Electronic Word-of-Mouth Marketing and Consumers

Abstract

The present research brief seeks to describe the effects of eWOM marketing on consumers. EWOM is defined as partner-to-partner communication with a goal of sharing information on a product or a service via the Internet. Current research describes the phenomenon as spontaneous and naturalistic but describable and manageable when given enough consideration. The research brief explains the motivation and intention of both reviewers and their online audience. It seems that reviewers provide feedback to both gain external reward and help others, be it consumers or companies. Consumers deter to eWOM to mitigate risks and learn about a product or a service beforehand. The current body of research indicates a positive association between eWOM and customer behavior. This proves that marketers cannot ignore eWOM; instead, they should research antecedents of persuasiveness to harness its influence.

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Introduction

Electronic word-of-mouth (eWOM) is an influential marketing instrument that can affect consumers’ attitudes and behaviors significantly. Thus, it is vital to analyze what methods marketing professionals may utilize to ensure higher levels of sales and revenues, as their online strategy may have a crucial impact on companies’ success. The purpose of this report is to identify the possible effects of eWOM marketing on consumers and the causes of impact. In this research brief, it is argued that at present, eWOM marketing has a significant effect on consumers that can no longer be dismissed by companies. The present paper will provide a literature review on the issue, featuring evidence from several current studies. The review is broken down into three sections covering the following key topics: the concept of eWOM and its importance, the effect of EWOM on consumers, and persuasive eWOM marketing. Finally, the report will provide an analysis of the findings and the possible implications of the research for marketing professionals.

Literature Review

EWOM Marketing, Its Forms, and Importance

First, it is essential to clarify what word of mouth (WOM) is in the world of marketing and explain the subtype that has been gaining the most traction in the last few years – electronic word of mouth (eWOM). The following explanation draws on the conceptual framework put forward by Daugherty and Hoffman (2014) for their experimental study in consumer behavior. The conceptual framework aims to integrate the most recent and relevant studies in both WOM and eWOM, which makes it relevant for the present literature review. Daugherty and Hoffman (2014) show that WOM communication is quite a broad concept that one can define in variety of ways. Some of the most common definitions refer to:

  1. conveyed consumer enthusiasm for a product or a service;
  2. positive or negative judgment, evaluative communication, or feedback;
  3. information transmission;
  4. collective consumer “buzz” (Daugherty & Hoffman, 2014).

For their study, Daugherty and Hoffman (2014) coin the new definition that seeks to integrate what has been pointed out by other researchers in the field. According to the authors, WOM is “person-to-person communication between a receiver and a communicator whom the receiver perceives as non-commercial regarding a brand, product, or service (Daugherty & Hoffman, 2014)”. The researchers highlight the naturalistic character of WOM: it occurs spontaneously and has a great influence on the parties involved. Due to its spontaneity, unpredictability, and flexible nature, WOM is hard to mimic artificially, which makes it challenging for brands to take control of the instrument. However, directing the course of action with regards to WOM may be integral to the company’s image and reputation. As Daughtery and Hoffman (2014) state, WOM has been associated with many processes such as increasing brand awareness, improving sales, attracting more customers.

Word-of-mouth communication takes different forms: it can communicate a diverse sentiment ranging from highly positive to highly negative. Positive forms of WOM, or PWOM, includes messages, feedback, and reviews that compel others to try a new service or a product. In contrast, negative WOM, or NWOM, is critical: it communicates a customer’s discontent and dissatisfaction with what they purchased. Daughtery and Hoffman (2014) argue that NWOM has a detrimental effect on the success of a company. Not only does it avert consumers from buying a particular product or service, it can cast a shadow on the entire reputation of a company. It is easy for consumers to infer their negative experiences on the whole range of products.

In contrast to traditional WOM, electronic WOM, or eWOM, is any statements made by potential, actual, or former consumers about a product, a service, or a company that are made available via the Internet (Daughter & Hoffman, 2014). It is argued that eWOM should be approached differently than traditional WOM. Firstly, online statements travel quicker than those made in person or via traditional media (Daughter & Hoffman, 2014). For example, a social media post can reach out to a considerably sized audience in no time and be reposted, targeting even more users than expected. Another defining feature of eWOM is its permanence: once something appears on the web, it is extremely difficult to erase it.

Further, accessing information generated by eWOM comes at a minimal search cost: all a person would need is Internet service. Daughter and Hoffman (2014) describe consumers’ motivation in analyzing eWOM. According to the researchers, in terms of intention, eWOM is not that different from traditional WOM. It appears that first and foremost, consumers are interested in mitigating risks. They want to be sure that they pay a reasonable price and have all the relevant information regarding a product or a service before purchasing it.

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Interestingly enough, recipients often encounter unsolicited reviews and advice, for instance, if they do not filter their news feed or go to a website by accident. This is one more important feature of eWOM that makes it so poorly manageable by brands. In regards to sources of eWOM, Daughter & Hoffman (2014) outline two main types: specialized and non-specialized. Specialized platforms are typically websites or social media pages dedicated to gathering customer feedback. Non-specialized sources are those that do not focus exclusively on providing other consumers’ reviews – those can entail any websites, forums, and platforms where people are free to choose any topic for discussion. It is readily imaginable that consumers are more likely to contact specialized platforms on purpose while the majority of unsolicited advice comes from non-specialized sources.

The question arises as to what exactly compels consumers to share their experiences with a product or service. At first glance, it seems that eWOM must be a goal-oriented activity: for instance, a consumer might want a reimbursement and seeks recognition via the Internet. Interestingly enough, researchers such as Reimer and Benkenstein (2016) claim that as with many other human behaviors, eWOM can be attributed to both extrinsic and intrinsic motivation. Extrinsic motivation in eWOM is goal-driven: the reviewers are relying on some kind of external reward without which they would not really proceed. In marketing, for years, the most widely recognized form of eWOM motivation was monetary, i.e. paying the leaders of opinion. However, as more recent research has shown, many consumers are intrinsically motivated when writing a review; moreover, they were altruistic at that. Reimer an Benkenstein (2016) conducted an experiment with four groups of consumers (three intervention groups and one control group). The intervention groups were provided with incentives to write a review for altruistic reasons (helping other consumers and helping the company). As a result, they proved to be more likely to write anything at all as opposed to the control group.

Now that “why” and “how” of eWOM marketing are answered, one aspect that is left for clarification is the role that eWOM plays in the decision-making process. It is a well-established theoretical concept that consumers do not make purchasing decisions in an instant; instead, it takes them passing several stages to make or not to make a purchase. In their systematic review, Mishra and Satish (2016) describe where eWOM may fit in this process. The researchers argue that after a consumer recognizes that they have a need, they set onto a search for information and evaluation of alternatives. At that, they might attend sites and platforms to learn more about the products and services that they are interested in. Mishra and Satish (2016) explain that there are many models showing exactly how consumers perceive information such as information adoption model and elaboration likelihood model. In summation, eWOM is a subform of WOM: the entirety of customers’ feedback communicated to second and third parties via the Internet. EWOM is different from traditional WOM due to the permanency of information on the web and low accessibility costs.

The Effect of eWOM Marketing on Consumers

The main point argued in the present literature review is that eWOM can affect customers’ purchase decisions and their attitudes towards products or services significantly. One of the primary reasons for this is that individuals are likely to avoid uncertainty and rely on other people’s experiences when purchasing or ordering items. Current literature on the topic proves that eWOM can help individuals to learn more about the products and services organizations offer, enhancing their awareness of them and, consequently, ensuring higher sales.

The study by Bao and Chang (2016) illustrates this viewpoint, showing that higher popularity of products and positive reviews can improve sales and product satisfaction among consumers. Such an outcome is possible because product satisfaction is a crucial factor affecting individuals’ desire to purchase items. The report by Bao and Chang (2016) features an online user review performed with an Amazon dataset of more than 350,100 various titles. By using this dataset, the authors have been able to identify more than 2,145,000 unique consumers and their reviews; around 21,500 of them can be considered opinion leaders based on their activity and the numbers of reviews written (Bao & Chang, 2016). The authors have found that these opinion leaders drive sales by disseminating eWOM, increasing product awareness and popularity. As the study utilizes a large sample and presents a clear analysis of product and timing effects, one can conclude that its findings are reliable.

The study by Tariq, Abbas, Abrar, and Iqbal (2017) supports this claim and suggests that brand awareness can be directly linked to purchase intention. The authors note that if individuals learn about products or services through eWOM, they are more likely to develop an interest in buying or ordering them. Moreover, Tariq et al. (2017) claim that eWOM can improve brand image, affecting consumers’ behavior as well. The authors have collected data through a structured questionnaire; the impact of eWOM on brand awareness and purchase intention was analyzed from the perspectives of several items. They included the desire to buy or recommend a product or service and the habit of reading individuals’ reviews and searching for recommendations online. The study featured 262 respondents and concluded that the influence of eWOM on purchase intention is almost 90% (Tariq et al., 2017). The authors add that eWOM affects brand awareness positively, which, in turn, improves brand image and leads to enhances purchase intention among consumers. Considering the large sample size and the detailed analysis of the statistics and findings, one can conclude that the evidence offered by Tariq et al. (2017) is reliable.

Another work supporting the claim that eWOM has such a positive impact because it enhances product awareness, presented above, is the study by Roy, Datta, and Basu (2017). The authors report that review recurrence, as the form of eWOM, enhances customer awareness and, therefore, increases sales. Roy et al. (2017) present a conceptual framework, featuring the factors affecting online sales. In the study, EWOM is considered the factor that can have an impact on the valence of services and products. To provide arguments for their claim, Roy et al. (2017) have captured real-time data from Amazon India and Flipkart. The authors have analyzed the obtained data using a multiple stepwise regression method. The findings of the report show that there is a direct link between eWOM and the increase in sales, as this marketing tool enhances the purchase decision of a consumer. Notably, the price is found to be another significant factor; however, it is not as vital for consumers because many of them need affirmative messages before purchasing products or services (Roy et al., 2017). It is possible to say that the authors’ approach to analysis is reliable, and the findings of the study correspond to the ones provided by other scholars.

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Finally, Truong and Simmons (2010) present another study supporting the primary claim of this paper. The authors use the exploratory research approach with the semi-structured strategy, conducting in-depth interviews with 20 consumers. The goal of Truong and Simmons (2010) is to learn how individuals search for information online, what factors affect their purchasing intentions, and what companies’ strategies they respond to. The findings of the study reveal that it is crucial for individuals to trust companies to purchase their products or services. Many consumers prefer to gain information from others’ reviews rather than advertisements, as they tend to trust other people’s experiences (Truong & Simmons, 2010). Moreover, the study has found that individuals are less likely to trust companies than other customers’ feedback. The authors present a clear overview of participants’ perspectives and base their research methods on well-designed theoretical frameworks, which implies that the findings of the study are reliable.

The literature review on the effect of eWOM offers some significant implications for marketing professionals. First, it shows that product price is not as important for consumers as the reviews they see online from the perspective of purchasing intentions. Thus, it is vital for companies to focus on strategies that can improve their online image and customers’ awareness of their products and services. Second, consumers rely on positive online reviews significantly, as they reinforce their belief that products or services worth their attention. Moreover, positive eWOM is crucial for generating sales and enhancing customers’ loyalty, which means that marketing professionals should ensure service quality that would generate eWOM. In general, positive messages can be considered highly persuasive, and marketing staff should use this information to guide companies’ approaches (Wang, Cunningham, & Eastin, 2015). It means that marketers may need to focus on improving the quality of products and services to generate more positive eWOM.

Persuasive eWOM: Factors and Antecedents

Even though WOM and eWOM are well-researched and described phenomena, what is often lacking from studies is the explanation of exactly what strategies are the most efficient for impacting consumer behavior in a positive way. The previous subsection of this paper showed the association between eWOM and dependent variables such as brand awareness and sales numbers. However, it did not specify the reasons for success, which is the theme of the present subsection. Khong, Go, and Chong (2014) focused on exploring the persuasiveness of social media eWOM. For that, the researchers recruited 78 participants for participation in an online survey on the effects of eWOM social media messages.

Khong et al. (2014) discovered that the most powerful antecedent of eWOM persuasiveness was argument quality, i.e. how clear, concise, and convincing a review is. Interestingly enough, if an argument was satisfying, consumers did not discriminate against the source. It does not mean, however, that the sources of information did not bear any importance for consumers. Khong et al. (2014) concluded that consumers valued source credibility, source attractiveness, source perception and source style were recognised as important antecedents of persuasive eWOM messages.

Current literature on eWOM persuasiveness shows the presence of other models as well. Rofianto, Kornelys, and Firmansyah (2017) conducted a structural equation modeling analysis of cross-sectional data from 150 surveys regarding video eWOM. The researchers discovered that argument quality and credibility were not two separate variables. In fact, credibility came after argument quality evaluation, if comes at all. Alongside credibility recognition, consumers assessed the usefulness of a product or a service for them by contrasting it to their needs and expectations. The last stage of the process was information or product/ service adoption – that if evaluation was positive.

Interestingly enough, other researchers managed to add even more variables to the already complex concept of eWOM persuasiveness. For instance, Ismagilova, Slade, and Williams (2016) discuss the linguistic properties of eWOM messages such as the presence of keywords, volume, sentence length, grammar, and others. Aside from the technicalities of eWOM, Ismagilova et al. (2016) show the importance of analyzing the issue in the cultural context. In cultures with a prevailing collectivist sentiment, people might be more inclined to trust eWOM. However, in countries with strong individualism, it is fair to expect that consumers will prefer to depend on their own opinion and be more critical of online communication. All in all, the persuasiveness of eWOM depends on a variety of factors that cannot be always calculated for purposeful use.

Analysis and Recommendations

The findings of the literature review show that eWOM is highly significant in today’s world, considering the general impact of social media and online marketing platforms on individuals. Marketing professionals should be aware of the current trends of social media platforms usage and the fact that the majority of consumers use them to obtain information and interact with each other (Greenwood, Perrin, & Duggan, 2016). It is possible to say that eWOM is one of the most significant online marketing strategies companies may utilize (Reimer & Benkenstein, 2016). The selected studies reveal that although advertisements are still used to improve consumers’ interest and loyalty and affect their purchase decisions, individuals tend to trust other people’s reviews.

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EWOM differs from traditional WOM due to the swiftness of knowledge dissipation, its permanence, and high accessibility at a low cost. These properties should be considered on a par with consumers’ tendencies and motivations to research and post information online. People are now more inclined to incorporate eWOM research in two important stages of purchase decision-making – information search and evaluation of alternatives. As for the reviewers themselves, they may rely on both extrinsic and intrinsic motivation when deciding to share information. One important conclusion that a marketer might make given the current state of research on the subject matter is that eWOM is naturalistic and spontaneous but at the same time may be subject to analysis and transformation.

The literature review has shown some knowledge gaps and limitations. Probably, the greatest limitation of cross-sectional and experimental studies covered in the review subsection is the subjectivity and unreliability of consumers’ opinions. As it has already been mentioned, there are a variety of models explaining information adoption, and it is fair to assume that the process might take place subconsciously (Ismagilova, Slade, & Williams, 2016). This, in turn, might prevent consumers from becoming fully aware of exactly how they make decisions. The significant knowledge gaps found in the process of literature research show the lack of information on actual techniques of harnessing eWOM. Besides, studies do not really differentiate eWOM using existing subcategories such as specialized and non-specialized sources.

The primary recommendation for professionals working in the field is that it may be feasible for marketers to encourage consumers to leave positive reviews online and share their detailed feedback with others. Such a strategy can improve future customers’ loyalty and purchase intentions significantly. Moreover, marketers should communicate with customers leaving their feedback online and interact with them to improve their trust in the brand and enhance their loyalty. Employees working in the area should understand that in today’s world, it is vital to focus not only on traditional marketing strategies, such as advertisements, but also on the company’s online presence and brand popularity. Lastly, marketers need to be aware of how complex the concept of eWOM persuasiveness is. Recent research may compel them to consider more factors when developing a strategy and heed not only the technical details (texts, sources, representatives) but also a larger context such as cultural and regional.

Conclusion

The presented literature review reveals that eWOM has a crucial impact on consumers, affecting their purchase decisions, brand awareness, and trust. The reason for it is that individuals tend to trust other people’s reviews and experiences more than advertisements. Studies included in the review show that many customers search for information about products online before purchasing them. The findings of the paper suggest that brands should focus on creating a positive image and pay attention to their online presence. Marketing professionals should encourage consumers to leave feedback online, as it may help other individuals to learn about their products. The literature review concludes that eWOM marketing can result in higher sales and that customers’ positive reviews are crucial for the company’s success.

References

Bao, T. T., & Chang, T. L. S. (2016). The product and timing effects of eWOM in viral marketing. International Journal of Business, 21(2), 99-111.

Daugherty, T., & Hoffman, E. (2014). eWOM and the importance of capturing consumer attention within social media. Journal of Marketing Communications, 20(1-2), 82-102.

Greenwood, S., Perrin, A., & Duggan, M. (2016). Social media update 2016. Web.

Hu, X. I. A. O., & Ha, L. O. U. I. S. A. (2015). Which form of word-of-mouth is more important to online shoppers? A comparative study of WOM use between general population and college students. Journal of Communication and Media Research, 7(2), 15-35.

Ismagilova, E., Slade, E., & Williams, M. (2016, September). Persuasiveness of eWOM communications: literature review and suggestions for future research. In Conference on e-Business, e-Services and e-Society (pp. 354-359). Springer, Cham.

Mishra, A., & Satish, S. M. (2016). eWOM: Extant research review and future research avenues. Vikalpa, 41(3), 222-233.

Reimer, T., & Benkenstein, M. (2016). Altruistic eWOM marketing: More than an alternative to monetary incentives. Journal of Retailing and Consumer Services, 31, 323-333.

Rofianto, W., Kornelys, D. A., & Rifkhansyah, M. (2017). Visual eWOM usefulness and credibility: The antecedents and consequences. Jurnal Ilmu Manajemen & Ekonomika, 9(2), 103-108.

Roy, G., Datta, B., & Basu, R. (2017). Effect of eWOM valence on online retail sales. Global Business Review, 18(1), 198-209.

Tariq, M., Abbas, T., Abrar, M., & Iqbal, A. (2017). EWOM and brand awareness impact on consumer purchase intention: Mediating role of brand image. Pakistan Administrative Review, 1(1), 84-102.

Teng, S., Wei Khong, K., Wei Goh, W., & Yee Loong Chong, A. (2014). Examining the antecedents of persuasive eWOM messages in social media. Online Information Review, 38(6), 746-768.

Truong, Y., & Simmons, G. (2010). Perceived intrusiveness in digital advertising: Strategic marketing implications. Journal of Strategic Marketing, 18(3), 239-256.

Wang, S., Cunningham, N. R., & Eastin, M. S. (2015). The impact of eWOM message characteristics on the perceived effectiveness of online consumer reviews. Journal of Interactive Advertising, 15(2), 151-159.

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