Word-of-Mouth Processes within a Services Purchase Decision Context - Essay Example

Research Methods Literature Review on “Word-of-Mouth Processes within a Services Purchase Decision Context” TABLE OF CONTENTS INTRODUCTION ……...……… …………………………P.1 2. CURRENT RESEARCH AND CONTEXT ……...……… P.1 3. RESEARCH PROBLEMS AND QUESTIONS …………..P.2 4. RESEARCH APPROACH AND METHODS……...……...P.3 5. SAMPLING ……...……… ……………………………….P.4 6. CRITICAL ANALYSIS ………………………………… .P.5 7. CONCLUSIONS…………………………………………...P.6 8. BIBLIOGRAPHY ……………………………………….. P.7 9. APPENDIX …………….. P 9 – 21 “Word-of-Mouth Processes within a Services Purchase Decision Context” Journal of Service Research, Nov 2000, Vol 3 No.2 , P.166-177 Critical Review – Word-of-Mouth Processes within a Service PurchaseDecision Context Introduction Word of mouth simply refers to an unpaid verbal promotion wherein exchange of information about a specific product or service offered by a company occurs. The sender is usually the satisfied party telling others (the receivers) how much the sender liked a product and/or service. According to Bansal and Voyer, Word of Mouth (WOM) can be considered as one of the most credible forms of advertising. (2000) Since service purchases are considered more risky than product purchases, Bansal and Voyer investigated the processes involving WOM in a service purchase context. This report critically reviews the Bansal and Voyer article. Current Research and Context The current trend in WOM advertising and marketing includes ethically questionable tactics such as viral videos, guerrilla marketing and paid endorsements of email or Facebook friends and family, or celebrity pages. Litven, etal proposed this modern definition, “WOM is the communication between consumers about a product, service, or a company in which the sources are considered independent of commercial influence”. (2005) This statement implies the perceived independence is actually more important than the actual independence. The Litven, etal. Article considers travel and hospitality business and the attempt to capture positive WOM. Since many people consider travel risky in terms of settling onto a poor choice of destination or accommodation, travelers seek WOM advice from prior journeys. The internet has become a resource for destination information, some independent, some apparently independent. Email, websites and blogs are asynchronous communications that control the outgoing message. The travel industry as well as other high risk applications should indulge in this form of WOM. Pictures still tell a story better than words, and corporate WOM marketing should include photographic evidence, especially to combat negative WOM. The Lee, etal. article quantifies the effects of WOM on business bottom lines. This study demonstrates the long-term lifetime value of WOM as opposed to indirect marketing. WOM is shown to create a definite value. (2006) The Villanueva, etal study relates closely to the Lee article; however, Villanueva looks at acquisition costs and equity return of building clientele by mass marketing and WOM. WOM proves to be more cost effective, although slower, than mass marketing because WOM provides the best clientele. Long-term customers come from WOM whereas one time customers, the wrong customers, come from mass marketing efforts. (2006) The Bansal and Voyer Research is fundamental to these other studies. This critique reviews these fundamentals. The Bansal and Voyer Research Problems and Questions A number of features of the study are worth pointing out before conducting a detailed critical appraisal of the research. The researchers provided a detailed account on the nature and concept of WOM, but suggested this research was necessary to further explore WOM in marketing services. The researchers also offered a detailed account on the conceptual model and how this lead to their hypotheses. Bansal and Voyer (2000) also offered a comprehensive analysis method in three stages – exploratory analysis, confirmatory analysis and path analysis. The study presented a contracted discussion of interpersonal and non-interpersonal influences on the word of mouth process. The authors indicate the importance of the study to management, and the feasibility for a wider implementation. Service users are identified through distribution of 450 questionnaires, 176 of which were returned. However, only 165 questionnaires are analyzed to be usable for the purpose of the study. One could understand that the researchers make use of informed sampling hence the study unintentionally excludes numbers of individuals with no experiences of being informed of either of the services listed. The study involved newly posted military members and their dependents at a Canadian Forces Base in Eastern Canada. Target participants are chosen basically because they tend to seek new services upon new posting and that is every 2 or 3 years. Research Approach and Methods Bansal and Voyer suggest and test nine hypotheses: 1. “The greater the extent to which the WOM is actively sought by the receiver, the greater the influence of the sender’s WOM on the receiver’s purchase decision. 2. The greater the strength of the tie between the sender and the receiver, the greater the influence of the sender’s WOM on the receiver’s purchase decision. 3. The greater the tie strength between the sender and the receiver, the more actively sought the WOM information. 4. The greater the perceived risk of the service, the more actively sought the WOM information. 5. The greater the sender’s expertise, the more actively sought the WOM information. 6. The greater the sender’s expertise, the greater the influence of the sender’s WOM on the receiver’s purchase decision. 7. The greater the receiver’s expertise, the less actively sought the WOM information. 8. The greater the receiver’s expertise, the less is the receiver’s perceived risk associated with the service. 9. The greater the receiver’s level of expertise, the less the influence of the sender’s WOM is on the receiver’s purchase decision.” (2000) These nine hypotheses are based on a sender, a receiver, their relative level of expertise, the tie strength between the sender and receiver, desire to find WOM and the risk of the service. Statistical analysis supported hypotheses 1, 4, 6 and 8. These results seem somewhat heuristic.1 If the receiver seeks advice, they value it. If the service is risky, for example a family doctor, advice is sought, and by extension (1) valued. Asking experts will be influential. If the receiver is knowledgeable, the perception of risk is abated. These results make sense. Hypotheses 2, 3 and 5 were supported less. Again, somewhat heuristic, if the sender and receiver are tied, the message is valued. People seek guidance from people they know and trust. And, people seek expert advice. Hypothesis 7 reached a counter result. It seems people who are well informed seek information. Informed people engage in data collection. Hypothesis 9 result was inconclusive. Sampling As opposed to randomisation, participants are chosen through an information oriented sampling (Yin, 2002). Results of the investigation are also presented in a tabulated form. Study designs are usually stronger when subject selection is guided by the need to make a valid comparison (Gail and Benichou, 2000). Hence, the research was able to make generalisations that will move from time and place for specific observations despite the fact implementation are still in its infancy. A simple weakness however is that the authors offer no conceptual definitions of service uses of the target participants. On the other end of the spectrum, a pretest study also makes the investigation more valid. A more heterogeneous group needs to be tested. A more contemporary set of decisions should be used as well. Perhaps with internet marketing, data collection could be accomplished at the point of sale. Data collection from referenced sales, for example book or music clubs where current members receive gifts for WOM sales, could be reviewed. Critical Analysis A relatively homogenous group was chosen, military families, because they relocate often and seek new services. This group also has a well trained hierarchy of decision making. The rank of the expertise may have as much influence as the social tie. Military organizations value conformity, and this value may interfere with testing and sampling. In ensuring that there will be no observer bias, a pretest was conducted using the students from a medium-sized Canadian university on a completely voluntary manner. A total of 82 usable questionnaires were obtained and used for modification of the questionnaires. Since measures are different and adapted from other peer reviewed journal articles, systematic bias was avoided in both information and selection of participants. No errors, in general, had been introduced during data collection. This is critical because errors on data collection could not be corrected later on and might affect the outcomes of the study (Ahrens and Pigeot, 2005). The reduction of observer bias does not eliminate participant bias. Bansal and Voyer (2000) recognizes the limitation of the study. Limitation is apparent on the utilization of retrospective data. The sender’s expertise is listed as non-interpersonal. Since the receiver must perceive expertise, especially in the military hierarchy, this factor seems more interpersonal. Perhaps further study is required in this particular facet of the study. Nevertheless, the authors presented a managerial implication section that outlines how the findings can or may possibly affect the operation of service providers. In newer studies, hypothesis 6 is interesting. “The greater the sender’s expertise, the greater the influence of the sender’s WOM on the receiver’s purchase decision.” As this applies to guerrilla marketing, Lee, etal. found marketing companies sending “young hip” actors into music stores to loudly positively “buzz” new albums; attractive actresses into bars to share new cigarette brands; and liquor sales people money to buy customers drinks of their brands. These marginally ethical enterprises use this hypothesis to sell merchandise. Conclusion Greenberg et al (2005) state that the concept of validity concerns the degree to which a measurement or study reaches a correct conclusion. A specific aim is stipulated though it is uncomplicated to assess whether the conclusions responded to the research aims since the discussion lacks conclusion. Savitz (2003) said that the implications of findings that is separate from the academic merits of the study create incentive to reach the conclusion. Since there is no conclusion, readers may be left in an ambiguous state. The data collected are worthy and the analysis is adequately performed. The study concerns fundamentals in WOM marketing. The wide-spread use of internet marketing has changed the basic usage of WOM. Facebook pages with “Like it” tags, written summaries and critiques from unknown sources, websites claiming to be independent evaluators of goods and services and “expert” bloggers create doubt in the veracity of internet information. The fundamental findings seem to be accepted and useful in current studies. However, current studies are more apt to address service provider attempts to control and manipulate WOM rather than the actual effects of WOM senders. Perhaps the heuristic hypotheses are widely accepted and the new senders, such as bloggers and websites, are being studied in depth. BIBLIOGRAPHY Ahrens, W and Pigeot, I 2005, Handbook of Research, 1st edn, Birkhauser. Bansal and Voyer (2003), Word-of-Mouth Processes within a Services Purchases Decision Context, Journal of Service Research, November 2000 vol. 3 no. 2 , P166-177 Creswell, J W 1994, Research design: Qualitative and quantitative approaches. Sage, Thousand Oaks, California. Gail, M H and Benichou, J 2000, Encyclopedia of Research Methods, 1st edn, John Wiley & Sons, New York. Greenberg, R S, Daniels, S R, Flanders, D W, Eley, J W and Boring, J R 2004, Medical Epidemiology, Lange Medical Books/McGraw Hill Professional New York. Lee, Jonathan; Lee, Janghyuk; & Feick, Lawrence. 2006, Incorporating word-of-mouth effects in estimating customer lifetime value. Journal of Database Marketing & Customer Strategy Management 14, 29 – 39. Litvin, Stephen W.; Goldsmith, Ronald E.; & Pan, Bing. 2006. Electronic Word-Of-Mouth in Hospitality and Tourism Management. Journal of Database Marketing & Customer Strategy Management 14: 29 – 39. Savitz, D A 2003, Interpreting Evidence: Strategies for Study Design and Analysis, 1st edn, Oxford University Press, Oxford. Villanueva, Julian; Yoo, Shijin; & Hanssens, Dominique M. 2006, The Impact of Marketing-Induced vs. Word-of-Mouth Customer Acquisition on Customer Equity, January 26, 2006. Yin, R K 2002, Case Study Research Design and Methods (Applied social research method series), 2nd edn, vol. 5, Sage Publications, California. Read More