Marketing Expenditures and Word-of-Mouth Communication: Complements or Substitutes?

Guillermo Armelini and Julian Villanueva

Foundations and Trends(R) in Marketing, 2010, vol. 5, issue 1, 1-53

Abstract: In this monograph we examine the extent to which word-of-mouth communication (WOM) plays a complementary and/or substitute role with regard to advertising. A review of the existing literature reveals the main similarities and differences between these constructs. We also examine the conditions in which a social contagion process is most likely. Specifically, our literature review helps us answer the following questions: whether WOM complements the advertising effect, when and how WOM can be a substitute of the marketing effort, and which issues limit WOM's ability to inform and persuade consumers. Published empirical evidence suggests that in most cases WOM complements advertising; however, three marketing strategies — viral marketing, referral reward programs, and a firm's creation of exogenous WOM — might work without advertising. This monograph concludes with a list of unanswered questions of potential interest to both researchers and managers.

Keywords: Word of mouth; Social contagion; Viral marketing; Quantitative marketing; Social networks (search for similar items in EconPapers)
JEL-codes: M3 M37 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:now:fntmkt:1700000025

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