Research Papers

eWOM Research Paper

At present, most companies that resort to one or another method of promoting their goods (services) on the market often use several forms of information dissemination at the same time. Such a rule is the most effective, since, in this case, it is possible to comprehensively take into account the specifics of a product or service, the characteristics of the manufacturer’s (seller’s) company, and the characteristics of competitors. Given the fact that the situation in the market may change, promotion specialists also need to respond to these changes. Marketing communications occupy a significant place in this complex.

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The success of marketing communications in the hospitality industry depends largely on the characteristics of these services that need to be considered (McCabe, 2017). Thus, the first feature of the hospitality industry and tourism is associated with the specificity of services – the intangibility of services and the heterogeneity of demand. A necessary sign of the implementation of these services is the presence of the client and the impossibility of their storage; thus, the personal aspect is enhanced. In this regard, the process of marketing communications in hospitality and tourism services can be automated to a much lesser extent than in case of goods. The effect of the service is estimated by the consumer in a certain emotional state, depending on a huge number of factors, including subjective characteristics (income, age, education, profession) and the high importance of factors in the external environment – the economic, political and social situation in the country, the ecology, etc.

Due to the intangibility and impossibility to store hospitality and tourism services, it is difficult for an advertiser to convince consumers of the benefits of this particular service, since the quality of services varies widely and depends not only on service providers, but also on the time and place of supply. If the client refused to travel at the last moment, then replacing him with someone is almost impossible.

In today’s hospitality and tourism market, it is not enough just to create a good product or service, set a price, and ensure accessibility. To achieve the planned effect, services of the industry should be promoted through various means, mechanisms, and technologies of communication.

However, even the most ingenious advertising ‘moves’ do not negate the simple fact that we trust our relatives and friends much more than classical media channels. The decline in confidence in traditional advertising is not just an a priori speculative fact. This trend has been studied for several years by Nielsen company. The company’s latest research suggests that marketing information such as word of mouth has the most trust of consumers and, more than other channels of advertising communication, influences the decision when making a purchase. According to the Nielsen global survey, 92% of respondents trust in the recommendations of friends and acquaintances (Nielsen official website).

Resourceful hoteliers are already using this WOM and taking it to a new level by investing in technology that turns guests into an excellent marketing tool. For example, on the platform, social propaganda works as follows. Guest shares his joy about the upcoming trip with friends and relatives. For mentioning the hotel and a link to the site, he is given bonuses, because the guest, in fact, has become a ‘freelance’ advertising agent. Typically, people who trust this potential client will follow the link to the site (Bilgihan, 2013; Chen, Fay, & Wang, 2011). Accumulation of reviews and their structuring also formed the basis of the TripAdvisor service, where the hospitality site is given a rating based on an assessment of the experience of the guests who visited it.

Despite the relative novelty of such services, it is namely well-known WOM. Also, this principle is laid down to the base of the promotion of various services in social networks. There is a trend towards the development and widespread adoption of technologies in the field of accumulation and processing of large volumes of information related to the personal experience of people (Nawaz & Vveinhardt, 2014). This is used by internet marketers in many industries.

People tend to trust WOM much more than other sources of information, because a person who advises any product or service, firstly, is a familiar or close person, and, secondly, he does not have personal gain; thirdly, information is not an advertisement; fourthly, a positive opinion about the product will be transmitted only if the consumer is personally satisfied with the quality of the product.

According to surveys, eWOM leads to a fivefold increase in sales – 90% of people tend to trust a brand they have heard about from a friend (Huete-Alcocer, 2017). If earlier one person could tell about his impressions, for example, ten other people, then with the advent of social networks, this number increased. Even if the author does not have a lot of people in the subscribers, his post can be easily found by searching or hashtags. Another option is to launch a campaign, the terms of which will be the publication of video content and a certain level of activity under the post. This can be encouraged by discounts. Moreover, one should not forget about ‘influencers,’ bloggers, who might be interested in staying at a hotel and could recommend it to their subscribers in the future (Litvin, Goldsmith, & Pan, 2008).

At the same time, this market segment is very sensitive to the so-called black PR. The slightest negative mention of a hotel is rapidly becoming overgrown with myths and is distributed among customers through its own channel, word of mouth, and it can be very difficult to refute it.

The United Arab Emirates (especially, Dubai and Abu Dhabi) have proven to be a popular tourist destination for wealthy tourists. However, due to a number of factors in recent years, the nature of demand has changed. As for the hospitality industry in the UAE, it should be noted that more visitors from different countries and with different income levels began to arrive. A growing middle class in key industry guiding markets, as well as a reduction in the cost of air travel, led to an increase in the number of visitors from developing countries such as China and India (Nadkarni & Heyes, 2016). These facts speak in favor of expanding the use of eWOM and its enormous potential.

In our world, social networks dominate as a channel for communication between people, and the majority are beginning to get the impression that word of mouth has shifted from personal conversations to recordings on “walls,” retweets, and personal messages. Many people think that social networks represent eWOM. However, this is not at all the case. It is important to understand that social networks themselves are not WOM: this is only a communication channel and one of the ways that word of mouth is distributed (Covers, 2015). Social media is only a medium for transmitting a specific story, to the same extent as a review read on a specialized website. Thus, only having a popular Instagram account is not a well thought out eWOM strategy. Likes and comments are much less effective than recommendations made in an online conversation between people trusting each other – in social networks or mobile applications (Bilgihan, 2013).

However, word of mouth is activated on these sites, as users prefer to share interesting content with their readers, friends, subscribers. Social networks use two basic approaches of word of mouth. The first approach can be called point distribution. It consists in addressing content about the product or service to potential buyers from one’s environment. The second approach is social distribution using text entries in Facebook, short tweet messages on Twitter, or photo footage on Instagram. From a marketing point of view, this approach is most effective because it allows reaching a larger audience compared to the point one (Filieri & McLeay, 2013; McCabe, 2017).

Social networks can be viewed as one of the tools for promoting goods, services, and even destinations, that are classically related to informal communication channels (by the type of word of mouth), but a number of studies prove that communications in social networks have significant differences from traditional “face to face” communications (Bonner & De Hoog, 2011). Distinctive characteristics of electronic communication is that people who do not know each other, belonging to different social groups, and not localized in one territory can enter into communication. Thus, the trust in the communicator in the “electronic word of mouth” is based on slightly different principles (Tham, Croy, & Mair, 2013). The authors of the study of the formation of “personality cults” on YouTube come to a similar conclusion. Comparing them with the concept of M. Weber’s charismatic power, they emphasize that new “personality cults” are formed through the mutual interdependence between the cult figure and bloggers. M. Weber saw the origins of charismatic authority in the innate and exceptional qualities of a personality, whereas in today’s digital economy the popularity of various famous personalities becomes a kind of joint venture (Cocker & Cronin, 2017). A similar conclusion can be applied to the digital marketing of goods/services/territory in the hospitality industry.

Antoni Cantallops and Fabiana Salvi in their article offer main impacts of eWOM in hospitality industry from the consumer and company perspectives. According to the authors, impacts from the consumer perspective include facilitating decision-making process, perceived trustworthiness/credibility, risk reduction, product acceptance, loyalty, hotel/brand awareness, hotel comparison, and book intention. Impacts from the company perspective include quality control and new procedures, revenue management (price premium), customer interaction response and recovery, specific marketing strategies, focus on target communication, online reputation comparison, and generating loyalty (Cantallops & Salvi, 2014). However, the authors note that in general, there are ample opportunities for future research and extend the level of knowledge regarding eWOM related to hospitality industry (Cantallops & Salvi, 2014, p.49). This is hardly to be doubted, taking into account the highly innovative nature of modern hospitality industry and constant changes on the market, customers’ demand, and competition situation.

Based on studying works devoted to the phenomenon of eWOM, in particular, in hospitality industry, we made an attempt to complement the range of factors regarding the impact of eWOM. We conducted empirical research among managers in the UAE hospitality industry, using the method of interview with open-ended questions. Such a choice of interview structure is determined by the fact that open questions, undoubtedly, represent the most attractive tool for obtaining free, bright, and unlimited answers, forcing the respondent to think, thus stimulating the ‘birth’ of thoughts that previously, perhaps, did not occur in his mind. Using open-ended questions, we aimed to obtain as complete list of the above-mentioned factors as possible. The sample size was fifteen respondents.

The question “How can modern word of mouth contribute to the sales of a hotel?” the following answers were received (we summarized the answers using some elements of grounded theory of Corbin and Strauss):

1. Identify a potential customer. The circle of friends and the environment of hotel guests is, for the most part, similar to them in habits, tastes, and perceptions of people. Increasing the loyalty of one client automatically leads to the expanding of sales channel, where his like-minded people enter, whom were shared with experience.

2. Reduce the remuneration of online agents. Attracting new guests thanks to the loyal guests is more profitable than regular payments at the level of 15-20% commission to intermediaries. Moreover, it will allow to more effectively build trust and loyalty in them; it is easier to make additional sales.

3. Competitive advantage in equal conditions. When most hotels have practically the same offers on the market, an approach based on the formation of a “sharing of opinions” will help increase demand in the context of limited market volumes.

When asked how eWOM can contribute to creating sustainable competitive advantages, the following answers were received: creating a loyal community (as opposed to simply increasing user loyalty, a loyal community provides a synergistic effect);

Unfortunately, within the framework of this paper we cannot provide a detailed description of all the answers. In order to summarize and systematize them in a brief form, we will describe graphically the range of eWOM influence factors we have compiled from the perspective of clients and enterprises of the hospitality industry (Fig.2).

Studying the literature (Bore et al., 2017; Cakir & Cetin, 2013; Cheung & Thadani, 2012; Choi & Scott, 2013; Ishida, Slevitch, & Siamionava, 2016; Montazemi & Saremi, 2014; Weitzl, 2016), including the above-mentioned study of Cantallops and Salvi (Cantallops & Salvi, 2014), we also attempted to reveal core factors of eWOM impacts from the consumer perspective (Fig.3).

Another source of word of mouth is industry experts. They are not expected, unlike ordinary consumers, to express enthusiastic and emotional opinions, as well as loyalty to the brand. Their opinion is just valuable because they know well the products of various manufacturers, can compare it, evaluate it, find advantages and disadvantages. At the same time, experts can be simultaneously users of a product or service. It is extremely important for marketers to maintain constant contacts with experts, inform them about new products, to find out their opinion. Journalists and bloggers are very useful sociable “gears” (Choi & Scott, 2013).

To assess the impact of different types of recommendations, there is a method for calculating the so-called value of the word of mouth. This indicator is calculated as the average impact of brand information on sales, multiplied by the number of statements related to the word of mouth. Assessing the impact and, at the same time, the scale of such statements, this indicator allows the marketer to accurately predict the effect in terms of sales growth and market share for various brands, individual advertising campaigns and the company as a whole. This impact – in other words, the ability of friends’ recommendations and negative feedback to influence consumer behavior – reflects the essence of the information transmitted, its source and location. The effect will also depend on the category of products and services (Wang & Kubickova, 2017).

When a person is going to buy a particular product, he begins by comparing the initial set of brands that has emerged in his mind based on past consumption experience, recommendations, or marketing activities aimed at increasing brand awareness. He then conducts an active assessment of these brands and other options, collecting information from a variety of sources, and decides the product of which brand to purchase. At different stages of the purchase decision process, the degree of influence of eWOM on consumer choice will be different, but this is the only factor that is among the three most important at each stage (Chu, Kim, & Taylor, 2018).

Moreover, this factor has the most drastic effect. The recommendations of friends may force the consumer to pay attention to the brand or product in such situations, when the additional costs of advertising would not give anything. In addition, the effect of eWOM is not limited to isolated cases. A properly formulated idea causes a resonance and spreads among those whom it interested, influencing the perception of the brand, the frequency of purchases, and, respectively, market share.
In general, taking into account the above, the eWOM mechanism can be represented as follows (Fig.4):

Moreover, the concept of consumer engagement in value co-creation is now widely covered in marketing literature. Interest in this issue is caused by the business need to look for new ways to create and offer value to consumers in the face of increasing competition and the development of social media (Chu, Kim, & Taylor, 2018). In this context, it should be noted that in recent years there has been a rapid growth in the hotel industry in the UAE, characterized by both a quantitative increase in the number of players in the market and a significant change in the strategies used by companies. The survival and profitability of companies in the hotel industry are directly related to their ability to meet the needs of target consumers. Accordingly, current trends in the development of services marketing require hotel industry companies to focus their activities on increasing customer satisfaction, developing long-term mutually beneficial customer relationships, and building consumer loyalty. One of the new areas of marketing allowing providing a unique offer of customer value (Bore et al., 2017) is customer engagement in value co-creation. Creating value together with consumers has a positive effect on their satisfaction and loyalty, as it allows customers to personalize the impressions received along with services in the process of interaction with the company in the hospitality industry (Higgins & Scholer, 2009). Services provided by hotels are impossible without direct interaction with customers; therefore, the hospitality industry is an ideal environment for engaging consumers in value co-creation.

The concept of value co-creation is based on the idea of open innovation, relationship marketing, and service-dominant logic of marketing. In the open innovation model, firms develop and commercialize ideas derived from both outside and within the company. As part of the service-dominant marketing logic, it has been suggested that value should be created jointly with the consumer, and not be embedded in the product by the company itself, so firms should involve consumers in the value creation process. The authors of the concept of value co-creation Prahalad and Ramaswamy define value co-creation as a company’s interaction with consumers to share knowledge and resources with the aim to create shared value (Prahalad & Ramaswamy, 2004). The value for the consumer lies in the unique experience gained, while the value for the company is expressed in the growth of knowledge about the client, on the basis of which it can create the best supply of consumer value in the market. Thus, within the concept of value co-creation, clients are no longer seen as passive recipients of value created by a company, but are perceived as active partners in value creation (Randalla, Gravierb, & Prybutokc, 2011). One of the channels of value creation in this case may be the namely eWOM (Fig.5).

The process of value co-creation is inextricably linked with the involvement of consumers in interaction with the company. Customer engagement is a consumer engagement to the cooperation with a company, that is characterized by a high degree of involvement for a consumer interested in this interaction, in which the company and the consumer jointly create value (Smith & Colgate, 2007). According to a study by Kohli and Jaworski, the proposal created by engaging consumers in value co-creation best meets customer requirements, which leads to an increase in customer satisfaction (Jaworski & Kohli, 2006). Also, consumer involvement in value co-creation increases the likelihood of a repeat purchase, as it creates in the client a desire to repeat a positive consumer experience again (Cabbidu, Lui, & Piccoli, 2013). Thus, the involvement of consumers in interaction with the company can become the basis of the competitive strategy in the hospitality industry.

Modern information technologies that allow consumers to quickly obtain relevant information, including the cost of services, when planning a vacation, made the tourist more informed and active. The similarity of the proposed product and the changing role of the consumer in cooperation with the company are pushing the organizations of the hospitality industry to move from price competition to the strategies of engaging customers in the joint creation of a unique consumer experience. Thanks to self-motivation and interest of consumers in value co-creation, they are ready to put more effort into the value co-creation process. The higher the degree of consumer involvement in value co-creation, the higher the level of personalization of customer value created (Chathotha et al., 2013).

By engaging consumers in value co-creation, companies in the hospitality industry provide customers with the right to choose and manage one of the main components of customer value – the impressions they receive in the service delivery process. The company’s task is to mobilize the consumer so that he can create value for himself. To do this, the company must constantly work closely with consumers, using the existing competencies of both parties. Its role is primarily to stimulate and ensure the creation of value by consumers in their daily activities, which is achieved through eWOM, based on sharing of positive consumer experience and expanding loyal community, which, in turn, continues to share its experience and contributes to raising company’ value in the form of goodwill.

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