Download Mc Kinsley quarterly A New way to measure word-of

MCKINSEY QUARTERLY:
A NEW WAY TO MEASURE
WORD-OF-MOUTH MARKETING
GURU
MARIE
PALAK
SHWETHA
AGENDA
Introduction
3 Types of Word of Mouth
Measuring WOM
Implications of WOM
Harnessing WOM
A NEW WAY TO THINK ADVERTISING
More and more products and innovations on the market
Huge amount of money spent by the brands for advertising
INCREASING WOM
WOM: A CONSUMER DECISION TOOL
FIRST PURCHASE
WOM used in
20 to 50% of all
the purchase
decisions
ONE TO MANY BASIS
EXPENSIVE
PURCHASE
(high involvement)
NEW CHALLENGE FOR MARKETERS: UNDERSTAND AND USE IN EFFICIENT WAY WOM
CONSUMER DRIVEN VALUE
• Consumer became skeptical toward brand ads
• THE SOLUTION: THINK INDEPENDTLY throught WOM
• CONSUMER are more powerfull
WOM impacts:
Brand Perceptions
Purchase rates
Market Shares
IMPORTANCE FOR
COMPANIES TO
INVESTIGATE AND
MANAGE WOM
Introduction
3 Types of Word of Mouth
Measuring WOM
Implications of WOM
Harnessing WOM
I. EXPERIENTIAL WORD OF MOUTH MARKETING
Product/Service
fails to meet
expectations
Brand
Sentiment/
Equity
Eg:- National Geographic: Augmented Reality
http://www.youtube.com/watch?v=TL62txWNFMY
Reduced brand
receptiveness to
tradition marketing
Effect of positive
word of mouth from
other sources
II. CONSEQUENTIAL WORD OF MOUTH MARKETING
Consumers directly
exposed to traditional
marketing campaigns
Direct Effect
Stronger impact than
direct advertisements
High campaign reach
and influence
Pass-On
Effect
Message and
marketing
media mix that
generates
highest ROI
III. INTENTIONAL WORD OF MOUTH MARKETING
Downsides:
1. Difficulty in
measuring the impact
2. Uncertainty
regarding
implementation of
such campaigns
successfully
Introduction
3 Types of Word of Mouth
Measuring WOM
Implications of WOM
Harnessing WOM
MEASURING WOM
Number of recommendations or
dissuasions
Variability in power
WORD OF MOUTH EQUITY
Volume
Volume  Number of WOM
messages
Impact  Average Sales Impact
WOM
Equity
Impact
Who?
What?
Where?
WOM
DRIVERS OF WORD OF MOUTH
+ Relevant key buying factor
- Irrelevant key buying factor
What?
• Content of the message
Who?
• Identity of the sender
Where?
• Environment
+ Influential
- Non-Influential
+ Close Network
- Large network
Introduction
3 Types of Word of Mouth
Measuring WOM
Implications of WOM
Harnessing WOM
IMPLICATIONS FOR MANAGERS
Flexibility
Performance not volume
Identify drivers of WOM
Insights!
Introduction
3 Types of Word of Mouth
Measuring WOM
Implications of WOM
Harnessing WOM
HARNESSING WORD OF MOUTH
• Internet plays the role of amplifier.
• Magnitude is larger than ever that was available.
FLIPSIDE
ADVANTAGES
Cannot control what consumers say
and examples of companies being
hurt by this characteristic
It can be a byproduct from
traditional
advertising
If I am happy I am likely to
recommend and if I am unhappy, I
am likely to propagate a negative
WOM
Consumers tend to
trust other
consumers than
they trust brands
WOM directly
driving or
explaining sales
drives of up to 20%
to 50%.
“If you still have doubts that WOM marketing is not an effective tool, its time to
rethink. Because of social media, it has emerged to be the biggest contributor
of a firm’s growth and YOY sales performances.”
4 ESSENTIAL DRIVERS TO DETERMINE IF WOM IS IMPACTFUL
Who is sending the message : A sender and the receiver
receiving the message. (Both should trust each other)
The message content (For. Ex recommending a product)…
substantiating the recommendation.
What triggers the sender to give the recommendation. (It
may be by hearing from others)
The context in which the WOM message takes place is
crucial.
• http://www.youtube.com/watch?v=FKeeku0O4l8
• http://www.youtube.com/watch?v=Wp_i-Cq7ec8
2 characteristics that create
Positive Word of Mouth
1. INTERACTIVITY
2. CREATIVITY
Ex: Cadbury’s Gorilla Ad with the Iconic Phil Collins song.
Result: 1. More than 6 million views on YouTube.
2. YOY sales of Cadbury increasing by more than 9%.
3. Brands positive perception among consumers increased by 20%.
INTENTIONAL WOM CAMPAIGNS: Identifying influential individuals who become brand and product
advocates.
Messages can be directed at specific individuals who are most likely to spread positive word of mouth
through their social networks. As a message spreads, this approach generates an exponential word-ofmouth impact, similar to the ripple effect when a pebble is dropped in a pond.