As consumers, we value the opinion of another consumer rather
than some form of marketing campaign from a multi-million dollar company.
Receiving reviews directly, especially from a respected person, cuts out the noise
quickly and effectively. A study by Nielson indicates that 84% of people around
the world prefer word-of-mouth (WOM) recommendations from friends and family,
which they find the most trust-worthy. Also it shows that word-of-mouth was the
primary factor for 20-50% of all purchasing decisions. Therefore it is
important for companies to understand the value of a customer in terms of
marketing, and to identify and target these influential people in order to
improve brand equity and sales.
Having unlimited resources, time and access to information,
it would be beneficial from a company stand point to understand the impact of
WOM marketing and to find out which consumers are the most effective. With this
information companies could specifically target these consumers to increase
sales and increase the return on marketing.
I believe the data and information needed to analysis the
social network of WOM would be complex. Due to the shrinkage in degrees of
separation and the increase of online communities, it is getting more
complicated in understanding the influence of WOM marketing. Taking a
restaurant recommendation for example, we would have to find out who the
message is from (a close friend, or an online community member), who the
receiver is, the relationship between the two, the content of the message, the
source of the message (own experience or review-based), previous amount of
recommendations (followed or not-followed), the environment of where the
recommendation was mentioned, the level of trust between two parties, the
different behaviors and values of each, and the impact of the decision. The
list of data needed is extensive, and would be very difficult to collect for a
particular company.
Overall, as consumer’s decision habits are shifting, companies
could gain a sustainable competitive advantage if they can identify which
consumers have the most effective WOM impact to their business.
1 comment:
Indeed, all true. I had hoped to see something more like an application of SNA that demonstrates your understanding of how it works and what it can be used for.
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