mckinsey quarterly: a new way to measure word-of-mouth marketing
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McKinsey quarterly: A New way to measure word-of-mouth marketing. Guru Marie Palak Shwetha. Agenda. Introduction 3 Types of Word of Mouth Measuring WOM Implications of WOM Harnessing WOM. A new way to think advertising. More and more products and innovations on the market. - PowerPoint PPT PresentationTRANSCRIPT
MCKINSEY QUARTERLY:A NEW WAY TO MEASURE WORD-OF-MOUTH MARKETING
GURUMARIEPALAK
SHWETHA
AGENDAIntroduction3 Types of Word of MouthMeasuring WOMImplications of WOMHarnessing WOM
A NEW WAY TO THINK ADVERTISING More and more products and innovations on
the marketHuge amount of money spent by the brands for
advertising
INCREASING WOM
WOM: A CONSUMER DECISION TOOL
WOM used in 20 to 50% of
all the purchase decisions
FIRST PURCHASE
EXPENSIVE PURCHASE
(high involvement)
ONE TO MANY BASIS
NEW CHALLENGE FOR MARKETERS: UNDERSTAND AND USE IN EFFICIENT WAY WOM
CONSUMER DRIVEN VALUE
• Consumer became skeptical toward brand ads• THE SOLUTION: THINK INDEPENDTLY throught WOM• CONSUMER are more powerfull
WOM impacts:Brand
PerceptionsPurchase ratesMarket Shares
IMPORTANCE FOR COMPANIES TO
INVESTIGATE AND MANAGE WOM
Introduction3 Types of Word of MouthMeasuring WOMImplications of WOMHarnessing WOM
I. EXPERIENTIAL WORD OF MOUTH MARKETING
Product/Service fails to
meet expectations
Brand Sentiment/
Equity
Reduced brand receptiveness to
tradition marketingEffect of
positive word of mouth from
other sources
http://www.youtube.com/watch?v=TL62txWNFMY
Eg:- National Geographic: Augmented Reality
II. CONSEQUENTIAL WORD OF MOUTH MARKETING
Consumers directly exposed to traditional marketing campaigns
Stronger impact than direct advertisements
High campaign reach and influence
Direct Effect
Pass-On Effect
Message and
marketing media mix
that generates
highest ROI
III. INTENTIONAL WORD OF MOUTH MARKETING
Downsides:1. Difficulty in
measuring the impact
2. Uncertainty regarding implementation of such campaigns successfully
Introduction3 Types of Word of MouthMeasuring WOMImplications of WOMHarnessing WOM
MEASURING WOMNumber of
recommendations or dissuasions
Variability in power
WORD OF MOUTH EQUITYVolume
Impact
WOM
Equity
WOM
What?Who?Where?
Volume Number of WOM messages
Impact Average Sales Impact
DRIVERS OF WORD OF MOUTH
What? • Content of the message
Who? • Identity of the sender
Where? • Environment
+ Relevant key buying factor
- Irrelevant key buying factor
+ Influential
- Non-Influential
+ Close Network
- Large network
Introduction3 Types of Word of Mouth Measuring WOMImplications of WOMHarnessing WOM
IMPLICATIONS FOR MANAGERS
Flexibility
Performance not volume
Identify drivers of WOM
Insights!
Introduction3 Types of Word of Mouth Measuring WOMImplications of WOMHarnessing WOM
• Internet plays the role of amplifier.• Magnitude is larger than ever that was available.
FLIPSIDE
ADVANTAGES
Cannot control what consumers say and
examples of companies being hurt by this
characteristic
If I am happy I am likely to recommend and if I am unhappy, I am likely to
propagate a negative WOM
It can be a by-product
from traditional advertising
Consumers tend to trust
other consumers
than they trust brands
WOM directly driving or explaining sales drives of up to 20% to 50%.
HARNESSING WORD OF MOUTH
“If you still have doubts that WOM marketing is not an effective tool, its time to rethink. Because of social media, it has emerged to be the biggest contributor of a firm’s growth and YOY sales performances.”
Who is sending the message : A sender and the receiver receiving the message. (Both should trust each other)The message content (For. Ex recommending a product)… substantiating the recommendation. What triggers the sender to give the recommendation. (It may be by hearing from others)
The context in which the WOM message takes place is crucial.
4 ESSENTIAL DRIVERS TO DETERMINE IF WOM IS IMPACTFUL
• http://www.youtube.com/watch?v=FKeeku0O4l8• http://www.youtube.com/watch?v=Wp_i-Cq7ec8
2 characteristics that create 1. INTERACTIVITY Positive Word of Mouth 2. CREATIVITY
INTENTIONAL WOM CAMPAIGNS: Identifying influential individuals who become brand and product advocates. Messages can be directed at specific individuals who are most likely to spread positive word of mouth through their social networks. As a message spreads, this approach generates an exponential word-of-mouth impact, similar to the ripple effect when a pebble is dropped in a pond.
Ex: Cadbury’s Gorilla Ad with the Iconic Phil Collins song. Result: 1. More than 6 million views on YouTube. 2. YOY sales of Cadbury increasing by more than 9%. 3. Brands positive perception among consumers increased by 20%.