However, the buying decision and the decision to participate in word-of-mouth communication are not disjoined and not much has been done to study the interdependency existing in this relationship. Prior research on word-of-mouth has mainly focused on studying either the factors that trigger consumers’ participation (sending or receiving) in word-of-mouth activities (e.g., Dellarocas et al., 2004 Godes and Mayzlrrin, 2004) or the impact word-of-mouth information has on consumers’ buying decisions (e.g., Chatterjee, 2001 Chen and Xie, 2005 Chevalier and Mayzlin, 2006). The objective of the study described in this article is to construct a computational architecture and use it as a simulation tool for the study of the dynamic recursive relationship between consumers’ decision to adopt a product and how the adoption experience may trigger their contribution of word-of-mouth messages to online review websites, which frequently exert impacts on other potential adopters.
It is an informal, customer-to-customer communication about the characteristics of a business or a product. Word-of-mouth plays a crucial role in helping to reduce risk and uncertainty in purchase and consumption ( Murray and Schlacter, 1990). We also discuss how system dynamics modeling can be used in other complex problems in business such as the creation of a global business. Our objective is to present a system dynamics model for the study of the relationship between the buying decision and the decision to participate in word-of-mouth communication. Most prior studies have not focused on a recursive relationship. The relationship between the two decision processes, however, is recursive and dynamic. Most of the prior research on word-of-mouth focused on studying either the factors that trigger consumers’ participation (sending or receiving) in word-of-mouth activities or the impact word-of-mouth information has on consumers’ buying decisions. Word-of-mouth plays an important role in reducing risk and uncertainty in purchase and consumption. In this article, we illustrate the use of system dynamics modeling approach to study a complex system: word-of-mouth. To profit from good advice requires more wisdom than to give it.
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Roman Wong, Shirley Ye Sheng Download this article as a PDF
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