Synergy Effect between WOM Generation and Consumption:-An Empirical Study on Laptop and Biscuit Product Category-

Abstract

Word-of-Mouth (WOM), as one of the most effective communication methods with influence on consumer decisions through product transmission, has drawn widespread attention by a large number of academic researchers and marketers in recent years.Arndt (1967) defines WOM as: Oral, person-to-person communication between a perceived non-commercial communicator and a receiver concerning a brand, a product, or a service offered for sale. In contrast to research regarding effects of WOM, there has been less contribution to WOM consumption or usage. This research intends to investigate whether a consumer is able to generate WOM to others and whether the consumer can use WOM for making purchasing decisions. The research utilizes two unique sets of data collected from two different product categories, including laptop and biscuit. The discrete choice model to study consumer WOM generation and consumption decisions is fundamentally based on Yangs model (2012). Particularly, the research interests lie in studying the synergy effects between the two WOM relating activities, and the key drivers of WOM generation and consumption. This research mainly adopts aforementioned Yangs model to analyze data, which were collected from the laptop and biscuit product categories. Also, we do find strong synergy effect between WOM generation and consumption. Moreover, it shows that the synergy effect on laptop is higher than that on biscuit between each WOM generation and consumption. Additionally, consumer product experience and media exposure are proved to have an effect on the propensity to generate and consume WOM. Above all, these findings lead to important managerial implications on targeting for effective use of WOM as a marketing tool.