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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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    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. 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.
    2. Hutter, Katharina & Mai, Robert, 2013. "Effective Incentives for Buzz Marketing: How Moral Concern Moderates the Willingness to Engage as Buzz Agents," EconStor Conference Papers 96482, ZBW - German National Library of Economics.
    3. 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).
    4. 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.
    5. 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.
    6. Pescher, Christian & Spann, Martin, 2014. "Relevance of actors in bridging positions for product-related information diffusion," Journal of Business Research, Elsevier, vol. 67(8), pages 1630-1637.
    7. 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.
    8. Claussen, Jörg & Kretschmer, Tobias & Mayrhofer, Philip, 2010. "Incentives for Quality over Time – The Case of Facebook Applications," Discussion Papers in Business Administration 12500, University of Munich, Munich School of Management.
    9. 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.
    10. Weijia Dai & Ginger Z. Jin & Jungmin Lee & Michael Luca, 2012. "Optimal Aggregation of Consumer Ratings: An Application to Yelp.com," NBER Working Papers 18567, National Bureau of Economic Research, Inc.
    11. 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.
    12. Richards, Timothy J. & Tiwari, Ashutosh, 2014. "Social Networks and Restaurant Choice," 2014 AAEA/EAAE/CAES Joint Symposium: Social Networks, Social Media and the Economics of Food, May 29-30, 2014, Montreal, Canada 166112, Agricultural and Applied Economics Association & Canadian Agricultural Economics Society & European Association of Agricultural Economists.

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