Download The effects of NWOM and PWOM on brand loyalty

Presenter: Katrina
Instructor: Kate
December 28, 2009
Introduction
Literature Review
Methodology
Background of the Study
Statement of Problems
Purpose of the Study
Research Questions
Definition of Terms
According to the Bass model, two kinds of
communication dominate a buyer’s decision:
advertising and word of mouth (WOM).
(Mahajan et al., 1990)
Word of mouth (WOM) is informal advice passed
between consumers. It is usually interactive, swift,
and lacking in commercial bias. WOM is a
powerful influence on consumer behavior.
Keaveney(1995)
In consumer choice,WOM is often the dominant
factor; for example, Keaveney (1995) observed
that positive word of mouth (PWOM) was the
main source of information when people found a
new service supplier.
The extant literature has only limited research on
the impact of WOM on the recipient compared to
research on the impact of marketing
communication, such as advertising, on
consumers.
To investigate the influence of the WOM on brand
loyalty
To examine the different influences of PWOM and
NWOM on loyalty
To explore the ways to deal with the NWOM
problems and enhance more loyalty of customers’
1
What is the role of WOM on brand loyalty?
Which has the most impact on brand loyalty, PWOM
or NWOM?
3
Does the brand loyalty reduce the impact of PWOM
and NWOM?
NWOM (Negative word of mouth)
When consumers have bad experience be
produced from their mind on purchasing or using
experiences to a product or service, and then
they will tell others the worse experiences and
prohibit them to purchase or use the product.
Brand loyalty
In marketing, brand loyalty consists of a
consumer's commitment to repurchase or
otherwise continue using the brand and can be
demonstrated by repeated buying of a product or
service or other positive behaviors such as word
of mouth advocacy.
1
2
WOM is an informal mode
of communication
between noncommercial
parties concerning the
evaluation of products and
Services
As WOM is a low cost and
reliable way of
transmitting information
about products and services,
WOM plays an
important role in information
diffusion in consumer
markets and
shaping consumers'
attitudes
(Arndt, 1967)
(Mourali et al., 2005)
(Keller, 1993)
Positive Word –of -Mouth
From equity theory that
firms can restore
consumers’ propensity to
spread positive
recommendations by
responding fairly to an
inequitable service failure
(Goodwin and Ross, 1992;
Seiders and Berry, 1998).
Negative Word-of-Mouth
“Negative word of
mouth
is more influential than
positive word of mouth”
(though this claim may
conflate relative incidence
and relative impact).
Assael (2004)
Questionnaires
People who
live in Taiwan
Taiwan