The Effect of Online Word of Mouth Versus Traditional Word of Mouth - Research Proposal Example

?The Effect of online word of mouth versus traditional word of mouth on Saudi consumers purchase decision: A case study of retail sector in Saudi Arabia Abstract Over the years, word-of-mouth (WOM) has been credited with the ability to influence the consumer behavior regarding purchase of commodities. Today, most people are advancing to online word of mouth as a new phenomenon with possibility of influencing the marketing patterns. This study compares the use of traditional word of mouth with the online word of mouth consumers purchase decision in the context of Saudi Arabia. The methodology involves the use of a case study that applies the use of both positivist epistemology and inductive reasoning approach to fully answerer the research questions. At the end of the study, the researcher found no significant difference between traditional word of mouth and the online word of mouth in regard to purchases in Saudi Arabia. However, the online word of mouth was found to be more influential than the traditional word of mouth due to various factors that surround its application. This information is thus of great significance to marketers who as they can use it as part of their strategies. Chapter One Introduction Word of mouth marketing is a substantial force in the advertising industry since companies spent up to $1.7 billion in their campaigns in the year 2009 alone (Cheung and Thadani, 2010). This is also projected to increase to $3.0 billion by the end of this year since most marketers are becoming aware that WOM has great influence on purchase decisions on customers. Consumers make many decisions on daily basis regarding the purchasing preferences, which are of vital information to a business. These information help shape the consumers products and related values before they recognize a need to purchase any product and thus marketers need it to strategize their marketing tactics. Traditional word of mouth has evolved into a new form of communication, which is done online due to technological changes that comes with great benefits. This type of communication involves both positive and negative statement made by customers through the internet in response to various products form different companies (Walker, 2001; Riegner, 2007). The increase in internet connectivity into most parts of the world offers a bright opportunity for online word of mouth for firms to take advantage of in their marketing plans. Currently there are increased businesses done online, the number of online customers has reached millions, and the number is ever on the rise (Chevalier and Mayzlin, 2006). This provides the markets with a powerful marketing force for those who want to advance their marketing strategies. There is variety of literature focusing on the effectiveness of online word of mouth but the researches to compare it with the traditional word of mouth have done little. Most studies on online word of mouth appear fragmented and conclusive since the scope is always broad. Various research approaches have been developed to study various aspects of online word resulting into various conclusions depending with the research questions. Marketers are particularly interested in gaining more understanding of online word of mouth as traditional forms of communication since the traditional forms of communication are losing their effectiveness to this new technology (Cheung and Huang, 2010). Online word of mouth marketing strategies are appealing since they overcome consumer resistance with relatively lower cost and quick delivery due to advancement in technology (Hung and Li, 2007). Online word of mouth is prominent in the internet and is associated with networking sites such as Facebook, Friendster, and Xanga among others. Billions of dollars are spent in advertising of firms aimed at increasing sales hence marketing communication is important in ensuring that money spent is effectively used. The main purpose of this research is to compare the influence of the traditional word of mouth and the online word of mouth influencing the purchase decisions in the context of Saudi Arabia. There are two independent variables in this study, which are the traditional WOM and the online WOM. Chapter Two Research Problems The word of mouth is continuously associated with marketing; the effectiveness of such marketing tool needs to be assessed to provide marketers with necessary knowledge about it. There is a continuous migration from the traditional word of mouth into the new word of mouth. There is need therefore to compare the traditional word of mouth with the online word of mouth to understand their benefits and shortcomings fully. Both of these approaches have been useful in convincing the customers and there is need to understand which method best suits the customers in the context of Saudi Arabia. Chapter Three Literature review Word of Mouth (WOM) According to Walker (2001), word of Mouth is world most effective and least understood marketing strategy, which involves informal, unpaid, oral, and non-commercial communication between two or more people, connected through the communication channel. Mulala and Themba (2013), also adds that the working of this technology is more complicated and thus required marketers to fully understand the mechanisms by which it operates if they wish to realize maximum profits from it. For several decades, the word of mouth has been used as the most effective source of information for the consumer that marketers can apply to optimize their marketing strategies (Hung and Li, 2007; Lee and Yuan, 2009). The social media oriented towards social interaction, information exchange provides a good such as Facebook, and twitter provides a good platform for online word of mouth (Chevalier and Mayzlin, 2006; Davis and Khazanchi, 2008; Cheung and Thadani, 2010). In such avenues, the consumers are able to share their experiences on their personal social networking sites and share ratings and products reviews through popular online retailer rating systems. This continuous and plentiful supply of information is what is beneficial to the consumers and the marketers since it shapes their decision-making on the available products. The word of mouth is an important source of information for household goods since it affects majority of purchase decisions of the customers in various ways (Trusov, Bucklin and Pauwels, 2007). Riegner (2007) claims that main problem with this marketing strategy is that most of the marketers still find it difficult to effectively apply it effectively into their advantage to maximize sales. Word of mouth has been used as a marketing tool for several decades thus realizing great profits for the marketers who use it effectively (Cheung and Thadani, 2010). The marketers have to apply proactive measures to incorporate word of mouth strategies in their planning efforts since it involves intentional influencing of the consumers to behave in a particular manner. Online Word of Mouth (eWOM) Online WOM is the communication between consumers through regarding a brand through electronic means in the internet thus highly influencing the manner in which they view a product (Walker, 2001; Hung and Li, 2007). According to Riegner (2007), social media tools that promote interactivity are a big support to eWOM since they consumers can easily share interest and feedback programs. Marketers who gain insight into the structure of the social media have higher understanding of the whole process that they can use to their advantage. This enables them to build stronger bonds and relationships with their customers that are advantageous for them in increasing the sales of their commodities. Mulala and Themba (2010) also supports that the social medial tools posses a great utility for online consumers as a way in which they exchange vital information with their networks of friends and acquaintances concerning their experiences thus creating the ability to exchange vital information for marketers. Comparing the traditional WOM and online WOM The online word of mouth is the electronic version of the traditional word of mouth thereby bringing little difference between them. The main difference of is that eWOM is limited to online environment who the traditional WOM could be used without the internet. The communications through the online environment contain both negative and positive information conveyed in written form. The traditional WOM enjoy fewer characteristics like the eWOM since the latter involves technology that is more advanced (Lee and Youn, 2009). Mulala and Themaba (2013) add that some of the unique characteristics enjoyed by the eWOM are that the communications occurs in an anonymous asynchronous environment that allows for maximum privacy thus enabling the consumers to express their real views about different products. The privacy environment also enables the consumers to express negative information about the product with a lot of ease than the traditional word of mouth (Hung and Li, 2007). The traditional word of mouth restricted the flow of information to few individuals while the online word of mouth has enough potential to reach a mass audience within short period. The online word of mouth is also superior to the traditional word of mouth in the sense that the former is more influential due to great speed of information flow, convenience and the lack of face-to-face pressure (Davis and Khazani, 2008). Unlike the traditional word of mouth, the online word of mouth is more reliable since the content of their message is savable for future reference thus permanent thus transcends space with time (Riegner, 2007). According to Hung and Li (2007), the traditional word of mouth is limited is mainly effective in small social boundaries with minimal influence as compared to online word of mouth. The online versions communications seems more honest with their views hence is reliable than the traditional word of mouth. There are several similarities between the online word of mouth and the traditional word of mouth more than the difference between them (Davis and Khazanchi, 2008). The senders’ trustworthiness is important in both the traditional WOM and online WOM since it determine the strength and influence of the message communicated by the customers (Mulala and Themba, 2013). In addition, the sender’s level of expertise and the receiver’s level of effort in seeking information coupled with the personal experience with the brand also determine the strength and influence of both the offline WOM and the online WOM. The traditional and the online WOM are both influential and both have been found to play a pivotal role in shaping the attitudes and behaviors of people in various aspects of their lives (Hung and Li, 2007; Chang, Lee and Huang, 2010). The traditional WOM based their argument that the few influences the many and this is evident in the online WOM since only a few people are needed to influence the majority of the customers. Chapter Four Theoretical Framework This study would incorporate the society response to the online word of mouth and the traditional word of mouth. The use of online word of mouth is becoming common due to its effectiveness and convenience. The study compares the use of online word of mouth, the traditional word of mouth, and the extent do they determine the consumer purchase decision. The study examines the strengths and weaknesses of both methods together with the relationships between them. The knowledge from the research will provide the basis for marketers to apply the used of these developments to optimize sales. Chapter Five Research Methodology This chapter introduces the various research methods applied in this study. The research design and method applied in this research is that of a case study which is done in Saudi Arabia, which specifically involves the use of theory orient approach. The focus is on building theories and ideas related to the success and the limitation of the two approaches of word of mouth. The quantitative data sources will consists of secondary resources such as external statistics, scholarly books and journals and annual reports. The quantitative data will com from the secondary sources such as market research information and reports from the consultants with vast experience in this field of word of mouth communication. The study will make the use of positive epistemology of positivism where both the physical world and the society operate according to basic laws (Wilson, 2010). The modern approach to positivism involves the idea that science is the product, which consists of linguistics or numerical set of statements that can be confirmed, falsified, or verified through empirical observations. Like the older forms of positivism, its modern use involves rejecting nearly all the metaphysics available in the study. The modern approach to positivism is a transcultural one which views that science can be used anywhere in the world with exceptions with regard to cultural phenomenon studied by social anthropological and psychological sciences. There is also the assumption that science is a type of cumulative knowledge hence scientific facts provide foundation for new types of research (Wilson, 2010). The study will also make the use of inductive logic approach, which involves the evaluation and construction of general ideas from singular examples (Wilson, 2010). Inductive reasoning is often known as the bottom up approach to general ideas (Blumberg and Cooper, 2008). Inductive logic can be understood as a system of support through evidence, which extends specific information to more general circumstances and employs the idea of odds and probability (Blumberg and Cooper, 2008; Wilson, 2010). The business research such as this involves a number of different approaches and strategies that includes surveys, case study, experiments, archival analysis, and case studies. The approach in this case will be a case study since case studies have shown an important method of doing research concerning a contemporary phenomenon within their natural context such as this study. Case studies are excellent approach of exploring existing theories and are effective in developing new theories. A case study can be theory orient or practice orient, but this study will be theory orient, the case study approach has two dimensions, which includes the case design and the unit of analysis. The case study design in this study will be a single case design involving the retail sector in Saudi Arabia with regard to word of mouth communications. The data analysis of the data collected through a case study can be challenging since it entails a variety of evidences from various sources. The data collected will be tabulated, categorized, and examined in order to determine if the evidence points to a possible underlying theory. The collection of data for the researcher consists of the researcher closely examining the data in order to develop a possible theory from them. There will be development of initial propositions followed by recoding of evidence, which appears to be relevant, and the judgment made on whether evidence supports any particular theory. The charts and tables will assist the researcher and the reader in clustering the important concepts (Creswell, 2008). Chapter Six Significance of Research The research is of great significance to both the public and the businesses since they can apply the recommendations of the research to their advantage in matters related to purchases. This research is important since it will add a lot of information needed by the academic institutions to enhance learning. The research is of great importance to the marketers since they need this information to organize their marketing strategies and optimize sales. Chapter Seven Research Implication The implication of this research is that the marketers especially those in Saudi Arabia will have information concerning the consumer purchase behavior that they can use to their advantage. This study did not find a significant difference between traditional and online word of mouth but the two may vary other certain conditions due to different environmental conditions. The scope of the study necessitated limiting the research to Saudi Arabian environment and thus the conclusions may not apply in other places. The study did not look in details the various forms of online word of mouth like emails, tweets, Facebook and their influence since they may also determine the relationship between the two. The future research should thus compare the traditional word of mouth and the online word of mouth across a variety of factors to come up with tangible results. Chapter Eight Time Line Activity Start date Target date Selection of the research topic 10/10/13 10/10/13 Develop and adapt research objectives 12/10/13 12/10/13 Obtain the relevant literature for the research 13/10/13 13/10/13 Complete the literature review 21/10/13 05/11/13 Design and adapt research instruments 06/11/13 11/11/13 Recruit respondents 12/11/13 17/11/13 Collect data 18/11/13 25/11/13 Analyze the collected data 26/11/13 27/11/13 Prepare for the data presentation 28/11/13 29/11/13 Prepare the final report 30/11/13 10/12/13 References Blumberg, B., & Cooper, D. R. 2008. Business research methods (2nd European ed.). New York: McGraw-Hill Higher Education Chang, L., Lee, Y and Huang, C. 2010. The Influence of E-Word-Of-Mouth on the Consumer’s Purchase Decision: a Case of Body Care Products. Kao Yuan University. Cheung, C.M.K and Thadani, D.R. 2010. The Effectiveness of Electronic Word-of-Mouth Communication: A Literature Analysis. Bled eConference. Slovenia. Chevalier, J.A and Mayzlin, D. 2006. The Effect of Word of Mouth on Sales: Online Book Reviews. Journal of Marketing Research, 43(3), 9. Creswell, J. W. 2008. Research Design: Qualitative, Quantitative, and Mixed Methods Approaches (3rd ed.). California: Sage Publications, Inc. Davis, A and Khazanchi, D. 2008. An Empirical Study of Online Word of Mouth as a Predictor for Multi-product Category e-Commerce Sales. Electronic Markets, 18(2), 130. Hung, K. H. and Li, S. Y. 2007. The Influence of eWOM on Virtual Consumer Communities: Social Capital, Consumer Learning, and Behavioral Outcomes. Journal of Advertising Research, 47(4), 485. Lee, M. and Youn, S. 2009. Electronic word of mouth (eWOM): How eWOM platforms influence consumer product judgment. International Journal of Advertising 28(3), 473. Mulala, M and Themba, G. 2013. Brand-Related eWOM and Its Effects on Purchase Decisions: An Empirical Study of University of Botswana Students. International Journal of Business and Management; Vol. 8, No. 8. Riegner, C. 2007. Word of Mouth on the Web: The Impact of Web 2.0 on Consumer Purchase Decisions. Journal of Advertising Research, 47(4), 436. Trusov, M.,Bucklin, R.E and Pauwels. K. 2007. Estimating the Dynamic Effects of Online Word of Mouth on Member Growth of a Social Network Site. Randolph Bucklin. Los Angeles. Walker, H.L.J. 2001. The measurement of word-of-mouth communication and an investigation of service quality and customer commitment as potential Antecedents. Journal of Service Research, 4(1), 60-75. Wilson, J. 2010. Essentials of business research: a guide to doing your research project. Califoria: Sage Publications Read More