Free Essay About Marketing
The Effects of Negative Word of Mouth towards Consumer Purchase Decision
In the words of McKenna; “Forget about market surveys and analyst reports. Word of mouth is probably the most powerful form of communication in the business world. It can either hurt a company’s reputation, or give it a boost in the market” (McKenna). The effect of negative word of mouth towards consumer purchase decision assumes significance in the context of how consumers react to word-of-mouth communication when deciding on buying something. While numerous researchers have studied the effect of word-of-mouth on consumer behaviour, there are still some contradictions on how negative word-of-mouth has on consumer’s purchasing behavior. By understanding a consumer’s purchasing behavior, organizations can improve their product marketability considerably, and word-of-mouth has contributed immensely to a consumer’s buying behavior. Consumers rely on word-of-mouth to make purchase decisions, and the importance of word-of-mouth is recognized as “playing a of the definitive role in shaping consumers’ attitudes and purchase behavior” (Sundaram and Webster)
The effect of negative word of mouth has caused enormous embarrassment for manufacturers and suppliers, and Laczniak, DeCarlo and Ramaswami (2001) defines negative word of mouth as “interpersonal communication among consumer’s concerning a marketing organization’s product that denigrates the object of the communication.” It is because of this that organizations recognize the influence of word-of-mouth in justifying their expenditure on complaint handling, customer retention, and service recovery (Cheng). It might come as a surprise, but more than one third of all word-of-mouth communication about a product or service is negative in nature, and evidence indicates that it usually is given higher priority and assigned a greater weight in decision making (Engel, Kollat and Blackwell).
When one considers the factors that influences a consumer’s purchasing behavior, the common factors that come to mind are brand, publicity, and referrals. There are ways a consumer can be influenced, and some of these include cultural influences; where consumers are influenced by their parents, brothers, sisters and other family members, personal references; where they are influenced by friends or colleagues who can directly influence their choice of purchase. Then, there is also the economical factor, where a consumer’s job and income can play a dominant role in what to buy; media publicity, where brand awareness and resonance is created, and finally, a consumer’s social status, where parents can influence their children. Most of the consumer’s who have the capacity and capability to purchase on their own without having to depend on others for money are the working class. Those in their twenties and thirties are the active buyers, and they belong to the earning group. They can take independent decisions on what they want to buy and when they want to buy. However, because they work with others in an office, there is a strong possibility that they will be influenced by someone close to them. Therefore, advertisement of a product or service doesn’t necessarily have to influence that consumer. While an advertisement may have given the consumer an idea of what he or she wants and the brand that he or she craves for, they do inadvertently turn to their best friend or colleague for advice. This is where word-of-mouth assumes significance. Whatever the friend or colleague says about a particular product or service may not be correct, but it does get that consumer thinking. If that friend on the other hand said that the particular product that the consumer was interested in buying is unreliable or is far too costly for its worth, it immediately has an effect on the consumer. The negative word-of-mouth from the friend was more than enough to damage a possible purchase.
Managers must understand that when consumers talk about a product or service, it not only affects their purchase behavior, but also influence their evaluation of the product in question. Therefore, word-of-mouth must be viewed by managers as a powerful tool that can play a positive role in attracting consumers to them (Bone). Seeking product information and advice tend to be most widely used consumer strategy for reducing risk. Although most marketing managers believe that word-of-mouth communication is extremely effective, one problem that they sometime overlook is the fact that informal communication can also be difficult to control. Negative comment frequently in the form of rumors that are untrue can sweep through the market place to damage the reputation of a brand. There is a general awareness of the positive influence persuasive word-of-mouth has on consumers, but at the same time, marketers are worried of the catastrophic effect negative word-of-mouth can have on their product sales and image (Abendroth and Heyman).
In order to maintain an inveterate relationship with consumers, companies need to stress more on relationship marketing. Relationship marketing involves the creation of a strong, long-lasting relationship, by which consumers feel privileged and important. Since the focus of organizations has shifted from attracting customers to assessing their needs, there has to be a strong marketing strategy that can make them talk about them judiciously.
As stated before, consumers are easy influenced by their close associates. A student would rather talk to his or her friend rather than their family members when it comes to buying something. Similarly, consumers with buying powers would rather turn to their friends and family members for their opinion on a product or service before buying it. Therefore, the focus of marketers should be to nullify any possible threat of negative word-of-mouth.
Research suggests that personal influence in the form of word of mouth is likely to occur when:
Consumer lacks sufficient information to make an adequate choice.
Product is complex and difficult to evaluate using objective criteria.
Consumer lacks the ability to evaluate the product or service.
Other sources are perceived to be of low credibility
Influential persons are more easily accessible than other sources and hence can be consulted without wasting time and energy.
Strong Social ties between the influential and consumer.
There is a need for social approval (Engel, Kollat and Blackwell).
Personal influence often plays an important role in consumer decision making, especially when there are high levels of involvement and perceived risk and the product or service has public visibility. In order to counter negative word-of-mouth, an advertising company (Contac) came out with a phrase that read; ‘thousands of tiny time pills,’ and this stimulated a lot of talk among consumers (Engel, Kollat and Blackwell). Word-of-mouth can be stimulated by increasing or decreasing marketing efforts under various circumstances. This holds true in most cases. Changes in marketing variables need not necessarily affect the word-of-mouth activity among customers. If John is inclined to persist with his intention to buy only a Sony, word-of-mouth need not necessarily have an effect on John’s decision-making. However, if Sue and Joe are inconclusive and are probing for answers, they are most likely to turn to their friends, family, and others for suggestions. This is when they can be influenced by word-of-mouth (Trusov, Bucklin and Pauwels).
The impact of negative word-of-mouth can be catastrophic. In one study in a prominent office in the U.S revealed that on an average, an unhappy customer can tell any number of customers about his/her experience that resulted in their aversion for a particular product or service. However, the same will not be the case with a satisfied customer. Though the potential to spread positive feedbacks through word-of-mouth is great, normally it is spread only to a select few (Maxham). Such word-of-mouth communication exerts a strong influence on consumer decision-making in short and long-term judgments (Bone). Such a situation is commonly seen when a consumer has a strong positive feeling toward a product. Word-of-mouth is also important from a service marketing perspective. Consumers rely heavily on feedbacks and information from friends and associates to reduce their level of perceived risk and uncertainties that are often associated with service purchase decisions (Murray). Murray found that personal references had a greater influence on purchasers of services than on purchasers of products. However, it is thought that negative word of mouth communication has a stronger influence on customers’ brand evaluation than positive word of mouth communication, and given its strength, the transmission of negative word of mouth communication involves interpersonal and informal processes. In short, positive word-of-mouth can be considered as cognitive-driven, while negative word-of-mouth is emotive in nature (Sweeney, Soutar and Mazzarol).
It is an acknowledged fact that when consumers refrain from buying a selected product, they are willing to accept the inconvenience caused by not owning it immediately. Many marketers look at word-of-mouth campaigns as a new way to cut through the clutter and connect with their consumers. Positive word-of-mouth and negative word-of-mouth has a greater impact in service-oriented businesses. In hindsight, it may be said that though word-of-mouth is considered an extremely powerful tool in marketing, negative word-of-mouth can have serious repercussions on a business..
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