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On Brands and Word-of-Mouth

48 Pages Posted: 6 Dec 2011  

Renana Peres

Leon Recanati Graduate School of Business Administration

Ron Shachar

Interdisciplinary Center (IDC) Herzliyah - Adelson School of Entrepreneuship

Mitchell J. Lovett

Simon School of Business – University of Rochester

Date Written: October 1, 2011

Abstract

Brands and word-of-mouth (WOM) are cornerstones of marketing, yet, their relationship was largely ignored. In order to explore this relationship we present a theoretical framework whose fundamentals are consumers and what stimulates them to engage in WOM. It argues that consumers spread the word on brands as a result of three drivers: functional, social, and emotional. Through these motives and needs we identify a set of brand characteristics (e.g. level of differentiation) that play a role in stimulating WOM.

To examine our theoretical framework empirically, we constructed a unique data set on the online and offline WOM and the characteristics of the 697 most talked-about national US brands. Using MCMC estimation we find that (i) brand characteristics play an important role in generating WOM, and (ii) that the impact of the characteristics differs between offline conversations and online brand mentions. We also find that while the social and functional drivers are the most important for online WOM, the emotional driver is the most important for offline WOM. These results portray an interesting picture of WOM and have meaningful managerial implications (e.g. investment in WOM).

Suggested Citation

Peres, Renana and Shachar, Ron and Lovett, Mitchell J., On Brands and Word-of-Mouth (October 1, 2011). Available at SSRN: https://ssrn.com/abstract=1968602 or http://dx.doi.org/10.2139/ssrn.1968602

Renana Peres (Contact Author)

Leon Recanati Graduate School of Business Administration ( email )

Ramat Aviv
Tel-Aviv, 6997801
Israel

Roni Shachar

Interdisciplinary Center (IDC) Herzliyah - Adelson School of Entrepreneuship ( email )

P.O. Box 167
Herzliya, 46150
Israel

Mitch Lovett

Simon School of Business – University of Rochester ( email )

300 Crittenden Blvd.
Rochester, NY 14627
United States

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