Word of Mouth –Phelps 1998

1. Word of Mouth –Phelps 1998 Suhyeon Moon Dan Stacey Johann Giertz VasilisTsakanikas Soomin Kim William New

2. Defining Word-of-mouth • Oral, person-to-person communication between • a receiver and a communicator • Positively/negatively • Lack of boundaries

3. Defining Word-of-mouth THE power of WORD-OF-MOUTH • Have more influence on the purchasing decision than other sources of influence • More important than advertising in raising awareness of an innovation and in securing the decision to try the product.

4. Characteristics of WOM • uttered by sources who are assumed by receivers to be independent of corporate influence. • VALENCE : positive / negative • FOCUS: the six-markets model customer

5. Characteristics of WOM • TIMING : uttered either before or after a purchase • SOLICITATION : customer seeks the input of an opinion leader or influential • INTERVENTION : in an effort to stimulate / manage WOM • (e.g celebrity endoresement)

6. Summary of Article Model of Word of Mouth (Phelps 2004) Interpersonal Values - Intrapersonal variables are states or processes which are associated either with seeking input WOM or giving output. Extrapersonal Values - Extrapersonal variables are contexual conditions which influence the seeking of input WOM or the production of WOM

8. “Receiver Perspectives” • people need to be led • “market mavens” (intrapersonal) • “not only does the market maven prompt word of mouth, but those with links to such individuals are disproportionately likely to act on what they are to” - Gelb & Johnson • so are these people more credible than experts?

9. Case Study example • “[WOM can be given to] me by people outside my immediate circle… but generally speaking, I would want to know who the person is, what their background is, those kind of things” • “If somebody is telling you about their experiences then what you do is automatically assess the person telling you. If it's someone, for instance, of a lower socioeconomic group and they say “Oh this fabulous restaurant that we went to” and your idea of a good restaurant is somewhat more upmarket then you are going to assess that word of mouth for you” • “...it depends on how much you think they share your views and how much you respect their general judgement”

10. In short... • Influentials bear more weight in the decision making process than experts • trust > knowledge? • if someone intimately involved is generally well versed in a particular field not concerning the decision at hand, is their WOM more trusted/credible than an unknown expert?

11. Case study:WoM as the best Ad • “There is a large group of people who are notorious suspicious about advertising and well aware of proliferation of fake positive/negative review.” (Harris Interactive research) • “WoM success starts with creating a culture that encourages your clients to consider themselves valued partners in your business” • “Despite the multitude of media platforms available, verbal buzz about your company is still the most cost-effective way to build loyalty and expand your business.”

12. In short... • Even with the explosion of review applications and sites (Google, Yahoo), recommendations made by friends/co-workers/neighbours is the most effective way to win new consumers. • Traditional advertising do not resonate with target audience. • WOM referrals stem naturally from an unparallel customer experience that fosters client’s identification with your brand.

13. Zooming in – Tools for Viral Campaigns When you think of the term “Viral” in relation to social media, what do you think of? What are the components that make a video go viral?

14. 3 Elements for a Viral Video Tastemakers Participation Unexpectedness Old Spice Campaign? Others?

15. Conclusion “What does this mean” WOM • Relationships are key • Tastemakers especially • Technology makes it more powerful • Timing is essential • Participation is important