European Journal of Marketing

4 downloads 240876 Views 192KB Size Report
Aug 4, 2014 - Article Information: Word-of-mouth and viral marketing referrals: .... Just as marketers were learning the rules of search engine optimization, ...
8/4/14

Emerald Insight | Word-of-mouth and viral marketing referrals: what do we know? And what should we know?

European Journal of Marketing Article Information: Word-of-mouth and viral marketing referrals: what do we know? And what should we know? To cite this article: AAdam Lindgreen, Angela Dobele, Joelle Vanhamme, (2013) "Word-of-mouth and viral marketing referrals: what do we know? And what should we know?", European Journal of Marketing, Vol. 47 Iss: 7, pp. To copy this article:

[email protected]

Downloads:

The fulltext of this document has been downloaded 1779 times since 2013

Article Type: Guest editorial From: European Journal of Marketing, Volume 47, Issue 7 About the Guest Editors Dr Adam Lindgreen is Professor of Mark eting at the University of Cardiff’s Business School. He received his PhD from Cranfield University. He has published in California Management Review, Journal of Business Ethics, Journal of Product and Innovation Management, and Journal of the Academy of Mark eting Science, among others. Among his most recent book s are Managing Mark et Relationships (Gower Publishing, 2008), Memorable Customer Experiences (Gower Publishing, 2009; with Joëlle Vanhamme and Michael Beverland), and A Stak eholder Approach to Corporate Social Responsibility (Gower Publishing, 2012; with Philip Kotler, Joëlle Vanhamme, and François Maon). His research interests include business and industrial mark eting, experiential mark eting, and corporate social responsibility. He serves on the boards of many journals; he is the joint editor of Journal of Business Ethics for the section on corporate responsibility. Dr Angela Dobele is a Senior Lecturer at RMIT University, Business College. She received her PhD from Southern Cross University. Her research has been published in Business Horizons, Australian Educational Researcher, Journal of Higher Education Policy and Management, Journal of Mark eting Management, and Journal of Education + Training. Her research interests include all forms of word-of-mouth communications, higher education issues, and complexities. Dr Joëlle Vanhamme is a Professor at the Edhec Business School. Her research has appeared in journals, including Journal of Advertising, Journal of Business Ethics, Journal of Economic Psychology, Journal of Retailing, Psychology & Mark eting, and Recherche et Applications en Mark eting, among others. It is with much pleasure that we present this special issue of European Journal of Mark eting. The theme for this edition centres on word-of-mouth (WOM) and viral marketing, designed both to consider current knowledge and to identify gaps that need to be filled. We hope that this special edition offers readers a compelling expansion of current knowledge and provokes an ongoing discussion and sharing of ideas related to WOM and viral marketing. The context of the special issue As we write this editorial, the concept of marketing has expanded to include referrals and their increasingly important roles, especially in electronic and social media (as United Airlines painfully realized). A decade’s worth of research highlights the continuing interest in this topic (for example, Anderson, 1998; Ennew et al., 2000; Fraser, 2011; Gladwell, 2000; Laemer, 2004; Li and Du, 2011; Spawton et al., 2006; Saren, 2011; Zhang et al., 2010) and exemplifies changes to the modern marketplace. It is marked by snowballing competition, increasing pressure to use resources more efficiently, and demands to realize returns on marketing and promotions spending, coupled with more educated and discerning customers. Added to the mix is electronic WOM that – unlike traditional WOM – spreads rapidly to many people in a very short time, from a source who may not be personally known to the recipient or even be anonymous, and that remains constantly available at anytime and anywhere. With its one-to-many potential and vast availability, such electronic WOM appears more important and impactful than even traditional WOM (Li and Du, 2011; Litvin et al., 2008). In turn, WOM has become a far greater challenge for marketers, in whatever form it takes. Unlike www.emeraldinsight.com/journals.htm?issn=0309-0566&volume=47&issue=7&articleid=17092635&show=html&view=printarticle&nolog=50632&PHPSESS…

1/5

8/4/14

Emerald Insight | Word-of-mouth and viral marketing referrals: what do we know? And what should we know?

communications and public relations strategies, WOM is never under the control of the firm; it relies solely and powerfully on the whims of customers and prospects (Fraser, 2011; Saren, 2011). Because of its powerful influence though – in particular, research shows that WOM communication is more influential than either advertising or editorial recommendations (Bickart and Schindler, 2001; Smith et al., 2005; Trusov et al., 2009) – the need for a better understanding of this form of marketing is acute. Despite the considerable research attention to WOM and viral marketing referrals, our knowledge remains limited. Specifically, we lack empirical insights into the relative influence of WOM among multiple sources of information on consumer decisions (Feng and Papatla, 2011) or the differences in the effects of positive and negative WOM on purchase selections (East et al., 2008) or the effectiveness of referrals that interact with media messages, whether traditional, online, or viral (Anderson, 1998; Gilly et al., 1998; Dobele et al., 2007). Various firms have attempted to incorporate WOM into their communications, yet these programs remain loose cannons, rather than practical, manageable marketing tools. Researchers are left illustrating WOM and viral marketing referrals with activity-based models, in which people talk with others in their social networks, whether traditional or online. But why is this sort of chatting so important? Traditional WOM was deemed important by findings that indicated the average consumer engaged in 121 WOM conversations each week (Keller, 2007). It became critical with the finding that for every three positive recommendations shared (Wilson, 1991), the number of negative WOM sources varied anywhere from nine to 20 (Cohen, 1991; Halstead, 2002; Knauer, 1992; Kotler et al., 2001, 2003). Such numbers seemed remarkable at one time, but today they seem dismissively small when we consider how many people online WOM reaches. On an average day in 2010, people watched 2 billion videos on YouTube, sent 70 million tweets, and added 10 million photos to Facebook (Pingdom, 2011). Social media has become the most common internet-based activity, fundamentally changing the way consumers engage and interact with and consume media (Katona et al., 2011; Qualman, 2009) by allowing “consumers to share information far more easily than ever before” (De Bruyn and Lilien, 2008, p. 151). In such a setting, electronic WOM likely influences myriad information search activities, purchase decisions, switching behaviours, new product trials and consumption choices. Talk in this realm is anything but cheap. As marketing practitioners and researchers, our task therefore is to investigate WOM to provide insights for other scholars and practitioners. The structure of the special issue This special issue offers five insightful studies that take their responsibility very seriously. To begin, in “Electronic word of mouth: the effects of incentives on ereferrals by senders and receivers,” Jan Ahrens, James Coyle, and Michal Strahilevitz compare incentive strategies that encourage existing customers to refer new prospects to the firm. They use a large field experiment, conducted in the context of an online mall, and offer respondents eight different conditions that vary in the magnitude of the incentives offered to both the sender of the electronic referral and its recipient. So that the authors could identify any equity effects, sometimes the rewards were equal, but in other cases, one party received more than the other. Both the objective and the relative magnitude of financial incentives influenced the electronic referral outcomes. Specifically, higher incentives to both senders and receivers prompted more referral invitations, earned more new members, and increased the number of actual buyers. The disparity in incentives also affected referral rates; firms should assign more of the incentive to the referral sender if they hope to improve their returns on this investment. Incentives are not the only means to encourage WOM though. Jan Becker, Christian Barrot, and Jannik Meyners consider the “Impact of service pricing on referral behaviour.” That is, pricing as a marketing instrument could stimulate WOM, depending on the strategy used. The authors find, according to data about customers of a German mobile network operator, that a less complex tariff increases referral likelihood and improves referral activity overall. In contrast, a network effects tariff generates less referral activity – but it produces higher revenues. Companies clearly can devise pricing schemes that influence referral behaviour; however, in so doing, they must carefully consider the trade-off between gaining more referrals by offering less complex tariffs or improving the value of referrals (in terms of revenue) by using network effects tariffs. Christina Lages, José Abrantes, Cláudia Seabra, and Chanaka Jayawardhena offer a conceptual framework to summarize these and other drivers of eWOM. They draw on social network theory and uses and gratifications theory to structure “Drivers of in-group and out-of-group electronic word-of-mouth (EWOM),” and they accordingly distinguish two types of eWOM. From a survey of 302 Internet users in Portugal, they reveal that various drivers (mood enhancement, escapism, experiential learning, social interaction) exert different impacts, depending on whether the eWOM is directed at an in- or an out-group. This initial study of the drivers of two types of eWOM offers some surprising insights, including the finding of a positive relationship between www.emeraldinsight.com/journals.htm?issn=0309-0566&volume=47&issue=7&articleid=17092635&show=html&view=printarticle&nolog=50632&PHPSESS…

2/5

8/4/14

Emerald Insight | Word-of-mouth and viral marketing referrals: what do we know? And what should we know?

experiential learning and out-group eWOM but a lack of relationship between experiential learning and ingroup eWOM. The last two articles shift from investigating the effects on eWOM to the effects of eWOM. For example, “How WOM marketing contributes to new product adoption: testing competitive communication strategies,” by Manuela López and Maria Sicilia, suggests that whereas previous research considered advertising the most effective marketing tool in the early stages of new product adoption, WOM marketing might be even more beneficial. These authors delineate two stages of new product adoption, product awareness and product adoption, and examine how different communication strategies can encourage their arrival. In two experimental studies, they find that WOM marketing (WOMM) should be the first step in new product communication, followed only then by advertising. Finally, the effect of online user reviews on sales of search items is the focus of “The impact of online user reviews on cameras sales” by Baolong Ma, Lin Zhang, and Debra Cartwright. This article offers two studies. The first, using data from just one period, reveals significant influences of average online customer reviews, the number of online reviews, the price, and the product’s (i.e., a camera’s) physical properties. The second, with data from two samples over two periods, further indicates that previous period sales provide an important indicator of future sales, which also depend on any changes in the average online review rating or the total number of online reviews. Further research The submissions for this special issue made it clear that many of us have been asking similar questions: Is the future of marketing inevitably digital (or mobile, tablet, social networking, or cloud)? As the articles in this issue reveal, we may not know the exact form it will take, but we can predict some notable challenges and exciting promise for WOM marketing. Current WOM combines communication and content and offers a sort of culture of committed caring. Both recipients and senders undertake WOM more than daily, using constant status updates to complain about a poor service experience, check in at a local restaurant, or praise the latest song release by a favourite band. With all this information available, it is up to marketers to determine how to capture the benefits of eWOM by converting senders and recipients into customers. To do so, marketers and firms need to update their skill sets. It is not enough to post sporadically on a blog; the blog must allow for meaningful exchanges that produce connections and sales. The modern marketer (Marketer 2.0?) needs all the existing skills related to data mining, targeting, attracting, segmenting, and so forth but also must be able to operate within an entirely new (online) system. In this evolution, we consider three areas that demand immediate research attention: 1. Sorting out search. Just as marketers were learning the rules of search engine optimization, Internet users threw the rule book out the window. For many customers, it is quicker and easier to outsource their searches to their social network, which gives them a range of perspectives and specific recommendations, rather than just a list of possibilities. 2. Keeping one’s head. Changes and developments in software and hardware markets are exponential, but it is still critical for firms to stay ahead of the change. For example, though managing data remains critical, the task became far more difficult when the necessary data expanded to include every online interaction. Modern technologies can track everything users say, buy, look at, or review, offering greater potential for accurate profiling, message distribution, and analyses – if companies know how stay ahead of all that information. 3. Managing mobile (or digital) resources. Just because everyone else has a smartphone app does not mean a company should develop one for itself. Regardless of the radical changes to the tools for communications and marketing, companies must remain true to their core values and have something to say in their messages to customers. If they do not have anything good to say, they should simply listen while customers and consumers have their chance to talk. Beyond these specific future research objectives, we conclude with our recognition that social media has had massive impacts on everything marketers do. The changes have been so notable that many of the textbook standards have become essentially defunct. In such a situation, our best hope is to continue to advance research into the new and changing role of marketing, as this special issue has attempted to do. Acknowledgements We embrace this opportunity to thank all those who have contributed to this special issue of European Journal of Mark eting. First, we thank the colleagues and reviewers who devoted their valuable time to provide www.emeraldinsight.com/journals.htm?issn=0309-0566&volume=47&issue=7&articleid=17092635&show=html&view=printarticle&nolog=50632&PHPSESS…

3/5

8/4/14

Emerald Insight | Word-of-mouth and viral marketing referrals: what do we know? And what should we know?

timely feedback to the authors, suggesting ways to improve their contributions. All the reviews in each stage of the reviewing process were completed within a six-week period. Working with such professional reviewers made our guest editing experience easy and enjoyable. Second, we extend a special thanks to the editor, Professor Nick Lee, for this opportunity to guest edit this special issue of European Journal of Mark eting. Third, and perhaps most important, we warmly thank all of the authors who submitted their manuscripts for consideration. We appreciate and are grateful for their desire to share their knowledge and experience with the journal’s readers by putting their views forward for possible challenge by their peers. We are confident that the articles in this special issue contribute to our understanding of referrals, in the form of both word of mouth and viral marketing. And we look forward to reading more research on this important and interesting topic. References Anderson, E.W. (1998), “Customer satisfaction and word-of-mouth”, Journal of Service Research, Vol. 1 No. 1, pp. 5–17 Bickart, B. and Schindler, R.M. (2001), “Internet forums as influential sources of consumer information”, Journal of Interactive Mark eting, Vol. 15 No. 3, pp. 31–40 Cohen, R. (1991), “The critical ingredient”, Sales & Mark eting Manager, Vol. 32 No. 11, pp. 21–22 De Bruyn, A. and Lilien, G. (2008), “A multi-stage model of word-of-mouth influence through viral marketing”, International Journal of Research in Mark eting, Vol. 25 No. 3, pp. 151–163 Dobele, A., Lindgreen, A., Beverland, M., Vanhamme, J. and van Wijk, R. (2007), “Why pass on viral messages? Because they connect emotionally”, Business Horizons, Vol. 50 No. 4, pp. 291–304 East, R., Hammond, K. and Lomax, W. (2008), “Measuring the impact of positive and negative word of mouth on brand purchase profitability”, International Journal of Research in Mark eting, Vol. 25 No. 3, pp. 215–224 Ennew, C., Banerjee, A.K. and Li, D. (2000), “Managing word of mouth communication: empirical evidence from India”, International Journal of Bank Mark eting, Vol. 18 No. 2, pp. 75–83 Feng, J. and Papatla, P. (2011), “Advertising: stimulant or suppressant of online word of mouth?”, Journal of Interactive Mark eting, Vol. 25 No. 2, pp. 75–84 Fraser, M. (2011), “Viral vigilantes: the unblinking panopticon and the wheelie-bin cat lady”, paper presented at Cyber-surveillance in Everyday Life: An International Workshop, University of Toronto, Toronto Gilly, M.C., Graham, J.L. and Wolfinbarger, M.F. (1998), “A dyadic study of interpersonal information search”, Academy of Mark eting Science, Vol. 26 No. 2, pp. 83–100 Gladwell, M. (2000), The Tipping Point, Abacus Publisher, Oxford Halstead, D. (2002), “Negative word of mouth: substitute for or supplement to consumer complaints?”, Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior, Vol. 15, pp. 1–12 Katona, Z., Zubcsek, P.P. and Sarvary, M. (2011), “Network effects and personal influences: the diffusion of an online social network”, Journal of Mark eting Research, Vol. 48, pp. 425–443 Keller, E. (2007), “Unleashing the power of word of mouth: creating brand advocacy to drive growth”, Journal of Advertising Research, Vol. 47 No. 4, pp. 448–452 Knauer, V. (1992), Increasing Customer Satisfaction, United States Office of Consumer Affairs, Pueblo, CO Kotler, P., Adam, S., Brown, L. and Armstrong, G. (2003), Principles of Mark eting, Pearson Education, Sydney Kotler, P., Adam, S., Brown, R. and Armstrong, A.G. (2001), Principles of Mark eting, Pearson Education, Sydney Laemer, R. (2004), Full Frontal PR, Bloomberg Press, Princeton, MA Li, F. and Du, T.C. (2011), “Who is talking? An ontology-based opinion leader identification framework for word-of-mouth marketing in online social blogs”, Decision Support Systems, Vol. 51 No. 1, pp. 190–197 Litvin, S.W., Goldsmith, R.E. and Pan, B. (2008), “Electronic word-of-mouth in hospitality and tourism management”, Tourism Management, Vol. 29 No. 3, pp. 458–468 Pingdom, A.B. (2011), “Internet 2010 in numbers”, available at: http://royal.pingdom.com/2011/01/12/internet2010-in-numbers Qualman, E. (2009), Socialnomics: How Social Media Transforms the Way We Live and Do Business, John Wiley & Sons, Hoboken, NJ Saren, M. (2011), “Marketing empowerment and exclusion in the information age”, Mark eting Intelligence & Planning, Vol. 29 No. 1, pp. 39–48 Smith, D., Menon, S. and Sivakumar, K. (2005), “Online peer and editorial recommendations, trust, and choice in virtual markets”, Journal of Interactive Mark eting, Vol. 19 No. 3, pp. 15–37 Spawton, T., Lockshin, L. and Romaniuk, J. (2006), “Word of mouth and advertising effects on wine brand buying”, paper presented at the Australian and New Zealand Marketing Academy Conference, 4-6 December Trusov, M., Bucklin, R.E. and Pauwels, K. (2009), “Effects of word-of-mouth versus traditional marketing: www.emeraldinsight.com/journals.htm?issn=0309-0566&volume=47&issue=7&articleid=17092635&show=html&view=printarticle&nolog=50632&PHPSESS…

4/5

8/4/14

Emerald Insight | Word-of-mouth and viral marketing referrals: what do we know? And what should we know?

findings from an internet social networking site”, Journal of Mark eting, Vol. 73 No. 5, pp. 90–102 Wilson, J.R. (1991), Word-of-Mouth Mark eting, John Wiley & Sons, New York, NY Zhang, J.Q., Craciun, G. and Shin, D. (2010), “When does electronic word-of-mouth matter? A study of consumer product reviews”, Journal of Business Research, Vol. 63 No. 12, pp. 1336–1341 Adam Lindgreen, Angela Dobele, Joëlle Vanhamme Guest Editors

Printed from: http://www.emeraldinsight.com/journals.htm?issn=03090566&volume=47&issue=7&articleid=17092635&show=html on Monday August 4th, 2014 © Emerald Group Publishing Limited

www.emeraldinsight.com/journals.htm?issn=0309-0566&volume=47&issue=7&articleid=17092635&show=html&view=printarticle&nolog=50632&PHPSESS…

5/5