Effects of Viral Marketing

Effects of viral marketviral trade1.1 viral MarketingThese years, the competitions among companies function to a greater extent than and to a greater extent(prenominal) furious. Song (2004) pointed expose that to a greater extent another(prenominal)(prenominal) another(prenominal) companies in distinguish to survive withal to develop, they try to pip good single- graded function any modality that give the sack support them to enlarge their market sh ar and build a sacrosanct brand. The traditional Medias such as television, modernisticspaper, radio and printed Ads were over gived in the last decade. This view was back up by Mogg (2006) who believed that victimization these traditional ship stick placeal to hike up a growth or value non longer fire stimulate audiences refundion and urge strengthively. Beca function in both(prenominal) extent, audiences were piddle used to receive data of these ways, they need something tender, need a tender flavor of the discipline they receive (Sally, 2006).The era that customers rely on sellers adumbrateions or advertising to confuse a purchase decision was g atomic number 53. Czinkota (2007) argued that solo come forth the entropy that you think customers would need is not sour uping, not nice to pack customers, and muckle not fulfill their needs and satisfy them. Customers already choke smart enough they do not analogous to be persuaded by marketers or advertisings in legion(predicate) authoritys. They prefer to be briskly in the buying function and use their own knowledge and standards to decide what they need, and what they keen to buy (Grewal, 2008). A strong brand gage make customers nourish faith in a community and its intersections. This view seems acceptable for gratify (2005) who agreed that building close relationship with customers is vital companies try their trump out to prosecute the best merchandise strategies with the purpose to be strong and profi table. term of sing is 1 of the effective ways for a ph unrivaledr to incite its products (Anderson, 1999). Word-of-Mouth (WOM) was described as oral, person-to-person communication surrounded by a pull in catcher and a communicator which the receiver perceives as a noncommercial kernel, regarding a brand, product or table attend to (Haywood, 1989, pp53-66). It sewer help a club use less money to do the smokestack furtherance. This view was supported by Buttle(1998), he believed that customers are easier to be persuaded through this way as they think it is a noncommercial way. They consider that they are on the active position to receive information and make a buying decision, not be persuaded to do that.With the evolution of technology, and the operate of the profits, the arena of many companies realize move from realistic globe to a smart worldthe net (Cas testifys, 1997). Word of brim has upgrade through net profit, and gets a new material body viral merch andising these years (Modzelewski, 2000). Base on Dichers (2001, pp47) search, viral trade is a strategy that companies use to stimulate their customer to start on something virtually their products to their nedeucerk of colleagues and friends. For the come with, viral market throne help a attach to use a little budget to promote itself sharply, since the information you send out, customers would survive them on by themselves. In the customers side, viral selling help customers feel better as they think that they make the purchase decision by themselves, and they get information from their friends who seem more authorized than marketers or advertisings. (Wangenheim, 2007, pp131-146)Base on the advantages of internet, using viral trade relate to internet batch make the promotion effect corresponding a nuclear bomb. meshing fanny make the information spare genuinely closely, even exceed your expectation. Sudaraman and Rajagopalan(2003) name that since you use viral market to send out your information, it whitethorn r for each one e very(prenominal) corner of world that has internet connections precisely need a few days. Internet seems something take information deliver from the Stone Age to 21st century, it playacting like a pair of wings of information delivery, make information deliver reach to an in credible speed.Considering the effective of viral merchandise strategy, this typography decides to examine the effects of viral trade that quite a little make to a company. The author is very interested in the effects of viral trade, as it is a trend for coming(prenominal) railway line it is so useful to companys promotion and information delivery. To know clear about the viral market can help author to enrich his marketing knowledge, and pull up stakes be very helpful in his future job or business, even can help readers of this report to know more about viral marketing. In order to make the research more reliable and get accurat e synopsis, this report would choose MySpace, an online company which seems to be achiever on using viral marketing strategy to assist the analysis.1.2 MySpace turkey cock Anderson (born November 8, 1970) is the President of the genial networking website, MySpace. He is one of the flock identified as a founder of the site, along with chief exe splayive officer Chris DeWolfe (Boyd, 2006). At the beginning, it was a website with a small number of users, which used to make friends. Then they invite some famous volume to join in, these famous plenty bring many fans in. since more and more bands build up their website on this station, MySpace becoming big and get huge number of users. It develop from a music marry station to a core of young peoples live in America, thusly explore all over the world(Diving into the Myspace Pool, 2006). It chooses to give users enough thawdom to build what they like in this attach station, and this set-apartdom and correct make it explore so quickly. People can use their electronic mail address to sign up as the user of it. (Source from Dwyer, 2007)Every user can upload the things they like, such as video and sound clips, pictures and many other things. MySpace discover to their users and improve the wed station, like increase blogs, meaning board, discuss rooms, and online communications. Users can chew up to their friends there, play games together, even use wed camera to meet each other when they talking.(source from Boyd, 2006) This wed station can make users feel so free in it they can talk what they like with their friends here. So users invite their friends to join in MySpace (Diving into the MySpace Pool, 2006).In such a way, MySpace reach to a great success. Until 2006, MySpace only inflexible up three years, but its development speed was faster than any wed station in history, it is a myth of the internet development history. It already beyond Yahoo and Google to be the biggest wed station in USA. It was set up with a very small cost, but in 2005, Rupert Murdoch, the CEO of The News Corporation Limited, use 580 million dollar to buy it. bingle year after it was purchased, it earn 900 million dollar from Google for advertising fee. (Source from Hempel and Lehman, 2005)It seems that MySpace rattling a success example to make good use of viral marketing strategy, that why this report choose UK MySpace as the suit of clothes turn over to assist the research and analysis.1.3 Research Objectivesa. Examine the effects that viral marketing can make to a company, associate with case studyUK MySpaceb. Access to customers mental attitude and reactions to viral marketing through primary and secondary data analysisc. Find out the effects of viral marketing for a companys success at last.Chapter 2 Literature Review2.1 The telescope and Development of viral MarketingMarketing is a social process which satisfies consumers needs. The term includes advertising, distribution and selling of a pr oduct or service. It is alike concerned with anticipating the customers future needs and expectations, often through market research (Frenzen and Nakamoto, 1993). This view was supported by Eugene (1998) who believed that marketing is the process of planning and penalize the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.Pamela (2000) pointed out that traditional marketing is the marketing techniques that are used for many years, it in general using strong points such as, television, newspaper, telephone and radio. Nowadays, there are many new technologies are used to replace the traditional mediums to do promotions Internet, multimedia smooth phone, blogs and so on. These new mediums can help marketers to reach more customers and cut cost.This view was supported by Wegert (2004) who believed that the traditional mediums do not work effective as before, they make many audi ences feel boring and many liberty chits what they dislike. Customers want to see something new and soothing, really make them interesting and happy, so the new mediums whitethorn work effective and can catch their eyeballs (Anderson, 1998, pp104-141).These years, more and more people like to surfing on internet (Wangenheim, 2007). This situation air currents to many marketers focus on internet to promote their products and services. Especially, young people prefer using internet to traditional mediums. For a companys future development, holding the young people now can make them get a big market share in the future (Bayus, 1985). So to make good use of the internet to do promotion is vital for many companies, especially the company which rely on internet to do business. there are many advantages to use internet as an advertising medium message can change quickly and good create own page cheaply humble cost rail gross revenue possible and so on (McWilliams, 2000). Base on its a dvantages, more and more companies choose to use internet to do advertisings. Several chief(prenominal) online promotion techniques are recognized by marketing researchers, viral marketing go outing be the focus of this research as it can reach mass consumers in a short time with a economic crisis cost.2.2 From WOM to Viral MarketingDuring the last decade, customer felicity and perceived service lumber digest been important topics in the marketing literature. This is due to the empirically verified belief that increases in satisfaction and quality will eventually result in elevateder profitability (Wangenheim, 2007). Over the past 10 years however the focus of research on satisfaction and quality has s pitifully shifted from understanding how service quality perceptions and satisfaction judgments are create to a more outcome-oriented view of assessing the returns on service quality and satisfaction al-Qaidad on a thorough understanding of the associated costs and benefit s (Buttle, 1998, pp76-89).A strategy called viral marketing was used by many companies to pursue the profit. Before the viral marketing appears, a marketing strategy called vocalise of mouth was used in that way. Haywood (1989) believed that Word-of-Mouth (WOM) refers to oral, person-to-person communication amid a receiver and a communicator which the receiver perceives as a noncommercial message, regarding a brand, product or service.Even though WOM strategy can bring huge benefits to a company, the development of technology usage has upgraded the cry of mouth strategy to a new one call viral marketing (Richins, 1999). These years, stationary Internet consumers communication environment has been changed and enriched. As a result WOM has gained new significance and WOM on the stationary Internet was termed viral marketing.This view was supported by Godes and Mayzlin (2004), that Viral or grape vine marketing has pass away very popular because it has a new mediumthe Internet. Ac cording to one venture capital firm, 76 percent of new business plans get to the tidingss viral marketing in them (File, Cermak and Prince, 2000). using e-mail makes it incredibly easy to pass information on to a friend or colleague, especially if it involves something fun or free. With millions using the Internet all over the world, the potential for exponential growth is quite huge.2.3 What is Viral MarketingSince the term viral marketing was introduced in 1997, many disagreements exist about its definition. Subramani and Rajagopalan (2003) view it as viva-voce advertising in which consumers arrange other consumers about the product or service. Yang and Allenby (2003) argued that true viral marketing differs from word-of-mouth in that the value of the virus to the original consumer is directly colligate to the number of other users it attracts. Shirky (2000) suggests that, in generally, viral marketing would be word-of-mouth advertising to most people. More importantly, ho wever, he adds that the concept describes viral marketing as a way of getting new customers by back up honest communication among consumers. The originator of each branch of the virus has a unique and vested interest in recruiting people to the network. (Modzelewski, 2000, p.30).According to Senecal and Acques (2004) suggestion, purchasing is factor of a social process, it involves a one-to-one interaction between the company and the customer and many exchanges of information and influence among the people who surround the customers. They as well suggest that many effective networks comprise hubs, clusters, and connections among clusters. In these networks, people will notice a constant flow of green sparks between true nodes.Wilson (2000) state that viral marketing is sort of this explosion that you start with one customer and he/she will tell people and pass it on continuously. In Dichters (2001, p47) touch sensation, viral marketing is the idea that you incite your custome rs or referral sources to pass on something about your business to their network of colleagues and friends. There is a similar saying that viral marketing describes any strategy that incites customers to pass on a marketing message to others, creating the potential for exponential growth in the messages exposure and influence (Hogon, maize and Libai, 2004). Nalor (2002) claimed that viral marketing is a marketing tactic relying on some aspects of the dust to promote itself as initial targets pass the promotion on to others.Depend mostly on Hogon, Lemon and Libais perspectives, the received article views viral marketing as the process of encouraging honest communication among consumer networks, and it focuses on email as the main channel.One example of viral marketing is encouraging current and potential customers to tell others about a companys products and services, and then encouraging those others to tell even more consumers, make the information go forward continuously (Subr amani and Rajagopalan, 2003 ). These strategies like viruses, can take advantage of rapid multiplication to blow a fuse the message to thousands even to millions customers in a short time.The term viral marketing is also used to refer to stealth marketing causesthe use of varied kinds of astroturfing both online and offline to create the impression of spontaneous word of mouth enthusiasm(Hennig-Thurau, Gwinner, Walsh and Gremler,2004, pp 95). Out of the internet, viral marketing has been described as word of mouth, creating a buzz, leveraging the media, network marketing. However, on the internet, whatever, it was called viral marketing (Helm, 2000, pp 57-71).Datta, Chowdhury and Chakraborty (2005) used the term as network-enhanced word of mouth to describe the then high innovative marketing strategy of the free email service Hotmail. For other words, such terms as propagation, assembling or organic marketing are used. Successful viral marketing is characterized as strategies tha t allow an easier, accelerated, and cost reduced transmission of messages by creating environments for a self-replicating, exponentially increasing diffusion, spiritualization, and impact of the message. (Hogan, Lemon and Libai, 2001)2.4. Forms and Categories of Viral Marketing2.4.1 FormsThere are many forms of viral marketing these include images, jokes, macrocosm TV show transcripts, digital video clips, e-cards, interactive microsites, advergames, and alternative human race games (Modzelewski, 2000). The list is continuously growing as the development of viral marketing.2.4.2 CategoriesThere are several ways to categorize viral marketing. First, difference between intentional and unintentional message delivery and used a motivational classification. Secondary, difference is between service- sales boothd and incentive-based. In the first situation, viral effect was decided by the quality of lead, another one means that company uses monetary incentive to stimulate customers so t hat they would pass on an advertisers message. Base on the differences between private and public recommendation, the potpourri between high (active) and low (passive) integration strategies are varying in the degree of requiring the consumers activity in passing on the virus . (Source from Goldenberg, Libai and Muller, 2001, pp 209-257)2.5 Viral Marketing in B2BBeside the explanation of viral marketing base on B2C, many authors get another similar definition for it on B2B side.In B2B, viral marketing means the rapid spread of a message about a new product or service, in a similar way to the spread of a virus (Yang and Allenby, 2003). Viral marketing can be word of mouth however, it is particularly third estate being use on the Internet, where messages can be spread substantially and quickly to reach people all over the world. Products can become very famous in this way with very little advertising cost.Carrabis (2006) has turn out that viral marketing rely on social networks in order to function. Linking is also an effective viral marketing tool, as is the proviso of free products or services. The Hotmail free e-mail service, for example, grew quickly with little marketing investment (Tafe, 2007).In B2B area, viral marketing works well in the following circumstances (a) when a product is genuinely new and different, and it is something that feel leaders want to associate with(b) when the benefits of the product are real (c) when the product is relevant to a large number of people, and the benefits are easy to fall out (Bansal and Voyer, 2000, p26-63).2.6 Why Viral MarketingThese years, online social networks are increasingly being considered as an important source of information to print the adoption and use of products and services (Mac, 2006). Viral marketing as the tactic of creating a process where interested people can market to each other, is therefore rising as an important marketing strategy to spread-the-word and stimulate the trial, adopt ion, and use of products and services. (Herr, Kardes and Kim, 1999)What is new about viral marketing is not word of mouth, but the way people are spreading it (Hogan, Lemon and Libai, 2004). vane users have the ears and eyeball of hundreds, even thousands of people. They are in contact with an International crowd they would never have met otherwise. Most significantly, they can reach people they do not really know. That is why several weeks after a people direct the first Hotmail message into India thousands of Indian users had Hotmail accounts (Kuruvilla, 2007).It is believed that a satisfied customer tells an add up of three people about a product or service he likes, and nine people about a product or service which he dislikes (Sudaraman, Mitra and Webster, 1999). Viral marketing is based on this earthy human behavior to conduct its campaigns.Domingos (2006) believed that the purpose of marketers interested in making a favored viral marketing campaign is to identify custome rs who with high social networking potentials, and then created viral messages that can attract this segment of the customers and have a high credibly to keep the message spreading.Viral marketing has received extensive attention from both academics and practitioners these years (Jurvetson, 2000). Base on the analysis before, many authors form their standpoints about the effect that viral marketing strategy can bring to a company. They argue with other authors opinions base on their own standpoints.2.6.1 Positive Effects of Viral MarketingViral marketing facilitates spreading commercial information and content inwardly the want target group (Hogan, Lemon and Libai, 2001)). Another advantage of it is that advertisers can billow the promotion reach significantly at a very low company expense (Baker, 2005). According a survey of Duhan, Johnson, Wilcox and Harrell (1997), 35% of the 3000 respondents said a friends recommendation would convince them to visit a website they do not kno w before. These results illustrated the huge potential of viral marketing for communication and distribution purposes.What is great about viral marketing is that it is low cost and works virtually by itself. Once you make an offer and provide the facility, for referrals, viral marketing spreads by itself very faster, just like a virus (Hogan, Lemon and Libai, 2004). Just like Tafe (2007) said that, Hotmail only cost 18 months to get 12 million users by using viral marketing that let users to referral users, it cost nothing to do Ads, only use free email account.Viral marketing has been studied both as an input into consumer decision-making, and as an outcome of the purchase process (Holmes and Lett, 1997). In the pre-purchase stage, as a risk reducing strategy, consumers seek product information by participating in the viral marketing process. Positive and detrimental messages are examples of exit behaviors exhibited by consumers at the conclusion of a service encounter ((Hogan, Le mon and Libai, 2004) or usage of a product (Naylor and Kleiser, 2000).Anderson (1998) pointed out that viral marketing could influence consumers choices and purchase decisions, and shape consumers expectations, pre-usage attitudes, even post-usage perceptions of a product or service. It is believed that the influence of viral marketing is much(prenominal) greater than that of classic advertising media (Gremler, Gwinner and Brown, 2001).BMW is a good example, it supply 5 video clips to watch and download for free, and then get over 11 million visitor in 4 months. The sales of BMW car are increase 12.5% in the next year (Hespos, 2002). It seems that video clips and internet can make viral marketing working effectively.Viral marketing has been referred to as product-related conversation, personal recommendations, informal communication, and interpersonal communication (Jacob, Barak and Muller, 2001). There are one big distinction between viral marketing activities and commercial mass communication. As viral marketing is a consumer-dominated channel of information, the communicator is thought to be independent of the marketer (Lau and NG, 2001). As a result, it is recognized by customers as a more reliable, credible, and trustworthy source of information. It provides information concerning product surgery and the social and psychological consequences of a purchase decision (Naylor and Kleiser, 2000). For example, Myspace use viral marketing to make the users to referral itself and make a big success (Dwyer, 2007).Viral marketing can convert lower order cognition and affect to higher order cognition and affect, which in turn can lead to committed behaviors of receivers (Baker, 2005). The credibility of viral marketing, coupled with the probability that a receiver will be more highly involved in a viral marketing message than an advertisement, lends itself to the formation of such higher order beliefs and cognition. Through multiple dyads and retransmission, one m essage can reach and potentially influence many receivers (Henning-Thurau, Gwinner, Walsh and Gremler, 2004). Make good use of the customers internet social networks, like using free email referrals and internet chat rooms, the information can spread sharply (Domingos, 2006).The effectiveness of viral marketing can also be explained by the accessibility-diagnosticity model (Hogan, Lemon and Libai, 2004). Some findings suggest that vividly (face-to-face) presented information is more memorable to customers and is weighed more heavily in their judgments (Henning-Thurau, Gwinner, Walsh and Gremler, 2004).such as Myspace, it use the chat rooms that users can talk to each other, even face-to-face through PC camera, and then its information become more reliable and memorable for users (Boyd, 2006). Because of internet, information accessibility increases, it is high likely that this information is used by customers as an input for their judgments and choices also increases (Hogan, Lemon a nd Libai, 2004).2.6.2 electronegative Effects of Viral MarketingFor all its advantages, viral marketing also has many unexpected pitfalls. Most important, companies have almost no control over the viral spread since it was send out, and therefore they can do little if the viral turns to against them and their products (Jurvetson, 2000).The action most frequently describe by consumers who are displease with a purchase or who have rejected or discontinued using a product is obese friends about the experience and urging them to avoid it (Weinberger and Lepkowska-White, 2000 ). Many researchers have suggested that prejudicial information tends to cause many attention to and weighting of that information (Bristor, 1990). For example, Naylor and Kleiser (2000) found that negative messages destroy the image of a brand are more than twice as strongly as positive WOM promoted sales of that product. Negative message has also led to the failure of many companies promotion. Wilson (2000) ar gues that negative messages would be communicated to more people than positive messages. According to much previous depict about the spread of marketing information, it is suggested that a negative message may travel farther than a positive message through retransmission. In previous research the influencer was often considering to be an opinion leader. However, a dissatisfied customer who initiates negative message need not be an opinion leader, and yet his opinions can have adverse effects on the marketer (Richins, 1999). For example, Sony try to use Youtube to promote its Playstation consoles, it created an imaginary character called Peter and act to make the character as a hip -hop shark. However, some expert users soon discovered the wile, and tell many others. Many people then angary with what SONY done, and refuse to buy the playstation consoles. In the end, Sony had to make a public justification to delighted and hold the customers. (Source from Kuruvilla, 2007)2.6.3 Vir al Marketing Effects in B2BFor business-to-business companies, it makes adept to begin with a product or service offer that has real, free value to prospects. Examples an e-mailed newsletter that can easily be forwarded to colleagues, or a product that comes with an incentive, such as gift certificates or coupons, sent via e-mail, which can be passed along to more than one person.Viral marketing can work effective for B2B providers, since the following is true. One very significant swither of viral marketing is to allow others to post articles that you have authored on their Web sites (Lau and NG, 2001). Another way to encourage visitors to spread the word about your product or service is to provide a link or press release on each Web page that they can click on to forward your wed site (Goldenberg, Libai and Muller, 2001).While some people may use viral marketing only as buzzwords, there is another significance for B2B marketers. Companies can encourage satisfied customers and r eferral sources in a credible way and persuade them to spread the positive words for their products. Keep the final payment combined with your business and appropriate for the size and type of referral. Ensure that your offer adds value or reward for the referrer and for those people that are referred to you, and then you will have a cost-effective marketing tool to grow your business (Herr, Kardes and Kim, 1999).2.6.4 Factors Motivating Viral MarketingAccording to Chen, Iyer and Padmanabhan (2002), viral marketing involves two parties the communicator and the receiver. Viral marketing will only start when the communicator is motivated to articulate and the receiver is motivated to listen. Therefore, in order to understand how the process works, it is very important that understand the inherent motives.In the case of the receiver, motivation to listen may be affected by (a) source reliability (Blodgett, Granbois and Walters, 1998) (b) interpersonal ties between the sender and rece iver (Goldenberg, Libai and Muller, 2001) (c)product and purchasing situation characteristics such as high perceived risk (Bristor, 1990), newness, .and intangibility associated with services (Weinberger and Lepkowska-White, 2000) and (d) situational factors such as conditions where product information may be hard or unaccepted to get from the marketer, or where there is a shortage of time.In the case of the communicator, motivation to speak may be influenced by (a) the personality of the communicator, for example, boldness (Bristor, 1990) and sociability (Richins, 1999) (b) the attitudes of the communicator, for example, a desire to help others (Lau and NG, 2001) and attitude towards complaining (Singh, 1990) (c) familiarity with the product and with the purchase decision (Henning-Thurau, Gwinner, Walsh and Gremler, 2004) and (d) situational factors like proximity of others during dissatisfaction (Lau and NG, 2001).Viral marketing has quickly been recognized by many companies be cause of many successful examples Marketers proved that a little budget they could motivate millions customers. They did so by encourage customer-to-customer communication to increase sales, brand awareness, and market share. Seth Godi uploads his ebook on the internet and the people can download for free and has the right to send to their friends. If they like, they can buy a print copy. Only three months, nearly one million people download the e-book. (Source from Tafe, 2007)Receivers getting a marketing message from familiar communicators participate more frequently in a campaign as initial contacts. Because the personal message which come from friends or people you know would be more credible than that coming directly from the egoism advertiser (Goldenberg, Libai and Muller, 2001). Taking advantage of the inherent nature of internet as communication vehicles viral marketing enables consumers to share information and content within their social network easier and faster, there a re without time and location limit point for internet communications (Naylor and Kleiser, 2000).Money incentive can works very effective when a viral marketing not clever and agreeable enough for customers. Give referrers a reward can encourage fast spread of the marketing information. Those people who pass on your information can get something in return can encourage their passion to pass on the information. That something may be a gift or service related to your business or simply the knowledge that they have added value for others.2.7 Measuring Success and EffectiveMany authors argue that what is a successful campaign? Can it based on the amount of number of people who positively interact with the campaigns content or the sales created by the campaign?Although no a single measurement system has build up for viral marketing, measurement tools do exist, allow the markers use to tracking the process and effects of viral marketing. It is hard to know whether audiences parcel out a bout the contents behind the campaigns, what ensure about the marketers maybe how many people see the campaign (Goldenberg, Libai and Muller, 2001).Shirky (2000) believed that viral marketing not always effective as it also have many disadvantages, and many situations would make it fail. The difference between a successful and unsuccessful viral marketing campaign is the campaigns ability to connect with audiences and persuade them to pass on the message and ultimately the product or service (Kirby, 2006, p.92).Kirby (2006) recognizes that in order to increase the chances of a successful viral campaign many companies are starting to invest more into the planning and implementation of it. Freedma