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Bobby M

Page history last edited by Bobby Menbari 8 years ago

Electronic Word of Mouth - Putting Power Back in the Hands of the Consumer

written by Bobby Menbari

 

 

Electronic Word of Mouth...referred to in this text as eWOM, is a revolutionary idea that stems from a social practice we as members of a society engage in everyday. Traditionally, amongst small communities, neighborhoods, families, and/or friends, people tend to utilize their specific expertise or experiences to recommend certain goods/services to one another (Negroponte & Maes, 1996). As Chatterjee discusses (2011), this form of recommendation is pertinent to the person inquiring because it has a great deal of relevant value...the opinions typically don't stem from marketing or advertisement, but simply from experience with that particular entity (p.82). For instance, "Oh, I have a guy that can do your window tint"...or..."That new restaurant down the street is terrible...try this one and ask to be served by Eddy"...or perhaps...."Don't buy that television, it died shortly after I bought it...buy this Panasonic model instead". These are all examples of conversations everyone has had and continues to have almost daily...mainly because it is an extremely valuable source of information. Now, imagine that you can acquire this insider info from communities outside your own...or perhaps outside your state...and going even further, even outside your country!! Welcome to the world of eWOM. A savvy world where consumers make the rules and businesses dance to whatever tune we decide to play...and if they don't dance appropriately, they will cease to dance altogether.

 

The Internet as the 21st Century "Water Cooler"

 

The internet as we know it today is no longer a specific thing or entity, but rather an integral aspect of our communicative practices...and the way we exchange ideas is not exempt from this undeniable force. As discussed by Kim and Chu (2011), the typical "water cooler" dialogue of sports, politics, and  various other word of mouth related topics is now occurring beyond the constraints of time and space...in the form of eWOM (p.48). However, to understand the true value of the resources available to us today, it is useful to reflect on the past. In an article dating back over a decade, Negroponte and Maes (1996) discuss how a consumer's will to thoroughly research a particular good/service was hindered by the sheer challenges of doing so. "Meeting with, speaking to, calling, or finding those who may be interested is too difficult, and you probably wouldn't know who to contact anyway." Concerns pertaining to immediacy are no longer obstacles that need to be overcome...and are rather comical to ponder considering the world we live in today. Although traditional methods of recommendation such as independent expert sources are still dominate in specific categories, by in large, user-generated reviews take the cake (Horrigan, 2008). An aspect of the internet that has helped facilitate this transformation are social networking sites (SNS) and the general integration of a social networking capability in an increasing percentage of popular, user-based web sites.

 

Expanding your Community...Social Networking Sites

 

A common haphazard critique of the internet is that it tends to lean towards social alienation...further distancing individuals from one another. However, SNSs such as Facebook, MySpace, and other online communities like Yelp are a testament to quite the opposite. As argued by Kim and Chu (2011), SNSs represent an ideal tool for eWOM as it allows diverse communities to share ideas amongst one another more easily (p.49). What separates eWOM from traditional marketing/advertising is one integral aspect...trust. "That is, the higher level of trust SNS users have in their contacts, the greater the likelihood they will engage in opinion seeking, opinion giving and opinion passing behaviour on SNSs" (p.66). This sense of accountability is not foreign to what communities experienced in the pre-internet era. Traditionally, the best source of information has always been someone whom you trust within your own network and/or a community "expert" on a particular good/service (Wikipedia, 2011). What has changed, however, is the power that these online encounters yield to consumers as a whole. Companies who model their business from the perspective of quantity versus quality are few and far between...and the ones that still operate under this notion are in for a rude awakening.

  

The Yelp Effect...Marketing vs. Customer Service

 

From an advertising standpoint, most businesses structure their marketing from a push or pull promotional strategy. A push strategy focuses quite obviously on imposing a particular good/service on a consumer through a variety of retailer based, internal promotions. Whereas a pull promotional strategy creates consumer demand through the costly creation of a perceived value...essentially duping the consumer into believing they truly need that particular good/service. The common denominator in both of these scenarios is that the consumer is consequently, and inevitably, at the mercy of the business. eWOM and SNSs have altered this dynamic indefinitely, leading businesses to reevaluate their dated marketing strategies. As discussed by Vellandi (2009) in an interview with a local business owner, "In the past, he'd spend $50-100k on Yellow Pages advertising, but now spends $0. The Yelp effect on his business was that (in terms of dollars) = increased customer service, lower marketing, and increased sales." This new dynamic has not only altered what businesses focus on, but how they market to their customers...rejuvenating the old adage of "the customer is King". Geoff Donaker, COO of Yelp discusses this very dynamic and the rhyme to Yelp's reason.

 

Listen to internet radio with Womma on Blog Talk Radio

 

Prior to the contagious spread of eWOM, entities such as the Better Business Bureau dominated the independent review market...but unfortunately were not able to adapt within the realm of social networking. Although the BBB was, and to some degree still is a credible source of information...its value is still trumped by that of user-based sites.

 

                         Post image for The Future of Business Ratings

 

"A customer has no need to contact the BBB when they can get online and affect your brand directly through places like Yelp. It means that you better be out there, engaging consumers, and influencing what they say about your business" (Bertoldi, 2010). What has occurred as a bi-product of this new dynamic is the perceived consumer value of a particular business's online reputation as well as a heightened awareness by marketers and businesses alike.  

 

Walking on Egg Shells...the Role of Online Reputation

 

As a society, we tend to put a great deal of value in our reputations...especially within our own communities. However, in a world of cutting costs and taking short cuts, this concept has traditionally fallen on deaf ears when it pertains to the way most businesses operate; reputation has traditionally taken second seat to profits and volume. "In today's online social media world, businesses of all shapes and sizes must actively participate in online reputation management" (Jantsch, 2008). A MSNBC panel of industry professionals discuss this concept and the role of eWOM as it pertains to businesses.

 

 

Due to complications created by the "Yelp effect", businesses are becoming aware of their dated methods of marketing and taking a more active role in social networking sites (Helft, 2011). This revolution has become so prevalent that entire businesses are being creating to provide an one-stop avenue for online reputation maintenance (Jantsch, 2008). So what does this mean for the user? Well, Tuttle (2010) would argue "That's why many business owners are reaching out to disgruntled customers who have trashed the establishment with a revenue killer of a review, begging (bribing?) the review to reconsider by offering free meals, gift certificates, free consultations, and money back for the original transaction."

 

Marketers have also jumped on the band wagon as their antequated methods are being overlooked by businesses more often everyday. Zhan and Li (2011) discuss how marketers utilize user-generated reviews almost as focus groups, paying close attention to what goods/services were rated positively and for what reasons (p.252). This information is often reported back to the business in question and ultimately used to better the user's experience, but in many cases, leads to "voluntary" user retractions and other suspect behavior. Youn and Lee (2009) elaborate on this very topic; "Determining the quality of online posts has become even more difficult now that marketers have attempted to influence eWOM by compensating consumers to review products and even going so far as to post their own reviews about their products" (p.474). Although sites such as Yelp have failsafes to avoid such occurrences, as it pertains to any form of information found online (present content included), individuals must be aware of how to effectively navigate and sift through the endless sea of information available to them at any given moment...so that ultimately, the power is rightfully put back in the hands of the consumer.

 

References

 

Bertoldi, M. (2010, October 14). The future of business ratings. Retrieved from

http://michaelbertoldi.net/yelp-or-the-better-business-bureau-the-future-of-business-ratings/

 

*Chatterjee, P. (2011). Drivers of new product recommending and referral behaviour on social network sites. International Journal of Advertising 30, 1, 77-101.

 

Helft, M. (2011, April 7). Facebook promotes social e-commerce. New York Times. Retrieved from http://bits.blogs.nytimes.com/2011/04/06/facebook-touts-social-e-commerce/?scp=9&sq=word%20of%20mouth&st=cse

 

Horrigan, J. (2008, May 18). The internet and consumer choice. Retrieved from http://www.pewinternet.org/Reports/2008/The-Internet-and-Consumer-Choice.aspx

 

*Kim, Y., Chu, S. (2011). Determinants of consumer engagement in electronic word-of-mouth (eWOM) in social networking sites. International Journal of Advertising 30, 1, 47-75.

 

Jantsch, J. (2008, December). Look good online. Entrepreneur Magazine. Retrieved from http://www.entrepreneur.com/magazine/entrepreneur/2008/december/198686.html

 

Negroponte, N., Maes, P. (1996, October 1). Electronic word of mouth. Wired Magazine. Retrieved from http://www.wired.com/wired/archive/4.10/negroponte.html?pg=1&topic=&topic_set

 

Tuttle, B. (2010, February 26). Online user reviews: Use them to buy wisely, vent, and get free stuff. Time Magazine. Retrieved from http://money.blogs.time.com/2010/02/26/online-user-reviews-use-them-to-buy-wisely-vent-and-get-free-stuff/

 

Vellandi, M. (2009, June 30). Yelp: Empowering consumers with local knowledge (WOMM-U). Retrieved from 

http://www.melodiesinmarketing.com/2009/06/30/yelp-reviews-word-of-mouth-marketing-case-studies/

 

Yelp, Inc. (2011). Wikipedia. Retrieved from 

http://en.wikipedia.org/wiki/Yelp,_Inc.

 

*Youn, S., Lee, M. (2009). Electronic word of mouth (eWOM). International Journal of Advertising 28, 3, 473-499.

 

*Zhan, L., Li, J. (2011). Online persuasion: How the written word drives WOM. Journal of Advertising Research 51, 1, 239-257.

 

Comments (21)

Jay Barton said

at 10:59 am on Apr 27, 2011

I've been wait for companies like JD Powers and other consumer rating services to go under because of this exact thing. Word of mouth wil crush them eventually. How can I trust some corporate giant, who in my mind is suseptable to bribes and the like, when I've got the opinions of thousands of individual consumer users at my fingertips? As bloggers initiated this type of advertising, I knew instantly JD and the others were on their way out. Great topic, very relevent, very now. I can't wait to see the final page when your done. Keep up the good work.

Jenna Saenz said

at 4:27 pm on Apr 27, 2011

Bobby (totally saying your name in a British accent) Nice topic! like Jay said, its totally going on in today's society! Nicely done!

uismiguel@... said

at 11:48 am on Apr 28, 2011

Hey Bobby, i like the topic, but i think there is still a bit work to be put in it. It is just good so far..

Bobby Menbari said

at 4:29 pm on Apr 28, 2011

well considering i have only written the first paragraph...i agree.

victorngo85@... said

at 2:13 pm on Apr 28, 2011

Looking good so far and I really liked your videos.

jt_thizzle@... said

at 3:15 pm on Apr 28, 2011

Word of mouth is a very powerful tool both F2F and in CMC. I cant wait to see your final wiki!

Mark Francis said

at 3:56 pm on Apr 28, 2011

Very interesting! i like how it is a different topic and not just something ordinary. Good job! goodluck finishing up as well!

Aubrey Lee said

at 8:04 pm on Apr 28, 2011

Interesting topic, word of mouth.. I dig it. Good luck!!!

Justine Cranford said

at 10:54 pm on Apr 28, 2011

Very well done sir. It looks great. I love the choice of font it stood out for me and got my attention. i look forward to your presentation. :)

dbooth said

at 12:28 am on Apr 29, 2011

hey this is a lot like mine, it's like you were listening in on my ideas. Just kidding of course- I read your comment. I dug the page. I dislike Yelp greatly because working in a service industry you know that the customer is rarely right. There have been lawsuits against yelp because I guess competing businesses have been trashing each other so people don't go there.

reilingss2b7@... said

at 6:47 pm on May 2, 2011

i like the topic, it shows how the world is going to change from scences from the office where jim and pam meet and eventually get married to stuff like that happening on the internet.

dbooth said

at 12:29 pm on May 3, 2011

hey this wiki is a lot like mine, it's like you were listening in on my ideas. Just kidding of course- I read your comment. I dug the page. I dislike Yelp greatly because working in a service industry you know that the customer is rarely right. I've seen people give the club I work for 1 Star because we have a two-item minimum. If you go to any comedy club you would know its standard practice. There have been lawsuits against yelp because I guess competing businesses have been trashing each other so people don't go there. I think the greatest example of viral advertising was the Shake-Weight product. Create an advertisement that is so insane and absurd(and strangely sexual) that people can't stop talking about it.

uismiguel@... said

at 7:19 pm on May 8, 2011

Now it looks far complete than when i saw it last time. You put a lot of more work and videos in this wiki, and the way it has evolved is great. I am looking forward to seeing the presentation, and i bet it will be great.. Good Job.

Lena Zubaid said

at 12:01 pm on May 9, 2011

Bobby, I like your topic, it is very interesting, and something I would not have thought of. This is so true though, how people basically advertise things and they do not even know it. I use Yelp all the time, it is currently helping me find places to eat and find apartments to live in. I guess it is a form of advertising form normal people. No one had to major in it to be able to do that and people are taking their word for their opinion. Now that I think about it, I don’t know if that is a good thing or a bad thing. I think that you did a great job!

ronnie hansen said

at 5:48 pm on May 10, 2011

Very interesting topic. I enjoyed your presentation which was well spoken by the way, and the topic was interesting. This is something that a lot of people rely on; electronic word of mouth. I know I always use yelp for several things, mainly service as you were talking about. It really does not affect a brand like you mentioned and this is more for people looking to get service in some form. I do, however, think this can be negative and positive. If someone on yelp or online YP gives bad ratings based on a rare experience or a silly reason, it could affect business over a random person with a personal vendetta. Overall well done and clean/neat wiki!

ericadeguzman@yahoo.com said

at 9:20 pm on May 10, 2011

Great presentation today, Bobby! I thought you came well prepared and you’re Wiki was very informational. I liked the question you asked about when was the last time any of us used the yellow pages.. and really, for me, it’s been forever. And that question really did get me thinking, we as a society have moved away from printed items so much. And certifications in restaurants or wherever else really are obsolete when compared to on line sources like yelp. Did you know you even have the option to have receipts emailed to you know as opposed to having them printed out during your purchase at the actual store? Or at least I know they give you that option at Apple stores. Overall terrific wiki, topic and presentation! Great job!

Jay Barton said

at 10:19 am on May 11, 2011

Great presentation yesterday, bro. I was already over the 100 word mark on your wiki (notice the missing *In Addition..*), so this is just me saying I really enjoyed it and think a business that maintains online reputations is a wonderful venture right now. On my way home from class yesterday I was thinkin bout your topic and came up with the name "Review Hounds" and "Strategic Online Review Management (SORM)"...actually talked to a buddy and think it'd be a cheap way to use our skills and get a consulting firm moving. Very cool, thank you. Have a great summer, dude.

gre_89@hotmail.it said

at 11:28 pm on May 11, 2011

Bobby, your project is very interesting! You made me think that for a local business, online reputation and customer service are really relevant aspects. I did not know anything about Electronic Word of Mouth and Yelp.com, but it is very good to know. As you wrote, it is a revolutionary idea, that small communities, neighborhoods, families, and/or friends, or simply people around the world can recommend certain goods or services. Further, exchange of information among online customers can have negative or positive effects on business, and quickly. Anyway, on your project, the communicative aspect is really highlighted, since that people through history have always looked for ways to exchange ideas in order to help and make suggestions to others. In fact, as you wrote, the internet is the perfect way and opportunity for us to exchange ideas.

sekashiwa@gmail.com said

at 1:49 am on May 12, 2011

This wiki had a lot of great insights to something we all do and depend on but never really analyze. I had to do a bit of research for my wiki on this but your's explains things very eloquently. I use yelp a lot just to check out places I haven't been to. I once tried to find a good Phillipino restaurant in town when my sister-in-law visited and we used yelp to find a great one in Milpitas. It seemed like word-of-mouth would make sense to be such a powerful too since the internet basically has absolutely no filter when it comes to garbage or fakes. The only way you can trust anything online now is if someone real confirms it's real. Even when I review games or products I check as many reviews as I can to try and weed out the people that are obviously biased one way or another, Even then nothing makes me more motivated to purchase than when people I know recommend something.

Juleane said

at 9:09 pm on May 12, 2011

First of all great project title caught my attention right away and great wiki presentation/page truly an interesting topic, good research too!
Customer service and marketing strategies or issues that I am becoming more and more familiar with. It's easy to say that I've been desensitized to eWOM and marketing tools and such because I have been, I used to think nothing of it. But now because of ALL THIS INFORMATION that's changed. Every aspect of the product and/or commercial or even reviews have been reviewed and reviewed again assessed and reassessed. There are people in large corporate buildings having meetings on how to best con consumers. It always fascinates me to think that someone somewhere thought that this was just a brilliant idea and told their supervisor who co-signed it and ran with it and this person got a promotion, a new shiny name plate, and a parking space when the whole point was to get people to buy something they probably really didn't need. (That was a long rant sorry). At the end of the day I may be a bit naive, but I think I'm not greatly affected by eWOM I much rather hear from someone I know and who knows me and not listen because it's a trending topic on Twitter or got the most hits on Youtube or 1,000 people like it on Facebook. I guess I like good old fashion WOM.

Serena Sharma said

at 3:00 pm on May 14, 2011

This was an interesting topic you chose! I think that it is true that we no longer heavily rely on what people have to say because we can easily go onto websites like yelp and get tons of reviews on any particular business we need at the time. Personally my friends are really big on using yelp and before we go into any restaurant they always want to read reviews on it first. After hearing your presentation, which I think you did a great job on, I did not really think too much of who was writing the comments whether is was people providing opinions or just their competitors trying to make them look bad. Good job on the wiki!

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