Final Thesis: The Power of “Word of Mouth”
Author: J.S. Tabak
Student number: 1230344
First supervisor RuG: Drs. J. Berger
Second supervisor RuG: Mr. Drs. H.A. Ritsema
Supervisor Grolsch International: J.W. van der Velde
Institute: University of Groningen
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Preface
The faculty of Management and Economics at the University of Groningen requires students to write a final thesis on a subject related to their specialization. In my case it’s Marketing. The thesis lying before you is written in the period of October 2006 until August 2007 and focuses on a Word of Mouth communication strategy adapted to the needs of Grolsch International and its beermarket in Canada.
I can remember arriving in Groningen several years ago. At that time I would never have guessed that the time between starting to be a student and starting to be a working professional would pass by so incredibly fast. This thesis marks the end of a beautiful period of studying in Groningen. I enjoyed every little bit of it.
Before writing my thesis I was doing an internship at the Grolsch headquarters in Enschede. My goal was to find an interesting thesis subject that was still quite new and untouched by mainstream marketing literature. Luckily I got in contact with Jan van der Velde, marketing manager for Grolsch International. He had the perfect challenge. I have learned a lot from him and from this project. It were both exciting and enjoyable times at Grolsch headquarters and at my office in Toronto at Doug’s Agency. The individuals at Doug’s Agency are all one of a kind and very pleasant to hang out with. Of course this is no surprise because Jan van der Velde made sure that my whole stay was very pleasant. He even send me to New York to “pick the brain” of Gaius Voute from Grolsch Americas Inc. and made it possible for my girlfriend to come over with Christmas and New Years. Therefore a special thanks goes out to Jan van der Velde.
I would also like to thank Jerry Biggar, Rob Mclean, Justin Lamontagne and Zach Kellum who helped me out in my search to get to know the big city of Toronto with its Art, Indie-pop and Gay communities.
Besides all the people from Grolsch I would like to thank Hans Berger and Henk Ritsema for providing feedback. Their efforts made my thesis worthy of graduation. My final thoughts go out to my family and girlfriend who never gave up on me and were always supportive.
Thanks. Jan Tabak
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Management Summery
Grolsch entered Canada in 1984 but only the last decade Grolsch started to focus on building its brand equity together with stronger market penetration instead of just exporting the beer. This resulted in the fact that 98% of all Grolsch is sold through off-premise channels. The mean ratio in the total International Premium Lager segment is 80% off- and 20% on-premise. Nowadays the focus should be more on selling beer in on-premise distribution channels where people encounter and try the brand.
Grolsch retains a number 4 position in its segment. The long term objective is to strengthen this number 4 position by:
1. Becoming strongly preferred in selected audiences in Canada
2. Growing from 70 thousand hectoliters sold per year to 120 thousand hectoliters per year in the next 5 years.
To realize the long-term objective a new and cost efficient communication strategy should be implemented.
Reasons for change in the communication strategy are:
• The effects of traditional advertisements are to low, especially compared to the relative high investments.
• The marketing message is send to a too broad audience. The targets of Grolsch are not affected by these messages.
• Grolsch wants to be in the conversation set, in- and outside its targeted audiences.
• Grolsch had small, but proven, success in targeting selected scenes with a WOM strategy and better consumer insights in the US.
To do this, more knowledge is needed about cost efficient communication strategies based on word of mouth. Thus, in order to pursue the marketing strategy Future, Focus, Fans and the objective of GIN, the communication strategy should be redesigned. Hence the objective:
To provide knowledge and give advice about a cost efficient communication strategy and potential target clusters in order to anchor the number 4 position in the
International Premium Lager segment in Canada for the Grolsch brand.
In order to obtain the objective, certain knowledge is needed. The question that is formulated to provide the necessary knowledge is:
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Methodology
To answer the main research question a literature desk research is performed where information is collected from academic magazines, articles and books as well as an interview with the Sales Director of Grolsch Canada Inc., many informal talks with the research director of depARTment Inc., Internal documents, the Internet and newspapers
To be able to choose a communication target that will do the actual WOM communication to a bigger group called the Early Majority, three clusters are compared on the highest potential profitability in terms of money (profit and costs), the highest capability of performing positive WOM communication and highest potential loyalty. A detailed profile needs to be collected in order to assess the different communication targets. To do this information is collected by surveys with consumers from different clusters together with in-depth interviews.
Results
First of all it is important to know how WOM communication works. WOM
communication can be seen as “Social Currency”. The strength of WOM persuasion lies in the fact that rewards are not material but always psychological, which makes an opinion authentic thus credible. It is the exchange of comments, thoughts, or ideas between consumers, none of whom represent a marketing source.
To start WOM communication, a cluster of people who do not represent a marketing source should be targeted in order to change their attitudes positively towards
Grolsch. They are the so-called influentials or prosumers and represent 30% of the total consumer pool. Three types of these prosumers, Opinion Leaders, Connector and Salesman are most likely to translate Grolsch’s message from GIN to the Majority. Together they are responsible for 34.5% of all decisive buying decisions. What these prosumers think now, the other 70% thinks next over a period of 6 to 18 month.
In order to provide the right message and spread the word more effective it is necessary to understand motivation to spread a message. The Salesman type is motivated to communicate because of material involvement; money. Opinion leaders are motivated because of interest in the product and Connectors are motivated because of self-involvement. They all please different, but specific needs and Grolsch can try to help please those needs.
Besides spreading messages, following up on them is just as important. Two factors are important in acting upon a thought, idea or comment of an influential about a product. The first one depends on the strength of the relationship between sender and receiver; the stronger the relationship, the better the receiver will react on thoughts, ideas or comments of the sender.
The second one depends on the relation between the perceived sender’s knowledge of a certain product; The higher the perceived knowledge, the better the receiver will react on thoughts, ideas or comments of the sender.
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it is important to listen to the target of communication in order to truly understand what is happening. Anticipate on that. Gladwell adds that people with the most weak ties are usually between 20 and 40 years old.
One can conclude that in order to create momentum by maximizing weight and relevance of a message, the content of the message has to be worthy of advocacy and be memorable to senders and receivers. It becomes more memorable and worthy of advocacy when the message complies with one or more of the seven truths.
It is also important to know what the success determinants and risks are. To have greater chance on success the product should fit with most of the eight product characteristics that can stimulate talk or buzz about it. A strong inner
conviction from the prosumers is more easily created when the brand or brandkey fits with the sender and his social surroundings. The higher compatibility between product and values of members of a social system, the quicker the rate of diffusion.
Grolsch should create a community based on involvement and trust. One where beliefs about the brand can be practiced, expressed and nurtured in order to change beliefs and behavior and to serve as example to others. Building a community that interacts with your brand leads to the ultimate loyalty.
Grolsch should target mainly Opinion Leaders and Connectors between 20 and 40 years old who usually have the most “weak” ties. They occupy many different worlds and are more likely to know something that the other would not know. In other words they are more interconnected within and between social networks.
In the case of negative experiences it should be easy for consumers to complain to the company instead of the rest of the world. Practices intended to deceive people are unethical and the advice is that it should not be used in building a relation with a potentially profitable cluster of consumers.
Three clusters were chosen by Grolsch to be subject of research. Only one of them could be chosen as communication target. All three clusters are interesting in their own ways, but the Art cluster is the one that turns out to be most profitable in terms of likelihood to perform positive WOM, loyalty and lower costs.
The researcher recommends to the marketing manager of Grolsch International that in order to achieve the long term goals of Future, Focus, Fans, which is to retain a number 4 position in its segment by,
• Becoming strongly preferred in selected audiences (clusters) in Canada • Growing from 70 thousand hectoliters sold per year to 120 thousand
hectoliters per year in the next 5 years.
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Introduction
"If the goal in the past was to get into the consideration set, the goal today should be getting into the conversation set."
Leinberger
Did you know that in the last three decennia more knowledge has been developed than in the last 5000 years? A similar kind of trend can be found in the growth of media. It is estimated that in 2007 the average North American will spend 3.874 hours per year with media filled with advertisements. That is 10.6 hours per day compared to 8.4 hours in 1977.1 The effect of this trend is that consumers get overloaded with information which results in an unconscious rejection and total ignoring of the message received.2 The second effect is that consumers get smarter and smarter. They will take most advertisements for exactly what they are: a biased message, paid for by a company with a selfish interest in what the consumer consumes.3
So who do consumers turn to and trust when making a decision? The answer is real people.
Real people giving their pure unfiltered opinion of goods and services, and with consumers increasingly unwilling to engage in traditional ad forms, word of mouth is filling a vital niche here. "You're not getting your information from an advertiser anymore, you're looking for some kind of objective information about a product; PR falls in there as well, but it doesn't beat the unbiased opinion of your friend or co-worker."4
But how do you communicate and distinct yourself while consumers are not that receptive for traditional communication and direct competitors can outspend Grolsch easily by their big budgets?
That is exactly the challenge and subject of this thesis. Grolsch International B.V. believes in giving people really something that’s interesting to talk about in order to spread the word. It’s in the nature of people. Therefore this thesis will focus on communication strategies that target specific groups in Canada in order to generate a buzz around the brand and strengthen the current position of the Grolsch brand.
1Mandese, Joe, “Study: Media Overload on the Rise,” Television Week, 17 May 2004, Vol. 23, Issue 20
2 Herbig, Paul A., Kramer, Hugh, “The effect of Information Overload on the Innovation Choice Process,”
Journal of Consumer Marketing, 1994, Vol. 11 Issue 2, p45-54, 10p
3 Michael Hoffman, “A Review of the fall of advertising and the rise of PR,” Club Industry, Jul 2003, Vol. 19 Issue 7, p42, 2p, 1c
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Preface... 2
Management Summery... 3
Introduction... 6
Chapter 1 Research Environment... 10
1.1 History ... 10
1.2 Vision, mission, objective... 10
1.3 Formal Structure of Royal Grolsch NV ... 11
1.3.1. Grolsch International BV... 12
1.4 The Canadian Beer market ... 12
1.4.1 World Trend... 12
1.4.2 Beer Market Canada... 13
1.4.3 Problems related to Canadian beer market ... 15
1.4.4 Strategy ... 16
Chapter 2: Research Plan... 18
2.1 Problem Analysis ... 18
2.2 Problem Statement ... 20
2.2.1. Objective ... 20
2.2.2. Main Research Question ... 20
2.2.3. Conceptual model and sub questions ... 20
2.2.4. Limitations ... 22
2.3 Methodology ... 23
2.3.3 Type of research ... 23
2.3.4 Data collection ... 24
Chapter 3: Effective WOM communication... 26
Introduction ... 26
3.1 Pro Active Consumers... 27
3.1.1 What are Prosumers ... 27
3.1.2 Who are Prosumers ... 29
3.2 Motivation ... 33
3.2.1 Sender Motivation ... 34
3.2.2 Receiver Motivation... 36
3.3 Process ... 38
3.3.1 Trickle Down Theory ... 38
3.3.2 Two-Step Flow Model ... 38
3.3.3 Multi-Step Flows Model ... 39
3.3.4 Adapted Multi-Step Flows Model ... 40
3.3.5 Momentum... 42
3.3.5.1 Speed of Diffusion ... 43
3.3.5.2 Weight and Relevance ... 44
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Chapter 4: Success and Risk Factors... 47
Introduction ... 47
4.1 Success Factors... 47
4.1.1 Ideal Product Characteristics ... 47
4.1.2 Optimal Marketing Context / Power of Context ... 49
4.1.3 Ideal Communication Target Group (Cluster)... 52
4.2 Risks ... 52
4.2.1 Lose of Control... 52
4.2.2 Ethics... 53
Conclusion... 55
Chapter 5 Cluster Assessment... 56
Introduction ... 56
5.1 End-target market ... 56
5.2 Three clusters ... 56
5.3 Differences between clusters ... 58
5.3.1 Methodology... 58
5.3.2 Population ... 58
5.3.3 Research instruments... 60
5.3.4 Data collection experiences ... 62
5.3.5 Coding of Data... 62
5.3.6 Justification of analysis ... 63
5.4 Results... 65
5.4.1 Knowledge of Product Category ... 65
5.4.2 Opinion Leader Scale ... 66
5.4.3 Potential to create Ultimate Loyalty... 67
5.4.3.1 Interest in Grolsch ... 67
5.4.3.2 Size of Clusters... 68
5.4.3.3 Adoration for the Grolsch Product ... 68
5.4.3.4 Nesting in a cluster... 68
5.4.3.5 Ability of Grolsch to Build and Sustain the Network... 68
5.4.4 Recommendation Intention... 69
5.4.5 Amount of “weak” ties... 69
5.4.6 Internet Activity... 69
5.4.7 Drinking Behavior... 70
5.4.8 Price Insensitivity ... 71
5.4.9 Strength of Competition... 72
Chapter 6 Highest Potential... 73
6.1 Capability of performing positive WOM communication ... 73
6.1.1 Knowledge of Product Category ... 73
6.1.2 Opinion Leader Scale ... 73
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Chapter 7 Recommendations ... 76
Introduction ... 76
7.1 Results... 76
7.1.1 How does effective WOM communication work?... 76
7.1.2 What are determinants for success and what are the risks?... 77
7.1.3 Which cluster shows the highest potential?... 78
7.2 Recommendation... 78 7.2 Further research ... 79 7.3 Conclusive Remark... 79 Bibliography ... 80 Journals ... 80 Literature ... 81 Internet ... 82
Other Data resources... 82
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Chapter 1 Research Environment
This chapter will briefly describe the history and organization of Grolsch together with the market where Grolsch is active in. It will be the start of setting a frame by taking a closer look at the parts of the organization (internal) and the market (external) that are relevant for this thesis.
1.1 History
Royal Grolsch N.V. is a Stock Exchange listed company with a history that goes back to the year 1615. This makes it one of the oldest companies of the Netherlands. Under the guidance of Peter Cuyper the beer, which was produced in the Guelders town called Grol, obtained an excellent reputation. The fame of the company expanded to a national level and after merging with a beer brewery from Enschede, the expansion of the company was stimulated even more on a national and international level. In April 2004 Grolsch opened a new brewery in Enschede, which is one of the most efficient and environmental friendly breweries in the world. Nowadays Grolsch is developed into one of the strongest beer brands of the Netherlands and exports the Grolsch beer into more then 70 countries.5
1.2 Vision, mission, objective
Vision:
Grolsch is a brand and a beer brewery. Grolsch provides for the drinks requirements of consumers, as far as it is able on the basis of its brand or expertise as a beer brewer. Grolsch has its own vision of beer and the beer market. The vision is stated as
followed:
The brewing industry has not responded fast enough to changing consumer demand for drinks. This has created a homogeneous category that is under pressure from other drinks. Grolsch believes in the strength of beer in the drinks market.
Mission:
On the basis of its modern brewery facilities and the unique strength of its brand, Grolsch sees good opportunities for itself in the drinks market in general and the beer market in particular. Grolsch regards optimum use of these opportunities as its mission. The mission is stated as followed:
Grolsch will break through the homogeneity of the category and restore the premium status of beer.
Grolsch International objective:
Further expansion of the existing market positions, volumes and margins in the selected key markets: the UK, the US, Canada, France, Australia and New Zealand. The market chosen for this thesis is Canada.
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1.3 Formal Structure of Royal Grolsch NV
In origin Grolsch is a family owned company, but in 1986 Grolsch became listed at the Amsterdam Stock Exchange. Royal Grolsch NV is now a statutory two-tier company under Dutch law, established in Enschede, with two main subsidiaries:
1. Grolsche Bierbrouwerij Nederland B.V. (100%) and 2. Grolsch International B.V. (100%).
Royal Grolsch N.V. also has a 51% interest in Grolsch (UK) Ltd.
Grolsch (UK) Ltd. is responsible for sales and marketing of the Grolsch brand in the UK and the Irish Republic.
Grolsche Bierbrouwerij Nederland B.V. is responsible for sales and marketing of the Grolsch brand in the Netherlands. Almost all production, logistical and support activities are concentrated in Grolsche Bierbrouwerij Nederland B.V.
Grolsch International B.V. is responsible for worldwide sales and marketing of the Grolsch brand (and other brands), apart from the Netherlands, the UK and the Irish Republic.
This research will focus on the activities of Grolsch International BV. The next paragraphs will discuss more in-depth the activities of this subsidiary.
Figure 1.1: Main Organs Royal Grolsch NV
Royal Grolsch NV
Grolsche Bierbrouwerij Nederland BV
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1.3.1. Grolsch International BV
Grolsch International B.V., revered to as GIN, exists of 5 staff departments and 5 Business Teams. One of these BT’s is BT Canada. The Marketing Manager
International is part of BT Canada and among other things responsible for creation, implementation and evaluation of marketing strategies in the Canadian market.
Figure 1.2: Main organs Grolsch International BV
Grolsch Canada Inc. is fully owned by GIN and stationed in Montreal. Grolsch Canada Inc. is responsible for the brand activation, strategy implementation and daily communication with distribution partner Sleeman Breweries Ltd.
The Marketing Manager International, who is part of the BT Canada, is the party within the company who has a management problem, more specific a marketing communication problem. An analysis of this problem will be presented in chapter 2.
1.4 The Canadian Beer market
This paragraph will discuss first of all an illustration of trends that occur in the world beer market related to small-sized breweries like Grolsch. Secondly, a description of the market position in relation to direct competitors in the Canadian market and finally the problems that GIN has to cope with and the marketing strategy of GIN in Canada.
1.4.1 World Trend
In the world beer market, it is important to distinguish between the corporate level, which is marked by continuing consolidation and the brand level, where there is little sign of such concentration. Major breweries are merging and acquiring smaller ones.
Grolsch International BV
USA AUSTRALIA /
NEW ZEALAND FRANCE / TRDF / CANADA UK Direct Export
Marketing Manager
International Strategic Alliances
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The effect is illustrated by the fact that the world’s five biggest brewery groups (Inbev, SABMiller, Anheuser-Busch, Heineken and Carlsberg) now jointly account for almost 50% of the world beer market6. This consolidation benefits Grolsch, a small-sized player in this market, as it opens up possibilities for alliances with
attractive market parties, who see beer market activities disappear when their original partners are absorbed by a larger entity. This is the case with Grolsch and her
Canadian partner Sleeman Breweries Ltd.
In order to survive as a brand it should have a substantial position in markets outside the home market. The Grolsch brand stands out in that regard, as Grolsch has won a strong position in the UK and other key markets, in addition to its prominent position in the Netherlands. This makes Grolsch a top 20 player in the global brand ranks for sales volumes achieved outside the country of origin.7
1.4.2 Beer Market Canada
With more than 33 million people Canada belongs to the top 10 importing beer countries of the world and imports almost 1.8 million hectoliters of International
Premium Lager. To put in perspective, this is 8% of the total Canadian beer market.
Grolsch is competing in this segment and is number 4 in total volume sold. This results in a market share of 3.3% in 2004 and it has already grown to 4.1% in 2005.8
Figure 1.3: Top 10 International Premium Lager Brands
6 International Beerbook 2006, p. 16 7 International Beerbook 2006, p. 18
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Grolsch competes primarily with other “European Imported Lagers” like number 2, 3 and 5 and secondarily with “Non-European Imported Lagers”, like number 1.9 These competitors are other organizations in the same type of business that provide goods to the same set of customers.10 As said before, Grolsch is a mid-sized brewery. These
competitors in Grolsch its segment are supported by large brewing companies that are 10 to 40 times larger in production volume then Royal Grolsch NV.
An observations regarding figure 1.3 is that Corona and Stella Artois had a substantial growth in absolute hectoliters as well as in percentages in the last 4 years. Although Grolsch doubled its volume, it is still a small player.
There are 3 main beer segments in Canada. Grolsch competes in the premium sector (which also includes all international premium lagers).
Figure 1.4 gives an idea of the position of Grolsch within the whole market of premium, mainstream and discount beers.
Figure 1.4: Leading brewers and import
The mainstream segment is responsible for 50% of the total volume of beer. Premium and discount are responsible for 20% and 30% respectively. As seen in above figure and according to qualitative research, consumers consider Grolsch as a premium lager. 11
9
Internal Document:Grolsch National Tracking (October 2005 – The Research Optimization Group) 10 Daft, Richard, L., Management, Harcourt Inc.: 2000, p. 78
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Growing premium and discount segments are squeezing the mainstream segment.12 There are 2 different reasons for this phenomenon which can occur within one and the same consumer.
1. Premium is growing because the present pro-active consumers increasingly value real quality, variety between beers and aspirational brands. They drink less, but switch to premium brands.13 This is an opportunity for Grolsch being a premium brand.
2. Discount is growing because the stigma of cheap beer is fading. Consumers are tired of paying high prices for mainstream beer that has no real distinctive power in taste or other added value.14
The above reasons do not segment consumers in premium and discount beer drinkers. Macro consumer trends explain why: Canadians regularly enjoy drinking 4 to 6 different beer brands depending upon the occasion.15 This means for example that the
same consumer buys discount beer for a barbeque party but at the same time he buys premium beers to enjoy a drink after work.
1.4.3 Problems related to Canadian beer market
Several problems are causing a slower growth in hectoliters then expected. These problems are of different nature.
External problems:
• The consumers in Canada are getting saturated by media. The consequence is growing ineffectiveness of all TV advertising.16
• Strong and large competitors with heavy competition in the market.
• Problems in getting Grolsch sold on-premise due to different strategic priority of Grolsch’s partner Sleeman. This results in lack of commitment and
resources.
• Unable to take planned price increase due to deflationary environment in Canada compared to Holland. In other words, the Euro is getting stronger then the Canadian dollar which makes imports more expensive.
Internal problems:
• Low spontaneous brand awareness of the Grolsch brand.
• Low budgets compared to competitors, inability to invest disproportionally in marketing.
• Insufficient knowledge and grip on cost efficient growth strategies.
12 Grolsch Canada, Business Update. Sales Numbers 13 International Beerbook 2006, p. 1
14 http://www.canadianbusiness.com/companies/article.jsp?content=20050718_69548_69548 15 Grolsch Canada, Business Update: Macro consumer trends
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1.4.4 Strategy
Grolsch entered Canada in 1984 but only the last decade Grolsch started to focus on building its brand equity together with stronger market penetration instead of just exporting the beer.
Building market share and brand equity happened mostly by distribution
maximization in the off-premise business. According to Ansoff’s Growth Share Matrix17, this strategy can be described as a “market penetration strategy”.
This resulted in the fact that 98% of all Grolsch is sold through off-premise channels. The mean ratio in the total International Premium Lager segment is 80% off- and 20% on-premise. Nowadays the focus should be more on selling beer in on-premise
distribution channels where people encounter and try the brand.
Future, Focus, Fans
The future of Grolsch in Canada will be determined by a strong focus strategy on selected audiences (clusters) to create fans (loyal consumers).
Grolsch nowadays retains a number 4 position in its segment. The long term objective is to strengthen this number 4 position by:
3. Becoming strongly preferred in selected audiences (clusters) in Canada 4. Growing from 70 thousand hectoliters sold per year to 120 thousand
hectoliters per year in the next 5 years.
According to Hoffman and others a marketing strategy exists of three aspects:18
• Target Market Selection
• Positioning Strategy and a
• Tailored Marketing Mix
The Future, Focus and Fans strategy of GIN is build upon the same blocks.
Information about the target market selection and the positioning strategy is confidential.
17 Keller, K.L., Strategic Brand Management, Prentice Hall: 2003, p. 577
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The last aspect, which is the tailored marketing mix, is based on the well-known 4 P’s; Product, Place, Price and Promotion. The P of promotion, also known as marketing communication19, is the main subject of this thesis.
To realize the long-term objective of Future, Focus, Fans, a new and cost efficient communication strategy should be implemented. According to many authors like Ries20, Salzman 21, Wiedman22 and Herbig23; Word Of Mouth strategies are regarded as strategies that bring lower costs per contact and have a better fit with the present pro-active consumer. In other words; cost efficient and more effective. This thesis will therefore focus on cost efficient communication strategies based on Word of Mouth. Reasons for change in the communication strategy are:
• The effects of traditional advertisements are to low, especially compared to the relative high investments.
• The marketing message is send to a too broad audience. The targets of Grolsch are not affected by these messages.
• Grolsch wants to be in the conversation set, in- and outside its targeted audiences.
• Grolsch had small, but proven, success in targeting selected scenes with a WOM strategy and better consumer insights in the US.
The next chapters will provide deeper insights in cost efficient marketing
communication for selected audiences in the International Premium Lager segment of Canada.
19 Douglas Hoffman, K., Marketing Principles and Best Practices, Thomson South-Western: 2005, p.18
20 Ries, A., Ries, L., The fall of advertising and the rise of PR, HarperBusiness: 2004, p. 6-8
21 Salzman, M., Matathia, I., O’Reilly, A., Buzzmarketing: De meest effectieve manier om uw klanten te
bereiken, Academic Service: 2003, p. 6-8
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Chapter 2: Research Plan
The first chapter gave an overview of the market and organization this thesis will be based on. Some important limitations are given in that chapter, namely:
• The chosen market is Canada
• The chosen marketing strategy is Future, Focus, Fans
• Strong focus on cost efficient communication strategies based on word of mouth.
This chapter will be based on the motive, which is strengthening the number 4 position in the International Premium Lager segment, and limitations discussed in chapter 1.
In paragraph 2.1 the analysis of the problem will be presented. Paragraph 2.2 will provide the problem statement based on the analysis and a conceptual model to see the relationships between the different elements of this thesis. Finally paragraph 2.3 will discuss the methodology.
2.1 Problem Analysis
According to De Leeuw24, every solid research needs to start with a proper diagnose of the problem. This paragraph provides an analysis of the background of the problem and translates this into a functional problem. The analysis provides an overview of who has what problem, why exactly this problem and what parties are involved furthermore.
Since the Marketing Manager International is responsible for creation and
implementation of the marketing strategy and most likely to have the “real” problem, he is the person to start off with.
Based on an interview with the Marketing Manager International25, a couple of judgments (instrumental) of the problem came to the surface.
• Our Canadian partner shows lack of commitment and resources due to prioritizing other strategic goals that are not in favor of the Grolsch brand. • GIN can not do as big investments in marketing communication as our
competitors.
• GIN does not have enough knowledge about un-conventional (creative) marketing.
• Grolsch needs more market pull.
• Grolsch needs a loyal consumer base.
One could say that these causes are directly related to the functioning of the Grolsch brand in Canada. The result of these causes is that Grolsch is not growing fast enough. This is the main management problem of GIN. A visualization of this causality is presented in figure 2.1.
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Figure 2.1: Causality of instrumental and functional judgments
Other parties that are directly involved in this problem and connected to the International Marketing manager are the director of Grolsch Canada Inc. and the president of Grolsch International BV. By executing the BO-BS game26 a
representation of the reality is shown in order to emphasize the differences in roles of these parties.
The Int. Premium Lager Market can be seen as the environment which Grolsch Canada Inc. tries to influence with corrective measures. The environment produces information that Grolsch Canada Inc. can use to measure their influence. Grolsch Canada Inc. is on its turn influenced by and depended on the output (strategy) of the Marketing Manager INT. He is on his turn influenced by the President of Grolsch International BV and reports back to the president.
All parties in figure 2.2 can be turned upside down, because they all try to do
corrective measures and learn from each other. But in the end the Marketing Manager International is responsible for giving enough corrective measures in order to obtain the goal that is set by the very same manager. The conclusion is that the Marketing Manager INT is the real problem owner for the slow growth.
Figure 2.2: BO-BS Game
26 De Leeuw, A.C.J., Bedrijfskundige Methodologie, Koninklijk van Gorcum: 2003, p. 155
Knowledge Budget
Market Pull Partner
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2.2 Problem Statement
The problem statement is the logical result of the problem analysis. A problem statement exists of 3 main components, namely the objective, main research question with sub questions and the restrictions.27 Each of these components will be described in this paragraph.
2.2.1. Objective
The result of the problem analysis is that Grolsch is growing to slow due to 5 factors. Striking is that 4 out of 5 factors can be addressed as or are related to marketing communication problems. The communication strategy is effective when more market pull and a larger loyal consumer base are created, without disproportional
investments. This should result in faster growth and finally in anchoring the number 4 position.
To do this, more knowledge is needed about cost efficient communication strategies based on word of mouth. Thus, in order to pursue the marketing strategy Future, Focus, Fans and the objective of GIN, the communication strategy should be redesigned.
Objective:
To provide knowledge and give advice about a cost efficient communication strategy and potential target clusters in order to anchor the number 4 position in the
International Premium Lager segment in Canada for the Grolsch brand.
2.2.2. Main Research Question
In order to obtain the objective, certain knowledge is needed. The question that is formulated to provide the necessary knowledge is called the main research question28.
Main Research Question:
What cost efficient communication strategy, based on word of mouth, can be designed in order to successfully reach the objective of GIN and how should this strategy be managed.
2.2.3. Conceptual model and sub questions
In the conceptual model the relevant concepts that influence WOM communication are related to each other. Besides the relationships, the model also provides insights in which information is going to be needed in this thesis in order to reach the objective.29 This information is then translated into sub questions. The conceptual model is presented in Figure 2.3 and explained in Chapter 3.
—————————————————————————————21 Conceptual Model:
Definitions:
GIN: Grolsch International B.V.
WOM communication: Exchange of comments, thoughts, or ideas between
consumers, none of whom represent a marketing source.30
Cluster: Clusters are groups of individuals. They vary in their
internal structure, ranging from loosely knit ones to densely interconnected relations.31
Social Network: Social Networks exist of clusters. They differ in the number and pattern of structural linkages between clusters.32
30 Fitzgerald Bone, P., “Determinants of word-of-mouth communications during product consumption.” Advances in Consumer Research, 1992, Vol. 19 Issue 1, p579, 5p, 2 charts.
3131 Bandura, A., “Social Cognitive Theory of Mass Communication”, Media Psychology, 2001, Vol. 3 Issue 3, p265-299
32 Bandura, A., “Social Cognitive Theory of Mass Communication”, Media Psychology, 2001, Vol. 3 Issue 3, p265-299
Figure 2.3: Conceptual Model
—————————————————————————————22 Sub Questions:
1. How does effective WOM communication work? • Who are the consumers performing WOM? • Why are they motivated to perform WOM? • What is the process of WOM?
2. What are determinants for success (Ideal brand/market situation, ideal product condition, ideal communication target group) and what are the risks? (ethics, loss of control)
3. What attractive clusters of people, within the International Premium Lager Market, should be targeted for communication in order to spread strong and positive WOM?
• What is the target market of Grolsch (early majority)?
• Which clusters are able to function as strong and positive WOM communicators to the early majority?
• What are the profiles of the clusters? • Results
4. Which cluster shows the highest potential profitability in terms of money (profit and costs), which cluster is likely to be more loyal and which one has the highest capability of performing positive WOM communication?
2.2.4. Limitations
Product limitations:
• The chosen brand is the Grolsch brand and not the Amsterdam brand of Grolsch.
• The chosen market is Canada.
• The chosen marketing strategy is Future, Focus, Fans
• Strong focus on cost efficient communication strategies based on word of mouth.
• Field research is limited to three clusters in order to be time and cost efficient. • Possible recommendations cannot be based on disproportional investments. Process limitations:
—————————————————————————————23
2.3 Methodology
In order to be able to provide answers to the main and sub questions, data has to be collected. This paragraph will discuss what needs to be done to get an adequate answer on the main research question within reasonable time and feasible effort.33 After a short explanation on relevant research theory of De Leeuw and Baarda and De Goede with the goal to typify this research, the data collection method will be
discussed per sub question.
2.3.3 Type of research
In the world of research a distinction can be made between practical and scientific research. Although both can be academic in terms of process, the end product is fundamentally different (see figure 2.4). Where pure scientific research results in general knowledge, practical research results in a contribution of knowledge, insights, methods and concepts that are useful for specific management problems.34
The problem analysis in paragraph 2.1 provides an overview of instrumental judgments of the international marketing manager that are causing the practical problem for GIN of slow growth in Canada. The product of this thesis, namely knowledge and advice to the board, is therefore of practical nature because it helps to solve this specific management problem.
Besides having a practical aspect to the research, it is also explorative. Firstly, there is not much written about the Word of Mouth communication subject, especially not about a model adapted to beer products. The fact that this area is relatively unknown makes this research explorative35. Baarda and De Goede36 classify this thesis as well as explorative because a large part of this thesis is actually exploring relationships between characteristics of Word of Mouth communication and clusters of people, in order to discover which cluster is most likely to send positive and strong WOM.
33 Verschuren, P., Doorewaard, H., Het ontwerpen van een onderzoek, Lemma: 2005, p. 111 34 De Leeuw, A.C.J., Bedrijfskundige Methodologie, Koninklijk van Gorcum: 2003, p. 71 35 De Leeuw, A.C.J., Bedrijfskundige Methodologie, Koninklijk van Gorcum: 2003, p. 78
36 Baarda, D.B., De Goede, M.P.M., Methoden en Technieken, Educatieve Partnerts Nederland B.V.; 1997, p. 79
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2.3.4 Data collection
This paragraph will provide the goal of every sub question within the context of the main research question and its method of collecting data.
Sub question 1: How does effective WOM communication work?
Chapter 3 will describe how effective WOM communication works. This information will be used to create a new communication model adapted to Grolsch’s specific situation in Canada and provides insights in WOM communication. Before creating a model and choosing different concepts it is important to know what kind of
consumers perform WOM in order to target them, why they are performing WOM in order to anticipate on that and what is the exact process in order to facilitate. In other words;
• Who are the consumers performing WOM? • Why are they motivated to perform WOM? • What is the process of WOM?
To answer these questions a literature desk research is performed where information is collected from academic magazines, articles and books as well as an interview with the Sales Director of Grolsch Canada Inc., many informal talks with the research director of depARTment Inc., Internal documents, the Internet and newspapers. Sub question 2: What are determinants for success (Ideal brand/market situation, ideal product condition, ideal communication target group) and what are the risks? (ethics, loss of control)
Chapter 4 will describe the risks of using WOM communication strategies to use it as an input for assessment of the different communication targets and to make the marketing manager aware of those risks. A similar motive exists for the success factors.
To answer this question some real life business cases have been explored and
opinions of managers and academics are collected by interviews and desk research to understand the ideal product conditions, optimal marketing context, the ideal
communication target group and risks of WOM marketing.
Sub question 3: What attractive clusters of people, within the International Premium Lager Market, should be targeted for communication in order to spread strong and positive WOM?
—————————————————————————————25 • What is the target market of Grolsch (early majority)?
• Which clusters are able to function as strong and positive WOM communicators to the early majority?
• What are the profiles of the clusters?
To answer these questions information is collected from internal Grolsch documents and by surveys with consumers from different clusters together with in-depth
interviews.
Sub question 4: Which cluster shows the highest potential profitability in terms of money (profit and costs), which cluster is likely to be more loyal and which one has the highest capability of performing positive WOM communication?
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Chapter 3: Effective WOM communication
Introduction
This chapter will provide insights in WOM communication in terms of type of consumer, motivation and process for fast movers like Grolsch in order to effectively manage Word of Mouth Marketing. This chapter is useful to all FMCG businesses but will be focusing on Grolsch specifically when necessary.
So what is WOM communication? Katz and Lazarsfield37 presented 50 years ago in
some detail the role of the individual as a communicator and as a relay point in the network of mass communication. They mention “influentials” and “opinion leaders” as key persons who perform informal persuasion and friendly influence in everyday contact with peers. But even before Katz and Lazarsfield, WOM communication goes all the way back to the first tribal storytellers. The human race always has been and is still a culture of the spoken word38. It is in the nature of people, as Wilson shows in his research39 “A story is simply a way of giving our experiences meaning, to the point that the telling of a story becomes an integral part of the experience itself.” In other words, unless we go and tell somebody about something that happened to us, it might as well have never happened in the first place.
Nowadays WOM is defined quite similar by many authors as 50 years before. One that gives a good description and will be the one used in this thesis is created by Paula Fitzgerald Bone40:
Word of Mouth communication is the exchange of comments, thoughts, or ideas between consumers, none of whom represent a marketing source.
Note: The last part of the sentence is very important. To provide an example: WOM communication and Multi Level Marketing programs (pyramid
systems, Tupperware parties) have a similar process. Point of difference is that people who spread the word in MLM systems are financially motivated, which makes them a marketing source. The consumers who spread the word without any direct gain of money, but gains of other kinds (discussed in chapter 3.2) are the consumers this thesis will focus on. Only they have the ability to provide a pure unfiltered opinion of goods and services.
Extrapolated from above definition is the “WOM Marketing” definition:
Word of Mouth Marketing is giving consumers a reason to talk about products and services and making it easier for that conversation to take place.
37 Katz, E., Lazarsfield, P.F., Personal Influence: The part played by people in the flow of mass
communication, The Free Press: 1955, p. 325
38 Mark Hughes, Buzzmarketing: Get people to talk about your stuff, Pinguin Group: 2005, p. 28 39 Wilson, Michael. “Teenage Tales”, Children's Literature in Education, Sep97, Vol. 28 Issue 3, p151-162.
40 Fitzgerald Bone, P. “Determinants of word-of-mouth communications during product consumption.”
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As stated in chapter 1, “normal” advertisement or mass advertisement is not doing the job anymore. A visualization of the biggest modern-day challenge for marketers of changing consumers and changing environment is summed up in a graph, made by Sean Moffit, CEO of Agent Wildfire, in figure 3.1.
Note that consumers are nowadays in control of making or breaking a brand. This new type of consumers is called the pro-active consumer, in short: prosumer. The concept of a “prosumer” was introduced in 1980 by the futurist Alvin Toffler in his book “The Third Wave” as a blend of producer and consumer41. What he meant
was that the future type of consumers are becoming involved not only as a consumer, but also in control, like a producer, in terms of product specifications and how
producers should market it based on the consumer individual preferences. In other words; this new consumer is in control.
3.1 Pro Active Consumers
Grolsch, like any other company, wants to maximize sales and profits by appealing to the best consumers. The best consumers are buyers who spend the most, require the least marketing efforts and spread positive WOM42. Before going in depth in whom exactly these consumers are, a general description is given about this new kind of consumers called prosumers.
3.1.1 What are Prosumers
Prosumers are an important and relatively large part of the total consumer pool. Figure 3.2 provides a division. Prosumers have information and technology in their
41Bandulet, Martin, Morasch, Karl, “Would You Like to be a Prosumer? Information Revelation, Personalization and Price Discrimination in Electronic Markets”, International Journal of the
Economics of Business, Jul2005, Vol. 12 Issue 2, p251-271, 21p;
42 Goldsmith, R.E., Flynn, L.R., Goldsmith, E.B., “Innovative Consumers and Market Mavens”,
—————————————————————————————28
blood43. More then other consumers they love to inform themselves. Prosumers have the power to start WOM communication and to keep the WOM going44. This specific part of the total consumer pool is therefore of outmost importance for successful WOM marketing and will be discussed in this paragraph.
Definition of prosumers by Salzman45:
Prosumers are a new kind of marketingwise consumers. Prosumers search proactive for information and opinions of products and services, they actively share thought and experiences with others and they are leading in the eyes of other consumers with opinions and purchase behavior while still having an average taste.
Furthermore, “they know what they want, they expect to be pleased and their needs to be fulfilled”
For example:
They know that the best wine comes from Nepal instead of the more classic French wine, they know why a DVD-player needs CD-R, i-Link, JPEG and MP3, they eat biological food because it just tastes better and drive a small Japanese car because quality is more important then image.
WOM Continuum 1 30 70 0% 20% 40% 60% 80% 100% T yp e o f C o n su m er s
% of total consumer pool
Prosumers Other Consumers
Figure 3.2: WOM Continuum 1
In addition to the above definition, an article from the newspaper Trouw46 describes the core of what prosumers look for:
“Success is not about what you can afford to spend, but what you can afford to enjoy.” and “Prosumers search for quality and tranquility in their hectic lives” This results in the fact that prosumer prestige is not about sophistication and splendour, but about simplicity and authenticity47.
43 Internet: http://www.prosumer.nl
44 Salzman, M., Matathia, I., O’Reilly, A., Buzzmarketing: De meest effectieve manier om uw klanten te
bereiken, Academic Service: 2003, p. 191
45 Salzman, M., Matathia, I., O’Reilly, A., Buzzmarketing: De meest effectieve manier om uw klanten te
bereiken, Academic Service: 2003, p. 210
46 Internet: http://www.trouw.nl/archief/article372154.ece/Prosumers_leven_slow
—————————————————————————————29 Prestige still works in the same way but nowadays people notice it without the consumers having to scream it. Furthermore, research in US, UK, China, India and Australia proves that what these proactive consumers think now, the other consumers think next over a period of 6 to 18 month48. This again proves that providing an
interesting message to prosumers can be a very cost efficient and effective technique to create awareness and pass on the message to the “other consumers”. Prosumers understand that they are part of the marketing game and they understand and like their role as a powerful player. To play they need to know everything they need to know and get an exclusive head start on others in their communities49.
Furthermore, the diffusion of the message, once started, can be describes as a commercial version of natural selection. It is assumed that the message only reaches consumers who are open to it and passes by to consumers who are not50. Only the strongest messages survive. This type of advertisement fits with prosumers. It is not forced, when asked it is not given by a biased representative of a company, but by a (strong or weak) tie. Above that, it provides social status to give advice and to be “in the know”. They trade information as a social currency. Paragraph 3.2 will discuss more about motivation and gains.
3.1.2 Who are Prosumers
In order to get a better understanding of the process of WOM it is necessary to first describe in more detail who prosumers and “other” consumers are and why they are motivated to behave as personal influencers. Four leading authorities in this subject will be discussed in order to refine the subtle differences and similarities.
48 Watson, Jo., Williams, Bram. “It's no longer about what you can afford to buy” B&T Weekly, 11/19/2004, Vol. 54 Issue 2498, p16-16, 1p;
49 Salzman, M., Matathia, I., O’Reilly, A., Buzzmarketing: De meest effectieve manier om uw klanten te
bereiken, Academic Service: 2003, p. 57
50 Salzman, M., Matathia, I., O’Reilly, A., Buzzmarketing: De meest effectieve manier om uw klanten te
—————————————————————————————30
The first author is Salzman. She provides the most general description. Figure 3.3 is an overview of the total consumer pool divided in 5 categories51.
WOM Continuum 2 2 8 20 50 20 0% 20% 40% 60% 80% 100% T yp es o f C o n su m er s
% of total consumer pool
Lunatic Fringe Alpha's Bees Mainstream Laggards
Figure 3.3: WOM Continuüm 2
The continuum should be read from left to right and represents the diffusions process of messages. Interesting aspect is that she gives an estimation of the group sizes. Both Alfa’s and Bees belong to the category of prosumers. This thesis will focus on the Alpha’s, Bees (the prosumers who will be target of marketing communication by GIN) and the Mainstream consumers, because they have the most power to bring leverage to marketing efforts, but in order to give a complete overview the other less relevant groups will be describes as well.
Lunatic Fringe:
These consumers are the most visionary and radical. They think beyond borders and are seen as too extravagant by the Bees, Mainstream and Laggerds. Only Alpha’s get inspired by them. Marketers normally neglect them because they can not get enough leverage out of this small group.
Alpha’s:
Alpha’s are the most influential consumers. Not because of the money they spend, but because of the opinions they influence. Alpha’s are independent, self-willed, always informed and have a desire to be the first in new developments. They are generous with their knowledge and contacts and are not afraid to take risks. Their role is to be a creator and they are the main information source for Bees. Although Alpha’s have extended social networks, they are not especially social people. They are typical persons who have deep conversations with one person in a social event instead of amusing a group of people.
Bees:
The Bees are crucial. They form the bridge between the Alpha’s and the Mainstream consumers and translate ideas in something that the mainstream can understand and use. They are the consumers that play the role of informer in networks and are
51 Salzman, M., Matathia, I., O’Reilly, A., Buzzmarketing: De meest effectieve manier om uw klanten te
—————————————————————————————31
extremely social. Usually Bees come in second (after the Alpha’s) with news about the new and cool. They take the ideas from the Alpha’s, rethink it en move it to others. They are the real spreaders of the message, the connectors. Alpha’s and Bees are “best friends”. Alpha’s appreciate the extravert social nature of Bees who are in bigger and more social diverse groups and Bees are inspired by the Alpha’s creativity.
Mainstream or Majority
The largest group of consumers is the mainstream. They are not likely to adopt easily new products or trends because of risk adversity and brand loyalty. On the other hand, if you can make them loyal, they are likely to stay loyal. Mainstream consumers posses lower self-confidence than Bees and Alpha’s and often distance themselves from exclusive brands. Only the Bees are able to translate new ideas from Alpha’s in usable data to the mainstream. Hoffman adds that mainstream consumers are actually seeking for the opinions of the alpha’s (opinion leaders) and bees (early adopters)52. Laggards:
They are old consumers that are not open for change. They are not likely to take any risks.
The next three authors provide more focus on some element described by Salzman. The second author is Gladwell53. He talks about “the law of the few” and distinct 3 types of prosumers. Gladwell states that Connectors, Mavens and Salesman are the connection between Opinion leaders and the Mainstream54. This makes them all fit to
the term: Bee. They are the translators of the message from left to right.
Connectors:
Connectors occupy many different worlds, subcultures and niches. They know lots of people and bring these worlds together. This ability is a result of something intrinsic to their personality. Connectors are self-confident, extremely social and very energetic. They fit best with Salzman’s Bees.
Market Mavens:
The word “Maven” comes from the Yiddish language and stands for “who
accumulates knowlegde”. Mavens are socially motivated to help acquaintances in buying decisions. They are the helpers in the marketplace. Mavens initiate
discussions about products and are always available to help. They are not persuaders, their motivation is to educate and help. This makes them so authentic and believable. They are actually probing to see if the receiver can give them new info. They are teacher and student at the same time.
Market Mavens are regarded as helpers and therefore have a different motivation as Connectors, but are still the bridge between Opinion Leaders and Mainstream.
52 Hoffman K.D., Markting Principles and Best Practices., Thomson: 2005 p. 303
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Salesman:
They have the skill to persuade others who are not convinced of what they are hearing. They can sell absolutely everything. They are energetic, enthusiastic and have a lot of charm. They are people who are actively and deliberately involved in the process of shaping and forming thoughts of others about specific products or services. Note: A difference between Connectors and Mavens is that Connectors would talk to anybody anytime. For example: The Connector would tell 10 friends that Grolsch is a very good beer and 5 of his friends would try it. A Market Maven might tell only 5 people that Grolsch is the best, but all of them would surely try it.
The third author is Price55. She makes a distinction in again three categories of prosumers, but this time the focus is on single product category or multiple product category influence.
Opinion Leaders:
Opinion leaders are motivated to talk about the product because they are involvement with it. Bloch and Richins56 add that opinion leadership is a manifestation of enduring involvement in a product class. They underline that Opinion Leaders score higher on the product interest component then on the communication component. Other
research provides evidence that there are no general (multiple product category) opinion leaders. Opinion Leaders can be regared as Alpha’s.
Early Adopters:
Early Adopters influence either passively or actively the Mainstream. Drinking a beer in a bar, passively, is very visual and therefore generates enough information by simple product use. Active diffusion of information occurs by talking about products. Reasons to talk about the product are not, like the opinion leaders, because of high involvement in the category. Reasons for Early Adopters to talk include novelty of the product, the desire to look like a pioneer in having purchases the product, or the involvement and expertise that come from the actual experience with the product. They are much more social oriented. Early adopters are like Opinion Leaders category specific according to Linda Price.
General Market Influencers or Market Mavens:
Market Mavens are individuals who have information about many kinds of products (multiple categories), places to shop and other facets of markets. They initiate discussions with other consumers, on- or off-line, and on their turn request more market information from consumers. Research has shown that Market Mavens are especially valuable in transmitting information about retailers who carry many products. Attributes most discussed include: Special sales, usual prices, product quality and product variety57.
55 Price, L., Feick, L.F., “The market maven: a diffuser of marketinformation.”. Journal of marketing , Januari 1987 vol 51 p 83-97
56 Bloch, P.H., Richins M.L., “A Theoratical Model for the Study of Product Importance Perceptions”,
Journal of Marketing, 1983, vol. 47, p. 69-81
57 Slama, Mark E.; Williams, Terrell G. “Generalization of the Market Maven's Information Provision
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They are not necessarily early purchasers or even users of the product that they have information on. But it is more likely that Market Mavens’ general market expertise leads them to earlier awareness of new products. They could enquire the product sooner then others (Early Adapter) or even get more involved with the product (Opinion Leader). The difference is their motivation.
The last author is Dichter58. He provides a differentiation of prosumers that is more
focused on the type of relationship between sender and receiver of everyday WOM and cannot be linked directly to the classifications of the other writers. The extra dimensions are the percentages that give the marketer a better view in whom to target to be most effective. • Disinterested friendliness (38.5%) o People of goodwill (24,5%) o Intimates (14%) • Community of consumership (28%) o Sharers of interest (18%) o Connoisseurs (10%) • Commercial authority (17%) o Salesman (6.5%) o Celebrities (7.5%) o Professional experts (3%)
• Bearers of tangible evidence (16.5%)
In-depth interviews done by Dichter show that, for example 38.5 percent of all persons interviewed and asked about conversations, in which products, services and advertisement had been discussed, are being influenced by “People of Goodwill” and “Intimates” in their buying decisions.
All of the previews described categories are not possible to identify in terms of age, place or product category. Prosumers are just everywhere and have every age59. In order to perform optimal marketing communication and to find and target these prosumers a selection has to be made between the different types of prosumers. The specific elements that define these types and have a strong fit with Grolsch are going to be used as variables for assessing clusters in Chapter 5.
The next paragraph will explain why sender and receiver perform WOM
communication to influence others. The main question is: What motivates senders and receivers.
3.2 Motivation
Nothing is for nothing. In WOM communication it is not different. WOM
communication can be seen as “Social Currency”. The strength of WOM persuasion
58 Dichter, Ernest, “How Word-of-Mouth Advertising Works” Harvard Business Review, 44, dec 1966, p. 155
—————————————————————————————34
lies in the fact that rewards are not material but always psychological, which makes an opinion authentic60 thus credible. This paragraph will be split into 2 sections. The first section provides information on why a consumer is motivated to talk about the brand or product (sender). The second part will discuss why a consumer is motivated to listen to a recommendation and to act in it (receiver).
3.2.1 Sender Motivation
Theory provided by Dichter describes 5 involvement categories that are used to serve the underlying needs of the sender.
• Product-involvement: a good experience with the product calls for repetition in the form of speech whenever a fitting occasion offers itself (could be a question about something you wear or drink from somebody). In many instances it is talk about a product, which confirms for the sender his ownership and joy in the product or his unique discovery of it.
• Self-involvement: The product is being used as a vehicle to carry the sender safely and sometimes victoriously through his own self-doubts and insecurity. This self confirmation has multiple goals, the most important are filling the need of:
o Seeking information of own judgment – the more people who follow the sender’s advice, the more justified he will feel in his own
judgment.
o Asserting superiority – recommendation of a product can be used as a tool to exercise power and test respect from receiver. (“will he or won’t he follow my advice?”)
o Attention – introducing a product in conversation to have something to say.
o Showing connoisseurship – talking about product proofs “being in the know”.
o Feeling like a pioneer – newness of a product provide the sender an opportunity to identify with product or makers of it.
o Having inside information – permits the speaker to know more then receiver and to feel clever.
o Status – talking about products with “social status” provides an elevator for the talker to elevate himself to the same level as other users that use the product.
The last five of the above (attention, showing connoisseurship, feeling like a pioneer, having inside information and status) are very similar to Mowen’s view on
motivation61. He mentions the most important need is filling the need of participation in a group by providing information.
60 Dichter, Ernest, “How Word-of-Mouth Advertising Works” Harvard Business Review, 44, dec 1966, p. 157
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• Other-involvement: The recommendation of a product fills the need to “give” or to express love, neighborliness, friendship and care.
• Message-involvement: This kind of communication is not about the product itself, but is mainly stimulated by advertisements, commercials or public relations.
o The Show is the Thing: Senders see advertisements as entertaining. A High score on entertainment and originality of an ad becomes topic of conversation.
o Shop Talk: Senders know that lots of high paid brains are competing for the favor of the consumer and have become experts on advertising effectiveness. Topic of talk is “clever” ads.
o Verbal play: Topic of talk for sender is repeating a quote from an ad. For example: Biertje??? (Heineken). This is independent from the fact if product is desired or not.
• Material-involvement: The need is to gain not something psychological but material. Most of the time it represents money. The senders doesn’t
necessarily have a strong inner conviction about the product or a personal relationship to the receiver.
