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Viral Marketing of Retail Products: A Study on the Influence of Attributes of Web Portals and Incentives Offered on User Registrations

Shailendra Dasari* and B Anandakrishnan**


Viral marketing, a relatively new concept, is the web-enabled Word-of-Mouth (WOM) publicity which leverages internet technology to significantly enhance its effectiveness. There is a good scope for retail chains in India to market their products using viral marketing techniques, as the number of internet and mobile phone users have been growing multifold in India. Reaching messages to prospective customers through connectors (freelancers who offer their services to portals operated by retail chains) has been successfully deployed by global companies like P&G, Amazon, Yahoo and Unilever. This paper, based on a study conducted in Bangalore, highlights the evolution of viral marketing, its efficacy as a promotional tool and relevance for the Indian retail sector. Based on two separate surveys conducted, key factors that influence the connectors to register with a portal and send/receive messages have been identified and results validated with the help of advanced statistical techniques.

Introduction
Marketing communications is one of the major activities aimed at communicating the value of products/services to prospective customers. Direct marketing is one of the major elements of communications and has gained immense popularity and acceptance in recent times due to its cost and time efficiency and unique characteristic of accurate measurability of Return on Investment (ROI) from a marketers perspective.
*

internet marketing is one of the tools of direct marketing and with the explosion of the internet, it has become one of the most powerful tools for marketers. Viral marketing is the web-enabled Word-of-Mouth (WOM) publicity which combines the traditional WOM publicity with the technological advantages offered by internet to marketers advantage, at the same time being customer-friendly. The term Viral Marketing, was coined by venture capitalist, Steve Jurvetson of

About the Authors


Faculty Member, IBS, Kanakapura Road, Bengaluru 560062, Karnataka, India. E-mail: shailendra.dasari@gmail.com * * Branch Sales Manager (Home Loans), ICICI Bank, Madurai, Tamil Nadu, India. E-mail: adk_26@yahoo.co.in Viral Marketing Retail Products: A Study on the Influence of Attributes 2010 IUP. All of Rights Reserved. of Web Portals and Incentives Offered on User Registrations 99

Draper Fisher Jurvetson (DFJ) in their Netscape newsletter published in 1997, to describe Hotmails practice of appending advertisements to outgoing e-mails from their users.1 An extension of the traditional WOM marketing, viral marketing, gets its name from the word viruswhich denotes infectious spread. It is the act of spreading WOM information about a brand online. It is the most time and cost-efficient mode of communication for a marketer. According to Wilson (2005), editor of Web Marketing Today, Viral marketing describes any strategy that encourages individuals to pass on a marketing message to others, creating the potential for exponential growth in the messages exposure and influence. Like viruses, such strategies take advantage of rapid multiplication to explode the message to thousands, to millions. 2 Some of the key factors that determine the success of viral marketing are:3

Types of Viral Marketing Campaigns


There are several types of viral marketing campaigns, some of which are listed below:

Pass-Along
Pass-along is a message which encourages the user to forward it to others. The crudest form of this is chain letters where a message at the bottom of the e-mail prompts the reader to forward it to his contacts by highlighting suitable rewards/punishments for acting upon/inaction.

Incentivized Viral
In this a reward is offered for either passing a message along or providing someone else's address. This can dramatically increase referrals. However, this can be effective only when the offer requires another person to take action.

Undercover Marketing
A viral message is presented as a cool or unusual page, activity, or piece of news, without obvious incitement to pass along. In this form of viral marketing, it is not immediately apparent that anything is being marketed.

Giving away products or services for free (to generate the initial interest and induce trial). Simplified marketing message to enable easy and quick transferability. Scalability of the viral model from small to ver y large. This requires proper design and selection of servers that do not crash when the explosion of virus happens. Leveraging the existing social networking preferences of prospective customers.

Edgy Gossip/Buzz Marketing


This makes use of advertisements or messages that create controversy by challenging the readers taste or appropriateness of usage. Discussion of the resulting controversy can generate enormous buzz and consequent WOM publicity. For instance prior to the release of a blockbuster, some Hollywood movie

1 2 3

Steve Juvetson (2000), What is Viral Marketing, Red Herring, May 1, available at http:// www.dfj.com Ralph F Wilson (2005), The Six Simple Principles of Viral Marketing, available at www.wilsonweb.com Swapna Gopalan (2007), Viral Marketing: An Introduction, in Swapna Gopalan and Nasreen Taher (Eds.), Viral Marketing: Concepts and Cases, pp. 3-10, The Icfai University Press, Hyderabad. The IUP Journal of Marketing Management, Vol. IX, Nos. 1 & 2, 2010

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stars get married, get divorced, or get arrested, or become involved in some controversy that directs conversational attention towards them and the movie.

User-Managed Database
Here users themselves create and manage their list of contacts using a database provided by an online service provider. By inviting other members to their community, users create a viral, self-propagating chain of contacts that naturally grows and encourages others to sign up as well.

book sites on the web. Within a short span of time, they succeeded in mustering more than a 100,000 affiliates to promote Amazon.com in return for a small commission for every sale attributed to them.

Flip Side of Viral Marketing


There have been few instances of organizations getting bogged down by legal and ethical issues while exploiting the potential of viral marketing as an effective communication tool, as illustrated below:

Viral Marketing in Action


The following case studies illustrate the successful deployment of viral marketing:

Success Stories4

The art of viral marketing was pioneered by Hotmail. In its first 18 months of operation, Hotmail attracted 12 million users, making it the fastest growing subscriber base company in the world. Hotmail had spent only $500,000 with astounding results, while non-viral competitors like Juno Online Services who had spent $20 mn on mass advertising during the same period were far less effective. Hotmails formula was soon successfully replicated by Yahoo and other free e-mail services with amazing outcomes. Amazon.com took viral marketing beyond its simple e-mail link status. They created affiliates to promote their
Ibid.

Procter & Gamble (P&G) created a division called Tremor in 2001, to market their products and concepts to the teenagers in the US. Tremor used both online and offline WOM marketing. By 2002, around 200,000 teens were identified by P&G as connectors without disclosing their affiliation. A typical connector had 150-200 names on his/her instant messaging list. Tremor teens were neither told what to say about the products nor were they paid for their work. They in return received coupons, discounts, free download and product samples as incentives.5

However Word-of-Mouth Marketing Association (WOMMA) 6 made it mandatory for the connectors to disclose their affiliation as not disclosing the affiliation amounted to exploitation of consumers which was considered unethical.

4 5

Kaikati A and Kaikati J (2004), Stealth Marketing: How to Reach Consumers Surreptitiously, California Management Review, Vol. 46, No. 4, pp. 6-22. WOMMA was founded in 2004 in US by Pete Blackshaw. It is the official trade association for the Word-of-Mouth (WOM) marketing industry and all its members are bound by the code of conduct laid down by WOMMA. 101

Viral Marketing of Retail Products: A Study on the Influence of Attributes of Web Portals and Incentives Offered on User Registrations

Gar y Ruskin, Executive Director, Consumer Alert, US Federal Trade Commission,7 remarked: Without such disclosure the company witnessed the danger of basic commercialization of human relations, where friends treat one another as advertising pawns, undercutting social trust. BzzAgent, an independent WOM agency launched in the US in 2001,

Further opening of multiple accounts by members with different (fictitious) profiles, filing false reports, selling their samples on eBay forced them to take the drastic step of expelling 10,000 members.9

Relevance of Viral Marketing for Retail Products in India


There is a good scope for spreading marketing messages of Indian retail stores

Exhibit 1: Viral Marketing Model of a Retail Chain


Retail store creates a portal.

Users register with the companys portal by providing required details.

Users receive and send e-mail and text messages of various promotional offers and new arrivals to as many people as they can through the portal.

Messages sent get recorded in their account and points are credited.

Users are eligible to receive some benefits based on their performance.

wanted its agents not to disclose their affiliations. Conventional wisdom says, it would work better if you were quiet about your affiliation, was the advice to its agents from Joe Chernov, Director of Public Relations.8 However by 2005 they were forced to do an about turn and advised their members to disclose their identity, in conformity with the guidelines issued by WOMMA in 2004.
7

Figure 1: Efficacy of Viral Marketing

An independent agency of the US government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of anticompetitive business practices. BzzAgent is a US-based WOM network founded in 2001. They pair consumers with products and supply digital tools that make widespread opinion-sharing easy. They currently have more than 500,000 agents. Betsy Spethmann (2007), Bracing for Backlash, in Swapna Gopalan and Nasreen Taher (Eds.), Viral Marketing: Concepts and Cases, pp. 107-116, The Icfai University Press, Hyderabad. The IUP Journal of Marketing Management, Vol. IX, Nos. 1 & 2, 2010

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through the internet in the form of e-mails, flash images and text messages through mobile phones which could be a novel marketing strategy to increase sales as users of internet and mobile phones have been growing multifold in India and there is a potential for further increase in the number of subscribers. A typical viral marketing model of a retail chain/store is depicted in Exhibit 1. A reward is offered for either passing a message along or providing someone elses contact information. A diagrammatic representation of the effect of viral marketing through which a marketing message spreads, is shown in Figure 1.

may prefer a site which offers good monetary/promotional incentives for the users. Currently, Guruji.com, a music site is using this type of viral marketing to create brand awareness of its site among musically inclined net savvy people.

Methodology
Survey methodology was used and two separate surveys were carried out in the city of Bangalore. The objective of the first survey, the sample size of which was 50, was to ascertain the general awareness about viral marketing among the potential users, their behavior patterns and willingness to using a retail chains viral marketing portal. The second survey was carried out among 82 respondents to find out the important attributes that the users would expect from a retail chain's viral marketing portal and incentives they look for before registering themselves. Both the samples were chosen on a judgmental basis from students, unemployed and employed youth in the age group of 18-25 years based at Bangalore. The information collected from the first group of respondents was tabulated based on their awareness, preferences and willingness to be connectors in the viral marketing channel and presented as several easy-to-read pie-charts. The data collected from the second group of respondents, which was larger in number, was subjected to factor analysis to identify the major factors which have a bearing on their decision whether to register with the portals of retail chains or not. Factor analysis was chosen in preference to other statistical tools as it was necessary to examine the whole array of interdependent relationships among the variables and identify few underlying factors that have a significant
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Objectives
The objectives of this study are: To understand the relevance and spread of viral marketing for retail products in India. To ascertain the influence of: Features and characteristics of the web portals of retailers; and Incentives offered by retailers on the registrations by user members. A market research was conducted at Bangalore among people of the age group 18-25 using two structured questionnaires to find out characteristics or attributes of the web portal the users look for and the incentives they would like to get from viral marketing firms before registering themselves. For example, a user might expect a viral marketing portal to be user friendly and facilitate faster downloading of messages and on the benefits side he/she

Viral Marketing of Retail Products: A Study on the Influence of Attributes of Web Portals and Incentives Offered on User Registrations

bearing on the preferences and choices of the respondents. Adequacy of the sample and appropriateness of data for factor analysis was validated by subjecting the data to Kaiser-Meyer-Olkin (KMO) test of sampling adequacy and Bartletts test of sphericity. The findings of the factor analysis and their

Analysis and Findings of the First Survey


Analysis
The analysis from the survey results reveals that 62% of the respondents knew about the term Viral Marketing (Figure 2).

Figure 2: Viral Marketing Awareness

Figure 3: Willingness to Send Viral Marketing Messages

Figure 4: Willingness to Send Viral Marketing Messages for Free Incentives

Figure 5: Willingness to Send Viral Marketing Messages After Getting Employed

implications for marketers have been reported in an action-oriented manner, from the perspective of leading retail chains in India, who could be major beneficiaries of this study. Areas for future research also have been suggested, considering the currency and relevance of this topic for the Indian retail sector. The questionnaires used have been appended as Annexures 1 and 2.
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About 54% of the respondents were willing to send viral marketing messages by logging on to the viral marketing web portals of retail chains even if no incentives are offered (Figure 3). When asked about their willingness to send viral marketing messages when they are offered incentives like discount coupons, free sample, etc., there was a drastic shift in responses from the previous question. A whopping 96% were willing to

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Figure 6: Willingness to Receive Viral Marketing Messages in E-Mail Inbox

Figure 7: Willingness to Receive Viral Marketing Messages in Mobile

Figure 8: Willingness to Receive Viral Marketing Messages on Both E-Mail and Mobile

format on their mobile phones and 32% did not prefer it (Figure 7). Compilation of response data from the last two questions shows that 50% of the respondents were willing to receive viral marketing messages on both their e-mail inbox and mobile phones and 50% were willing to receive the messages either on their e-mail inbox or mobile phones and not on both (Figure 8).

Findings
The analysis shows that the retail chains send viral marketing messages if they are offered some incentives for their service (Figure 4). At the same time 62% of the respondents were not willing to spend time on sending viral marketing messages once they are employed on a full-time basis and 38% of the respondents were willing to continue it even after getting employed (Figure 5). About 80% of the respondents preferred to receive viral marketing messages in their e-mail inbox while 20% did not prefer it (Figure 6). About 68% of the respondents preferred to receive viral marketing messages in SMS have to attract youngsters who do not have full-time employment in the age group of 18-25 to register with their viral marketing web portals by offering free membership and also must offer incentives after one sends a particular number of messages to the target customers either to their e-mail inbox or mobile phones. There seems to be great potential for implementing viral marketing to send marketing messages of retail chains to prospective customers as many net savvy youngsters are willing to send and receive viral marketing messages of latest offers and product launches of their favorite retail chains.
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Viral Marketing of Retail Products: A Study on the Influence of Attributes of Web Portals and Incentives Offered on User Registrations

Analysis of Second Survey


Factor Analysis
The important components of the output and their interpretation are as follows:

Table 1: Communalities
Initial Download Speed Navigation Features Firms Offers 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Extra -ction 0.638 0.778 0.587 0.794 0.899 0.794 0.678 0.737 0.845 0.719 0.827 0.828 0.800 0.770 0.709 0.734 0.671 0.633 0.751 0.597

KMO and Bartletts Test


Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartletts Test of Sphericity df Sig. 190.000 0 Approx. Chi-Square 1036.303 0.520

Incentives Customer Database Site Appearance News Updates Free Downloads Score Reader Security Net-to-Mobile Messaging Social Networking Integration Firms Products Frequency of Offers Updating of Site Multilingual Messaging Free Membership

The Kaiser-Meyer-Olkin (KMO) and Bartletts test measure the adequacy of the sample. Bartletts Test of Sphericity: Sphericity means all the variables are uncorrelated to each other. H0: All the variables are uncorrelated (= 1) H 1 : All the variables are correlated ( 1) Significance value < 0.05 H0: Is rejected as KMO is greater than 0.5 and Chi-square value is significantly high at the chosen level of significance. H1: Is accepted which indicates that all variables are uncorrelated to each other and data are suitable for factor analysis.

Brand Name of Firm 1.000

Note: Extraction Method: Principal Component Analysis.

Total Variance Explained Based on eigenvaluesonly principal components with eigenvalues greater than 1.0 have been retained (Table 2).
Only six factors have been retained each containing a set of variables.

Communalities
Table 1 shows the extent to which the variance has been accounted for by the extracted factors. For example 89.9% of variance in Incentives has been taken into consideration.

Scree Plot
As evident from the scree plot, the curve begins to even out after the extraction of the sixth factor. Therefore, only six factors have been retained (Figure 9).

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Rotation Sums of Squared Loadings

Cumulative %

Rotated Component Matrix


Loadings less than 0.7 are not shown as the values less than 0.7 were suppressed using the factor analysis options dialog box in order to minimize the number of variables that have high loadings on a factor (Table 3).
19.847 36.429 47.311 56.459 9.148 65.336 8.877 73.943 8.607

% of Variance

19.847

16.582

10.882

Summary of Factor Analysis


20 variables have been reduced to six uncorrelated factors. A common name has been assigned to the variables under each factor having absolute value of more than 0.7 in Table 3.

Extraction Sums of Squared Loadings

Cumulative %

3.969

3.316

2.176

1.830 59.646

1.775 67.157

Table 2: Total Variance Experience

21.876

39.464

50.169

73.943

1.721

Total

Naming the Factors


Factor 1Major technical attributes of viral marketing portal.

21.876

17.588

10.705

% of Variance

Factor 2Incentives, nature of offers and social networking. Factor 3Brands and products of the retail chain.

9.477

7.511

6.786

Total

4.375

3.518

2.141

1.895

1.502

1.357

Factor 4Free downloads offered to user members. Fa ctor 5Net-to-mobile messaging facility in the viral marketing portal. Factor 6Security expectations of the users/connectors.

Initial Eigenvalues

Cumulative %

21.876

39.464

% of Variance

21.876

17.588

10.705

50.169

59.646 9.477

67.157 7.511

6.786 1.357 6

73.943

Findings and Interpretations


The respondents top six attribute preferences for choosing a viral marketing portal of a retail chain are zeroed in using the factor analysis. It can be concluded that most of the potential connectors of a viral marketing portal may choose to log on to a retail chain's viral marketing portal based on the extent the above listed factors are addressed
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Total

Component

4.375

3.518

2.141 3

1.895 4

Viral Marketing of Retail Products: A Study on the Influence of Attributes of Web Portals and Incentives Offered on User Registrations

1.502

Figure 9: Cattells Screen Plot

4 Eigenvalue

0 1 2 3 4 5 6 7 8 9 10 1112 1314 15 16 17 18 19 20 Component Number

Table 3: Rotated Component Matrix


Component F1 Download Speed Navigation Features Firms Offers Incentives Customer Database Site Appearance News Updates Free Downloads Score Reader Security Net-to-Mobile Messaging Social Networking Integration Brand Name of Firm Firms Products Frequency of Offers Updating of Site Multilingual Messaging Free Membership
108 The IUP Journal of Marketing Management, Vol. IX, Nos. 1 & 2, 2010

F2

F3

F4

F5

F6

0.712 0.875 0.856 0.726 0.749 0.843 0.864 0.869 0.705 0.794 0.828 0.716

by the retail chains while designing their portal and deciding the benefits to be offered to the user members/connectors. The identification of important factors enables a retail marketing chain to concentrate more on those factors to establish initial points of parity for their viral marketing portal.

Responses to questionnaires are subject to individual biases and to that extent accuracy of some of the findings could be affected. Sample size is not large enough to completely eliminate the possible sampling errors.

Recommendations
Retail chains must target youngsters within 18-25 years of age to act as connectors as there is vast potential and willingness among them which is evident from the survey response and findings. Viral marketing can be used by retail chains in India to communicate their promotional messages, new product launches or arrivals and also to create brand awareness of their private brands among their customers at a relatively low cost. During this period of global recession where cost-cutting is the order of the day, retail chains can consider cutting cost on advertisements and promotions by using viral marketing campaigns as tools, starting in a small way initially by targeting their loyal customers.

Areas for Further Research


Viral marketing being a relatively new concept, there is lot of scope for further research on this topic. Some of the suggested areas for research are: Whether connectors of viral marketing channels patronize select retail chains in groups rather than as individuals. If so, what could be the common characteristics of these groups? Influence of social networking groups on the acceptance or rejection of a viral marketing channel. Cost effectiveness of viral marketing vis--vis other forms of e-marketing Suitability of viral marketing as a tool for cause-related marketing.

Conclusion
There is a good scope for the deployment of viral marketing as a marketing communication tool in the Indian market by the retail chains, which is evident from the sample survey conducted as a part of this project and the findings from this project will be useful for retail chains to concentrate on the important factors before designing and commercializing their viral marketing portal. The success of viral marketing campaigns depends on how well they are promoted within the target users,
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Limitations
This study is confined only to Bangalore metropolis and therefore cannot be representative of the choices and preferences of connectors in smaller cities and semi-urban areas. Age group of 18-25 has been chosen arbitrarily and not based on any statistical tools.

Viral Marketing of Retail Products: A Study on the Influence of Attributes of Web Portals and Incentives Offered on User Registrations

and also the increased usage of internet and mobile phones by the Indian consumers provides a very good platform for the retail

chains to promote their business by using viral marketing as an effective and cost efficient tool for marketing. J

Annexure 1
Questionnaire on Viral Marketing

Name: 1. 2. Yes No

Age:

Occupation:

Are you aware of the term viral marketing? Do you prefer to send viral marketing messages of a retail company by logging on to its portal? Yes Yes Yes No No No

3. Do you prefer to do it if you are offered incentives/rewards? 4. Will you prefer to do it even if you are employed fulltime? 5. Do you like getting messages of attractive offers of your favorite retail company to your e-mail inbox? Yes No 6. Do you like getting messages of attractive offers of your favorite retail company on your mobile? Yes No

Annexure 2
Questionnaire on Viral Marketing

Name:

Age:

Occupation:

Please rate the importance of the following attributes on a seven point scale for registering with a viral marketing portal of a retail firm.
Attributes 1. Download Speed 2. Navigation 3. Features 4. Firms Offers 5. Rewards/Incentives (1 Least Important, 7 Most Important) 1 1 1 1 1 2 2 2 2 2 3 3 3 3 3 4 4 4 4 4 5 5 5 5 5 6 6 6 6 6 7 7 7 7 7

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Annexture 2 (Cont.)
Attributes 6. 7. 8. 9. Customer Database Site Appearance News Updates Free Downloads (1 Least Important, 7 Most Important) 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 7 7 7 7 7 7 7

10. Score Reader 11. Security 12. Net-to-Mobile Messaging 13. Social Networking 14. Integration 15. Firms Products 16. Frequency of Offers 17. Updating of Site 18. Multilingual Messaging Options 19. Free Membership

Reference # 03J-2010-02/05-07-01

Viral Marketing of Retail Products: A Study on the Influence of Attributes of Web Portals and Incentives Offered on User Registrations

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