Advantages and disadvantages of word-of-mouth marketing

By: | Tags:

Advantages and disadvantages of word-of-mouth marketing

This article aims to identify some of the advantages and disadvantages of word-of-mouth marketing. It also explores the definitions of word-of-mouth marketing and provides the readers with a comprehensive insight into the topic.

Definitions of word-of-mouth marketing

According to Kotler et al. (2009) word-of-mouth (WOM) is an interpersonal communication of products and services where the receiver regards the communicator as impartial.

According to the Cambridge dictionary (2021) word-of-mouth (WOM) refers to people talking about something or telling people about something.

The idea of word-of-mouth has changed over the years. The traditional method that relied on spreading a message orally from one person to another, has been largely replaced with targeted efforts using social media. In fact, social media have unleashed the power of word-of-mouth marketing.

Advantages of word-of-mouth marketing

Word-of-mouth has a number of advantages and can be an important part of an integrated marketing communications. It can work alone; however, it often performs best in association with the other promotional techniques such as advertising and sales promotion.

According to Nielsen (n.d.) cited in Whitler (2014) 92% of consumers believe word-of-mouth i.e. recommendations from friends and family over all other forms of advertising. Most of the marketing executives also consider it as the most effective form of marketing. When real customers give positive feedback about a product/service, it becomes more trustworthy. The unbiased positive feedback can help persuade potential customers to consider a brand positively.

Word-of-mouth is very good for creating brand awareness. When someone shares something with a friend or a family member, there is a strong possibility that that person will share the information with others as well. Especially, at a time of social media, if something goes viral, it works like a magic and creates massive brand awareness even though the conversations are not translated into purchases.

One of the biggest advantages of word-of-mouth marketing is the affordable cost. It is usually cheaper than other types of marketing. As it is an oral communication, it does require pens, papers, computer systems, or any other supplies resulting in a bit of saving for companies.

According to Kotler et al. (2009) a key aspect of social networks is word-of-mouth. More and more companies are becoming aware of its power. It is virtually impossible to find a company now-a-days not using social media to spread positive word-of-mouth.

Disadvantages of word-of-mouth marketing

One of the biggest disadvantages of word-of mouth marketing is the limited coverage. A satisfied customer may tell a friend or even two about a product/service who then may purchase and use the product/service and share the experience with others. This type of marketing is usually limited to family and friends and can take longer to spread the message than other forms of advertising. Therefore, organisations need to use social media to make the best use of word-of-mouth marketing.

Limited control over the message is a problem in word-of-mouth marketing. There will always be some people who will complaint about a company and share their frustrations online and offline. It only takes a few outspoken dissatisfied customers to create negative brand images which is damaging for a company.

Word-of-mouth marketing strategies

Harrison (2019) proposed three effective word-of-mouth marketing strategies i.e. 1. Encouraging user-generated content, 2. Adding testimonials and reviews, and 3. Creating sharing incentives.

Most people now-a-days love to share things. Therefore, if organisations can make their customers satisfied and provide them with good reasons and ways, they would not hesitate to share their experience with others. It is worth noting that most if not all organisations today apply targeted efforts to encourage satisfied customers to share their satisfaction with others.

Examples of word-of-mouth marketing strategies

1.Some telecommunications companies offer their customers discounts on their bills if a new customer signs up based on their recommendations.

2. ‘The Scarecrow’ – Chipotle’s emotionally powerful video to encourage word-of-mouth.

3. Since its inception, Starbucks has been focusing on creating unique experience for its customers to encourage them to share their positive brand experience with others. No wonder why people keep on coming back to it even though its products are expensive.

4. McDonalds made use of word-of-mouth marketing very convincingly in China. For instance, in 2010, it offered customers to purchase McSpicy Wings at a discount rate with discount coupons from any restaurant in the country. It promised to give out free chicken wings at seven of its restaurants if one million customers shared the storey of McSpicy Wings online. Interestingly, within four weeks, McDonald’s achieved the target with pledges from over two million people (Magni and Atsmon, 2010).

We hope the article ‘Advantages and disadvantages of word-of-mouth marketing’ has been helpful. Hope the definitions of word-of-mouth marketing are clear to you. You may also like reading Personal selling – definition and examples. Other relevant articles for you are:

Advantages and disadvantages of branding

Advantages and disadvantages of franchising

If you liked any of these articles, please feel free to share with others by clicking on the social sharing icons.

Last update: 30 March 2021

References:

Cambridge Dictionary (2021) Word-of-mouth, available at: https://dictionary.cambridge.org/dictionary/english/word-of-mouth (accessed 30 March 2021)

Harrison, K. (2019) 3 Powerful Word-Of-Mouth Marketing Strategies That Can Help Your Small Business Grow Faster In 2019, available at: https://www.forbes.com/sites/kateharrison/2018/12/30/3-powerful-word-of-mouth-marketing-strategies-that-can-help-your-small-business-grow-faster-in-2019/?sh=5b3ace5c2420 (accessed 30 March 2021)

Kotler, P., Keller, K., Brady, M., Goodman, M., and Hansen, T., (2009) Marketing Management, 1st European Edition, England: Pearson Education Limited

Magni, M. and Atsmon, Y. (2010) The Power of Word-of-Mouth in China, available at: https://hbr.org/2010/04/the-power-of-word-of-mouth-in (accessed 30 March 2021)

Whitler, K. (2014) Why Word Of Mouth Marketing Is The Most Important Social Media, available at: https://www.forbes.com/sites/kimberlywhitler/2014/07/17/why-word-of-mouth-marketing-is-the-most-important-social-media/?sh=31e739c154a8 (accessed 29 March 2021)

Author: Joe David

Joe David has years of teaching experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality, and tourism management. He holds a Postgraduate Diploma in Management Studies and a Post Graduate Diploma in Marketing Management.