An Empirical Study of Word-of-Mouth Generation and Consumption

Posted: 29 Jan 2013 Last revised: 4 Jul 2013

See all articles by Sha Yang

Sha Yang

University of Southern California - Marshall School of Business

Mandy Hu

The Chinese University of Hong Kong (CUHK) - Department of Marketing

Russell S. Winer

New York University (NYU) - Department of Marketing

Henry Assael

New York University (NYU) - Department of Marketing

Xiaohong Chen

Central South University

Multiple version iconThere are 2 versions of this paper

Date Written: 2012

Abstract

Word-of-mouth (WOM) plays an increasingly important role in shaping consumers' attitudes and buying behaviors. Prior work in marketing has mainly focused on the aggregate impact of WOM on product sales as well as the generation of WOM. Very little attention has been paid to the consumption or usage of WOM. In this paper, utilizing a unique data set that collects information from the automobile category on whether a consumer generates WOM to others and uses WOM for making purchase decisions, we build a discrete-choice model to study consumer WOM generation and WOM consumption decisions simultaneously and empirically answer questions that have not been explored previously. We are particularly interested in studying the key drivers of WOM generation/consumption and the synergy effect between the two WOM-related activities. We apply the proposed model to survey data collected on the automobile category. We find a strong synergy between WOM generation and WOM consumption. Although some consumers view WOM generation and WOM consumption as complementary to each other, others tend to perceive the two activities as competing with each other. We also find that consumer product experience and media exposure are positively correlated with their propensity to generate WOM. However, their effect on WOM consumption is mixed. Our empirical analysis also provides evidence of unobserved heterogeneity in the way consumer WOM activities are related to consumer product experience. Overall, these findings lead to important managerial implications on targeting for effective use of WOM as a marketing tool.

Keywords: word-of-mouth, communication, discrete-choice model, probit model, finite mixture model

Suggested Citation

Yang, Sha and Hu, Mandy and Winer, Russell S. and Assael, Henry and Chen, Xiaohong, An Empirical Study of Word-of-Mouth Generation and Consumption (2012). Marketing Science, Vol. 31, No. 6, pp. 952-963, 2012, DOI: 10.1287/mksc.1120.0738, Available at SSRN: https://ssrn.com/abstract=2196708

Sha Yang (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

Mandy Hu

The Chinese University of Hong Kong (CUHK) - Department of Marketing ( email )

Room 1101, 11/F, Cheung Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
China

Russell S. Winer

New York University (NYU) - Department of Marketing ( email )

Henry Kaufman Ctr
44 W 4 St.
New York, NY
United States
212-998-0540 (Phone)
212-995-4006 (Fax)

Henry Assael

New York University (NYU) - Department of Marketing ( email )

Henry Kaufman Ctr
44 W 4 St.
New York, NY
United States

Xiaohong Chen

Central South University ( email )

Changsha, Hunan 410083
China

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