Expanding the horizon of marketing: contemplating the synergy of both traditional word of mouth and e-word of mouth

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Opinions by other consumers influences considerably on consumers’ buying decisions as well as on post-purchase product perceptions. This is called word of mouth (WOM) and it is assumed to be more efficient than conventional marketing tools like advertising and personal selling.

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International Journal of Management (IJM) Volume 8, Issue 3, May–June 2017, pp.204–212, Article ID: IJM_08_03_023 Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=8&IType=3 Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510 © IAEME Publication EXPANDING THE HORIZON OF MARKETING: CONTEMPLATING THE SYNERGY OF BOTH TRADITIONAL WORD OF MOUTH AND E- WORD OF MOUTH Dr. Rajesh Singh Kumabam Post Doctorate Fellow (ICSSR) in Manipur Institute of Management Studies (MIMS), Manipur University (A Central University), Imphal-795003, India Dr. Ch. Ibohal Meitei Dr. Ch. Ibohal Meitei is Professor in Manipur Institute of Management Studies (MIMS), Manipur University (A Central University), Imphal-795003, India Dr. Seram Sureshkumar Singh Guest Faculty in Centre for Entrepreneurship and Skill Development (CESD), Manipur University (A Central University), Imphal-795003, India Thokchom Pratap Singh Faculty in Ibemhal IAS Academy, Imphal-795001, India ABSTRACT Opinions by other consumers influences considerably on consumers’ buying decisions as well as on post-purchase product perceptions. This is called word of mouth (WOM) and it is assumed to be more efficient than conventional marketing tools like advertising and personal selling. With the dawn of the Internet, major changes to the way consumers express their opinions about product or services have seen a sea change. Customers can now interact with other consumers via social media, e-mail, instant messaging, homepages, blogs, forums, online communities, chat rooms and review sites. Such interactions now commonly known as electronic WOM (eWOM) also influence consumer behavior. The Internet’s accessibility, reach, and transparency have empowered marketers in influencing consumers. There is also need for understanding to what extent e-WOM is similar or different from offline WOM. Influence of e-WOM and traditional WOM cannot be undermined in today’s highly competitive business environment. Market is ruled by organizations that can influence consumer behavior in its favour. Consumers are inclined to consider their friends and relatives are more credible and trustworthy than any form of sales promotional activity like advertising, public relations, and sales people. Thereby consumer-dominated communications tend http://www.iaeme.com/IJM/index.asp 204 editor@iaeme.com
Expanding The Horizon of Marketing: Contemplating The Synergy of Both Traditional Word of Mouth and E- Word of Mouth to be more powerful and influential than information from other sources. This indicates that individuals are more inclined to embrace the information disseminated through WOM than commercial promotion. The advances of information technology and the emergence of online social networking sites have profoundly changed the way information are transmitted and have transcended the traditional limitations of WOM. The effect of e-WOM on consumers is similar to that of traditional WOM. Previous consumer’s reviews on products and services have been an influential tool as an information source for consumers. Effectiveness in influencing customer behavior of both traditional WOM and eWOM cannot be undermined. However, there are some differences between traditional WOM and e-WOM. In traditional WOM communication, the information is exchanged in face-to-face conversation while in e- WOM consumers need only to interact with their computers to post or search consumer reviews. That is senders and receivers of information are separated by both space and time. Thus, it is a many-to-many communication in which the information exchanged is more voluminous in quantity compared to information obtained from traditional contacts in the offline world. As traditional WOM comes from friends and relatives while the source is anonymous in e-WOM differences of influence between the traditional and the online process may also depend on other factors. The relative influence of WOM and e-WOM may be dependent on the volume of information obtained from both sources. When consumers obtain more information from traditional WOM than from e-WOM, WOM influence is likely to be higher than e-WOM influence. Equally, the reverse effect is expected for consumers who obtain more information from e-WOM than from WOM. The differences between online and traditional process could affect the degree of influence on consumer behavior. Understanding the strength of both traditional WOM and eWOM can broaden the horizon of marketing products and services of an organization. Key words: Traditional WOM, Electronic WOM, Consumer’s buying decisions, Post- purchase product perceptions. Cite this Article: Dr. Rajesh Singh Kumabam, Dr. Ch. Ibohal Meitei, Dr. Seram Sureshkumar Singh and Thokchom Pratap Singh, Expanding The Horizon of Marketing: Contemplating The Synergy of Both Traditional Word of Mouth and E- Word of Mouth. International Journal of Management, 8 (3), 2017, pp. 204–212. http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=8&IType=3 1. INTRODUCTION Consumers often put trust on personal opinion, recommendations, and suggestions from friends, family, and acquaintances when making many of their purchasing decision. In the realm of marketing, traditional Word of Mouth (WOM) and electronic Word of Mouth (eWOM) can exclusively broaden the horizon of marketing. Personal influence appeared to have more “impact” than the mass media on decisions (Katz & Lazarsfeld, 1966). Opinions by other consumers influences considerably on consumers’ buying decisions (Arndt, 1967; Chatterjee, 2001) as well as on post-purchase product perceptions (Bone, 1995). This is called word of mouth (WOM) and it is assumed to be more efficient than conventional marketing tools like advertising and personal selling (Engel et al., 1969; Goldsmith & Horowitz, 2006). Word-of- mouth (WOM) marketing is an increasingly important technique for a firm to intentionally influence customer to customer communications (Kozinets et al., 2010). Besides, word of mouth (WOM) has been recognized as one of the most influential resources of information transmission (Jalilvand et al., 2011). Positive WOM messages has a greater effect on people's http://www.iaeme.com/IJM/index.asp 205 editor@iaeme.com
Dr. Rajesh Singh Kumabam, Dr. Ch. Ibohal Meitei, Dr. Seram Sureshkumar Singh and Thokchom Pratap Singh willingness to use a service than does negative WOM, besides brand equity enhances positive WOM and acts as a buffer to negative WOM (Sweeney et al., 2014). The introduction of the Internet and the expansion of the World Wide Web, however, have given consumers an entirely new realm in which they can communicate and thus influence each other (Negroponte & Maes, 1996). With the dawn of the Internet, major changes to the way consumers express their opinions about product or services have seen a sea change. It has been said that the new communication structure is an amorphous web of connections (Ahuja and Carley 1999). Electronic peer-to-peer communication can take place in many alternative ways, like emails, discussion forums, and news groups. These platforms are focused on being not only user friendly, but also highly interactive, providing many unique ways to create and distribute content. Customers can now interact with other consumers via social media, instant messaging, homepages, blogs, online communities, chat rooms and review sites. Such interaction through the Internet is now commonly known as electronic WOM (eWOM). Electronic Word of Mouth (eWOM) is thus a form of buzz marketing. It can become viral if the message is persuasive or funny enough. Evidenced by the sheer amount of social communication online, marketers and managers acknowledged that eWOM has become a vital component of e- commerce (Kirkpatrick et al., 2005). The Internet’s accessibility, reach, and transparency have empowered marketers in influencing consumers (Kozinets et al., 2010). In sector specific studies by Sotiriadis & Van Zyl (2013), electronic Word of Mouth (eWOM) through social medium (like twitter) is another marketing channel to be wisely used in integrated communications marketing of tourism services. Elaborate understanding of the power of both traditional Word of Mouth (WOM) and electronic Word of Mouth (eWOM) in expanding the horizon of marketing is lacking. This paper is an effort to throw light on the importance of expanding the horizon of marketing using both traditional and electronic WOM through literature reviews of relevant articles. 2. OVERVIEW AND CONCEPTUAL UNDERSTANDING 2.1. Traditional Word of Mouth (WOM) Elaborate studies on how personal influence works were carried out as early as 1960’s (Kaztz & Lazarsfeld, 1966; Arndt, 1967). Sen and Lerman (2007) define WOM as “face-to-face conversation between consumers about a product or a service experience” and it usually takes place in an interpersonal communication, face-to-face, takes place between two people: the source perceptions and the information seeker (Gilly et al., 1998). Definitions of WOM are constantly evolving, according to Litvin et al. (2008), WOM is “the communication between consumers about a product, service, or a company in which the sources are considered independent of commercial influence”. Any form of sales promotional activity like advertising, public relations, and sales people sounds less credible and trustworthy than the WOM information permeated from their close friends and relatives. Meaning, information transmitted from consumer-dominated communication tends to be more powerful and influential than from other sources (Herr et al. 1991). Moreover, absence of any ulterior motive or incentive for the referrals, individuals are more inclined to embrace WOM information than commercial promotions (Grewal et al., 2003). Customer WOM can generate value through market expansion. In other words, it can gain customers who would not otherwise have bought the product or service. Alternatively, WOM can generate value by accelerating the purchases of customers who would have purchased anyway (Libai et al., 2013). People often share opinions and information with their social ties, and WOM has an important impact on consumer behavior (Berger, 2014). The strength of the social tie relationship tends to influence a WOM receiver’s intentions to purchase http://www.iaeme.com/IJM/index.asp 206 editor@iaeme.com
Expanding The Horizon of Marketing: Contemplating The Synergy of Both Traditional Word of Mouth and E- Word of Mouth a brand; however, social tie strength has a much weaker association with a consumer’s WOM retransmission intentions (Baker et al., 2016). 2.2. Electronic Word of Mouth (eWOM) As the population of Internet users grows, consumer-dominated communication on the Web, also called eWOM, is also increasing. Consumer reviews, one of the ways consumers exchange opinions and experiences on products and services on the Web, have been successfully practiced. These technological advances have transcended the traditional limitations of WOM (Shin, 2007). Companies are increasingly using online communities to create value for the firm and their customers. To date, evidence regarding the effectiveness of online communities as a marketing tool has been primarily anecdotal. Yet, industry practice suggests that online communities add value when consumer share their product and service related experiences on the Internet via e-mail, bulletin boards, chat rooms, forums, fan clubs, brand and user-groups (Goldsmith, 2006). eWOM is defined as “all informal communications directed at consumers through Internet-based technology related to the usage or characteristics of particular goods and services, or their sellers” (Litvin et al., 2008). In short, scholars like Huang et al., (2009) articulate eWOM communication process as “the informal communications through Internet”. Hennig-Thurau et al. (2004) concluded that eWOM has similar consumers effect to that of traditional WOM. Web‐based technologies have created numerous opportunities for electronic word‐of‐mouth (eWOM) communication. This phenomenon impacts online retailer as this easily accessible eWOM information could greatly affect the online consumption decision of customers (Cheung et al., 2008). eWOM has been found to be more effective than firm- generated sources on the Internet (Bicakart & Schindler, 2001) and traditional media (Trusov et al., 2009). Consumer tie strength, trust, normative and informational influence are positively associated with users’ overall eWOM behavior (Chu & Kim, 2011). Teng et al.(2016) concluded that argument quality, source credibility, source attractiveness, source perception, and source style exerted varying influences to users’ attitudes and intentions. 2.3. Traditional Word of Mouth (WOM) vs Electronic Word of Mouth (eWOM) There are some patterns common to both forms of Word of Mouth. However, there exists some differing characteristics, with a bearing on consumer decision making (Pokrywka & Gfrerer, 2012). In electronic Word of Mouth (eWOM) communication, according to Sen and Lerman (2007), consumers need only to interact with their computers to post or search consumer reviews, while in traditional WOM, the information is exchanged in face to face conversation (Park & Kim, 2008). Information sources in case of eWOM are mostly anonymous individuals meaning there is little or no prior relationship between the two parties: the source of information and information seeker (Xia & Bechwati, 2008). But, information sources in case of traditional WOM are mostly synonymous. Thus, eWOM is a many-to-many communication as the information exchanged is more voluminous in quantity compared to traditional WOM in the offline world (Hennig-Thurau et al., 2004). Unlike traditional WOM, in case of eWOM consumers need not directly meet the other people to exchange their views, experiences and opinions on products, services and trades (Shin, 2007). In eWOM, the sender and receiver of information are separated by both space and time (Stefees and Burgee, 2009). Figure 1 illustrates the most important diverse characteristics of traditional WOM and electronic WOM communications. http://www.iaeme.com/IJM/index.asp 207 editor@iaeme.com
Dr. Rajesh Singh Kumabam, Dr. Ch. Ibohal Meitei, Dr. Seram Sureshkumar Singh and Thokchom Pratap Singh Figure 1 Diverse Characteristics of traditional WOM and electric WOM Communications Source: Pokrywka & Gfrerer (2012) As shown in the Figure 1, the channel for communicating information is either traditional WOM (offline) through the social network of friends, family, peers and colleagues or electronic WOM (online) through social media such as social networking sites, blogs or forums. As already mentioned, traditional WoM is a synchronous conversation and occurs face-to-face, electronic WoM is in general an asynchronous process, where time and geographical distance are of little or no essence. Moreover, electronic WoM can reach a higher number of individuals and has the implied characteristics of a rapid diffuse while in traditional WOM, the exchange of information takes place with a relatively low number of people and hence low diffusing. Moreover, eWoM is anonymous in nature, whereas, traditional WOM is non anonymous characterized by an interpersonal environment. Interestingly, companies have limited influence on customers’ online activity. There are few characteristics of traditional WOM which set it apart from electronic WOM. According to BuzzTalk Blog (Kremers, n.d.), the characteristics of traditional WOM and eWOM are: 1. It consists of interpersonal communication which sets it apart from mass communication such as advertising. 2. It's about commercial content and commercial entities such as companies, products, services and brands. 3. The communicators are non-commercially motivated so communication is perceived as unbiased, genuine and honest. http://www.iaeme.com/IJM/index.asp 208 editor@iaeme.com
Expanding The Horizon of Marketing: Contemplating The Synergy of Both Traditional Word of Mouth and E- Word of Mouth So to demystify the concept of electronic word of mouth: it's just word of mouth as we've always known it with two characteristics added: 1. It uses the internet so information is passed on a written text, images or even movies. 2. It can reach a multitude of people at the same time so it has a greater potential of becoming viral. The relative influence of WOM and eWOM may be dependent on the volume of information obtained from both sources. When consumers obtain more information from traditional WOM than from e-WOM, WOM influence is likely to be higher than e-WOM influence. Equally, the reverse effect is expected for consumers who obtain more information from e-WOM than from WOM. However, studies by Steffes and Burgee (2009), found that information sourced from online consumer reviews is more influential on consumers than speaking with friends or acquaintances in person. Therefore, these differences of influence between the traditional and the online process may also depend on other factors like tie strength (Brown & Reingen, 1987), source experience (Bansal & Voyer, 2000), valence of opinions (Chevalier & Mayzlin, 2006), volume of information exchanged (Duan et al., 2008). Thus, the relative influence of WOM and e-WOM may be dependent on the volume of information obtained from both sources (López & Sicilia, 2011) 3. EXPANDING THE HORIZON OF MARKETING Marketing has been criticized from all spheres today since the real worth of all the marketing efforts can hardly be precisely determined. Today consumers are better informed and also misinformed at times due to the bombardment of various pieces of information through traditional WOM and electronic WOM via social media (Sharma & Choudhury, 2015). Both traditional and electronic WOM plays an important role in expanding the horizon of marketing. Figure 2 depicts the potential cause-and-effect relationships of both traditional (offline) and electronic (online) WOM regarding high-involvement products and purchase decision-making. Figure 2 Customer involvement increases the purchase decision-making Source: Pokrywka & Gfrerer (2012) According to Pokrywka & Gfrerer (2012), within a high involvement context, factors impacting traditional (offline) and electronic (online) WoM are homophily with connection to social ties, and trustworthiness that are regarded as a behavioural credo crucial in leading to a possible persuasion. Accordingly, in the context of persuasiveness, it is reasonable to expect potential influences on the consumers’ decision-making process. Marketers are searching for lower cost alternatives to traditional means of advertising such as television and radio ads, which has led many to WOM Marketing. Word-of-mouth (WOM) has long been known to be an effective means of spreading the message about a great product or service, and with the rise of the Internet, electronic WOM (eWOM) has taken a lead role in increasing the velocity and reach of traditional WOM. Thus, traditional and electronic WOM are complementary to each other. Besides, traditional and electronic WOM are part of marketing ecosystem that complements traditional marketing channels like publications (newspapers, magazines, and journals), radio and television, billboards etc thereby expanding the reach and horizon of marketing. http://www.iaeme.com/IJM/index.asp 209 editor@iaeme.com
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