I am starting to document the writing and researching of my thesis project. This first part is the literature review I have completed for my project proposal.
Word-of-mouth (WOM) communication is ubiquitous. Consumers discuss favorite restaurants, where to buy a car and complain when a company’s customer services falls flat. These conversations, both positive and negative, have an impact on consumer behavior. In fact, WOM conversations generate over 3.3 billion brand impressions each day (Keller & Libai, 2009). When successfully leveraged, interpersonal WOM is a powerful marketing tool. In 2006, an independent research report said that marketers spend $1 billion on word-of-mouth marketing (McConnell, 2007). WOM is seen as a more trusted referral mechanism and is a better method for targeting interested consumers (Burger, 2013). Anecdotal evidence has suggested that online WOM could be leveraged as a new marketing tool (Duan, Gu and Whinston, 2008).
WOM is best described as “informal communication directed at other consumers about the ownership, usage, or characteristics of particular goods and services or their sellers” (Westbrook, p. 261, 1987). WOM has been shown to increase movie sales (Liu, 2006), the adoption of social platforms (Trusov, Bucklin and Pauwels, 2008) and success of television programs (Godes and Mayzlin, 2004). According to Balter (2008), approximately 70 percent of all purchasing decisions are influenced by WOM communication. As a model, WOM consists of the message, communicated by the source or sender, through a communication channel to an audience. Finally, WOM has behavioral consequences. These consequences are the effect the message has on the audience. It is this effect that has received much more rigorous academic exploration (Burger, 2012).