hundred twenty college undergraduates to find if word-of-mouth communication can effect product judgement if previous judgement is available. The researchers were also interested in finding if vivid word-of-mouth communications effect product judgements if negative judgements were available. The subjects were given pervious information about a product (in this case a car). Afterwards, a confederate was put in with student groups to manipulate the subjects. The researchers found that a vivid word-of-mouth communication has a reduced effect on product assessment when the consumer already has a negative opinion of a product. The researchers claim that consumers are likely to trust their own opinions more than they trust the opinions of others. Still, it is concluded that word-of-mouth communication has a strong impact on product judgement because it is accessible and vivid.

 

The last two articles discuss the social impact of word-of-mouth communication. Brown and Reingen (1987) believe that previous research on word-of-mouth communication did not effectively look at the impact on dyads and groups. Previous research failed to determine how word-of-mouth starts with the individual and ends up aggregating to large groups. The researchers study the role of word-of-mouth communication in the interpersonal process and discover how this is intertwined in the macro and micro word-of-mouth process. By examining and interviewing a population of sixty-seven students of piano teachers, the researchers tried to find all referral sources for the studentsí piano teachers. By finding this information, the researchers could then find data to support their hypotheses. At the end of the study they found that ties between consumers (piano students) are important in explaining how dyadic communication forms large scale aggregates. Strong ties between consumers were found to play an important role in consumer attitudes.

 

In the last article, Ellison and Fudenburg (1995) study how word-of-mouth communication summarizes information for individuals. The two researchers focus on how word-of-mouth creates "conformity and "diversity." They divide consumers into two groups- "conformity" and "diversity." They test whether word-of-mouth communication supports their positioning. They found that when consumers receive more detailed word-of-mouth information they display more diversity than when they receive limited and /or general information. The researchers used textural analysis to support their hypotheses.

 

 

In summary, word-of-mouth not only plays an important role in the evaluation of products but also plays an important role in society as well. In the first article the types and frequencies of word-of-mouth communication were researched shedding light on what is discussed and who gets identified as "market mavens." In the next two articles, word-of-mouth and product assessment is addressed and the idea that negative information can lessen product familiarity is highlighted. In the last two articles we see that word-of-mouth communication is part of a social process.

 

Disseminating information through word-of-mouth communication is one of the most effective mediums for relaying important product and company information. For many years it has been largely ignored by companies and retailers. Recently, many companies have found its effectiveness through studies similar to the five listed in this literature review. Word-of-mouth has been effecting people and organizations for many years. As its effectiveness becomes more clearly understood, it will be managed to effect many more.