Seeding as Part of the Marketing Mix : Word-of-Mouth Program Interactions for Fast-Moving Consumer Goods

Dost, Florian and Phieler, Ulrike and Haenlein, Michael and Libai, Barak (2019) Seeding as Part of the Marketing Mix : Word-of-Mouth Program Interactions for Fast-Moving Consumer Goods. Journal of Marketing, 83 (2). pp. 62-81. ISSN 0022-2429

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Abstract

Seeded marketing campaigns (SMCs) have become part of the marketing mix for many fast-moving consumer goods (FMCG) companies. In addition to making large investments in advertising and sales promotions, these firms now encourage seed agents or microinfluencers to discuss brands with friends and acquaintances to create further value. It is thus critical to understand how an FMCG seeding program interacts with traditional marketing tools when estimating the effectiveness of such efforts. However, the issue is still underexplored. The authors present the first empirical analysis of this question using a rich data set collected on four brands from various European FMCG markets. They combine advertising and sales promotion data from FMCG brand managers with sales and retail variables from market research companies as well as firm-created word-of-mouth variables from SMC agencies. The authors analyze the data using several approaches, confronting challenges of endogeneity and multicollinearity. They consistently find that firm-created word of mouth through SMC programs interacts negatively with all tested forms of advertising but positively with promotional activities. This phenomenon has significant implications for understanding the utility of SMCs and how they should be managed. The analysis implies that SMCs may increase total sales by approximately 3%-18% throughout the campaigns.