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Viral Marketing Group 3 Understanding and managing referral marketing

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Viral Marketing . Understanding and managing referral marketing. Group 3. Introduction I) Opinion Leader & Mass Marketing II) Intrapersonal Variable III) Negative & Positive WOM IV) WOM with Services V) Cultural Limitation of WOM. Table of content. - PowerPoint PPT Presentation

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Viral Marketing

Viral Marketing

Group 3

Understanding and managing referral marketingTable of contentIntroduction

I) Opinion Leader & Mass Marketing

II) Intrapersonal Variable

III) Negative & Positive WOM

IV) WOM with Services

V) Cultural Limitation of WOM

IntroductionWith text messages, emails, wall posts and tweets, its easier to communicate than ever before.

The easier it is to talk, the faster information will spread. As you may know, word of mouth (WOM) advertising is the most effective form of consumer persuasion

3Evolution of Marketing CommunicationTheory of mass communication (< 1940)Vs.Concept of Opinion Leaders (late 1940s)Attitudes +behaviorsMarketerOpinionLeaderPerson 1Person 2Person 3Person XTheory of mass communication = mass media messages impacted directly upon all audience members

Late 1940s, studies showed that mass media messages were intercepted and distributed by strategically situated individuals they called opinion leaders

marketer-controlled communication flows to opinion leaders who in turn communicate it through WOM to their peers, thereby influencing their attitudes and behaviours4Opinion LeadersAll levels and in all groupings of society

Influential on one or several topics

Three common characteristics:Social participationSocial statuscosmopolitanism

Rogers (1962), however, claimed to have identified three traits which broadly typified all opinion leaders: social participation,social status and cosmopolitanism.

cosmopolitanism, leaders were barely distinguishable from followers, but that they were more gregarious, more knowledgeable (for the area of expertise) and more innovative. Knowledge is commonly assumed to be a determinant of personal influence (Solomon, 1992)5 Case of PR strategy use WOM to promote Microsoft Vista notebooks

Opinion leaders High Profile Bloggers

Microsoft and AMD have sent free Acer Ferrari 1000 and 5000 notebooks loaded with Vista to a group of high-profile bloggers.Goal = get good reviews from those very influent bloggers in the tech world to get their message across. Positive WOM. Even more influent than advertising, since it appears as unpaid, non commercial, transparent etc;

6 and its PR scandal.Scandal in 2006MS accused of bribery

ConsequencesNegative Publicity vs. Positive Buzz

From a PR perspective, rather than creatingpositive buzz, this initiative will actually generate a lotof negativepublicity

This time = bad consequences, people thought MS crossed the line, called it bribery. It betrayed the concept of WOM which states that it is non commercial, unpaid, etc. people lost their trust in the bloggers who accepted.

its very easy to criticize something youre not part of.Finally, sending bribes tobloggers is not a good look for Microsoft, and this isexactly how thisinitiativewill beperceived.7Interpersonal VariableCustomer satisfaction is the key of positive WOM

Focus on customers expectations

intrapersonal variables >> difference between satisfaction of the customer and performance of the product>>depend on its expectations this will have an impact on WOM they will provide (positive or negative)If the expectation is only satisfied but nothing unexpected: no WOM will be providedCompanies have to think about the value added and excitement characteristics for their products in order to get positive WOMBUT they also have to be careful to certainly not disappoint their clients expectations because it could provide negative WOM

8What did you think about the iPhone 5C?

Lets take the example of the Iphone 5CApple has launched this product in focusing about expectations of the client and the customer requirements concerning the last iPhone. Indeed, for example this is cheaper than the 5S, colorful and in perfect adequacy with the new software IOS 7 etc. Furthermore, Apple has this particularly intelligent way to make their customers totally expecting the launching of the product in creating input word of mouth and in letting consumers talk about it and want to get it before the launching. However, after launching it, Apple needs to ensure that clients are not disappointed and even are satisfied by the product. This satisfaction is needed by the company in order to get positive WOM from the first buyers of the Iphone 5C.

9Positive WOM vs Negative WOMNegative WOM = unsatisfactory imbalance between expectations and perceptions. It is one form of customer complaining behavior.

Both positive and negative WOM is a force that can influence the purchase behavior of consumers.

75% of the general population say when they've had a bad experience with a product they advise friends and family.

2me point: Customers have 3 options when they face an unmet expectation :- voice their dissatisfaction to the supplier- exit the relationship- utter negative WOM to a social network10Positive WOM vs Negative WOMNegative WOM has a stronger impact because the consumers will spread even more the information in order to prevent the others to live the same bad experience.Ex: Theme park customer

Negative WOM has 2.4% more financial impact than positive comments: negative comments increase profits decreased.

Ex theme park : If someone waits in line for a ride with a live tour guide and finds that the tour guide does a terrible job or if a line is longer that a posted wait time, people are likley to want to find someone to complain to. However, if the opposite happens, if the tour guide is the best they ever had or if the wait was shorter than anticipated, the same people probably will not go out of their way to provide positive feedback.

2me point: Dissatisfied customers with a product/service spread negative WOM to 12 people on average and each of them will mention the occurrence to 6 others. Satisfied customers share their positive experience to only 3 individuals (on average).11If a customer has a positive experience with your company they will tell on average 3 people, if they have a negative experience they will tell 12 people.

More than one-quarter of US consumers (26%) say they are more likely to tell family, friends, and coworkers about a bad experience with a product or service than a good one

too many people LOVE the negative side of things and are quick to believe everything they read, as being true and even quicker and more willing to spread it around.12Positive WOM vs Negative WOMIllustrating video:

Its about the performance of Miley Cyrus, like its sulfur twerk on the summer hit Blurred Lines.She was the image of youth in the United States and just a few days later her show at the MTV VMA awards, her performance has toured the world.Here is an example of a negative word of mouth. 13The word-of-mouth for servicesWOM appears more efficient for a service (someone who you trust in)

But WOM for a product is more effective than for a word of mouth about celebrities because people dont even know the person and cant be related to the famous person and who just recommend a product

14Cultural Limitation

LifestyleChinaUSAConception of selfCollectivistIndividualistSocial relationshipFormal, hierarchicalInformal, egalitarianFriendshipSmall number of close, lifelong friendsLarge collection of "friends" and acquaintancesObligationsRelationships with other people involve reciprocal obligationsPeople avoid interdependent relationshipsTime ConsciousnessRelatively more attention to the past and to the longer-term futureLess interested in the past; eye on near-term futureAscribed vs. Achieved StatusInherited characteristicsOwn achievements

% of people considering F&F recommendations66%38%The more people I know that are using a product, the more confident I can be that it will not fall apart, malfunction, or otherwise embarrass me.Thank you for your attentionAny Questions?