Impact of Word Of Mouth on Purchase Decision

As a customer, when you buy something, you talk about it positively or negatively depending on your experience with that product or service. These opinions expressed by customers are what referred to in marketing as word of mouth (WOM).

Word of mouth has great impact on businesses and it shapes customers’ purchase decisions. Word of mouth is effective than any other advertisement, and that influence doubles when the customer wants to buy the product or service for the first time, or when the price is high.

Today, word of mouth appears also in the form of opinion leaders that have more impact on a lot of people than the person to person impact in the old form of word of mouth. Opinions leaders are "Influential members of a community, group, or society to whom others turn for advice, opinions, and views."

Over time, researchers and marketing specialists tried to understand the customer’s behavior and how he’s affected by others’ opinion. Understanding what convinces the customer to make a purchase decision will help create marketing strategies depending on that.

In this context, a group of researchers from Bo?aziçi University, Istanbul, Turkey carried a study to evaluate "the efficiency and profitability of different marketing strategies consisting of different price, promotion, quality levels and different number of targeted opinion leaders where consumers are subject to WOM effects."

Researchers stated in this study published in a Journal of Marketing Research and Case Studies that they "aimed to find how product sales patterns evolve over time and profitability of the company changes when WOM is in and not in effect."

When the customer likes a product or service, she or he would recommend it for others and the same when not satisfied or had bad experience. The customer would warn others to avoid making the purchase. But there must be some factors that affect the customer satisfaction and his decision to make a purchase.

The primary factor that entices a customer to make a purchase is product quality. Researchers found that "product quality is the most important factor that influences consumers’ buying decisions." After that, business’ promotion efforts come in the second position. "Promotion strategy of the company is the second important factor that triggers consumers buying motivation" as stated in the study.

Researchers investigated effects of opinion leaders that have become among the marketing strategies used by businesses. The influence of opinion leaders is significant and it’s something worth investing in, but researchers found that it has no effects if the quality of product is not good. Researchers found that "decreasing price and increasing number of opinion leaders to collaborate with do not lead to significant increase in number of buyers, when the product quality is under the consumers’ expectations."

The influence of word of mouth helps businesses when they offer quality products and stands against them if the quality of their products does not meet the customers’ expectations. Researchers said that "when the product quality characteristics are low, consumers share this information and less people purchase the product." So they recommend that "the company should produce higher quality products to increase its profit and avoid negative influence of WOM effect."

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