AI and Analytics for Business

Research Paper Series

On Brands and Word-of-Mouth

Brands and word-of-mouth (WOM) are cornerstones of marketing, yet, their relationship was largely ignored. In order to explore this relationship we present a theoretical framework whose fundamentals are consumers and what stimulates them to engage in WOM. It argues that consumers spread the word on brands as a result of three drivers: functional, social, and emotional. Through these motives and needs we identify a set of brand characteristics (e.g. level of differentiation) that play a role in stimulating WOM.

To examine our theoretical framework empirically, we constructed a unique data set on the online and offline WOM and the characteristics of the 697 most talked-about national US brands. Using MCMC estimation we find that (i) brand characteristics play an important role in generating WOM, and (ii) that the impact of the characteristics differs between offline conversations and online brand mentions. We also find that while the social and functional drivers are the most important for online WOM, the emotional driver is the most important for offline WOM. These results portray an interesting picture of WOM and have meaningful managerial implications (e.g. investment in WOM).