Word of Mouth Advertising: A Comparative Market Analysis Report

This report examines the usefulness and effectiveness of word-of-mouth (WOM) advertising, particularly within the context of the Chinese market. It explores WOM's role in promoting products and services, building brand awareness, and influencing customer purchase decisions. The report compares WOM with other promotional strategies like advertising and direct marketing, evaluating their respective impacts on achieving company goals and fostering customer relationships. It delves into advertising models such as ATR, AIDA, and DAGMAR, highlighting how these frameworks can be applied to enhance the effectiveness of advertising campaigns. The analysis covers the advantages of WOM, including its cost-effectiveness and ability to generate trust, while also acknowledging potential disadvantages. The report emphasizes the importance of positive customer experiences in driving WOM and its significant influence on consumer behavior within the Chinese market.

Word of Mouth
Advertising
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
The usefulness of Word of mouth in the market..........................................................................4
Effectiveness of WOM in the market........................................................................................10
Comparison with other form of communication........................................................................12
How it can be applied................................................................................................................14
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................17
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Illustration Index
Illustration 1: Word of Mouth..........................................................................................................6
Illustration 2: ATR Model...............................................................................................................7
Illustration 3: AIDA model..............................................................................................................9
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INTRODUCTION
In the contemporary scenario, the internet has changed the way of doing businesses as
well as it also plays an essential role advertising and promoting the business and their products in
the worldwide market (Balter and Butman, 2005). Verbal as well as written praise by the
satisfied customers to the prospective customers is considered as the effective form of promotion
that is often known as Word of mouth (WOM). The present report is being carried out to
measure the usefulness as well as effectiveness of WOM in the foreign marketplace. As, China is
one of the emerging economy in the world thus, advertisement under the economy will prompt
their customers to purchase the new products. However, the report will also compare the
promotional tactics Word of mouth with the other forms of communication like advertisement
and direct marketing. The effectiveness of WOM and other promotional strategy would also be
evaluated as it help the organization in achieving common aim of the company and building
good relationship with customers. Furthermore, the report will also study different other form of
communication that result in persuading the customers to purchase the company products and
services.
The usefulness of Word of mouth in the market
In the contemporary business environment, for being prospering in the competitive
marketplace the establishment must concentrate on impressive publicity and promotions of their
products and services (Clow, 2007). These are also required for every business organization so
that, they can desire success in the contemporary environment. In the contemporary environment
promotions and advertising techniques are consider as the significant aspects that assist the
business organization in communicating the information to the target audiences. WOM is
considered as an effective form of advertisement that assist in spreading the marketing message
and information from individual to individual (Ewen, 2008). However, it is also known as unpaid
form of communication through internet medium, verbal communication or via text message. It
may be done with the help of face-to-face interaction, via blogs, on-line shopping sites,
Facebook etc. As, China is among emerging economy with highest rate of population though
usage of word of mouth advertisement is an cost efficient method for promoting and creating
awareness among the brand within the China market.
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Advertising is defined as the process under which organization displays and sends
product information via newspaper, TV or radio etc (Hackley, 2005). However; the term
promotion refers to the method which raises awareness regarding the new product or brand in the
market. Promotion and advertising both methods assist the organization in generating sales and
creating brand awareness in the market. Customers of China market have always valued the
opinions as well as recommendation that are verbalized to them. Indeed of word of mouth
marketing mainly influence the purchase decisions of the product (Mangold and Faulds, 2009).
Word of mouth is challenging to control as if the customers experience is good regarding
the product and services of business then the individual will quickly promote the business
activities in the market that highly influences the customers purchase decisions. According to
Jamasa (2010) word of mouth publicity within the China economy is an essential promotional
tool that influences the buying behavior of the Chinese customers. However, it has been also
stated that WOM is also considered as an significant source that assist in enhancing the brand
awareness in the market (O’Guinn, Allen and Scheinbaum, 2014). However, WOM publicity can
be good as well as bad. For instance, customers have purchase the smart phone of China and
have good experience while using the smart phone then they may express their positive
experience to the other consumers this result in promoting the brand activities in the market.
However, the customers those who have badly experience the services will result in spreading
the negative information or message regarding the product that result in building image among
the customers. The effect of negative WOM publicity result in changing the behaviour of
customers regarding the purchasing of products (Wilmshurst and Mackay, 2010).
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One of the effective advertising model include ATR framework that focuses on the
systematic purchasing procedure that mainly include early-on mental effect the assist or result in
perceiving the action regarding final purchase of goods. Although introducing new product and
services in the China market organization must focus on ATR model for buying the product
(Angoujard, 2015). The framework basically deals with the three sequential steps that is-
 Awareness: The first step in the framework include raising awareness within the market.
The potential customers who have purchase the product will perceive the brand attributes
within the market through using different activities like word of mouth, social media
networking etc. with the help of generating awareness in the market customer will trial
the product that have been recommended by the potential customers (Belch, 2013).
 Trial: Another step within the model include trial of the product. If the customers
positively promote or advertise the attribute of the products within the China economy
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Illustration 1: Word of Mouth

then the customer will be driven to try the products and goods through purchasing their
products.
 Repurchase: When the individual to whom product has been recommended purchases the
products and delivers the expectable value then customers would inclined towards
repurchases the products (McStay, 2013). However, if the product misses the expectation
of customers then customers would not purchase the product in future.
AIDA framework
The main purpose of advertising model is to deliver persuasive messages as well as
information to the targeted audiences so that they engage in the purchasing activity. AIDA
framework of advertisement is mainly used to make prospect action for making purchase
(Vilanilam and Varghese, 2014).
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Illustration 2: ATR Model

 Awareness- For operating the new business within the China market company need is to
set up first opinion among the through creating awareness among the customers regarding
products which are being offered by organization existing in China. For instance;
Morrison supermarket within the China market will create awareness with the aid of
images or video of the products that they are offering as it will assist in attracting the
customers (Richards and Patterson, 2005).
 Interest- After creating awareness next step of the model is to make interest among the
target audience regarding offerings or products through word of moth publicity or
advertisement. For instance; to aware the customers Morrison may provide elaborated
information regarding the prices and attribute of the products for creating interest among
the target audiences.
 Desire- Next step is to create desire or feeling of getting the product which are offered by
Morrison that is they must perceive the customers that purchasing products will satisfy
their needs (Scott and Walker, 2010).
 Action- The last step in AIDA model is to put the inclination into the action by
purchasing the products that are offered by Morrison.
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DAGMAR model
DAGMAR stands for defining advertising goals for measured advertising results. The
main aim of this advertising model is to generate awareness of the brand within China economy
as well as influencing their behaviour to finally purchase the products (Steenkamp, Nijs and
Dekimpe, 2005). DAGMAR model basically focuses on the effective publicity of the brand to
consumer to develop their attitude that result in inducing the purchasing action.1. Awareness- It is necessary to aware the target audience within the China market
regarding the product and company so that customers can easily develop the purchasing
behaviour. For instance, Samsung company may aware their target audience with the help
of different promotional activities as well as through advertising form so that they may
easily increase the awareness regarding the product and offer in the market (Yan, 2010).2. Comprehension- For rousing the purchase within China market awareness is not
sufficient company operating within the China market need to perceive the product
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Illustration 3: AIDA model

worth, attributes and their benefits to the target audiences. Under this step consumer will
come to know about the company's as well as their products and offering that they are
offering in the China market (DelVecchio, Henard and Freling, 2006).3. Attitude or conviction- Another step in the model is establishing sense of conviction for
buying the product. Through verbal promotion as well using different publicity activities
customers are moved in the position where they have mental attitude to purchase the
product. The task of advertising at this stage will mainly demonstrate the superiority of
the product over different rival companies (Dens and De Pelsmacker, 2010).
4. Action- The final stage in the DAGMAR process include purchasing of the product by
the customers. From all the above step customers finally engage in the buying activity of
the products.
Usefulness of WOM advertising method include that-
 It helps the organization existing in the China market to support their business activities
so that they may easily market it in the emerging market. However, China is among the
developing country customers will purchase their product (Ailawadi, Beauchamp and
Shankar, 2009).
 It helps the China company to rise or enhance their brand image within the economy that
results in gaining large market area.
 However, the with the help of word of mouth advertising, the information and message
regarding the products may reach to the large scale consumer.
 However, the advertising also act an integrated promotional strategy for the China
organization in boosting the profit margin of the organization as positive word of mouth
result in purchasing the product (Alvarez Alvarez and Vázquez Casielles, 2005).
 Another usefulness of WOM advertising is that it is termed as a essential tool that drive
the sales of the organization.
Effectiveness of WOM in the market
Before technological advancement sand broadcasting communication activities individual
mainly relies on the word of mouth advertising for promoting and advertising about their
products and services. However, to build the strong customer base foreign market organization
often relies on the word of mouth publicity tactics that assist in raising brand awareness within
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the China economy. The effectiveness of WOM tactics within the China market is that it results
in-
 Creating trust: WOM marketing is effective in the China market as it results in creating
trust. Customers incline to trust the individual those who recommend them the services
and product of the organization. Therefore, Word of mouth results in growing the
business activities in the overall market. It has being stated that Chinese customers often
trust the recommendation that are provided by the friends ad family (Importance of
advertisement in today's world, 2015).
 Long term value: However, the effectiveness of WOM in the market also result in
creating long term value within the market. Sit has bee stated that customer who
purchases the product based on the referral basis will mainly required to buy same brad
product in the future that assist in creating long term relationship. However, the happy
customers often direct their wording to their family and friends that result in increasing
the profit margin of the company (Major Methods of Advertising and Promotion
(Methods of External Communications), 2015).
 Low cost: Advantage of word of mouth advertising is that it mainly termed as
inexpensive marketing method that result in increasing the awareness of new business in
the China. From the different advertising tool word of mouth in the china market is cost
efficient method as satisfied customers will promote positive feeling regarding the
products and services (Dunn, 2000).
 Builds brand: However, the effectiveness of word of mouth advertising is that it outcome
in building the brand within China marketplace. Using the WOM publicity will also act
as an significant tool that support in building the image among their rival companies
through rendering positive feedback regarding the organization products and services.
Despite of certain advantages and effectiveness of the Word of mouth advertising there
are certain disadvantages too that is if the customers had bad experience that they may spread
negative response regarding the products that result in decreasing the customer base (Gedenk,
Neslin and Ailawadi, 2012). Another disadvantage of WOM is that it is considered as slowly
process of spreading the information and knowledge among the target audience as China has
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highest population in the world through WOM it result in slower the rate of information to the
ultimate customers.
Comparison with other form of communication
There are some other form of communication and promotional activities that may be used
by organizations those are setting their business in the China market that is- Face to face personal communication: It is consider as one of the effective form of
advertising that focuses on transmitting the information and message from one individual
to the other individual through verbal communication. It is an effective form of
communication that focuses on emotions and behaviour of the individual (Karve, 2012). Door-to-door marketing: Another form of communication include door-to-door
marketing that can be mentioned to as marketing the products at the personal level, and
this is considered as cardinal forms of below-the-line advertising methods. This method
of advertising and promotion requires extremely trained and qualified sales staff that
would result in building the strong customer base by building relationship. However, in
the China market door to door marketing will play essential role in promoting the
products and services (Mehra, 2007). Sales promotions: Another effective technique of bottom-the-line publicity includes sales
promotion. Within China economy customers tends to purchase the products that offer
some value or additional products thus, with the help of sales promotion customers will
purchaser the products. However, this form of advertisement in the economy will assists
in encouraging their customers to purchase the organization goods and services. For
instance; typical sales promotion method that is being used by Morrison in the China
market such as buy one get one free offering, price discounts, gifts etc. although, the
discounted offers are for shortened but it influence the customers in purchasing their
products and also result in creating brand loyalty among the customers (Sriram and
Kalwani, 2004).
 Social media marketing: However, the other form of communication include advertising
through social media sites. It is considered as one of the leading trend in advertising and
promotion of the products and services to the large targeted audiences. With the
assistance of different social media sites like Facebook, YouTube, LinkedIn etc.
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