BUSINESS COMMUNICATION - II

DETAILED PROPOSAL (DRAFT)

Topic: Effect of word-of-mouth in digital era marketing

 Table of Contents

Acknowledgement....................................................................... Error! Bookmark not defined.

Executive Summary .................................................................... Error! Bookmark not defined.
Introduction ................................................................................................................................ 4
Literature Review ....................................................................................................................... 5
Methodology .............................................................................................................................. 7
Analysis and Interpretations ....................................................................................................... 8
 Secondary Research .......................................................................................................................... 8
A Comparative Analysis of eWOM and WOM ...................................................................................... 8
 Primary Research .............................................................................................................................. 9
Conclusion ................................................................................................................................16
Bibliography ................................................................................ Error! Bookmark not defined.
Abstract

This research analyses the impact of ‘word-of-mouth marketing’ technique in the digital world,
i.e. the e-commerce industry. There is an increasing trend in writing reviews online and sharing
opinions on various blogging websites which persuades people and influences their purchasing
decisions through evaluating various views and thoughts online.

We have researched about how credibility and trust plays an important role in word-of-mouth
and influencing people to make purchase in various e-commerce platforms, the challenges and
opportunities created by this novel medium of information spread and the influence of varying
degrees of e-word-of-mouth currently used. We have compared the traditional word-of-mouth
with the e-Word-of-mouth and then evaluated how positive and negative comments tend to
influence the buying decisions of consumers. We have also compared the effectiveness of the
word-of-mouth and benchmarked it against currently prevailing mediums of advertisements
like television ads. Customers usually make recommendations about using products or
services and voluntarily share their experiences and opinions with others. Messages from
experts and non-experts are equally influential but messages from experts are more influential
than those from non-experts. Therefore, it has been revealed that information from opinion
leaders or consumers with expertise are more reliable to current and prospect
customers.

Through the data collected through questionnaire, we have done our analysis and substantiate
it with relevant graphs obtained from responses of questionnaire. Electronic Word-Of-Mouth
makes both information and disinformation, because as customers, we can't distinguish reliable
data, and firms can't dependably recognize whether an online comment is genuine or fake. In
spite of the fact that there are a several factors that impact E-WOM, this research attempts to
adopt an all encompassing strategy, because the different impacts are interconnected and it is
exceptionally hard to declare that any single factor is the trigger in E-WOM. There are
numerous unknown factors in this field which should be analyzed and cleared up that are
fundamental for organizations with the end goal for them to convert the data into a source of
revenue.

This research takes a holistic approach in understanding the various interconnected factors that
influence E-Word-of-mouth, understands its implications on e-reputation and the roles virtual
communities and social networks play in this new-age medium of advertising.
Introduction

Word-of-mouth is "a relational correspondence in which a sender spreads a message to

receivers. A similar thought when connected to the Internet becomes electronic verbal, a 21st
century marvel. The intensity of WOM is so outstanding that in 2004 the Word of Mouth
Promoting Association (WOMMA) was established so as to lead the WOM business through
support, training, and morals. In this situation, the central idea behind our research is to
elucidate the central matters for the two gatherings (organizations and shoppers) and to give
an all encompassing point of view on the E-WOM world that influences promoting procedures.
Starting from the comparison between WOM and E-WOM to grasp the distinctions and
relationships among disconnected and online channels and how data is passed on. Also, we
analyses the job of influencers through online remarks which appeared on various social media
platforms, and estimate the positive and negative remarks.

Electronic WOM assumes a critical job in electronic showcasing (e-promoting) these days since
remarks can summon feeling and influence conduct. Word-of-mouth happens wherever
individuals get together: at the nearby bar, at home, in the games club and progressively on the
web and via web-based networking media. What's more, there are numerous reasons why
individuals like to discuss their encounters with items and brands. Client benefit, fulfillment,
and so on are shared and frequently have an exceptionally close to home and emotional
nature. Be that as it may, they progressively occur in an extremely open space: the social Web.

Clients utilize web-based social networking and that verbal exchange is a fantastically rich
wellspring of data as unstructured information and unmistakable information, cooperation
potential outcomes, etc to help us in enhancing our general correspondence procedure and
increment consumer loyalty. Verbal exchange is an open door for each business with potential
outcomes that go a long ways past the conspicuous and are just restricted by our creative
energy.

E-word-of-mouth marketing can't be controlled; it's anything but a correct science. Its greater
part gets away from your control conceivable outcomes as a result of its relational and confined
controllable character, in as opposed to exemplary correspondence monologues that can even
now be seen in traditional broad communications. Purchasers produce and appropriate data
and disinformation, which can prompt a reaction from different shoppers or undertakings.
Verbal exchange assumes an imperative job concerning wellsprings of data and in the
meantime is more trusted, believable and convincing than business data. When utilizing
innovation it is a lot less demanding for the purchaser to share data about the experienced
brand, item or administration and this is making the data viral more convenient through digital
means.
Literature Review

Verbal (WOM) is a unreliable system to spread data and information. According to her, there is
a communication among WOM and E-WOM, making diverse channels for the spread of data.
(Aramendia, 2017). Notwithstanding, this data can't be controlled by advertisers. Positive and
negative remarks are found in eWOM and they affect believability, trust and convincingness,
where influencers assume a fundamental job. Brand notoriety is formed by the stream of data
and disinformation on the Internet. Interpersonal organizations are a genuine instrument with
which to make and place data. A remark may incredibly profit purchasers, preventing
vulnerability and boosting deals. eWOM scatters both data and disinformation, thus web clients
and advertisers are looked with the issue of how to swing this to their own advantage.

E-informal exchange as a convoluted idea through which advertisers battle to locate a one of a
kind genius motional gadget that will slice through the messiness of on-line interchanges.
(Eaton) In any case, influential e-verbal information showcases efforts that can be a compelling
on-line promoting instrument and serve a few capacities for item and administration
advertisers. E-verbal reviews can make interest and create buzz prompting movement on a
specific site (e.g., composing directions for an animation character to pursue), which will thusly
advance the organization's contributions. Also, some e-verbal promotion techniques can be
utilized to adequately drive deals with coupons. Advertisers likewise depend on individuals to
volunteer forward these connections and offers to a man they realize will be intrigued.
According to him, advertisers should know about the effect of both positive and negative e-
WOM on their promoting endeavors. As correspondence obstructions keep on diminishing due
in vast part to the proceeded with reception of the Internet, viable utilization of e-WOM
exercises will be of significantly more noteworthy significance later on.

Coulter and Roggeveen in their research paper contemplated how shoppers reacted to WOM
correspondences in the online informal community stages. They inspected how the source,
channel and message content influence the customer reaction to WOM correspondence in the
online life setting. The two most utilized online social networking sites i.e. Facebook and Twitter
were utilized for the examination. Information were gathered utilizing two overviews which the
members reacted with respect to an item page recommendation in those two internet based
life destinations. Results demonstrated that steady with other WOM examinations, source
validity (aptitude) essentially decides the viability of an enticing correspondence. The item page
had all the earmarks of being the most imperative driver to rationale clients for online WOM. In
this way the advertisers were proposed to keep up a solid item page.
 With respect to, as the believability of the item page expanded, the purchasers were bound to
look for more information about the item. The investigation additionally uncovered connection
between part number and item page seeing. The more the quantity of preferences (in
Facebook) or the quantity of devotees (in Twitter) the more possibilities were that the shoppers
will look for item data as the validity goes up. With respect to closeness, the examination found
that increasingly the quantity of companion/devotees joined or prescribed the item page, the
more likely the client was eager to get more data on the item. This was on the grounds that the
system closeness is a component of standardizing impact. Future research could think about
the other item classes. The creators anticipated that apparent hazard related with the item or
item types may affect the outcomes.
Methodology

To validate our research topic, we have taken the sample of college students since they
comprise as the largest part of users of electronic media. We have prepared a questionnaire
containing questions related to the impact of worth-of-mouth in digital era marketing. The
questions pertain to various factors which could influence word-of-mouth communication and
build credibility and trust. Then we will analyse the data collected through questionnaire to
draw necessary conclusions. Our sample will include people who shop frequently and read
reviews and opinions about products before purchasing that. We also include people in our
sample who do not care about reviews and rely more on brand identity and image of the brand
so that we can differentiate word-of-mouth technique from other modes of advertising and
promotion. To gauge respondents' commitment in eWOM in their most loved interpersonal
interaction destinations, opinion leadership, opinion seeking, and pass-along behavior were
assessed.
We have collected secondary data from various research studies and develop our subtopics of
research from them. We have analysed the previous work done on this topic and find out how
credibility and trust plays an important role in word-of-mouth and influencing people to make
purchase in various e-commerce platforms. An extensive review of the literature led us to the
formation of three constructs: social media usage, EWOM and purchase decision involvement.
We have also done the comparison between traditional word-of-mouth technique and e- word
of mouth marketing to find out how technology and digitisation has increased the effectiveness
of word-of-mouth medium of communication in present world. We have also evaluated how
positive and negative comments tend to influence the buying decisions of consumers. Positive
comments can increase the brand reputation and market value of the firm whereas negative
comments can put down the value of firm and can lead to closure of business. Then we
analyses the effectiveness of word-of-mouth and benchmark it with currently prevailing,
traditional mediums of advertisements like television ads, print media, hoardings etc. We have
done the assessment of financial implication of the word-of-mouth marketing technique as it
acts as a cost effective measure of advertising and boost the sales of a product/service without
incurring any major cost. It reduces the overall of cost of firm’s advertising and increase the
profitability of firm.
Through the data collected through questionnaire, we have done our analysis and substantiate
it with relevant graphs obtained from responses of questionnaire. In our interpretation, we
have also used secondary data from various publications and make necessary conclusions from
the same based on our understanding.
Analysis and Interpretations

 Secondary Research
A Comparative Analysis of eWOM and WOM

eWOM and WOM are two different ways for information dissemination. WOM is highly
effective in influencing decisions of the masses, especially people you are close with. For
example, when it is conducted with family members, friends or colleagues, it is called an ‘in-
group’ form of WOM. On the other hand, ‘out-group’ WOM is when people try to contact
people out of their reference groups in order to collect reviews of a product/service. eWOM is a
form of the latter.

Both WOM and eWOm can through various directions: one-to-one, one-to-many and many-to-
many. Both can increase the probability of purchase of a product with positive reviews.

With the increase in number of internet users around the world, eWOM is increasing its
outreach in shaping views of prospective customers/buyers of a given product. Also the most
common form of medium for this is social media platforms. Contrastingly, WOM supports
direct, face-to-face interactions to spread information. These factors combined have made
eWOM a more common and effective advertising technique than plain WOM. As a result, a
piece of information has more potential of going ‘viral’ online than offline. This information has
chances of being spread further through other diverse channels.

Although online communication mediums have less regulation than offline mediums and no
proper feedback mechanisms for the help of marketers and researchers for further relevant
improvements. It is additionally worth seeing that secrecy gives a more noteworthy chance to
define deceiving data, in light of the fact that the source is unknown thus can't be checked.

The contrary impact of comments on eWOM is likewise noted by companies to influence

business, being negative to their deals. It is regular practice for purchasers to visit a retail outlet
with the end goal of seeing an item physically and afterward to buy it online. Online
communications are integral and advertisers need to acknowledge it. Undertakings are
adjusting to the current circumstance since consumers utilize cross-channel data. A long time
back, business concentrated on creating multi-channel moving methodologies and now they
are transforming into omni-channel procedures, where customers check data on disconnected
and online channels and after that they choose where to purchase. All things considered, the
interconnection of eWOM and WOM is vital to buyers due to their omni-channel conduct.
  Primary Research

 From the survey question, we can conclude that people prefer face-to-face
communication as the medium of communicating with others about a product/service
related experience which contributes 63% of the responses.

 We can also observe that reviews/testimonials and social media form majority of the
remaining responses.

 We can observe that 1 in 9 respondents use social media for communicating about
product experiences. There is a small but significant base of users who are actively
communicating product reviews via eWOM.

 Blogs/Forums and brand mentions are the least preferred methods for communicating
customer experiences.

Inferences

 All are IIM students so a clear bias is expected due to strict age demographic bound
between 21 and 26.

 People in India still prefer the personal touch provided by face-to-face communication
over social media.
  From the survey question, we can conclude that personal use, which contributes 85% of
the responses, is the strongest motivating factor in influencing customers to
communicate about the product/service.

 There is a small proportion of the respondents that are influenced by social media
platforms.

 Effective advertisements and celebrity endorsements was the least preferred of the
options.

Inferences

 Personal use comprises of both positive and negative experiences with the product.
These are strong motivators towards sharing the product reviews with acquaintances.

 Combined with the insights from the first question, there is some evidence that social
media is an energing option among the young educated consumers in terms of being an
effective medium of communicating product reviews.
  From the survey question, we can infer that about three-fifth of the respondents are not
present on any social media that allows them to provide WOM assistance.

 Two-fifth of the people are present on social media with WOM assistance. This is an
indicator that the use of social media for WOM discussions is quite prominent.

Inferences

 The traditional use of social media is to keep in touch with the lives of your friends and
colleagues but the shift to use social media as a communication platform for product
reviews is steady.

 However, there is still some resistance to use the online platforms for reviewing
products. People still have not shown confidence in the online social media platforms as
a medium of providing customer feedback and reviews. There is still a preference to use
personal communications as a effective reviewing mechanism.
  From the survey question, we can observe that customer experience is the prime driver
among the attributes that leads to a positive WOM impression.

 Product/Service quality is the second most important attribute that makes a customer
provide a positive feedback of the item.

 Innovative idea and business communication methods were picked by 1 in 9

correspondents each as their preferred attribute while forming a good impression about
the product.

 Advertising tools have little impact as can be seen from the survey and research
techniques was the least preferred among the options.

Inferences

 In alignment with previous inferences, we continue to observe that people prefer

physical interaction with the product or service to create a favourable influence about
the product. Innovative ideas and the communication techniques employed by
businesses also have a notable influence on the customer perception of a product.

 Factors that involve non-interaction with the product have lesser impact in good review
formation when compared to interaction with the product. But eWOM is a useful
technique when the product is high value where physical interaction is expensive and
infeasible.
  From the survey question, we find that the major cause of concern for businesses
embracing WOM within their company is the lack of trust from consumers which
contributes about 60% of the poll result.

 Bad reputation and scale of operations contribute the majority of the remaining reasons
for businesses adopting WOM approach of marketing.

 Legal obligations and budget constraints constitute the minority reasons hindering the
process of accepting WOM in company business.

Inferences

 According to the survey, companies are not employing online WOM marketing methods
because they feel that there is a lack of trust from customers about this technique. The
preceding survey questions provide evidence to this hypothesis.

 The minority reason for not favoring eWOM techniques is scale of operations and fear
of bad reputation. eWOM methods are prone to misuse by haters and competitors.
  The survey reveals that the most trusted source of WOM marketing would be a
customer advocate chosen from the customers themselves. Customers can identify with
the experiences of the customer advocate more than that of a blogger or an influencer.

 Brand advocates was the least trusted among the options owing to the professional
nature of the experiences conveyed by the brand advocates.

Inferences

 We can infer that the personal connection is an important factor for any marketing
strategy that incorporates WOM techniques. The customer advocate has used the
product solely for consumption reasons just like the other consumers and so there is a
perception that he/she provides an unadulterated and unbiased opinion. This makes
him more trustworthy and his testimonial more credible.

 The professional brand advocate is perceived to be at work and to have other benefits
outside of consumption. Therefore there is a feeling of doubt around his perspective
and reviews.

 Influencers and bloggers are midway on the trust and credibility scale which is clearly
reflected by the outcome of the survey.
  The survey leads to a somewhat paradoxical observation that online reviews are more
credible than family and friends when reviewing a product or service. This is counter-
intuitive to the earlier observations that the physical interaction with the product is
more important.

 Blogs form the minority of credible medium of reviewing a product. This is in accordance
with the observations of the previous question where bloggers were notable
contributors to the type of people trusted most about an online review

Inferences

 We can infer that even though people prefer physical touch and feel when reviewing a
product or service themselves, they also rely on online reviews by internet denizens
while accepting a review as credible. This is primarily because not all products and
services can be tried by oneself before purchase for its quality.

 This shows a gradual shift from traditional WOM marketing which was in person to a
trend of eWOM which is online and with the absence of physical interaction.
Conclusion

WOM has become an important factor determining consumer behavior and social media is the
most commonly used tool especially among the youth consumers. Factors affecting WOM
behavior in social media may include credibility of information in social media, social media
using experience, attitude toward marketing with social media, credibility of friends in social
media, daily social media using duration and credibility of relationship.

EWOM is a complicated concept and marketers are struggling to find an out of the box
promotional method to cut through the clutter of online communication. Here, marketers need
to be cautious of the negative and positive impact of eWOM in their marketing effort as
communication barrier decreases due to the continued adoption of internet. Electronic Word-
Of-Mouth makes both information and disinformation, because as customers, we can't
distinguish reliable data, and firms can't dependably recognize whether an online comment is
genuine or fake. In spite of the fact that there are a several factors that impact eWOM, this
research attempts to adopt an all encompassing strategy, because the different impacts are
interconnected and it is exceptionally hard to declare that any single factor is the trigger in
eWOM.

In eWOM, influencers have a leading role and are an arbiter between enterprises and potential
users, but they can likewise make disinformation since some might be paid to declare
something positive notwithstanding when they themselves are not persuaded of it, leading to
sending false information to the customers. eNWOM should be pursued and taken care of
because it has a significant impact on e-reputation. A prompt reaction may keep a conceivably
unfortunate snowball effect. However an excess of ePWOM is also suspicious and can extend a
distorted picture of an organization.

Virtual people groups are exceptionally important to organizations and they can be a pivotal
resource for them in several circumstances. Social networks can be an medium to promote
such online communities. The information inside individual remarks is hard to classify owing to
the measure of data available on the Internet and few studies about them. There are numerous
unknown factors in this field which should be analyzed and cleared up that are fundamental for
organizations with the end goal for them to convert the data into a source of revenue. Although
there is a several research of e-WOM, gap remains that require further research.