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Running Head: WOM

WORD-OF-MOUTH

A Definition of Communication

By: Megan Williams

Under the guidance of Prof. Gurram Gopal, CBE.

Elmhurst College

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INTRODUCTION

In a blink of an eye, a person or product can go from utter obscurity to having the highest

number of inquiries on a search engine. The power of Word-of-mouth communication has even

caught the attention of major news networks highlighting videos on You Tube that have the

highest number of views. Whether an email forward or a conversation over dinner, peer

communication is becoming more important than advertising. In “How to Build Buzz” Steve

Brooks cites a GfK Roper Consulting study that found that “81 percent of U.S. Consumers cited

‘people’ as a trusted source of information and purchase ideas, versus 55 percent for advertising”

(Brooks 32). If word-of-mouth communication is an alternative to advertising and advertising is

a paid marketing effort, what is word-of-mouth communication?

Through a review of literature, this paper will identify the parts of word of mouth

(WOM) and demonstrate how these parts interact. This paper researches marketing, sociology,

and graph theory to develop a definition of WOM. While the topic of WOM can be anything

from a product, service, person, or information, for the purposes of this paper all topics of WOM

will be referred to as a product.

WORD-OF-MOUTH

In “Word-of-mouth: Understanding and Managing Referral”, Francis Buttle highlights

two pervious definitions before updating the definition for today. J. Arndt characterized WOM

as “oral person-to-person communication between a receiver and a communicator whom the

receiver perceives as non-commercial, regarding a brand, product or service” (Buttle, 242). As

this definition was developed in 1967, the person-to-person component is no longer the only

method by which WOM is communicated. Buttle identifies electronic bulletin boards as a

medium used today for WOM communication (Buttle, 243). In addition, Buttle acknowledges

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that the “brand, product or service” component of Arndt’s definition can also now include

organizations (Buttle, 243). This extension, taken at its loosest interpretation, can include the

every formal or informal group and the affairs surrounding these groups. The organization could

include affairs involving the federal government. For instance the campaign video posted on

You Tube developed by a Barack Obama supporter depicting fellow Democratic candidate

Hillary Clinton as George Orwell’s Big Brother from 1984 was quickly shared within and

between networks. The video gathered so much attention that the topic was highlighted on

network news programs (CNN).

The second definition that Buttle highlights is one developed by B. Stern in 1994. Buttle

identifies Stern’s definition as “the exchange of ephemeral oral or spoken messages between a

contiguous source and a recipient who communicate directly in real life . . . Consumers are not

assumed to create, revise and record pre-written conversational exchanges about products or

services . . . WOM communication vanishes as soon as it is uttered, for it occurs in a spontaneous

manner and then disappears” (Buttle, 242). Buttle does not directly contest this definition, but

does mention that online communication is not necessarily direct or in real life and that online

posts can be recalled at a later time (Buttle, 243). I agree with Buttle’s critique of Stern. To take

the ability to recall WOM communication even further, even through face-to-face

communication, a comment may be made to a recipient whom may later recall this comment and

share it with a new recipient.

Buttle’s own look at WOM attempts to define the communication by breaking it down

into its components: (1) valence, (2) focus, (3) timing, (4) solicitation, and (5) intervention.

However, the problem with Buttle’s classification is that it looks at WOM solely as a tool for

marketing. “Neither the timing or content of WOM is under the control of the manufacturer”

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(Kamins, 166). For Buttle, the focus component is the attention that management invests in

WOM and how management can use it to establish loyal customers (Buttle, 243). And the

solicitation component for Buttle only differentiates the solicitation between management and

the customer and not between customers. While I agree that these five components exist in

WOM, these components combined do not combine to create a model that demonstrate the total

process of WOM communication. Buttle does not identify the persons or actions within the

model. Knowing what these components are one can identify where in the model a company can

take advantage of WOM.

A definition for WOM today must include every possible WOM communication method

available. It also must make room for marketer driven WOM. Word-of-mouth communication

is:

Interpersonal communication between individuals within networks that either explicitly

or subconsciously identify preferences.

“Interpersonal communication” is used to distinguish this communication from forms of mass

media. While the information may originate from management or even an advertisement, it is

continued by people communicating with people. The term network is used to demonstrate that

everyone is in some way connected to a group of people, and thus excluded from others.

Networks can be large or small. Individuals can be connected to a variety of networks, some of

which strong ties are made and in others there are weaker ties. Individuals may also be part of

extended networks where there is no direct connection between two individuals, but through a

series of networks people are connected. And the use of “preferences” is important because

every communication in some way reflects our interests. The simple fact that one is willing to

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share a piece of information demonstrates a level of interest in the topic. The preference can be

for a particular product or for a scandalous rumor about a celebrity.

This definition can be deconstructed even further to identify the actors within the WOM

communication, their actions, and the environment in which they act.

ACTORS

While WOM by one individual can reach hundreds or thousands of people through

resources, essentially at its core WOM is an action that exists between two people. It is a

communication between one person that has experienced a particular product and one person

who has not. These are essentially the two actors within the WOM model. The purpose of the

actors is to focus their communication to each other about a particular product. In this case it is a

product.

These actors will be referred to as the pre-consumer, the individual who has not

experienced the product, and the post-consumer, the individual who has experienced the product.

The product that is the focus of the WOM discussion can be any product, service or information

and is independent of the two actors. However, as I alluded to before we are not to assume that

there are only two individuals participating in WOM discussions. Depending on the type of

WOM, one pre-consumer may seek the advice of several post-consumers.

There is one type of individual who is very important to the progression of WOM, the

opinion leader. While the opinion leader can be a pre- and a post-consumer, their influence as a

post-consumer is essential to successful WOM. Opinion leaders are hypothesized to give

unsolicited advice more often than non-opinion leaders (Engel, 16). In addition, opinion leaders

are more likely to be receptive to WOM than non-opinion leaders (Reynolds, 449).

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The receptivity of opinion leaders and those that seek their opinions is likely due to the

level of creativity in these individuals. These individuals most likely are in the first few groups

of the adoption curve, especially the innovators. Their creativity doesn’t necessarily refer to

their abilities as an artist or writer, but instead the ability to participate in thought experiments

(Hogarth, 116). These thought experiments reflect the position of these individuals as choice

makers. They are able to weigh and consider other alternatives. They are not solely influenced

by their environment. Instead of letting mass advertising determine their choices, they are

willing to seek out new innovations (Hogarth, 110). So when other alternatives are presented to

them, for instance through WOM, these individuals are likely to include such recommendations

into their choice possibilities.

The terms pre- and post-consumer are used to cover both sides of the purchase

transaction. The terms cover all the different types of WOM transactions. Neither hint at the

possibility of either being an opinion leader because the opinion leader can be both a pre- and

post-consumer that either seek or solicit information.

It is important to note that social networks are not a series of rigid social islands that have

no connection to each other; Actors within WOM can interact with individuals within and

outside of their network. Several factors could influence whether or not actors would

communicate outside of their network; like focus, geography, or economics. And someone who

was an opinion leader in one network might not be one in another.

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ACTION

There are six basic WOM transactions between two actors either within or outside of their

networks. These transactions cover the actions of pre- and post-consumers:

1. Post-consumer uses product and gives unsolicited information to a pre-consumer. 2. Post-consumer is solicited by a pre-consumer for information on a product. 3. Post-consumer uses product and posts review on an online forum or website. 4. Pre-consumer is given unsolicited information on a product from a post-consumer. 5. Pre-consumer solicits information from a post-consumer. 6. Pre-consumer seeks information from an online forum, paper, or blog.

While it may seem as though (1.) and (4.), and (2.) and (5.) are the same, they have subtle

differences. These two pairings may in some instances be the same, but they are left separate to

account for the distinction of a post-consumer using a particular product and recommending it

and a pre-consumer seeking general information from a post-consumer about a type of product.

Ex. Post-consumer uses a new pair of headphones and is impressed with the quality of the

headphones. The post-consumer would then tell people about the headphones. However,

a pre-consumer may be in the market for new headphones and could either seek out

information from a post-consumer about types of headphones or a particular headphone.

Interactions in which pre- and post-consumers directly exchange information are

considered within the same immediate network because there is at least some sort of basic social

interaction between the two. However, the degree to which these members are close in a

network can vary greatly. There may be only one characteristic between two people and

therefore wouldn’t be closely related in a network. It could be two people that catch the same

bus every morning but still come from very different social, economic and educational

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backgrounds. This would also include online social networks like Myspace and Facebook.

Individuals’ profiles may or may not be public but internal messages between members of the

same network are private.

As mentioned before, information can be solicited or unsolicited. There are different

factors which affect whether or not someone will give unsolicited information. These factors

will be covered in the environment section.

WOM can also be verbal or nonverbal. Verbal would be the most common and would

include online posts. Specific words are spoken to express a view about a product. Nonverbal

WOM would be classified in the same way nonverbal communication is through appearance,

paralinguistics , proxemics, gestures. A post-consumer may wear or carry an item and those

around not asking will see this item. It could be two people near each other on the train and one

sees the other using a new phone and their interest may be peaked. They could ask that person or

seek information on that phone form another source. Because of its nature, nonverbal WOM is

always unsolicited. It can also include tone. While a specific view may not be expressed, the

specific tone used can express some view about a product. However, tone can be solicited or

unsolicited. One can ask, “Why do you think of this product?”. They can express in tone what

isn’t expressed in words. Nonverbal would also have more of a subconscious affect than

conscious affect.

Another aspect of WOM would include timing. Buttle highlights the timing of WOM

around the time of purchase. This may affect the level of variance because the experience is so

near that the product involvement will be higher at this point. While this may help in continuing

the WOM to get people to continue to talk, there is also the timing of WOM in the product’s life

cycle. WOM has been seen to be highly effective in the beginning of the life cycle.

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REACTION

Whether by action or inaction, pre-consumers will respond to WOM by either verifying it

or ignoring it. The pre-consumer will choose two different paths: one path will follow the WOM

and one path will ignore the WOM. The valence of the WOM will determine what type of action

is taken. If the WOM valence is positive for a product, following WOM would be a purchase of

the product and ignoring WOM would be not purchasing the product. The opposite is true of a

negative WOM valence.

Positive Valence

If action follows +WOM, the purchase of the product either confirm or contradict post-consumer+ WOM.

If the action doesn’t follow +WOM, the pre-consumer will either buy an alternative or seek WOM

from alternative source.

Purchasing this other alternative the pre-consumer will either like or dislike the product. If the alternative is liked it would contradict the WOM from the post-consumer. However, this will be less of a contradiction than if the pre-consumer purchased the original product and disliked it. Here the pre-consumer would be comparing their pleasure from the alternative to the original product and the imaginable pleasure they think they would receive from it. The opposite would be true if the pre-consumer didn’t like the alternative. This would confirm the original +WOM, but its confirmation strength would not be as strong as it would have if the original product had confirmed

the +WOM.

If the pre-consumer seeks the WOM of an alternative source, the alternative WOM would either confirm or contradict the original +WOM. Here the pre-consumer must evaluate the sources to determine whether or not they choose to follow the +WOM or ignore it.

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Negative Valence

If the WOM is negative, the paths are somewhat similar to the paths of positive WOM,

but inverted. If a pre-consumer purchases the product in question the action would be ignoring

the –WOM and if the product isn’t purchase the pre-consumer is following the –WOM.

There is a level of value given to everyone’s WOM. If we assume that everyone has an

initial neutral evaluation and personality isn’t used to evaluate their value of WOM, a positive

evaluation of a product will reflect on the person and negative evaluation of a product will reflect

on the product (Kamins, 168). That is to say that if Bob recommends that Sara purchase a

product and she likes it, for Sara the value of WOM will a positive reflection of Bob. However,

if she dislikes the product, the value of Bob’s WOM will be lower. However if Bob gives a

negative review of a product, whether or not Sara likes the product or not won’t significantly

affect her evaluation of Bob.

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ENVIRONMENT

WOM with its simple parts broken down may seem like a simple physics equation. Two

objects, one acts on the other and that causes a reaction. “For every action there is an equal and

opposite reaction.” While this equation may be easily solved in physics class, the world doesn’t

operate in a vacuum. The environment in which WOM exists greatly affects when, why, and

how WOM is conducted.

Cost

One of the first attributes of WOM that seems to be associated with WOM is lack of cost

as its defining characteristic that distinguishes it from advertising. However, as Adam Smith

would say, “There is no such thing as a free lunch.” Buttle suggests that the distinctions between

WOM and advertising are blurred in today’s markets (Buttle, 243). Therefore WOM cannot be

assumed to be free. There is always some sort of cost involved, even between individuals of the

same network. The cost may be as simple as the cost of a phone call, internet connection or time

spent while meeting friends over a cup of coffee (including the cost of the cup of coffee). Also,

companies wishing to have celebrities photographed using a product or having a product featured

in a magazine must forgo the profit they would receive from the sale of such item. A company

must also employ the individual who writes the press release that is published in a magazine or

newspaper free of charge.

There are also intangible costs that may be associated with WOM. Frenzen and

Nakamoto also identify a cost that may affect whether or not a consumer will share WOM

information in (Frenzen, 363). Personal motivations of the consumer may limit flow of

information if they feel that by sharing such information it will negatively affect them. They use

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the example of a consumer being informed about an upcoming sale (Frenzen, 363). If by sharing

the information the consumer feels that they would be limiting the supply of items on sale, they

might opt not to share the information.

An additional cost that may limit the flow of WOM is the danger of weakening a

network. There is a general level of trust within any network because within a network there any

number of shared characteristics between its members that allow the members to identify with

each other. Depending on how many characteristics are shared the bond between the members

of the network may be weak or strong. A decrease in the value of the WOM of members of the

network can weaken the network in its ability to continue to the flow of information. If a

member of a network continuously gives positive reviews of products that the other members

feel are unwarranted, the other members of the network are unlikely to give much regard to

positive reviews in the future.

Cost is a definite influencer on how and why or why not WOM communication is

conducted. While it may not be always be a conscious decision for a consumer to specifically

select one method of communication over another, access to a method or the preference of a

particular method would automatically limit available methods. A consumer may not have an

internet connection or a company may not have access to celebrities to give their product to. Or

members of a particular network may prefer to exchange information through blogs, as opposed

to over the phone.

Product Involvement

Once the risks are weighed, consumers are still influenced by their motivations. One of

the first motivators affecting WOM is product involvement. Product involvement can include

the amount of time or money taken to find or choose a product or the emotional connection to a

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product. However, these two distinctions of product involvement are not mutually exclusive.

For big ticket items it is likely that there is a great deal of information flowing about the product.

Consumers want to ensure that they are getting the best that they can for their money. Or maybe

the item is a difficult item to find and the consumer.

The product involvement can also be an emotional connection, not just to the product, but

also to the company that manufactures the product. A product may have offered a new

innovation that the consumer perceives as an improvement in their quality of life. The emotional

connection to the product and or company may be created by the company allowing its

customers to beta test products and offer suggestions for improvement. The customer then might

feel some sort of ownership of the product concept. In some way the company creates a bond

with its customers that not only makes it loyal to the company and its products, but also increase

the likelihood of the company’s customers recommending the company/product to members of

their network.

Other possible motivations include status and the reduction of dissonance. “People

spread rumors that reflect highly on their choices,” (Kamins, 182). Sharing information about a

recent purchase might reflect the consumer’s taste, buying power, or awareness of the newest

innovations. The goal is more to demonstrate to others how they are superior, than it is to spread

the word about a product. However, this motivation for WOM is not one that hampers WOM,

but instead may help it.

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NETWORKS

In WOM communication, the network is the important component that keeps the flow of

information going. In “Social Networks and Economic Sociology: A Proposed Research Agenda

for More Complete Social Science” Michael Davern identifies four components of social

networks that have applications for explaining networks utilized in WOM communication:

1. The structural component is the shape of the actors and the ties between them;

2. The resource component is the distribution of characteristics within networks;

3. The normative component are the norms and rules that govern the network; and

4. The dynamic component is the opportunities and barriers to tie formation (Davern, 289).

These four components combined demonstrate that a network is a flexible and that the ties

between actors can be created or destroyed (Davern, 289). Davern identifies some criteria that

can be used to measure the strength of the ties between actors as time actors spend together,

emotional bonds, business connections, or like and dislike of person (Davern, 290).

The dynamic characteristics of social networks are important for marketers to

acknowledge if they are attempting to take advantage of existing networks. Because ties can be

broken, marketers must choose carefully how they incorporate a network into their marketing

efforts. Exhaustive use of a network may dissolve the ties between actors. A marketer must

anticipate changes in these networks.

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RECOMMENDATIONS

1. Find a way to create some sort of bond between company and customers. It may be as

simple as making sure that the lines of communication between the two are open. If the

customer feels that there is some sort of connection, they might feel that the company is

actually part of their own personal network. In the article “Analysis of Referral

Networks in Marketing,” Reingen and Kernan observed that those members of a network

that knew the local piano tuner personally were more likely to recommend his services

than those who knew the piano tuner professionally, like piano store owner (Reingen,

377). If this observation were to be applied to broader conditions, a company would

benefit from consumer relations that seek to establish a high level of product involvement

and emotional connection to incorporate itself into the networks of its customers to

increase the likelihood of referrals.

2. Identify opinion leaders. Opinion leaders, whether consciously or subconsciously, will

drive the initial WOM. They are more likely than any other group to pass on information

about a product. By identifying this group you can concentrate a small portion of your

marketing efforts to hopefully achieve a high rate of return from the consumers who

receive WOM from these opinion leaders. The concentration of efforts by a company

focused on opinion leaders should work because this group is also more likely than any

other group to listen to WOM efforts (Reynolds, 449). In addition, opinion leaders may

be viewed as experts in some areas. People tend falsely to believe that a person’s

expertise in one area translates to other areas (Hogarth, 162). Identifying opinion

leaders/experts in similar areas to a particular product field may be useful to future

marketing efforts. However, using opinion leaders that don’t have an expertise in a

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company’s particular product must be done carefully. These alternative opinion leaders

must be able to present a level of expertise that can be perceived to translate to other

areas.

Recommendations for Further Research

The use of graph theory to illustrate social or referral networks is a natural choice that

some researchers are utilizing. For example Reingen, Kernan, and Brown. Reingen and Kernan

(1986) attempt to map out the referral network of a piano tuner and identify and classify its

members. Some members are identified as being part of his personal network and others are

identified as opinion leaders. However the network is mapped out after the WOM

communication has taken place. Members are required to recall their referrals after the fact.

Johnson Brown and Reingen (1987) also attempt to map out a referral network after WOM

communication has taken place. While these two studies are able to illustrate the network and

show where networks overlap, they do not identify a relationship between WOM communication

and consumer behavior.

Coupons are pricing tools that are used to drive sales (Perreault, 415). They are abundant

in the Sunday paper, but there is also an increasing trend of online coupons. Some can be printed

directly off a manufacturer’s website. Currently Swifter is offering a coupon for $5 off of the

Swifter® WetJet® (Swifter). Or the coupons can be emailed to individuals, who can forward

these to people they know. I recently received two emails from peers offering coupons. One

was for a promotional “Friends and Family Sale” at H&M and the other was for “Buy One, Get

One Free” at Jamba Juice. One thing that I noticed about these coupons was not only how wide-

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spread they were used, but how there was no method register how effective these email coupons

were.

As I thought about how I was forwarded the coupon from one peer and I passed it on to a

peer not associated with the original sender, I realized that the trail of forwards represented

WOM communication through a network. If a company could develop a simple program that

could track the communication between its customers, the company could identify various

networks within its customer base, opinion leaders in the market, and the relationship between

WOM communication and consumer behavior. A proposed outline of a program is available in

the appendix.

CONCLUSION

In their article, “Word-of-mouth Communication and Social Learning,” Ellison and

Fudenberg suggest that WOM communication plays an integral role in what could be classified

as a sort of “survival of the fittest” (Ellison, 95). They found that “word-of-mouth

communication may allow for efficient social learning in the sense that all players eventually

adopt the action which is on average superior (Ellison, 95).” However, they also warn that this

only remains true when minimal amount of information is sought, presented, or made available

(Ellison, 95). Yet, in today’s market the lines between consumer generated WOM and

management generated WOM are blurred. Either way WOM works the same. But to ensure that

WOM works for management, management must acknowledge that WOM begins as a simple act

of communication between two people.

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APPENDIX

To map out a WOM network as the communication is taking place I suggest developing

an email system that would track the spread of communication. For the purposes of this

proposal, we will call the company Cloth, a clothing company for men, women and children.

Cloth would first select a list of recipients to send an email to offering a coupon for either a

percentage of their total purchase or a percentage off the purchase of a new product that the

company is offering. Depending on what information Cloth has on its customers, Cloth should

make every attempt identify opinion leaders to include in the initial email list.

In the most “friendly” language possible the email should communicate that a discount is

available. The recipient needs only to follow a simple link to receive the coupon. This link is

created specifically for the recipient so that Cloth will be able to identify which recipients

responded to the email.

Through this link Cloth has the opportunity to collect some basic demographic information about

the recipient. The number of questions should be limited in order not to detour the recipient

from continuing. The scope of the questions should also be as unobtrusive as possible; like age,

gender, and location. Here the recipient also has the opportunity to insert email addresses of

people they know to pass on the discount. Cloth would then send emails to these people from

the first recipient. These emails would have a link that would take them to a similar page to

receive the coupon, enter demographic information, and email addresses to pass on the discount.

However this link would be specific to the original email recipient and the individuals to which

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the email was forwarded to. This link would be able to identify who responded to which emails

sent by which individuals.

These individualized links will identify to whom individuals are sharing information,

who is responding to this information and who is sharing information. The email system will be

able to identify actors in a network and the ties between them. The coupons themselves would

have information identifying who the coupon is from, therefore providing data from which

relationships between WOM and behavior could be identified.

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Davern, Michael. "Social Networks and Economic Sociology: a Proposed Research Agenda for a

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(1997): 287-302.

Ellison, Glenn, and Drew Fudenberg. "Word-of-Mouth Communication and Social Learning."

The Quarterly Journal of Economics 110 (1995): 93-125.

Engel, James F., Robert J. Kegerreis, and Roger D. Blackwell. "Word-of-Mouth

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"Source Behind Internet Attack on Clinton Revealed." CNN. 22 Mar. 2007. 21 Sept. 2007

<http://www.cnn.com/2007/POLITICS/03/21/clinton.you.tube/index.html>.

Swifter. 2007. 21 Sept. 2007 <http://www.swiffer.com/swiffer/en_US/promotions.do>.