Tuck professor says those happy about their finances are more apt to talk about purchases.
Read the full story, published by the Tuck School of Business.
Is there anything more satisfying than making a great new purchase—whether it’s a trendy purse or a shiny car—and telling friends and family about it?
Retailers rely on consumer word-of-mouth to build awareness of their products and entice others to buy them. Sometimes, businesses even encourage buyers to post about their purchases on Facebook, Twitter, or Instagram.
“Word-of-mouth is one of the most effective sources of influence on consumer behavior,” says Eesha Sharma, an associate professor of business administration at Tuck and the Paul E. Raether T ’73 Faculty Fellow. In fact, some studies have found that word-of-mouth affects some 70 percent of purchases. “Managers spend a lot of time understanding who the influencers are and thinking about how they can seed word-of-mouth,” she adds.
But understanding word-of-mouth gets more complicated when consumers feel financially constrained.