Positive and Negative Word of Mouth in Restaurant Industry - Example

The paper "Positive and Negative Word of Mouth in Restaurant Industry" is a perfect example of a marketing capstone project. The introductory chapter covers the information of the study with the details of the background information, statement of objectives, objectives of the study, research questions, limitations of the study, importance of the research, and range of the study.

1.1 Study background

The use of word of mouth is not entirely a new concept in the service industry. It was first introduced in the 1970s by George Silverman who was a psychologist. He introduced this concept of the use of word mouth while trying to conduct focus groups with physicians (Evans, 2013). In the world of marketing, to persuade customers is the core to making business though marketers sometimes forget that conversation between clients always has the greatest effect. Word of the mouth involves sharing views about goods or services amongst different individuals and people who are not dependent on the organization offering the service. Consumers will always trust fellow friends and family members because their opinions are without prejudice (Podoshen, 2008).

In the service industry, and in this case, in the restaurants, there has been quite high competition, and this paves way for the use of the most successful and innovative ways in enhancing these services. In order to influence purchasing decision in the service industry, and fasten the adoption cycle, show purchasing intentions, also, fasten the acceptance and rejection speed, the use of word of mouth is of great need (Swan & Oliver, 1989). Word of mouth is thought to be a very influential and powerful tool and has been used as a medium of marketing for consumers mostly in the first stages of material generation to the evaluation of service givers and to making after-purchase decisions. Word of mouth has also been proven to assist when it comes to decision making (Thakor, M V. & Kumar, 2003). It is also evident that word of mouth is the only advertising mechanism which moves from one client to the other at very low cost and it is very effective. Customers view 90% of advertising to non-credible while 90% word of mouth to be credible (Lee Thomas, M., Mullen, L. G., & Fraedrich, 2001).

1.2 Statement of the problem

The use of word of mouth has been adopted by different service industries. Scholars have done research on word of mouth from a different perspective. According to (Dongsuk, 2001) this form of advertisement has a very big effect on the restaurant industry and the channel that most people use is face to face. Besides, Dongsuk also found that educated and knowledgeable clients actively look for information through word of mouth times when they are not sure about the restaurant choice to make. In his research, there was no mention of the relationship between the word of mouth and loyalty of customers in the restaurant service business. This gives a gap to be filled by further research.

Farooqi (2012), discussed how the word of mouth influences the decisions made in the service industry just like in restaurants. In his study, he found out that there is a higher preference to the use of word of mouth use by customers hence, it’s relied on heavily though there is no mention of the relation between hearsay and trust in the service industry.