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h. Competition The forces that influence the competition in the industry is the
competition in the relevant industry, product substitution, suppliers, customers, and the threat of new entrants.
i. The nature of the market Each company needs to understand the nature of market linkages and
demand that it faces, whether including perfect competition, monopolistic competition, oligopoly or monopoly.
E. Word of Mouth
1. Definition Word of Mouth Word of Mouth communication is communication that is done through
word of mouth conversation by telling experience or excellence of a product. Initially this term specifically referred to the oral
communications but now includes all types of human communication, such as face-to-face, telephone, e-mail and text messages. Word of mouth
is considered to be the most powerful force in the market. In the fact, consumer choice is usually influenced by word of mouth Casalo and
Flavia: 2008. Kotler and Keller 2007: 204 argue that the communication word of
mouth is a process of communication that the form of recommendations either individually or in groups to a product or service that aims to
provide personal information. Communication word of mouth is one of
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the communication channels that often used by companies that produce both goods and services because of communication and word of mouth
word of mouth considered to be very effective in expediting the process of marketing and can provide benefits to the company. According to
Hasan 2010: 32 word of mouth is the act of consumers providing information to other consumers interpersonal noncommercial both
brands, products and services.
Rangkuti 2009: 77 defines WOM as a marketing effort that triggers the customer to discuss, promote, recommend and sell a product, service
or brand to another customer. Mowen and Minor 2002: 180 says that the word of mouh communication refers to the exchange of comments,
thoughts or ideas between two or more consumers are neither a source of marketing. WOM is defined as a form of communication of goods and
services between people who are independent, not part of the provider of such products, which occurs through the medium is also believed to be
independent. Hasan 2010: 25 suggests the reason that makes WOM can become
powerful resources in influencing purchase decisions, which is: 1 WOM is an independent source of information and honest, which
means when the information comes from a friend it is more credible because no relation of the person with the product
company.
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2 WOM is very powerful because it provides benefits to those who ask with direct experience of the product through the experience
of a friend. 3 WOM tailored to people who are interested in it. A person will not
join the conversation, unless they are interested in the topic of interest.
4 WOM produces informal media information. 5 WOM can start from a single source depends on how the power of
influencers and social networks that spread rapidly and widely to others.
6 WOM is not limited by space or other constraints, such as social cohesion, time, family or other physical obstacles.
According to Kotler 2007: 206, receiving and responding to consumer WOM on the conditions and the situation in:
1 Consumers lack sufficient information to assist in making a choice.
2 The product is very complex and difficult to assess using the criteria of assessment.
3 Consumers are less able to judge the product, no matter how the information is distributed and addressed.
4 Other sources have a low credibility.
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5 Effect of other people more easily accessible than other sources and because it can be consulted by saving time and effort.
6 Strong social ties that exist between disseminator and recipient information.
7 Individuals have a high requirement on the approval of the social environment.
Thus the word of mouth is one way to reduce the uncertainty, because by asking others who have already used the product
concerned, will produce information that is more reliable, so it will also save time and brand evaluation process. So, word of mouth
cannot be invented or created. Because of WOM conducted by the consumer voluntarily or without reward, all of them purely from
personal experience of other consumers who ultimately formed consumer confidence of consumers on the other. Trying making up
WOM actually make the company will fail and can lead to more severe effect. Making up WOM can damage the brand and image of
the company so that the company will eventually fail completely. 2. Create Word of Mouth
Word of mouth will be created when the products are delivered to provide benefits to the audience. According to Rosen 2000: 19, stated that there are
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several elements that must be possessed of a product in order to generate positive WOM and sustainable, including:
a. The product must be able to evoke an emotional response. b. The product or the brand should be able to give the effect of
something that delight or excitement. Means that the product must be able to provide something that exceeds consumer expectations.
c. The product must have something that can advertise themselves or inspire someone to ask it.
d. A product becomes more powerful when many users. e. The product must be compatible with other products, in particular
can be applied in products that rely on technology. f. The experience of consumers using the product the first time.
Once consumers were disappointed, they are not going to use your product again and they will act like a terrorist.
Based on the research of Diamond Management Technology Consultants in Mix Magazine 2007: 17 there are some forms of the
method for creating word of mouth, among others: a. Buzz marketing, use or entertainment activities are good news for
people who have been involved with a product can discuss these products to others.
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b. Evangelist marketing, the disseminator of news evangelist, speakers or volunteers who became a leader in the active
dissemination activities on behalf of the company. c. Community marketing, establishing and supporting community
niche niche community which happily divide their interest in a brand, provide tools, content, and information to support the
community. d. Conversation creation, interesting or funny ads, e-mail, as well as
entertainment to start WOM activity. e. Influencer marketing, identifying key communities and opinion
leaders are happy to tell you the product and have the ability to influence the opinion of others.
f. Cause marketing, providing support for outreach programs through fundraising to get the respect and support of the people
who have the same concert with the company. g. Viral marketing, creating an entertaining and informative
messages and is designed to spread exponentially through electronic media or e-mail.
h. Grassroots marketing organize and motivate volunteers to get involved in a personal or local.
i. Brand blogging, creating blogs and participating in the blogosphere, in the spirit of openness, transparent communication,
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sharing information of value that may be discussed blog community.
j. Product seeding, putting the right products in the right hands, at the right time, providing information or samples to influential
individuals. k. Referral programs, creating tools for customers who are satisfied
that they recommend the same product to the relatives. 3. Dimension Word of Mouth
Referring to the concept that has been implemented Basel et. al. in Barata 2005: 27, there are two variables of word of mouth, the
perception of risk and consumer knowledge. And in a study conducted by Surya Sutriono 2008: 31, which draws on research conducted by Brown
and dacin there are three variables, which is satisfaction, incentives, and opinion leaders.
1 Risk Perception Word of mouth can affect a persons perception of the value of
a product or the perception of risk that would arise when consuming the product. The perception of the risk of becoming one of the
important components of information processing performed consumers. If the information obtained through the word of mouth is
negative, it will also result in the perceived level of risk that is higher
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Rini, 2011: 3. According to Gods 2005: 27 in the marketing process, consumers always face with the risk in any decision making.
According to Mowen and Minor 2002: 89 the perception of risk is understood as the likelihood of consumers to experience the
negative consequences of using products and services. According Trocchia in Suhartomo 2010: 29, there are six dimensions of risk
perception, which is: a. Financial risk is the perception that the product would not be in
accordance with the price. b. Risk promotion is the perception that the product will not have
the promotion as expected. c. Risk perception that time is the time spent to search for the
product will be wasted when the product is not performing as expected.
d. Physical risk is the perception that the product will harm or threaten the safety of consumers or others.
e. Psychological risk is the perception that the product would not be in keeping with the concept of self or consumers.
f. Social risk is the perceptions that the product is not good will embarrassing consumers.
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2 Consumer Knowledge Through WOM, consumers create knowledge about the
products that will be chosen. If consumers know more about the products that will be chosen, then the risk he would receive would be
less than he has no knowledge about the product. According to Gods 2005: 29, consumers have to have the level of knowledge about the
products offered so that it will ignore more information from others before making the purchase.
Consumer knowledge about the product also has influence not only on the search WOM actively, but also on consumers
perceptions of risk. Consumers with little knowledge of the products tend to have a greater perception of risk and benefit that is greater
than searching for information through WOM activity. In the decision, the information possessed formed into consumer knowledge
needed to assess the risks of all alternative products that will be chosen, so that consumers have more information to be able to assess
the choice of products to be consumed which a minimum risk has compared with consumers who do not have sufficient information.
According to research conducted by Mishra, Umesh, and Stem in Barata 2005: 30 there are three sizes to measure the level of
consumer knowledge, which is:
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a. Knowledge is the knowledge of consumers about the products consumers know exactly what is offered by the provider of the
product concerned. b. Experience of consumer-related products are consumer
knowledge about the product as what is obtained when using the product.
c. Information owned by consumers about the product is consumer knowledge about the products concerned which he
obtained from other sources. 4. Satisfaction
Customer satisfaction will affect the consumers desire to disseminate information about the product or service is consumed. If
consumers are satisfied with the products they use it instinctively consumers will tell the people around him about his satisfaction and
word of mouth spread, both positive and negative among these people. Word of mouth behavior can be linked to consumer
satisfaction and unsatisfaction with previous consumption experience.
Consumers who are satisfied after consuming a product certainly will spread positive word of mouth, while consumers who are not
satisfied after consuming a product would spread negative word of mouth basis. According to Zeithaml 2003: 85, consumer
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satisfaction will be influenced by the specific features of the product and the perception of the quality. Product quality basically describes
how much the perceived benefit of consumers so as to satisfy their expectations.
5. Incentives In the word of mouth communication, necessary incentives to
stimulate consumers who have used a product spread it to others. The incentive to be creative although it can also be in the form of
money. Erida 2009: 2, explained that incentives, both monetary and non-monetary form can reduce the negative word of mouth
behavior and reinforce positive word of mouth. When linked with the satisfaction of consumers, the incentive
is considered as a catalyst to improve the behavior of consumers are satisfied WOM and dampen the negative WOM than
consumers who are not satisfied with the product consumed Erida, 2009: 3.
6. Opinion Leader Widyaharsana 2009: 44 argues, an opinion leader of
consumers that regularly affect the views, attitudes, and behaviors of others. Furthermore, Widyaharsana provide an
explanation of the roles performed by opinion leaders, including:
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a. They provide a stimulus to other consumers, so that consumers become aware of the needs that have been
unaware. b. They provide information to other consumers about a
product. In many cases, consumers are more likely to trust a third party rather than promotion by the first
party. c. They give advice that allows consumers to choose
products that best of many options. These suggestions are useful in helping consumers to shorten the
evaluation process significantly choice. d. They provide feedback that is trusted by other
consumers. The expertise and credibility of the opinion leader can sometimes affect other consumers in
determining a product. Furthermore, Widyaharsana 2009: 52 explains that
the good opinion leader must have two main requirements so that they play a major role in the process of WOM,
including: a. Networking, they should have an extensive
network. The numbers of listeners that many
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will increase the chances of people listen to the information of an opinion leader.
b. Credibility, addition to an extensive network, the opinion leader must have credibility.
Credibility is the quality, capability, or power to generate trust. There are two factors that
make a person has credibility, honesty and the ability or expertise. Someone who is not
considered to have expertise not wants to hear his opinion. Furthermore, an expert who is not
considered fair also will not be able to influence others.
F. Brand Image
