Its required to write a Literature Review on the topic area (Word- of -Mouth…………….

positive and negative word of mouth

Companies have continued to appreciate the role of verbal word of mouth as a popular marketing strategy to market their products without having to engage in intense marketing efforts. It is however important that these companies understand the effects of verbal word of mouth. Word of mouth can be both positive and negative at the same time (Kelly 2007).

Positive verbal word of mouth is a consumer behavior exhibited by satisfied customers. Customers who are satisfied with a particular product will promote a company and the products it produces. Their main intention will be to enhance other consumers’ perception of the company, product or even its brand (Brown et al., 2005). Positive word of mouth‘s drive comes from customers who possess rational attitudes and evaluations about the quality of the service or product that was sold to them (Brown et al., 2005).

Positive word of mouth increases consumer loyalty and therefore increases a company’s potential to grow. When friends or relatives speak positively about the brand of a particular company, others are likely to have an interest on the brand being praised. They will buy small portions of the product to confirm if it is worthwhile and after confirmation of the goodness of the brand they will make more purchases and will influence others to make purchases (Keiningham et al, 2008). The authors also point out that it is very unlikely that consumers will buy expensive products through mere word of mouth, they need further convincing.

Positive word of mouth encourages customer retention and repeat purchases rather than post purchase dissonance (Nadeem 2007). Nadeem, in his study argues that provided a customer has a positive feeling that is the opposite of a feeling of discomfort or dissonance after purchasing a product, he / she will make more purchases and will propagate a positive word of mouth that will be beneficial for that particular company and will help it retain its customers and hence improving customer loyalty (Nadeem 2007). He also points out that post purchase dissonance is a very influential feeling in putting forward a negative word of mouth for any company.

For consumers who perceive lower switching costs, positive word of mouth is likely to elicit more commitment on the part of consumers and they are less likely to switch suppliers or service providers (Wang 2005). According to Wang, positive word of mouth creates a good reputation for the company and no matter how much the switching cost might be low, a company’s consumers are less likely to think of switching service providers.

Wang also points out that positive word of mouth has more benefits to a company in helping it achieve sustained competitive advantage. When people engage in informal talk about any particular company, provided they talk positively about it, then that company is likely to gain a competitive edge in the market than its competitors. More consumers will be inclined to buy its products and they will often have no intention of changing their buying behavior (Wang 2005).

Negative word of mouth is generally exhibited by those consumers who are dissatisfied with a company’s product or service. Studies show that many consumers engage in negative word of mouth rather than positive word of mouth (Richins 1983). Negative word of mouth is usually due to strong emotions such as frustration and anger that reflect the level of dissatisfaction that a company’s product produced in a particular customer (Pruden and Vavra 2004). Dissatisfied customers will tend to talk more about their dislike for certain products and will work towards discouraging others form buying such products.

Negative word of mouth has been known to create more consumer complaints than expected. According to Halstead (2002), some consumers have been known to complain not because they were dissatisfied but because they were influenced by what other people say about a company’s products and services. Halstead also argues that not customers who are dissatisfied will complain; even those who are satisfied may be inclined to do so when influenced by negative word of mouth (Halstead 2002).

Negative word of mouth affects the sales that a company is able to make. Empirical studies have shown that provided customers are dissatisfied, 30% to 90% of them do not make repeat purchases and will influence others not to buy those products. Further 34% of customers who were influenced through negative word of mouth did not buy personal care products (Richins 1983). Richins also points out that provided the effects of negative word of mouth are long lasting the company involved is likely to have a bad image and its sales are likely to be lower than expected.

Negative word of mouth has been known to adversely affect the image that consumers have of companies. Most companies believe that rarely are consumers dissatisfied by their products (Richins 1983). However, when negative word of mouth gets to those consumers who were once loyal to a particular company, they are more likely to change their perception of the company and will engage in further verbal negative word of mouth to destroy the company’s image. Customer loyalty gradually diminishes and the company is left not only with few or no customers but with a bad reputation (Herr, Kardes and Kim 1991).

Negative word of mouth affects the buying behavior and decisions of consumers. Most consumers when faced with situations where they have to make important purchase decisions give more attention to negative word of mouth. Empirical studies have shown that individuals who have to make decisions to buy products such as cars and other expensive products will not make the purchase after friends or relatives tell them something negative about particular brands (Lau and Ng 2001).

Negative word of mouth influences the behavior of consumers in relation to switching costs. Consumers who get access to negative word of mouth are likely to have more intentions of switching suppliers than those who are influenced by positive word of mouth and they are also likely influence others to switch to other service providers (Lee and Romaniuk 2009). In their study they also attribute the negative word of mouth to consumers who perceive a company’s switching costs to be higher than normal, such consumers engage in more damaging talk about the company in question.

Conclusion and recommendations

Both types of verbal word of mouth influence consumer behavior, however, few consumers react quickly to positive word of mouth as compared to negative word of mouth. Negative verbal word of mouth is more likely to lead to a larger grapevine which has detrimental consequences to any company that is affected by it. While positive word of mouth helps companies to gain a competitive edge in the market, helps them to grow and retain customers, negative word of mouth works towards defeating these efforts. It is the habit of most consumers to let their buying behavior and decisions get affected by negative words from friends, relatives or from gatherings, because they would rather refrain from purchasing such products than have a feeling of dissatisfaction.

Since negative word of mouth seems to affect more and more companies, it is recommended that companies find ways that will enable them lessen the cause of negative word of mouth and hence the need of further research on ways in which companies can do away with verbal negative word of mouth that spreads around about them.

References

Brown, T.J., Barry, T.E., Dacin, P.A. and Gunst, R.F., 2005, Spreading the Word:

Investigating Antecedents of Consumers’ Positive Word-of-Mouth Intentions and Behaviors in a Retailing Context, Academy of Marketing Science Journal, 33(2), pp. 123-123-138.

Halstead, D., 2002. Negative word of mouth: Substitute for or supplement to consumer

complaints? Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior, 15(08998620), pp. 1-1-12

Herr, P, Kardes, F and Kim, J, 1991, Effects of word of mouth and product attribute

information on persuasion, Journal of Consumer Research, vol. 17, No. 4, pp. 454-462.

Keiningham et al, 2008. Linking Customer Loyalty to Growth. MIT Sloan Management

Review, 49(4), pp. 51-51-57.

Kelly, L., 2007, Beyond buzz: the next generation of word of mouth marketing, AMACOM

Div American Management Assn.

Lau, G.T. and Ng, S., 2001. Individual and situational factors influencing negative word-of-

mouth behaviour. Canadian Journal of Administrative Sciences, 18(3), pp. 163-163-178.

Lee, R. and Romaniuk, J., 2009. Relating Switching Costs to Positive and Negative Word-

Of-Mouth. Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior, 22(08998620), pp. 54-54-67.

Nadeem, M.M., 2007. Post-Purchase Dissonance: The Wisdom of the ‘Repeat’ Purchases.

Journal of Global Business Issues, 1(2), pp. 183-183-193.

Pruden, D, & Vavra, T 2004, ‘Controlling the grapevine’, Marketing Management, 13, 4, pp. 24-30, Business Source Complete.

Richins, M. L., 1983, Negative Word of Mouth by Dissatisfied customers: A Pilot Study, The

journal of Marketing, vol. 47, No. 1

Wang, H. 2005,The effect of positive word of mouth on consumer switching behavior,

University of China.

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