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McKinsey quarterly: A New way to measure word-of-mouth marketing

McKinsey quarterly: A New way to measure word-of-mouth marketing. Guru Marie Palak Shwetha. Agenda. Introduction 3 Types of Word of Mouth Measuring WOM Implications of WOM Harnessing WOM. A new way to think advertising. More and more products and innovations on the market.

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McKinsey quarterly: A New way to measure word-of-mouth marketing

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  1. McKinsey quarterly:A New way to measure word-of-mouth marketing Guru Marie Palak Shwetha

  2. Agenda Introduction 3 Types of Word of Mouth Measuring WOM Implications of WOM Harnessing WOM

  3. A new way to thinkadvertising More and more products and innovations on the market Hugeamount of money spent by the brands for advertising INCREASING WOM

  4. WOM: A CONSUMER DECISION TOOL FIRST PURCHASE ONE TO MANY BASIS WOM used in 20 to 50% of all the purchase decisions EXPENSIVE PURCHASE (high involvement) NEW CHALLENGE FOR MARKETERS: UNDERSTAND AND USE IN EFFICIENT WAY WOM

  5. CONSUMER DRIVEN VALUE • Consumer becameskepticaltoward brand ads • THE SOLUTION: THINK INDEPENDTLY throught WOM • CONSUMER are more powerfull WOM impacts: Brand Perceptions Purchase rates Market Shares IMPORTANCE FOR COMPANIES TO INVESTIGATE AND MANAGE WOM

  6. Introduction 3 Types of Word of Mouth Measuring WOM Implications of WOM Harnessing WOM

  7. I. Experiential Word of Mouth Marketing Reduced brand receptiveness to tradition marketing Product/Service fails to meet expectations Brand Sentiment/ Equity Effect of positive word of mouth from other sources Eg:- National Geographic: Augmented Reality http://www.youtube.com/watch?v=TL62txWNFMY

  8. II. Consequential Word of Mouth Marketing • Consumers directly exposed to traditional marketing campaigns • Stronger impact than direct advertisements • High campaign reach and influence Direct Effect Message and marketing media mix that generates highest ROI Pass-On Effect

  9. III. Intentional Word of Mouth Marketing Downsides: Difficulty in measuring the impact Uncertainty regarding implementation of such campaigns successfully

  10. Introduction 3 Types of Word of Mouth Measuring WOM Implications of WOM Harnessing WOM

  11. Measuring WOM Number of recommendations or dissuasions Variability in power

  12. Word of Mouth Equity Volume  Number of WOM messages Impact  Average Sales Impact

  13. Drivers of Word of Mouth + Relevant key buying factor - Irrelevant key buying factor + Influential - Non-Influential + Close Network - Large network

  14. Introduction 3 Types of Word of Mouth Measuring WOM Implications of WOM Harnessing WOM

  15. Implications for Managers

  16. Introduction 3 Types of Word of Mouth Measuring WOM Implications of WOM Harnessing WOM

  17. HARNESSING Word of Mouth • Internet plays the role of amplifier. • Magnitude is larger than ever that was available. FLIPSIDE ADVANTAGES If I am happy I am likely to recommend and if I am unhappy, I am likely to propagate a negative WOM Cannot control what consumers say and examples of companies being hurt by this characteristic It can be a by-product from traditional advertising Consumers tend to trust other consumers than they trust brands WOM directly driving or explaining sales drives of up to 20% to 50%.

  18. 4 ESSENTIAL DRIVERS TO DETERMINE IF WOM IS IMPACTFUL “If you still have doubts that WOM marketing is not an effective tool, its time to rethink. Because of social media, it has emerged to be the biggest contributor of a firm’s growth and YOY sales performances.” Who is sending the message : A sender and the receiver receiving the message. (Both should trust each other) The message content (For. Ex recommending a product)… substantiating the recommendation. What triggers the sender to give the recommendation. (It may be by hearing from others) The context in which the WOM message takes place is crucial.

  19. http://www.youtube.com/watch?v=FKeeku0O4l8 • http://www.youtube.com/watch?v=Wp_i-Cq7ec8

  20. 2 characteristics that create 1. INTERACTIVITY Positive Word of Mouth 2. CREATIVITY Ex: Cadbury’s Gorilla Ad with the Iconic Phil Collins song. Result: 1. More than 6 million views on YouTube. 2. YOY sales of Cadbury increasing by more than 9%. 3. Brands positive perception among consumers increased by 20%. INTENTIONAL WOM CAMPAIGNS: Identifying influential individuals who become brand and product advocates. Messages can be directed at specific individuals who are most likely to spread positive word of mouth through their social networks. As a message spreads, this approach generates an exponential word-of-mouth impact, similar to the ripple effect when a pebble is dropped in a pond.

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