Page 150 - The Handbook of Persuasion and Social Marketing

142 The Handbook of Persuasion and Social Marketing

of this paper replicated those observed by Liu (2006) four years earlier us-
ing WOM generated from Yahoo! movie sites. Finally, Duan, Gu, and
Whinston (2008) developed a dynamic simultaneous equation system that
showed that a movie’s box office revenue and WOM valence both signifi-
cantly influence WOM volume. In turn, WOM volume leads to higher box
office performance. Essentially, WOM serves as a feedback mechanism
that both generates and sustains retail sales.
An important finding that may clarify the lack of strong support for the
impact of negative information in WOM dissemination is evident in the
research of Goldenberg, Libai, and Muller (2001). If it is true, as Ahluwalia
(2002) observed, that the degree of brand familiarity regulates the impact
of negative WOM, then the point at which the effect of advertising and
promotion serves to educate the consumer about the brand is critical in
regulating the ultimate effect of WOM. Through the use of mathematical
modeling (i.e., stochastic cellular automata), Goldenberg, Libai, and
Muller showed that the major role of marketing efforts (e.g., advertising
and promotion) occurs in the initial stages of the diffusion process. They
found that when 16 percent of the market was informed about a new
product, the impact of marketing efforts began to decline in relation to
WOM. When information dissemination reached half of the target popula-
tion, the impact of marketing efforts diminished further, to one-third and
one-quarter the impact of WOM activities through strong and weak ties,
respectively. This finding suggests that in a new product category, knowl-
edge about the product spreads rather quickly, and the window where a
given individual knows little about the product (and is therefore suscepti-
ble to negative WOM) is not wide open.

WOM as a Conduit for Rumor

WOM serves as the conduit through which rumor spreads through the
population. Interestingly, Kamins, Folkes, and Perner (1997) showed that
consumers are significantly more negative about their beliefs and opinions
about rumor than they are about WOM. When asked how important and
credible a specific informational source was as a provider of product infor-
mation in relation to rumor, individuals rated WOM as significantly more
credible and significantly more important. In fact, WOM was rated as be-
ing equally as credible and equally as important as “published sources,”
whereas WOM was rated as being less credible and less important than
advertising. In simple terms, for the business world, the term “rumor” is
viewed unfavorably, yet if the same information is framed simply as WOM,
it gains instant recognition and importance. Einwiller and Kamins (2008)