The Impact of Word of Mouth on Intention to Purchase Currently Used and other Brands

Abstract

This paper measures how the impact of positive and negative word of mouth (PWOM, NWOM) is related to the receiver's intention to purchase brands, using shift in the intention to purchase as the measure of impact. It distinguishes between currently used and other brands, and finds that PWOM has more impact, and NWOM less, when these forms of advice are on the current brand. The PWOM effect persists among those who are disinclined to rebuy their current brand, so it is not based on preference. Similarly, the NWOM effect is not enhanced when respondents are disinclined to repurchase their current brand. To explain this phenomenon, we suggest that the current brand is better understood, making it easier for customers to accept PWOM and reject NWOM on it, irrespective of preference. This work, by showing that the response to WOM is relatively independent of preference, also indicates that bias based on preference may be a limited hazard in survey responses about WOM. When account is taken of the relative frequency of WOM on current and other brands, PWOM has twice as much effect on customer acquisition as customer retention, while NWOM has more than four times as much effect in deterring the acquisition of new buyers as it has on deterring customer retention. This evidence contributes to our understanding of how WOM acts to both retain and acquire customers.