That’s the question I explore in my latest article (Journal of Services Marketing). Using both the home improvement sector and a real estate brokerage I find that things such as word-of-mouth and maintaining a good website can bring in more clients (at a cheaper cost) than actual advertising can. For a home improvement contractor, each time they get a request they need to submit a proposal which is costly. However, a lot of customers that come via this marketing communications channel haven’t narrowed down their company search. If the consumer comes via a word-of-mouth or the website then they likely did their homework on the firm. This means they are more likely to be a paying a customer. Effect of Interactive Marketing Communications Channels on Customer Acquisition – JSM – 2020.
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Cars from Germany, Wine from Paris, hockey players from Canada, we have positive expectations of certain products from particular countries. However, what happens when those expectations are violated? For example, do we expect France to produce discount wines? Not really but the do, they actually produce all kinds of wines. However, when those expectations are violated we may draw negative inferences about the product. Negative as in, it’s a fake! I conducted a couple of studies over the past few years to find out what happens when people encounter low cost goods from countries that they think very positively about. The results show a positive country of origin can be a bad t hing..
You’re shopping and see a great deal so you Tweet it out to your friends. Or after you bought something new online your purchase is then “shared” on Facebook. When you post something you purchased, is that really just a social media post or is it an advertisement? The only thing that separates it from a traditional advertisement is that nobody paid you to advertise for them. It’s becoming more common for consumers to share this “pro bono” form of advertising but what happens to consumers when they see things that you’ve posted? Two of my independent study students and I just studied this and found that online retailers get a boost when purchases are posted online. The paper was presented a few months ago at the Big Data Analytics Conference at NYU Stern. A copy of the presentation can be found here.
Have you ever had to hire a contractor to do some work? You know that there are numerous good and bad contractors, if you want to see the bad you should watch one of my favorite shows, “to catch a contractor”. If you’re scared of hiring a bad contractor (and most people are) then this hurts the good firms. Good firms face skeptical consumers and have to spend more on marketing to signal their quality so that a person does not mistake them for a bad firm. My colleague Andrew Crecelius (University of Missouri) and I recently examined how consumers choose a good contractor and our preliminary findings show that word-of-mouth goes a long way to influencing which firms consumers choose. The bottom line is that a firm can save money by simply doing a good job because good word-of-mouth can decrease the cost of signalling that they are a good firm. Our paper was recently accepted for presentation at the American Marketing Association Annual Conference in Las Vegas (February 2016).