Marketing is an effective tool and strategy for increasing the sales of products and services. It is all about understanding the customers and finding the best way of providing products or services that customers demand. It involves communicating the value of the products or services to the customers to influence the customer purchasing decision making. Various marketing models, especially the traditional ones, generally concentrate on single individuals without taking into account the social interactions between the individuals. People are generally influenced by others (their peers, family members, and friends) and this influence affects their purchasing decision. This influence is known as the word of mouth effect. In this article, the authors try to assess the profitability and efficiency of different marketing strategies where consumers are subjected to word of mouth effect.
The main idea is that, in the presence of word of mouth effect, the quality of the product is the most significant factor that affects the sales (profitability). A positive word of mouth effect spread by the consumers improves the profitability while a negative word of mouth effect lowers the profitability.
Marketing strategies normally create psychological and sociological influences on consumers. The level of influence on each individual is distinct. Besides, every individual has the ability to influence other individuals, based on their purchase experience. The purchase experience is driven by the product quality and characteristics. The article is mainly about consumer behavior and the study evaluates the efficiency of different marketing strategies in a monopolistic market. The authors’ main interest is to investigate how price, promotion, and quality factors affect the profitability of a company. The authors also focus on the importance of word of mouth effect in marketing strategies.
Why the authors are writing about the topic
Human behavior is quite complex, and consumer behavior is surrounded by sociological and psychological ambiguities. This makes it difficult to identify and implement a marketing strategy that delivers as expected. As believed by many, “half of the advertising budget is wasted, and one doesn’t know which half.” The authors chose this topic in order to present a model that gives a better understanding of consumer behavior. As with the traditional modeling approach, it is difficult to understand why a decrease in price of a product doesn’t always result in an increase in sales. Human beings do not act rationally at all times and may not purchase a product even when the product satisfies the consumer’s expectations.
Human beings learn from their past experiences and get influenced by their social environments. The past experiences and the influence of social environments constitute the purchasing decisions, based upon individual’s current beliefs and values. Marketing strategies (such as advertising and promotions) also influence the purchasing decisions. Traditional market models only concentrate on single individuals and not the social interactions. This topic takes into account both the individual experience and the social interactions.
The third reason for the choice of this topic is that the traditional models do not comprehend the inner psychological processes of consumer purchase decisions. The attitude of consumers towards a product may change with time based on the impacts of the perceived social facts and the social network. Price changes and advertisements also create psychological effects that are likely to change individual’s attitude.
Facts that are presented
Several facts are presented in the article. It is a fact that every consumer has different priorities and preferences for a product. External factors influence each individual in different levels. External factors do not affect buyers’ utilities after the purchase of the product (the utilities do not decay because of the external factors). Product quality is the most important factor that affects buyer decision, especially when the word of mouth is in effect. The second most important factor affecting buyer decision is the company’s promotion strategy. No matter the promotional strategy, product quality will always influence the buyer decision. Price is another factor that affects buyer decision.
It’s a fact that consumers communicate with each other and share information of products, such as quality. If the quality is low, the information is shared among consumers and less people purchase the product.
Critique the article
The arguments in this article have been presented in a logical manner. The authors have identified an area that actually needs more insight due to its complexities and immense importance in marketing. It’s logical that product’s quality greatly affects its purchase. The text is clear and easy to read, though not well organized. For instance, the discussion section is combined with the results section. This prevents extensive and conclusive discussion of the results. In fact, much of the discussion is presented in the literature review and methodology sections.
The facts presented in the article are accurate and supported by various theories and research studies. Important terms have been clearly defined and the authors have provided sufficient evidence to support their arguments. The text is very appropriate for the audience and helps in better understanding of the main subject.
The findings of the article, however, cannot be generalized. The investigation was carried out with only one company and one product. The market environment is monopolistic and not competitive as most markets nowadays. Further research should be done on this area, with more companies, products, and various market structures for good and accurate outcomes.
Conclusions and recommendations
Consumers always communicate with one another. They share such information as quality characteristics of products. The information shared among consumers influences the consumer purchase decisions. Product quality has been identified as the greatest factor that influences consumer purchase decision when the word of mouth (social interaction) is in effect. When the product quality is low, a negative word of mouth effect is created as the consumers share the information. This lowers the sale of the product. When the quality is high, a positive word of mouth effect is created and the sale increases. Promotion strategy is also identified as an important factor that affects buyer decision. When the price is low, more purchases are made. However, a decrease in price does not increase the amount of purchases when the product quality is low, no matter the number of opinion leaders to collaborate with. Marketing strategies should therefore focus on both the individual effects and the social interactions.
Karakaya, C., Badur, B., and Aytekin, C. (2011). Analyzing the Effectiveness of Marketing Strategies in the Presence of Word of Mouth: Agent-Based Modeling Approach. Journal of Marketing Research and Case Studies, 2011. Retrieved October 16, 2012 from http://www.ibimapublishing.com/journals/JMRCS/2011/421059/421059.pdf