In the beginning was the word…

In the beginning was the word…

Word of Mouth communications is as old as humankind. In the Garden of Eden, after Eve tasted the forbidden fruit, she strongly recommended Adam to take a bite. Eve’s insinuations stirred up in Adam heart an irresistible temptation which led him to try the fruit himself. And thus was set in motion the first ever word-of-mouth phenomenon.

Though marketing communications has certainly evolved since the days of Adam and Eve, the power of the word remains unchallenged. Every business in the modern era, either knowingly or unknowingly, generates word-of-mouth that is either positive or negative. While positive word-of-mouth increases sales and helps raise brand equity, negative buzz is usually harmful to business.

Even as positive word-of-mouth can substantially reduce your marketing and advertising costs, negative word-of-mouth is accompanied by the danger of annihilating your brand. Therefore it follows that every marketer in his right mind will aim to minimise negative buzz about his brand while maximising positive buzz around it.

The power of Word-of-Mouth

George Silverman, President, Market Navigation, Inc. says, "In study after study, with almost every category of buyer, word of mouth has been shown to be what is known as the proximal cause of purchase – the most recent thing that happened just before purchase."   [1]

Ask yourself what you do when you’re looking for a doctor, lawyer, plumber, architect or a financial consultant? Seek a reference from a trusted friend? You bet.

There is a small automobile service centre in this writer’s neighbourhood. It specialises in service and repair of Maruti cars and has thriving business. The owner is a thorough professional and believes in providing true to service to his customers. He never fixes anything that doesn’t require to be fixed, and goes that extra mile to ensure that the car delivered to the customer is as perfect as it can be.   His work is brilliant – the car always runs smoother and better after a visit to his garage. He never charges you for minor repairs. He’s installed computers at his office to record the repair history of all his customers. His bills are never inflated and his charges are quite reasonable – certainly much lower than what an authorised centre would charge. Almost all the Maruti cars in the area (numbering in hundreds) turn up at his garage for servicing. This, in spite of the fact, that there is a Maruti Authorised Service station right next to his small little garage. His business is brisk because he believes in consistent quality service. His customers (including this writer) swear by his service and bring their friends, colleagues and associates to him. His is a local business and he does absolutely no advertising.

The Bukhara of ITC Maurya in Delhi, which is now ranked seventh among the top 50 restaurant brands in the world, has never been advertised.

According to Gautam Anand, general manager, ITC Maurya Sheraton, Delhi, "Bukhara is like a temple of the Indian experience where it’s stayed relevant for 25 years and nothing has changed – not its menu, not its ambience or even its seating style. It offers a very predictable experience and people know what to expect consistently. It has just been the buzz that has made it so." The brand has grown and has lent itself neatly to ‘Kitchens of India’, the ready-to-eat, canned premium range from ITC Foods and not just that; the restaurant itself has spread to other cities such as Chennai and Mumbai, albeit as Peshawari. [2]

On the negative side we have the Palio car from FIAT. Its sales picked up very well only to slacken down later because of the buzz that it is a petrol guzzler. In spite of Sachin Tendulkar’s endorsement, the brand could not hold on to the market share, as negative word-of-mouth about its poor fuel efficiency caught on.

The above examples of positive word-of-mouth are by no means exceptional. In a study of 7,000 consumers in seven European countries, 60 percent said that they were influenced to use a new brand by family and friends. [3] See Box: What do people "buzz" about?

What do people "buzz" about?

  • Exciting products (like movies or destinations that offer exciting experiences)
  • Innovative products (like web browsers)
  • Personal experience products (hotels, airlines, vacation)
  • Complex products (in order to reduce risk people talk about products they do not understand like software, medical devices)
  • Expensive products (a very expensive vacation package will make potential buyers ask about what it offers and how good it is since it requires a big investment by the buyer)
  • Observable products (people engage in discussions about what they see in other people, e.g. clothing, expensive cars)
  • Personal activities (like attending a cultural or sporting event, people usually talk about this kind of experiences while socializing with friends and relatives)

Products like books, films and entertainment depend heavily on buzz. It is common knowledge that word-of-mouth is the single largest determinant in the success or failure of a film. In fact, a 2001 McKinsey report found that buzz plays a major role in entertainment. The report states that motion pictures and broadcasting are two of the categories largely driven by word-of-mouth. The report also says that 54 percent of sales across industries are affected by word-of-mouth. [4]

Because this is the age of the Internet, e-mail, websites, chat rooms, and video teleconferencing, word-of-mouth is even more important to businesses today than ever before. Information travels faster than ever before.

Word-of-mouth marketing contributed significantly to the success of many large companies and brands such globally recognised brands a KFC, Harley Davidson, Body Shop, Hotmail and Apple.

Apple did not advertise until very late in the game, and relied almost entirely upon word-of-mouth in the form of dealer recommendations and friends telling friends. [5]  

Coca Cola re-entered the Indian market in 1993 after 16 long years of absence, yet its brand awareness among the youth was substantially high. They had heard about Coca Cola from their parents and other elders who knew about the brand.

Studies have shown that a satisfied customer will tell an average of three people about a product or service she likes. Yet, more importantly, a customer will tell eleven people about a product or service with which she had a negative experience.[6]

The average urban consumer is exposed to 200-800 commercial communications per day, but only acts on one every week or two, and then mostly to get more information, not to buy.[7] When people ask someone about a product, they are likely to ask, "Did you face any problem using X?"

Another reason that word-of-mouth is so often negative is because the positive experiences are expected and soon forgotten, but the negative experiences cause people to be angry and frustrated, generating negative word-of-mouth. Studies have also shown that unexpected extraordinary service also causes strong positive word of mouth. In fact, some of the strongest and most frequent word of mouth results when a customer who has been let down is turned around by an extraordinary response to their expression of dissatisfaction.

Advertising versus Word-of-Mouth

Research shows that word-of-mouth can be seven times more effective that print media, twice as effective as broadcast media and four times more effective than sales personnel. Why? Because the source of word-of-mouth communications is normally independent of the company – the person is offering his or her own candid opinion and therefore, the information appears credible. On the other hand, advertising is the renting of a medium to send out a carefully crafted message to a specific audience.

"People are deluged with promotional information, and they are beginning to distrust it [advertising]. People are more likely to make decisions based on what they hear directly from other people, including friends, experts, or even salespeople. These days more decisions are made at the sales counter than in the living room armchair," wrote Regis McKenna, considered the marketing guru of Silicon Valley. [8]

Management consultants Cap Gemini Ernst & Young found only 17 per cent of the 700 U.S. consumers it surveyed in the past six months said TV ads influenced their car-buying decisions. Ads on Internet search engines influenced 26% of consumers. Nearly half, or 48%, of the consumers said a direct-mail offer from a car dealer would influence their vehicle purchases, but the most influential measure was word-of-mouth, cited by 71 per cent of consumers. [9]

The findings are significant because, as a group, automotive marketers are the largest purchasers of advertising and skew heavily toward TV advertising.

In a report in Advertising Age, Mike Wujciak, a vice president who oversees Cap Gemini’s auto practice said, "We think manufacturers and their dealers are wasting money on broad-based TV advertising instead of a direct-marketing approach," said While he’s not suggesting carmakers entirely ditch their TV ad budgets, he said "maybe they should re-evaluate the media mix, because TV is such a big part of their budgets." [10]

Yet, a good advertising campaign has the power to trigger off a strong word-of- mouth phenomenon. Like, what the legendary Bill Bernbach, considered father of modern advertising by many, said, "A great ad campaign will make a bad product fail faster. It will get more people to know it’s bad."

Harnessing the Power of Word-of-Mouth

Ensuring a good product and high quality service are best things you can do to avoid negative, and generating positive, word-of-mouth communications. Yet most marketers feel that WOM is like weather – you can do nothing about it.
 
The best way to get people talking about your company or its products is to create some excitement. Wendy’s did it years ago with a funny demonstration of the competitive advantage their burgers hold over McDonald’s. By asking "Where’s the Beef?" they were able to build name recognition and show customers why their burger is better. The humorous and offbeat approach helped turn a successful consumer campaign into a positive word-of-mouth campaign.

As recently as September 2003, Sony Entertainment Television launched a massive buzz campaign to launch and promote its new comedy series Jassi Jaisi Koi Nahi. Besides TV, print and outdoor, the channel also fired up other offline initiatives such as flash mobs, PR, email marketing, radio, SMS, leaflet messages and phone-in messages, all of which saw a steady build-up from pre-launch to post-launch.

Another way to create excitement is to give something away. Car Company Chrysler went directly to business leaders to introduce its LH series, offering new cars for a weekend to 6,000 top executives. The subsequent exposure in newspapers and the electronic media brought immediate public relations benefits. According to statistics in follow-up surveys, 90 percent said their opinion of Chrysler had changed; 98 percent said they would recommend the car to a friend; and at least 32,000 people know about the car as a result of the 6,000 weekend test drives.[11]

But marketers must remember that ultimately artificially created buzz can do only so much. If ultimately the consumer does not like the product, it will fail anyway – and maybe faster due to the buzz.

Dealing with negative word-of-mouth

Often, companies and brands become victims of negative buzz. Unfortunately, people are more likely to talk about your business when they are unhappy than when they are happy or satisfied. Recent research reports that 92.6 per cent of rumours about companies or brands heard in the past year by consumers were negative in nature.[12] Whether the negative buzz is a rumour or reality, marketers must deal with the situation carefully. You must control damage as early as possible, definitely before it blows out of proportion and harms the image of your company or brand.

The best way to counter negativity is to create positive word-of-mouth. Try to find the source of the problem and specifically answer the charges.

Sometimes keeping quite and doing nothing about it is the best option because consumers may actually hear about the rumour only when marketers attempt to correct it. Many years ago in Ohio, the McDonald’s Corporation was the victim of a nasty rumour. The focus of the rumour was that McDonald’s hamburgers contained worm meat in them. McDonalds tried to counter the rumour by posting a letter from the Secretary of Agriculture which claimed that hamburger produced by the effected establishments is "wholesome, properly identified and in compliance with standards prescribed by Food Safety and Quality Service regulations." In spite of these attempts to quell the rumour, it remained strong. Later, a study found that 35 per cent of consumers learnt about McDonald’s worm only when they saw the company’s anti-rumour campaign.[13]

Another option is to deal with negative word of mouth is address it discreetly. When people in the US perceived oil companies as greedy, companies launched campaigns highlighting the socially desirable things that they had achieved. [15]

Another idea employed of marketers to deal with negative word-of-mouth is to release creative advertising to get consumers to think about something else. For example, during the time period of the worm rumour, McDonalds could have advertised their cleanliness and the quality of their food. Here, without mentioning worms, the rumour is indirectly addressed by getting consumers to realise that a clean McDonalds is a wormless McDonalds. [14]
 
For business-to-business and service industries, negative feelers are often a result of discontented customers. Compile your customer complaints, and check for a pattern. If a particular product or service emerges as the problem, rectify the problem immediately.

Final Words

The Holy Bible say: In the beginning was the Word, and the Word was with God and the Word was God (John:1:1-3). Well, from the above discussion we can safely conclude that as far as marketing communications go, the Word is still God.

WOM has the power to both accelerate and slow up product acceptance. Most marketing professionals, even those who understand the power of electronic broadcast, believe that WOM is the most compelling way to bring in new customers. It is credible, spreads fast, is low-cost and triggers purchase better than all other form of communication. Time and again, WOM has proven to be more effective in stimulating sales than any other medium, mass or niche.

When used effectively in combination with other tools like mass media advertising, direct marketing and public relations, WOM can lead to substantial savings in your marketing expenditure. Take my word for it!

Notes:
[1, 5] How to Harness the Awesome Power of Word of Mouth by George Silverman, Direct Marketing Magazine, November 1997, pp 32-37
 [2] Flash mobs! That’s buzz marketing by Shamni Pande, The Economic Times Wednesday, December 24, 2003
[3] "Marketing Management" by Philip Kotler, 11 E, 2003
[4] "The Buzz on Buzz" by Renee Dye, Harvard Business Review, November-December 2000.
[6] "The Secrets of Word-of-Mouth Marketing How to Trigger Exponential Sales through Runaway Word of Mouth" by George Silverman, Amacom 2001
[7] "Heard it from a Friend, The Secrets of Word-of-Mouth Marketi
ng" by George Silverman, Quirk’s Marketing Research Review, Feb. 2002,
[8] Regis McKenna, The Regis Touch (Addison-Wesley, 1985)
[9, 10] Advertising Age, October 13, 2003
[11]
http://www.smartbiz.com
[12, 13, 14] Rumor Has It That Word-of-Mouth Can Be Dangerous by Michael A. Kamins, www.marketingprofs.com
[15] Conceptual Issues in Consumer Behaviour: The Indian Context, 1/e by S Ramesh Kumar, Pearson Education 2003

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