Free Report On Marketing Service Organizations
This report is going to focus on the value of word of mouth as a marketing tool for service organizations. At first, it will show the difference between the value of the word of mouth (WoM) and the value of the electronic word of mouth (eWoM) for both customers and service organizations. The report will also give a short description of netnography, its values of electronic word of mouth, and an analysis of anonymous quotations of online examples to assess the electronic word or mouth for a service organization’s marketing utility. Finally, it will provide a conclusion of this report.
What is the word of mouth marketing?: Word of mouth marketing (WoMM) can be described as a marketing campaign that firms use to trigger 10 percent of population to influence the behavior of the other 90 percent. It is considered to be one of the most cost effective marketing strategies for exchanging and spreading a product or service information among target customers (Nancy, Evangeliste, & Jonathan, 2010).
Why is the WoMM so important to the modern marketing managers? Word of mouth affects everybody and exists everywhere there is business and trade. People tend to trust the opinions and the experiences of other people as they share information about brands, products, services and staff. Therefore, it is crucial to establish public trust and praise for any product, brand or service. It is proven that no other marketing campaign can compete with an advice or a recommendation from loved ones, friends, or colleagues. People are easy to persuade as long as it is suggested by someone they respect and trust.
The WoMM tool, Buzz Marketing: In the present information explosion era, people are flooded by a massive amount of advertising information. Thus, it is important for a marketer to target potential customers accurately and then influence them. In this case, Buzz marketing would accomplish the job much better and cheaper than many other marketing strategies (Wilson, 1991).
The “Buzz” marketing is very flexible and nontraditional. A positive “Buzz” is often achieved by marketers by using viral marketing strategy (Emanuel Rosen). Buzz is also a theory within the viral marketing theory. The Buzz marketing relies on customers spreading positive messages through word of mouth in their social media and networks. It is considered significantly inexpensive when compared to other marketing campaigns (Wilson, 1991).
Key features that determine a good WoMM: In present days, most firms realized that their future survival is heavily dependent and relies on customer satisfaction level. The satisfaction is often determined by what customers receive from firms and it includes the quality of goods or services, and the attitudes experienced during and after sales. The two features of quality factor and customer care jointly decide the final outcome of WoMM (Smith and Taylor, 2002).
Quality is the core factor that determines whether customers intend to purchase or not purchase a product or service. A good marketer knows how to demonstrate the good side of their products. In the early stages of WoMM, marketers identify the strengths and weaknesses of their products or services. Marketers carefully avoid exposing the downside during development of a marketing strategy and emphasize the positive strengths. Moreover, a clear sense of quality in a product or services help marketers to identify target audience precisely. It also can help reduce the risk of sending negative information to the first 10 percent of the initial target population. (Smith and Taylor, 2002)
In WoM perspective, the ‘first generation’ should be considered as the most important. The first generation represents the first group of audience that helps marketers to initially spreading out the positive information into the market. Hence, the first generation determines whether the product or service is worth recommendation or not (Smith and Taylor, 2002).
However, customer care can also affect the later stage performance of WoMM. It is extremely important for businesses to take care of their customers before, during, and after sales because developing a new customer is five times more expensive than retaining an old customer (Smith and Taylor, 2002).
What is eWoMM?
eWoM: eWoM is a new form of WoM communication which is generated by the development of modern technologies of Internet, cell phone, social media and other digital forms of communication. Henning-Thurau et al. (2004) refers to eWoM as ‘any positive or negative statements made by potential, actual, or former customers about a product or company, which is made available to a multitude of people and institutions via the Internet’.
Why is it important? The Internet is being used more and more widely and frequently. Table 1 (Gannes, 2014) shows that the number of global Internet users is still expanding every year, although the growth rate is gradually decreasing because of mobile usage. Thus, many companies expect the eWoM to become a new mainstream marketing communication tool in the future.
Characteristics: Many companies consider some characteristics of eWOM to have advantages over the mainstream communications. Firstly, anonymity is the one of main characteristics of eWOM; consumers could freely share their experience of the products on the Internet because online comments generally do not need to consider legal or moral responsibility. Diversity of eWoM involves different forms of communication including face to face, spread of images, videos, and so on through the Internet. It is also a highly efficient communication because all the information is open to all public rather than one person. For example, many famous companies have their own official websites on the Facebook and twitter. McDonald’s is always criticized as fat fast food maker in recent decades, but they are trying to change people’s mind, particularly as they share plenty information that helps people keep their good health using images and videos on their website. They also publish on where the food material comes from and the communication enables some people to regain confidence in McDonald’s brand. Finally, Controllability involves the management of communications on the Internet. For instance, some online shopping websites may restrict the mode of comments, such as setting full five stars product comments for rating. However, Alibaba, Hedge, Chuang (2009) hold that companies ought to pay more attention to negative comments; most consumers would rather seek the negative information of products or companies that seem credible. Actually, negative comments are more precious than positive, because only a few people will report the defects of products. However, most of them prefer to share the bad experiences with their family and friends.
What is the netnography？
Netnography is a new English word fabricated by the famous anthropologist, Malinows. It is formed considering and combining two fields of knowledge which are Internet (net) and Ethnography (nography). The method is based on the traditional ethnography that lay emphasis on member communications online and exchange of information with each other for analysis. The purpose is to study the culture of members, group active characteristics, analysis the data, and give feedback.
Thus, the electronic commerce gradually became an important part in businesses around the world. On the other hand, it is rapidly accepted by most people who live the day shopping online, visiting the official website of a company or government to get comments by other members. Malionws provided that there are least five types of places to collect members in groups: 1) electronic announcement 2) independent website 3) the e-mail 4) the discussion or chat room. Moreover, Malinows provided 5 standards to help the researchers to choose appropriate online groups to study. The 5 standards include 1) whether they are closer to the research problem, 2) whether there is more information, 3) whether there is more discrete information publishers, 4) whether there is more detailed data and 5) members to study the problem of whether to have more communication.
Netnography and eWOM have many common points, both derived from the network field and mainly function according to communication with members and customers to collect the information and data to analyze characteristics, thereby to improving the brand domino effect as well as to adjust the weak part of products.
Features of eWOM:
With the rapid development of technology and emergence of internet, WoM has been turned into the digital form to be eWOM that makes communications faster than WoM. This means that eWoM has more new features than the old WoM. The WoM was defined as oral, communication between person-to person such as the perceived information from others or conveying information concerning a product, news or a service offer about any product for sale (Chevalier & Mayzlin, 2006). Unlike the traditional WoM that might be substituted for the small number of consumers, the modern form can be substituted for enormous number of customers. Additionally, the regular WoM vanishes as soon as uttered, while the digital form can remain for long (Chen & Xie, 2007). Also, the eWOM cost is much cheaper than the original WoM.
Example of eWOM: Electronic WoM has attracted academics and practitioners attention in recent years. The eWOM, for todays’ society, has been very useful already (Longart, 2010). Many apps in laptop and mobile phone have advertisements to show a new product or special offers for users. For example, when people need a hotel or restaurant, they can look for “TripAdvisor”. The app has many promotions online. People can use this app to find which one of restaurant or hotel is better than the others and high quality. TripAdvisor indicates that more than 45% of first-time customers decide to try a Hilton hotel, primarily based on the recommendations from friends and acquaintances and 20% of those new customers become repeat customers. Word of mouth not only affects the repurchase decision-making but also brings great impact on expressing satisfaction or dissatisfaction of product experience (Park & Lee, 2009). The report indicates that
"Compared with often expensive and planned marketing communication, word of mouth is perceived as an unplanned, non-commercial communication that preferably confirms the other brand messages and is not manipulated by the marketer. In additional, it possesses a higher credibility than other sources of brand messages." (Khammash & Griffiths, 2011).
Considering the fact of low cost and large scale expression in electronic interpersonal information transfer, eWoM is changing the industry structure and creating new industry dynamics. However, local hotels have not strategically commenced the eWoM campaigns due to their limited knowledge of what methods have tremendous influence on eWoM and bring more business. The limited understanding is also attributable to the restrictions in accessing dominant social media such as Twitter and Facebook. Utilizing limited social media tools immediately, the small hotels can achieve competitive advantages.