Biomedical Engineering Reference
In-Depth Information
Sources of WOM.
WOM as a form of interpersonal communication can be initiated
by either customers or firms. Customer-initiated WOM, often referred to as generic
or exogenous WOM or user-generated content (UCG) is both generated by custom-
ers and implemented by customers. Natural WOM occurs because customers like to
talk about interesting products or products that are frequently cued by the environ-
ment (Berger and Schwartz
2011
). People tend to contribute more content to shared
platforms with a larger audience base (Zhang and Zhu
2011
). Because WOM may
be a cost effective driver of sales, firms seek to initiate WOM about their products
that could be spread by customers. Firms can create WOM by anonymously posting
positive comments on the Internet about their own products (Mayzlin
2006
; Godes
and Mayzlin
2009
). Mayzlin (
2006
) shows that firm-created anonymous online
WOM may be a profitable equilibrium strategy even when consumers are aware of
the possibility that the firm is creating the positive WOM. Firms can also generate
positive WOM by offering incentives for existing customers to refer friends (Schmitt
et al.
2011
; Trusov et al.
2009
; Van der Lans et al.
2010
). Customers acquired
through referral programs have higher customer lifetime values than those acquired
through non-referral methods (Schmitt et al.
2011
).
Inference of WOM
. Face-to-face communications can be rarely observed by researchers
in nonexperiment settings. In the context of online WOM in social media and social
networks, direct measures of WOM are readily available. Measures of online WOM
studied include number of tweets on Twitter (Rui et al.
2011
), posts on message
boards or chat rooms (Godes and Mayzlin
2004
; Liu
2006
), book reviews on Amazon.
com and bn.com (Chevalier and Mayzlin
2006
), e-mail invitations (Schmitt et al.
2011
; Trusov et al.
2009
), and online comments (Sonnier et al.
2011
). The availability
of online WOM data provides tremendous opportunities for researchers to answer
many questions that are not possible to address in offline settings.
Attributes of WOM
. WOM can be characterized by its quantity or volume (such as
the number of times a product is mentioned on an online message board), dispersion/
reach (the extent to which product-related conversations are taking place across a
broad range of communities), and valence (positive, negative, or neutral comments).
The relationship between attributes of WOM and product performance is of great
research interest. Prior research in this area offers conflicting results. Godes and
Mayzlin (
2004
) find that dispersion of WOM rather than volume of WOM has a
significant effect on TV ratings. Chevalier and Mayzlin (
2006
) find that both volume
and valence of reviews are signiicant predictors of sales ranks of topic titles from
Amazon.com and bn.com. However, Liu (
2006
) analyzing over 12,000 messages
posted on the Yahoo movie message board, finds that volume of WOM, not its
valence, is a significant predictor of box office revenues. Some results show that even
negative WOM can lift sales by building awareness and increasing accessibility a
product (Berger et al.
2010
; Liu
2006
). However, other studies show that negative
WOM's destructive power could be more than twice as large as that of positive WOM
and harmful in the long term (Luo
2009
; Nam et al.
2010
; Sonnier et al.
2011
).
Impact of WOM
. WOM is particularly important for forming new attitudes and per-
ceptions toward new products, so researchers have focused on how WOM affects
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