Leveraging Social Media in the Pharmaceutical Industry - Innovation and Marketing in the Pharmaceutical Industry - page 477

Inference of WOM
Self-reported Ties
Geographic Proximity
Online Posts/Mentions

Individual Results
Adoption
Retention
Customer Lifetime Value

Source of WOM
Customer Initiated
Firm Created

Attributes of WOM
Quantity
Reach
Valence

Recipient

Sender WOM Actions

Aggregate Results
Sales Revenues
Prescriptions
Stock Returns
Return on WOM
Marketing Multiplier

Firm Targeting
Influencers: Opinion Leaders
Influenceable Customers

WOM vs. Traditional
Marketing
Different Impact
Interactions

Traditional
Marketing

Alternative Explanations
Homophily
Social Learning
Correlated Unobservables
Simultaneity
Dynamics

Fig. 16.1 Conceptual framework of how word of mouth works

Second, WOM in social media and social networks can be more persuasive than
general WOM that takes place offline. Social media and social networks connect
people with a common interest. Word of mouth that flows through social networks
is powerful because people believe more credible information comes from people
“like themselves” (Sarasohn-Kahn 2008 ), and 3 times more likely to trust the opin-
ions of their online friends than advertising (Bart et al. 2005 ; Jupiter Research
2007 ). In contrast, general WOM that takes place offline may not be effective
because of the difference among parties involved in the WOM conversation.
Third, unlike offline WOM, the influence of WOM in social media and social
networks is not limited to particular location. Offline WOM takes place through
interpersonal communications. WOM in social media and social networks take
place on the Web, and it can take effect on users of the Web, anytime, anywhere
without time or location limitation.
Given the power of WOM in social media and social networks, there has been a
surge of marketing literature in this area. Studies on WOM in social media can be
summarized using the following framework based on the sender-recipient pair
engaged in WOM communication in a social network (Fig. 16.1 ).
Studies on WOM in social media and social networks have investigated different
aspects of the WOM communication process. These aspects include sources of WOM
(customer-initiated vs. firm-created), inference of WOM (online metrics vs. offline
metrics), attributes of WOM (volume vs. valance), impact of WOM (on individual
decisions vs. aggregate results), comparison of WOM vs. traditional marketing (dif-
ferences and interactions), and firm targeting strategies (seeding strategies, targeting
influencers vs. the influenciables). We will discuss each aspect separately below.