Word of mouth: A Business defining Wave

Published by MBA Skool Team, Published on January 23, 2011

Business organizations spend millions of dollars for marketing and promoting their products and services. Sponsorships, celebrity endorsements and advertising, all form a pivotal part in the marketing plan of an organization, which eventually decides the success or failure of the brand. But one more aspect which creates an uncontrolled chain reaction and can define a brand is known as “Word of Mouth”.


Word of Mouth

In plain terms, word of mouth is a simple definition and experience of a product or service which is described by an existing customer to a prospective customer. The buzz created by simple conversations between friends, family and colleagues often gives direction to the fate of a brand. A positive word of mouth due to a memorable and wonderful experience would work wonders to an organization. On the contrary, a bad experience would not only lead to the loss of an existing customer, but a negative chain reaction may also lead to declining fortunes for the business.


One of the most prominent industry which works on a word of mouth is the film industry. The fate of movies releasing are in most cases decided within the first weekend itself. Movies which people appreciate and enjoy are instantly popular as people create a buzz amongst their close ones. People recommend everyone around them to watch the film if they themselves find it interesting. However, even if a movie has the biggest actors and extensive marketing, a bad taste would create a negative word of mouth, thereby destroying the hopes of the movie to succeed.


Word of mouth is an important aspect in every industry and sector. Leading social networking sites Facebook and Skype became a household name globally because of a positive word of mouth spread by their users. Facebook emerged as the biggest social networking hub despite the presence of Orkut and other websites. Facebook owes its success not only to its positive word but also a negative word of mouth for Orkut.


Another incident which created a negative buzz was with confectionary giants Nestle. Nestle failed to maintain good relations with its customers on its customer interactive page. This incident not only hurt Nestle then, but even now serves as an example of being irresponsible towards customers, thereby generating a negative word of mouth.


Hospitality services and tourism industry operators like Cox n Kings, Cosmos, and Raj Travels etc all are dependent on a positive word of mouth for their success.


Similarly, the telecom sector is also governed by the word of mouth and reference from users. MTNL and BSNL get a considerable favor in the internet broadband market as the services provided influence its customers positively. But despite having lower rates and facilities like 3G, MTNL and BSNL fare badly as compared to Airtel, Vodafone, and Idea in the mobile services market segment. Service industry organizations like McDonalds, Pizzahut, and Dominoes are the most affected by word of mouth.


A positive word of mouth is like free marketing worth millions of dollars. But the challenge lies in tackling the problem of negative publicity. Cadburys had apologized to every customer when a bad word about the quality of its chocolates was doing rounds. Similarly, soft drink giants Pepsi had to present an apology to its customers when the pesticide scandal rocked them. Thus, no matter how big a brand is, the customer should always be the prime priority.


Customers decide the fate of any organization, business or brand. Every word, every action and every movement is noticed, evaluated and judged by a customer at every moment. It is the customers who start the wave of word of mouth with their gossip. And depending upon the word of mouth being spread, it can be a wave of opportunities or a tsunami of destruction.


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