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Firm-Created Word-of-Mouth Communication: Evidence from a Field Test

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Author Info

  • David Godes

    ()
    (Graduate School of Business Administration, Harvard University, Boston, Massachusetts 02163)

  • Dina Mayzlin

    ()
    (School of Management, Yale University, New Haven, Connecticut 06520)

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    Abstract

    In this paper, we investigate the effectiveness of a firm's proactive management of customer-to-customer communication. We are particularly interested in understanding how, if at all, the firm should go about effecting meaningful word-of-mouth (WOM) communications. To tackle this problem, we collect data from two sources: (1) we implement a large-scale field test in which a national firm created word of mouth through two populations: customers and noncustomers, and (2) we collect data from an online experiment. We break our theoretical problem into two subproblems. First, we ask: “What kind of WOM drives sales?” Motivated by previous research, we hypothesize that for a product with a low initial awareness level, WOM that is most effective at driving sales is created by less loyal (not highly loyal) customers and occurs between acquaintances (not friends). We find support for this in the field test as well as in an experimental setting. Hence, we demonstrate the potential usefulness of exogenously created WOM: conversations are created where none would naturally have occured otherwise. Then, we ask: “Which agents are most effective at creating this kind of WOM?” In particular, we are interested in evaluating the effectiveness of the commonly used opinion leader designation. We find that although opinion leadership is useful in identifying potentially effective spreaders of WOM among very loyal customers, it is less useful for the sample of less loyal customers.

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    File URL: http://dx.doi.org/10.1287/mksc.1080.0444
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    Bibliographic Info

    Article provided by INFORMS in its journal Marketing Science.

    Volume (Year): 28 (2009)
    Issue (Month): 4 (07-08)
    Pages: 721-739

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    Handle: RePEc:inm:ormksc:v:28:y:2009:i:4:p:721-739

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    Related research

    Keywords: word of mouth; promotion; advertising;

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    Cited by:
    1. Bruno Schivinski & Dariusz Dabrowski, 2013. "The Effect Of Social-Media Communication On Consumer Perceptions Of Brands," GUT FME Working Paper Series A 12, Faculty of Management and Economics, Gdansk University of Technology.
    2. Jörg Claussen & Tobias Kretschmer & Philip Mayrhofer, 2012. "Incentives for Quality over Time - The Case of Facebook Applications," CEP Discussion Papers dp1133, Centre for Economic Performance, LSE.
    3. Hinz, Oliver & Schulze, Christian & Takac, Carsten, 2014. "New product adoption in social networks: Why direction matters," Journal of Business Research, Elsevier, vol. 67(1), pages 2836-2844.
    4. Florian Probst & Laura Grosswiele & Regina Pfleger, 2013. "Who will lead and who will follow: Identifying Influential Users in Online Social Networks," Business & Information Systems Engineering, Springer, vol. 5(3), pages 179-193, June.
    5. Liao, Shuling & Cheng, Colin C.J., 2014. "Brand equity and the exacerbating factors of product innovation failure evaluations: A communication effect perspective," Journal of Business Research, Elsevier, vol. 67(1), pages 2919-2925.
    6. Richards, Timothy J. & Allender, William J. & Hamilton, Stephen F., 2012. "Social Networks and New Product Choice," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124762, Agricultural and Applied Economics Association.
    7. Bijmolt, Tammo H.A. & Blömeke, Eva & Clement, Michel, 2010. "Should they stay or should they go? Reactivation and Termination of Low-Tier Customers: Effects on Satisfaction, Word-of-Mouth, and Purchases," Research Report 10008, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    8. Tiwari, Ashutosh & Richards, Timothy J., 2013. "Anonymous Social Networks versus Peer Networks in Restaurant Choice," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150467, Agricultural and Applied Economics Association.

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