Word of Mouth Behavior and Online Activity: A Study of On/Off Line Communication Strategy and Online Business

Priscila B de O Claro and Silvio Abrahao Laban Neto

No 128, Business and Economics Working Papers from Unidade de Negocios e Economia, Insper

Abstract: Research on word of mouth WOM is recently becoming more prominent in marketing literature. Word of mouth (WOM) is recognized for quite some time as a powerful source of products and services’ information dissemination (Brooks 1957). For example, referral programs generate more profitable customers in the short and long term (Schmitt, Skiera and Van den Bulte 2011), high-uniqueness consumers (the consumer that prefers to differentiate from members of his or her reference group) were more likely to recommend privately consumed products (Cheema and Kaikati 2010), and a “word-of-mouth equity” is proposed as an index of a brand’s power to generate messages that influence the consumer’s decision to purchase (Court, Gordon and Perrey 2010). Online communities have increased in size, number, and character to make companies recognize the growing importance of WOM. This paper is a result of a preliminary and exploratory research about WOM. We aim to study the WOM behavior and analyze the impact of on/off line communication and online Activity on consumption. We tested four hypotheses with evidence of a survey with 248 online users. As our research model implies on antecedents, mediator variables and outcome variable, we estimated a three sets of ordinary least square regressions. Our results show an indirect impact of a company’s communication, by WOM behavior and WOM activity, on online consumption. The direct impact of communication on consumption is interestingly negative. Consumers may look suspicious all kind of direct manipulation of press or customer evaluation. Consumers have become overloaded and skeptical about traditional company-driven communication. On the other hand, communication impact online consumption through WOM behavior and online activity. It appears that the right communication messages echo and expand within interested social networks, affecting product perceptions. The rise of online communities and communication has increased the potential for significant and far-reaching momentum effects. Our study attempts to help understand the WOM behavior and to identify those who influence online activity and consumption. The starting point for managing WOM is understanding WOM behavior and online activity. WOM analysis can detail the nature of the antecedents of consumption. The highest-impact messages, contexts, and social networks are essential components of a companies’ communication strategy and sales.

Pages: 15 pages
Date: 2011
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