Firm-Created Word-of-Mouth Communication

Word-of-Mouth communication (WoM) has proven to be important in the advertising of a company. Both negative and positive WoM communications have a big influence on a company’s brand value and sales numbers.

There are two different types of Word-of-Mouth communication:

• Endogenous WoM: conversations that are occurring naturally among consumer due to experience with the product in the past.

• Exogenous WoM: conversations that are created by the actions of a firm.

In addressing the two, both weak and strong ties between people must be identified. Weak ties are ties between people that have little in common with each other, where as stronger ties are ties between people in for example friends and/or families.

Within exogenous WoM communication, communication between weak ties is most effective, since then the information is communicated to people who might have very different knowledge, where as people with strong ties mostly already know about the preferences and experiences of the others, before starting the WoM campaign. Thus a campaign focusing on the stronger ties may be less effective.

Opinion Leadership

Opinion leadership is when an active media user first interprets several media messages and than explains them to people that are less active media users. This is a very effective medium amongst marketers, but the question is if it is also useful when creating word-of-mouth communication. The problem with opinion leadership is that they are at the risk of loosing their status if they recommend products that their followers are not interested in. After all, opinion leadership has shown to work well with the creation of WoM for more loyal consumers, whereas it has been less well functioning with less loyal consumers.

Since it has been proven that exogenous WoM communications work better with less loyal consumers, opinion leadership is less fit to use.