Description
This paper examines the relationship between marketing mix and word of mouth communication. These variables are increasingly recognized as being sources of competitive advantage in the marketing and management literature
Innovative Marketing, Volume 3, Issue 4, 2007
74
Ekrem Cengiz (Turkey), Hilmi Erdoan Yayla (Turkey)
The effect of marketing mix on positive word of mouth
communication: evidence from accounting offices in Turkey
Abstract
This paper examines the relationship between marketing mix and word of mouth communication. These variables are
increasingly recognized as being sources of competitive advantage in the marketing and management literature. How-
ever, no empirical research has been conducted to examine these variables’ relationship. An integrative model was
developed and tested with structural equation model using data collected from the 503 Turkish accounting offices’
customers. The results show that marketing mix components, namely price, product, promotion and place have effect
on word of mouth communication with different impacts significantly.
Keywords: word of mouth communication, accounting offices, marketing mix.
Introduction
8
In the past, consumers used to talk to other people
when looking for opinions on a particular brand,
product or company. This became known as word of
mouth (WOM) in the marketing literature (Pollach,
2006). WOM is probably the oldest mechanism by
which opinions on products, brands, and services
are developed, expressed, and spread (Lau and Ng,
2001). A spate of recent articles and books in popu-
lar press already notes an increasing interest in word
of mouth (Ozcan, 2004). File et al. (1992) define
WOM as recommending the firm and the service to
others. Specifically, Anderson (1998) refers to posi-
tive WOM as relating pleasant, vivid, or novel ex-
periences, recommendations to others, and even
conspicuous display. Numerous research reinforced
the contention that positive WOM is a cherished
outcome in marketing. In 1955, Katz and Lazarsfeld
found positive WOM seven times more effective
than newspaper and magazine advertising, four
times more effective than personal selling, and twice
as effective as radio advertising in influencing con-
sumers to switch brands. In 1983, Morin uncovered
that referrals from others accounted for three times
as many purchases as did advertising when consum-
ers were asked what factors influenced their pur-
chases of 60 different products. WOM communica-
tion is an important source of consumer information.
It forms the basis of interpersonal communications
and significantly influences product evaluations and
purchase decisions (Mahajan et al., 1990). In fact,
WOM has been shown to be more powerful than
printed information (Borgida and Nisbett, 1977),
primarily because WOM information is considered
to be more credible. Another reason for the power
WOM marketing is that WOM is always relevant
and timely, it is driven by customer needs and it
grows exponentially, for example, one tells a story
to five people, they each tell it to five more, who tell
© Ekrem Cengiz, Hilmi Erdoan Yayla, 2007.
it to five more after that. WOM also makes use of
human nature, feeding on the fact that many people
like to consider themselves experts (Jerram, 2003).
The marketing mix is, as also known as the 4Ps,
summarily, the product, price, places and promotion
(Koontz, 2004). The 4Ps framework is widely used
by marketers as the underpinning of their marketing
planning is based on the high degree of acceptance
of the marketing mix by marketing practitioners as
the universal marketing paradigm. Grönroos (1997)
argues that the 4Ps framework has won an over-
whelming acceptance among marketing practitio-
ners, noticing that “…Marketing in practice has, to a
large extent, been turned into managing this tool-
box…”, a point shared by Goldsmith (1999) who
argues that the “…time-honoured concept of the 4Ps
the marketing mix…” is the heart of the contempo-
rary marketing management (Constantinides,
2002a). In a competitive situation, a firm has to
prioritize marketing mix elements. This does not
mean concentrating only on a few elements and
ignoring the others. Prioritizing emphasizes the need
to recognize the fact that some elements may be
important than others at a given point in time
(Kumar, 2002). On the other hand, in recent years
some scholars in marketing literature increase the
marketing mix to the “5 Ps”, to include people.
Besides, some discusses “7 Ps”, to include physical
evidence and process.
This paper may be of interest for several reasons.
Firstly, despite the interest in WOM, no research has
been done yet about the marketing mix contribution
towards WOM communication. Based on a synthe-
sis of the literature, this paper develops a conceptual
framework of the factors that contribute to WOM.
Eight factors are identified that contribute to
WOM’s significance. Four of these factors (cus-
tomer loyalty, customer satisfaction, perceived
value, perceived quality) are known as the determi-
nants of WOM but four of them (price, place, promo-
tion and product) hadn’t been explored. Our research
Innovative Marketing, Volume 3, Issue 4, 2007
75
is important to fill this gap. Secondly, except for
some papers discussing on segmentation of business
clients of CPAs (i.e. Walt et al.,1994) and level of
service quality clients recieved from CPAs (i.e.
Yayla and Cengiz, 2006; Woodside et al.,1992), no
one has seriously aimed to marketing of CPAs, ac-
counting services and offices. Thus, this study is
devoted to analyse clients’ perceptions of the mar-
keting components (marketing mix and word of
mouth communication relations here) accounting
offices use.
The rest of this paper is organized as follows . In
section 1, we offer a brief outline of accounting
offices in Turkey. Section 2 provides the theoretical
framework which specifies constructs of marketing
mix, WOM and WOM’s determinants like customer
loyalty, customer satisfaction, etc. In section 3 a
model is introduced to investigate relationship be-
tween marketing mix components and WOM com-
munication. After dealing with the model test, this
paper discusses the results of the empirical study
that was undertaken to test our research hypotheses.
1. Accounting offices in Turkey
Since 1989, the establishment and the operations of
professional accounting offices in Turkey are ar-
ranged with the Law Number 3568 of “Independent
Accountancy, Certified Public Accountancy and
Sworn-in Certified Public Accountancy”. The Law
establishes accounting and auditing as a profession
and defines those who are rendering services in
these fields as professionals. The Law creates and
defines three categories of accounting and auditing
professionals (TURMOB, 2006b):
independent accountant (IA);
certified public accountant (CPA);
sworn-in certified public accountant (Sworn-in
CPA).
According to the Law, the persons who are entitled
to operate the accounting offices are the persons
who fulfil the private and general conditions stated
in the Law and have the title of Independent Ac-
countant (IA) and Certified Public Accountant
(CPA). Sworn-in Certified Public Accountants are
prohibited from the enterprising of the accounting
office and they can only execute the auditing and the
attesting duties as specified in the Law. The real
persons who have the titles of Independent Ac-
countant (IA) and Certified Public Accountant
(CPA) can start their accountancy activities by reg-
istering in the occupational chamber which is apper-
tained to the Union of Certified Public Accountants
of Turkey (TÜRMOB) in the city where they carry
on their own activities. As of the year 2006, there
are 16.219 Independent Accountants and there are
19.289 Certified Public Accountants in Turkey
(TÜRMOB, 2006a) who are registered in the Union
of Certified Public Accountants of Turkey.
The 2nd, 44th and 46th articles of Law number 3568
handle the product, promotion and the price from
the marketing mix elements and indicate the use of
the same by the accounting offices. There is no ar-
rangement in the Law regarding the place element
and there is no restriction regarding the place for the
establishment of the accounting offices.
The 2nd article of the Law defines the profession
subject to the Independent Accountant (IA) and
Certified Public Accountant (CPA), in other words,
it defines the services and the products of the ac-
counting offices. According to this article, the work-
ing subjects of the accounting offices are as shown
in the following 3 paragraphs:
to carry out the works of bookkeeping, to ar-
range the balance sheets and profit-loss sheets
and their statements and similar works of the
real persons and corporate bodies as per gener-
ally accepted accounting policies and the provi-
sions of the relative legislation;
to establish the accounting systems of the real
persons and corporate bodies and to develope
the same, to arrange the relative works for the
enterprising, accountancy, financial legislation
and to arrange the works in relation with their
applications, and to provide consultancy ser-
vices in these subjects;
based on the documents: to do examinations,
analyses, audits based on the subjects stated in
the above paragraph, to provide written opinion
standpoint for the financial sheets and state-
ments, to arrange reports and the similars and to
do arbitration, expertising and similar works.
According to Law number 3568, Certified Public
Accountant (CPA) can achieve all works stated in
the above areas while the Independent Accountant
(IA) can only achieve the activities indicated in the
above stated paragraph (Law No 3568, Article 5).
The 44th article of the Law refers to promotion from
the marketing mix elements and it
states:“Profession members can not do the activities
which can be considered as advertisement. In their
signboards or printed papers they can not use any
other designation being other than their own occu-
pational titles determined with the licence.” And
with this provision, the advertisement activities of
the accountant offices are prohibited. Nonetheless,
the 46th article of the Law makes detailed arrange-
ment to the price of the marketing mix elements:
Innovative Marketing, Volume 3, Issue 4, 2007
76
“Fee means the amount for the payment
against profession members’ services. The
minimum amount of the fee is determined with
the price tariff. The acceptance of any work
with the fee being charged under the price
tariff is prohibited and acting on the contract
of this provision requires discipline penalty.
The board of directors of every chamber pre-
pares the price tariffs for the fees to be paid
against each of the works and processes to be
carried out by Independent Accountants, Cer-
tified Public Accountants and Sworn-in Certi-
fied Public Accountants to be effective from
January of each year and they send this to the
Union. The Board of Directors of the Union
prepares the tariffs to be applied in the
groups by taking the proposals of the cham-
bers into consideration and by determining
the groups and sends the same to the Ministry
of Finance and Customs. Ministry of Finance
and Customs attests the tariff being the same
or attests according to the changes which are
deemed to be necessary. Tariffs become effec-
tive after being published in the Official Ga-
zetta and the existing tariff remains effective
until the attestment of the new tariff.”
2. Theoretical framework
Marketing mix: The Marketing Mix is a term used
to describe the combination of tactics used by a
business to achieve its objectives by marketing its
products or services effectively to a particular target
customer group (CIM, 2004). It is also referred to as
the 4 Ps: Product, Price, Promotion and Place. The
four Ps of the marketing are briefly described as
follows (Copley, 2004): Product, the item or service
being marketed, through its features, quality, bene-
fits and quantities; Price, this includes the price of
the item and product assortments and lines, price
changes and payment methods; Place, the location
where the product or service is available to the cus-
tomer, including distribution channels; Promotion,
market communication is achieved by personal sell-
ing, advertising, direct marketing, public relations
(PR), sales promotion and sponsorship. As Bennett
(1997) observed, it is now just over 40 years since
McCarthy (1964) offered the marketing mix, often
referred to as the 4 Ps, as a means of translating
marketing planning into practice: product, price,
place and promotion. On the other hand, the short-
comings of the 4Ps marketing mix framework, as
the pillar of the traditional marketing management
have frequently become the target of intense criti-
cism. A number of critics even go as far as rejecting
the 4Ps altogether, proposing alternative frame-
works (Constantinides, 2002b; see Kotler, 1967;
Bennet, 1997; Grönroos, 1997 for example).
Word of Mouth: Arndt (1967) defines Word of
Mouth (WOM) as oral, person to person communi-
cation between a receiver and a communicator
whom the receiver senses as non-commercial, re-
garding a brand, product or service. Instead, accord-
ing to Stern (1994) WOM differs from advertising
in its lack of boundaries. WOM comprises the inter-
change of shortlived oral or spoken messages be-
tween an adjacent source and a recipient who com-
municate directly in real life (Stern, 1994). Actually,
it has been asserted that WOM can be more influen-
tial than neutral print sources such as consumer
reports (Herr et al., 1991). Besides, according to
Sheth (1971) WOM was more important than adver-
tising in developing awareness of an innovation and
in securing the decision to try the product. In accor-
dance with Day (1971) this was due to source reli-
ability and the flexibility of interpersonal transmis-
sion. WOM is supposed to be of two types: negative
WOM and positive WOM. Less unanimity, how-
ever, exists with regard to the extent of the informa-
tion being transferred; in conceptualizations and
operationalizations of the WOM construct, some
authors underline manifest counsels (see Fullerton
and Taylor, 2002; Gremler and Brown, 1999; Har-
tline and Jones, 1996), while others view WOM as
an activity that contains sharing notion about a
commercially based experience (see Maru File et al.,
1994; Mikkelsen et al., 2003; Westbrook, 1987).
Perceived Quality: In a broad sense, perceived value
of a service can be developed by delivering better
service (Ravald and Grönroos, 1996). Supplement-
ing value to the service at a competitive price is a
potent source of competitive advantage. Generally,
customers sense higher value in the service when
they comprehend the quality of service as passing
away the costs they have given away to get the ser-
vice. In paralel, there is a body of empirical evi-
dences to support the view that quality is positively
related to perceived value (see Brady and Robert-
son, 1999, for example). Furthermore, perceived
quality of service is dependent on a comparison
between expected and perceived service, and is thus
the consequence of a comparative evaluation proc-
ess (Gronross, 1984). Particularly, Parasuraman et
al. (1985) describe service quality as the degree and
direction of discrepancy between a customer’s per-
ceptions and expectations, while perceived service
quality is the gap between a customer’s expectations
and perceptions as a measurement of service quality.
When the gap is smaller, the quality of service is
better and the customer satisfaction is greater. The
actual quality of service is difficult to characterize
and measure (Gavin, 1983; Parasuraman et al., 1988;
Brown and Swartz, 1989). However, there is a una-
nimity that service quality should be characterized
Innovative Marketing, Volume 3, Issue 4, 2007
77
and measured from the customer’s view. Perceived
service quality definition that is the most widely
accepted is that symbolizes the discrepancy between
customers expectations and their perceptions of the
service performance (Lewis and Booms, 1983;
Grönroos, 1984).
Customer Satisfaction: A body of literature has been
the subject of attention on consumer satisfaction and
its potential effects on consumer behavioral inten-
tions and customer retention (e.g. Anderson and
Fornell, 1994; Cardozo, 1965; Cronin and Taylor,
1992; Olson and Dover, 1979; Rust and Oliver,
1994). Hunt (1977) defines satisfaction as an
evaluation of a feeling, suggesting that it reflects the
grade to which a consumer believes that the posses-
sion and use of a service awake positive feelings
(Rust and Oliver, 1994). Arguably, according to
Churchill and Surprenant (1982) customer satisfac-
tion is a result of purchase and use resulting from
the buyers’ comparison of the rewards and costs of
the purchase in relation to the expected conse-
quences. Besides, customer satisfaction has also
been regarded as an emotional state that appears in
response to the evaluation of a service (Westbrook,
1981). Woodruff et al. (1991) claim that customer
satisfaction can be defined as an emotional re-
sponse, that arises from a cognitive process of
evaluating the service received against the costs of
getting the service. On the other hand, customer
satisfaction has been proposed to be the resulting
determinant of loyalty (e.g. Anderson and Fornell,
1994; Bitner, 1990). Customers’ loyalty to a service
provider is affected by their overall satisfaction with
that provider. Most prior research has found quali-
fied support for a positive “satisfaction-customer
retention” relationship (McDougall and Levesque,
2000; Olsen, 2002). Rust et al. (2000) propose that
the relationship between satisfaction and loyalty is
positive, for example, the more satisfied customers
are with a service provider the more loyal they are
to the service provider.
Customer Loyalty: Stank et al. (1999) specify cus-
tomer loyalty as a customer’s attitude to the service
where loyalty has been described as repeat purchase
behavior impinged by proper attitudes or as a con-
sistent purchase behavior arising from the psycho-
logical decision-making and evaluative process.
According to Jacoby and Kyner (1973) customer
loyalty is shaped by a customer’s cumulative (long-
term) experience with the service over time, not by a
specific service encounter. It’s a clear fact that, cus-
tomer loyalty can lower costs and increase profit-
ability. The cost of recruiting a new customer is said
to be five times more than the cost of keeping an
existing customer (Barsky, 1994; Reichheld, 1996).
Fornell et al. (1987) have asserted that the costs of
customer retention are in fact less than the relative
costs of customer acquisition, and loyal customers,
if served correctly, are said to generate increasingly
more profits each year when they stay with a com-
pany (Lam and Burton, 2006). Customer loyalty
should be realized through customer satisfaction,
ground on the perceived performance of the service
product; therefore service quality and customer sat-
isfaction are two prerequisites of loyalty (Cronin
and Taylor, 1992; Shoemaker and Lewis, 1999;
Mclroy and Barnett, 2000). Further, in the last dec-
ade researches on loyalty have emphasized its posi-
tive effects on customer satisfaction (Ganesh et al.,
2000; Jamal and Naser, 2002). Perceived service
quality has also been found to have a positive asso-
ciation with customer loyalty (Lam and Burton,
2006) and has even been said to be a key determi-
nant of service loyalty (Lee and Cunningham,
2001). Besides, according to Hennig-Thurau et al.
(2002) though satisfaction is modeled as the only
immediate antecedent of loyalty, other key drivers
of loyalty include service quality and customer ex-
pectations (Ehigie, 2006). Also Payne and Rickard
(1993) specify that service quality has measurable
impact on customer retention (Ehigie, 2006).
Perceived Value: Zeithaml’s (1988) research of the
value construct determines four unique definitions
upon which consumers appear to base their evalua-
tions of service exchanges. However, Zeithaml’s
summed the four definitions into a single unique
definition “perceived value is the consumers overall
assessment of the utility of a product based on per-
ceptions of what is received and what is given”
(Zeithaml, 1988). Some researchers examined the
role of perceived value in consumption contexts. For
instance, Zeithaml (1988) supplies evidence sup-
porting an infuential role of value in consumers’
purchase decision making. As per the means-end
model asserted by Zeithaml (1988), perceived value
is a direct antecedent of a purchase decision. By
Dodds et al.’s (1991) work perceived value is con-
ceptualized as a tradeoff between perceived quality
and perceived psychological as well as monetary
sacrifice and Dodds et al.’s model points that per-
ceived value is a direct antecedent of consumer pur-
chase intention. On the other hand, Woodruff (1997)
put forward a perceived value hierarchy model in
which perceived value was received as a hierarchi-
cally structured construct at degrees of consumption
goals, consequences, and attributes. Besides, ac-
cording to Woodruff, perceived value stands in
every level of customers’ expectancy-
disconfirmation process. Furthermore, prior studies
determined perceived performance or perceived qual-
ity as a direct antecedent of value and repurchase in-
tention and these studies support the general concept
Innovative Marketing, Volume 3, Issue 4, 2007
78
that perceived value leads to customer loyalty (Gre-
wal et al., 1998; Voss et al., 1998 for example).
In the light of stated knowledge in the theoretical
background, the article’s hypotheses are as shown
below.
H1. Price component of marketing mix will
have positive effect on word of mouth com-
munication of Accounting Offices in Turkey.
H2. Product component of marketing mix will
have positive effect on word of mouth com-
munication of Accounting Offices in Turkey.
H3. Promotion component of marketing mix
will have positive effect on word of mouth
communication of Accounting Offices in Tur-
key.
H4. Place component of marketing mix will
have positive effect on word of mouth com-
munication of Accounting Offices in Turkey.
A conceptual path model is now presented as Figure1.
PRICE
PERCEIVED
QUALITY
PRODUCT
PROMOTION
PLACE
PERCEIVED
VALUE
CUSTOMER
SATISFACTION
CUSTOMER
LOYALTY
WORD OF
MOUTH
Fig. 1. Research model
3. Research method
3.1. Measurement of constructs. Marketing mix
component items are adapted from Bradley (2001).
Product construct is measured with 7 items, each of
promotion and place constructs include 4 items,
price construct is scaled with 5 items. Perceived
value is measured through three indicators ‘good
value for money’, ‘acceptable price’ and ‘to be a
good buy’ (Cronin et al., 2000). The latent variable
customer satisfaction is measured through three
indicators, ‘overall satisfaction’, ‘to fulfil expecta-
tions’, ‘to be perfect in all aspects’ (Ryan et al.,
1995). Other two indicators describe the latent vari-
able customer loyalty: ‘Resubscription intention’
and ‘New services subscription intention’ (Juhl et
al., 2002). Other constructs and constructs’ items
can be seen in Appendix A.
3.2. Survey method. A survey was conducted to
512 customers of 23 Accounting Offices in Turkey
(in cities of Ankara, stanbul, zmir, Trabzon,
Giresun, Diyarbak?r, Antalya, Kayseri) from
January 22 to March 30, 2007. A self-administered
questionnaire was distributed to customers of these
Accounting offices who were asked to express
his/her agreement with the items, based on a seven-
point Likert-type scale with anchors ranging from
“inferior performance” (1) to “superior perform-
ance” (7). Respondents were asked to rate how
much they agreed with each item on the scale
(Appendix A). A total of 512 questionnaires were
collected. Of these, 9 questionnaires were deleted
due to unanswered items and 503 questionnaires
were finally used in the analysis.
4. Results
4.1. Measurement model. The proposed research
model in this study is composed of nine constructs
with interrelated dependence relationships or causal
paths among themselves, requiring a structural
equation model (SEM) analysis (Bollen, 1989; Hair
et al., 1998) which can estimate multiple causal
relations simultaneously. SEM analysis usually re-
quires that the constructs should first be assessed
and measured rigorously by confirmatory factor
analysis (CFA) (Fornell and Larcker, 1981; Hair et
al., 1998; Segars and Grover, 1993). In order to
generate statistically reliable estimates on causal
paths among constructs, the minimum sample size
for reliable SEM analysis ranges from 100 (Bollen,
1989) or 150 (Anderson and Gerbing, 1982) to 200
or more (Boomsma, 1982). Given that the research
model is relatively simple with ten constructs, the
sample size of 503 collected in this study is consid-
ered adequate. Seven common model-fit measures
were used to assess the model’s overall goodness of
fit: the ratio x2/(d.f.) = 3.259, adjusted goodness-of-
fit index (AGFI) = 0.93, normalized fit index (NFI)
= 0.96, non-normalized fit index (NNFI) = 0.94,
comparative fit index (CFI) = 0.97, relative fit index
(RFI) = 0.98 and root mean square error of ap-
proximation (RMSEA) = 0.069. All the model-fit
indices exceeded the respective common acceptance
levels suggested by previous research, demonstrat-
ing that the measurement model exhibited a good fit
with the data collected. Therefore, we proceeded to
evaluate the properties of the measurement model in
terms of reliability, convergent validity.
Table 1 shows the results of CFA from undertaking
by AMOS 5.0. As shown in Table 1, convergent va-
lidity of CFA results should be supported by item
reliability, construct (composite) reliability and aver-
age variance extracted (Chau, 1996; Hair et al.,
1998). Item reliability denotes the amount of variance
in an item due to the underlying construct, t-values
for all the standardized factor loadings of items were
Innovative Marketing, Volume 3, Issue 4, 2007
79
found significant (p < 0.05), assuring item reliabil-
ity. Hair et al. (1998) proposed construct reliability
estimates as being greater than 0.70. In this study
construct reliability estimates range from 0.879 to
0.982, which is satisfactory. The average variance
extracted, which should be above 0.50, measures
the amount of variance explained by the construct
(Chau, 1996; Hair et al., 1998). Table 1 shows that
the average variances extracted are between 0.916
and 0.995. These results indicate that the meas-
urement items have high reliability and validity.
In this research, alternative factor based procedure
for assessing discriminant validity was used pro-
posed by Fornell and Larcker (1981). In this
method, the researcher concludes that constructs
are different if the average variance extracted
(AVE) for one’s constructs is greater than their
shared variance. That is, the square root of the av-
erage variance extracted (AVE) for a given con-
struct should be greater than the absolute value of
the standardized correlation of the given construct
with any other construct in the analysis. In the
analysis the biggest correlation value is 0.562 be-
tween customer loyalty and customer satisfaction.
Other correlation values are smaller than this. So
when we look at AVE values (Table 1), it is obvi-
ous that no correlation values can exceed square
root of AVE values.
Table 1. Confirmatory factor analysis results
Constructs Items (MLE) sd t
Construct
reliability
Average var.
extracted
P1
.982 .086 10.84
P2 .823 .073 10.46
P3 .916 .102 8.34
P4 .911 .053 16.79
P5 .889 .031 27.74
P6 .954 .086 11.51
Product
P7 .932 .039 24.58
.953 .971
PRO1 .908 .171 5.12
PRO2 .926 .115 7.84
PRO3 .954 .053 17.52
Promotion
PRO4 .827 .076 10.46
.944 .957
PL1 .825 .077 10.43
PL2 .897 .025 30.83
PL3 .844 .093 8.75
Place
PL4 .892 .105 8.33
.981 .995
PR1 .862 .015 45.33
PR2 .743 .027 29.87
PR3 .895 .023 30.83
PR4 .964 .182 5.21
Price
PR5 .857 .023 34.23
.982 .994
PQ1 .885 .023 38.47
PQ2 .893 .043 20.76
PQ3 .992 .101 9.82
PQ4 .990 .089 11.12
PQ5 .798 .031 25.45
PQ6 .821 .111 7.39
Perceived quality
PQ7 .943 .078 12.08
.923 .954
WM1 .874 .045 19.42
WM2 .934 .096 9.72 Word of mouth
WM3 .918 .112 8.19
.912 .931
PV1 .792 .038 20.84
PV2 .889 .096 9.26 Perceived value
PV3 .876 .117 7.48
.896 .923
CL1 .923 .099 9.32
Customer loyalty
CL2 .897 .056 16.01
.905 .916
CS1 .887 .026 34.11
CS2 .815 .017 47.94
Customer satisfaction
CS3 .821 .074 11.09
.879 .928
4.2. Structural model. A similar set of fit indices
was used to examine the structural model. Compari-
son of all fit indices, with their corresponding rec-
ommended values, provided evidence of intermediate
model fit (X2/d.f. = 6.891, AGFI = 0.85, NFI =
0.89, NNFI = 0.86, CFI = 0.90, RFI = 0.91, RMSEA
= 0.099) (see Figure 2). After that, we wiped unsig-
nificant path and then we run structural equation
Innovative Marketing, Volume 3, Issue 4, 2007
80
procedure again. New situation fit indices have good
fit (X2/d.f. = 2.154, AGFI = 0.92, NFI = 0.96, NNFI
= 0.94, CFI = 0.97, RFI = 0.97, RMSEA = 0.071)
(Figure 3). Thus, we could proceed to examine the
path coefficients of the structural model.
In the model, direct and indirect effects (Table 2) and
total effects (Table 3) can be seen.
Table 3 shows total effect of marketing mix compo-
nent on other research constructs. As can be seen from
Table 3, promotion and price components have strong
positive effects on word of mouth communication.
Product was found to show intermediate effect on
word of mouth. On the other hand, place has little
influence on word of mouth.
H1. Price component of marketing mix has
positive effect on word of mouth communication
of Accounting Offices in Turkey (r = 0.719,
ACCEPTED).
H2. Product component of marketing mix has
positive effect on word of mouth communication
of Accounting Offices in Turkey (r = 0.442,
ACCEPTED).
H3. Promotion component of marketing mix has
positive effect on word of mouth communication
of Accounting Offices in Turkey (r = 0.869,
ACCEPTED).
H4. Place component of marketing mix has
positive effect on word of mouth communication
of Accounting Offices in Turkey (r = 0.108,
ACCEPTED).
Fig. 2. Structural equation analysis results
Fig. 3. Repeated structural equation analysis
Table 2. Direct and indirect effects on constructs
Perceived
value
Perceived
quality
Customer
satisfaction
Customer
loyalty
Word of
mouth
D
i
r
e
c
t
I
n
d
i
r
e
c
t
D
i
r
e
c
t
I
n
d
i
r
e
c
t
D
i
r
e
c
t
I
n
d
i
r
e
c
t
D
i
r
e
c
t
I
n
d
i
r
e
c
t
D
i
r
e
c
t
I
n
d
i
r
e
c
t
Price .712 - - - - - - .354 .531 .188
Product - .184 .475 - - .218 .315 .345 - .442
Promotion - - - - .634 - - .213 .485 .384
Place .412 - - - - - - .205 - .108
P. quality .359 - - - .461 - .381 .348 - .583
P. value - - - - - - .498 - - .264
C.satisfaction - - - - - - .337 - .429 .178
C. loyaly - - - - - - - - .531 -
Table 3. Total effects on constructs
Perceived
value
Perceived
quality
Customer
satisfaction
Customer
loyalty
Word of
mouth
Price .712 - - .354 .719
Product .184 475 .218 .660 .442
Promotion - - .634 .213 .869
Place .412 - - .205 .108
P. quality .359 - .461 .729 .583
Innovative Marketing, Volume 3, Issue 4, 2007
81
Table 3 (continued). Total effects on constructs
P. value - - - .498 .264
C. satisfaction - - - .337 .607
C. loyaly - - - - .531
Conclusion
Word of mouth is a way of communication between
people regarding product and service performances.
It is considered an unofficial form of communication
and there are various expressions as to how people
and academics refer to it. Words like “buzz”, “grape-
vine” or “customer talking” are often used to describe
this communication activity people engage in.
Based on extant literature, seven factors can be
thought of as contributing towards the pervasiveness
of WOM. Firstly, WOM is a global phenomenon,
although individualist and collectivist cultures may
engage in WOM to a different extent. Secondly,
WOM operates across all industries. WOM’s impor-
tance stretches across diverse industries encompass-
ing corporate services, personal services, basic
goods and complex goods. Thirdly, the proportion
of consumers engaging in WOM has been found to
be very high. Fourthly, the proportion of consumers
relying on WOM has been found to be very high.
While the precise proportion is disputed, it is clear
that the majority of consumers often rely on WOM
for decision-making. Fifthly, WOM can spread
quickly. Sixthly, one of the key factors in allowing
WOM to spread quickly is the fact that WOM may
be retransmitted. That is, WOM may be received by
a consumer who then passes the message onto an-
other consumer and so forth. Lastly, one of the most
powerful facets of WOM is that it can be shared
with more than one person, i.e. multiple dyads.
As a result it can be seen that word of mouth is the
most powerful communication way to reach cus-
tomer. Accounting offices are not exception. So we
research how word of mouth communication em-
powered. Firstly, we investigate literature on word
of mouth communication and we find that five fac-
tors affect word of mouth that are customer satisfac-
tion, customer loyalty, customer expectation, per-
ceived quality and perceived value. Beside these
factors we put forward that marketing mix (price,
place, promotion and product) affects word of
mouth via foregoing five factors. We did an empiri-
cal research based on a model on customer of ac-
counting offices of Turkey. Finally we found that
marketing mix especially product and promotion
components have important influence on word of
mouth communication indirectly.
Managerial implication
From the clients point of view, it is of paramount
importance that accounting offices have a good un-
derstanding of customer responses and thought
about them, and use this knowledge to provide a
personalized high quality service. In this regard,
marketing mix may help to realize this aim. This
research has shown that by doing so, accounting
offices can increase significantly their clients loyalty
and word of mouth activities by using marketing
mix. Hence, policies and decisions of accounting
offices must favor an in-depth knowledge of cus-
tomer needs, goals and expectations. Recent techno-
logical advances have helped to make this objective
achievable. Rapid improvements in information
technology allow accounting offices and their front-
line staff to track customer characteristics more
easily and respond with appropriate marketing of-
fers. Businesses are no longer restricted to market-
ing at segment level, but can now tailor offers to
individual customers. Accounting offices can also
benefit from new information technologies to de-
velop an image of good and effective service, given
that this factor was found to affect word of mouth.
In that respect, account managers should seek refer-
ences from clients who they think are very satisfied.
This strategy could prove to be very beneficial be-
cause positive word of mouth has been identified as
a powerful factor in the purchase of accounting ser-
vices.
Although the tariff has been restricted by the 46th
article of the Law 3568, it is seen by the research
results that Turkish accounting offices’ price com-
ponent of marketing mix has positive effect on the
customer loyalty model components. The reason of
that the competition between accounting offices in
Turkey has gone too far and the non-competitive
regulations of the UNION seem unreasonable to
applicants. So, accounting offices in Turkey are
illicitly using price component as a tool of attracting
clients’ loyalty. We suggest that Turkish regulators
should either enhance inspection on the price using
accounting offices as a marketing tool or the union
should set a new market regulation on the price
component which gives the opportunity of setting
own tariffs to accounting offices.
Every business, either knowingly or unknowingly,
generates word of mouth that is either positive –
which helps build their business, or negative –
Innovative Marketing, Volume 3, Issue 4, 2007
82
which hurts it. There are even some fortunate (but
relatively few) businesses that rely entirely on word
of mouth to generate more business than they can
handle. When someone says good things about a
business to someone else, it serves as a real-life
testimonial, which is much more believable than
when owner of that business saying good things
about it. Studies have shown that the vast majority
of dissatisfied customers and prospects will not
voice complaints to responsible persons in a busi-
ness which they have experienced some dissatisfac-
tion with, but will quietly take their business else-
where. And since they will likely spread negative
word of mouth about their experience to others, not
only does the business lose future business from the
dissatisfied customer or prospect, but also from
others that may be repelled by hearing such negative
word of mouth. Here are some tips on generating
positive word of mouth advertising for accounting
offices:
1. Accounting offices should use experts (for ex-
ample, advisory groups of agents, professional
association representatives or careers counsel-
lors) in marketing (Jerram, 2003).
2. Internet offers a significant potential for market-
ing accounting services. IAs and CPAs should
harness the power of web sites into marketing of
services.
3. Accounting offices actively should seek feed-
back in the form of questions, comments, and
even complaints from customers and prospects.
It should be viewed as opportunities to improve
firm’s services and customer support (Foley,
2007).
4. IAs and CPAs shouldn’t forget the importance
of internal staff in talking about accounting of-
fices and providing a “virtual experience” (Jer-
ram, 2003).
5. Another key for positive word of mouth com-
munication is delivering excellent customer ser-
vice. Even if customers are not satisfied with
firm’s business, they can have been neutral by
excellent after selling services (Foley, 2007). In
other words, accounting offices should provide
quality service.
Limitations
Our study was based on a descriptive perspective,
rather than on a longitudinal one, which limits the
knowledge of the long-term impact of the factors in
our model. Would a longitudinal research produce
different results from ours? Wilson (1995) argued
that some determinants are very important at certain
stages of the relationship development, but may
become latent in others. In that respect, it could
prove interesting to study the phenomenon under a
long-term horizon. Such a study would also increase
our understanding of the development process of a
relationship. Do the results of our study apply to
other business sectors? Would we obtain the same
results at the international level? To answer these
questions, researchers could eventually test the
model presented in this paper, but under a com-
pletely different angle. Studies could, for example,
be conducted in another industry (e.g. telecommuni-
cations), for a particular type of clientele (e.g. the
government) or in another region (e.g. Asia). The
results that we have obtained, although interesting,
constitute only a spring-board for future investiga-
tions in a domain growing in theoretical and practi-
cal importance.
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Appendix A
Table 1
Marketing mix items (Bradley, 2001)
Product
P1. Wide range of services
P2. Very high standard of services
P3. Excellence of services
P4. Comply rigidly with technical specifications
P5. Innovativeness
P6. Incorporation of new technical developments
P7. Adaption of services to user needs
Place
PL1. Good residential area
PL2. Closeness to business centers
PL3. Open hours
PL4. Accessibility
Promotion
PRO1. Active dissemination of new information on services
PRO2. High quality of content in bureau communications
PRO3. Truthful communications
PRO4. Imaginative/creative bureau adver.
Price
PR1. Good value for money
PR2. Good discounts
PR3. Good credit terms
PR4. Competitively priced
PR5. Imaginative use of nonprice factors
Innovative Marketing, Volume 3, Issue 4, 2007
86
Table 1 (continued)
Customer loyalty model items
Perceived quality (Stafford, 1996)
PQ1. Atmosphere
PQ2. Relationships
PQ3. Avaliable services
PQ4. Convenient service
PQ5. Reliability
PQ6. Honesty
PQ7. Tellers
Perceived value (Cronin et al., 2000)
PV1. Good value for money
PV2. Acceptable price
PV3. To be a good buy
Customer loyalty (Juhl et al., 2002)
CL1. Resubscription intention
CL2. New Services subscription intention
Customer satisfaction (Ryan et al., 1995)
CS1. Generally satisfied
CS2. Fulfil expectations
CS3. Perfect in all aspects
Word of mouth (Maxham, 2001)
WM1. Intent to recommend
WM2. Spreading firm good reputation
WM3. Inform others about firms services
Note: 1: inferior performance…..7: superior performance.
doc_736050879.pdf
This paper examines the relationship between marketing mix and word of mouth communication. These variables are increasingly recognized as being sources of competitive advantage in the marketing and management literature
Innovative Marketing, Volume 3, Issue 4, 2007
74
Ekrem Cengiz (Turkey), Hilmi Erdoan Yayla (Turkey)
The effect of marketing mix on positive word of mouth
communication: evidence from accounting offices in Turkey
Abstract
This paper examines the relationship between marketing mix and word of mouth communication. These variables are
increasingly recognized as being sources of competitive advantage in the marketing and management literature. How-
ever, no empirical research has been conducted to examine these variables’ relationship. An integrative model was
developed and tested with structural equation model using data collected from the 503 Turkish accounting offices’
customers. The results show that marketing mix components, namely price, product, promotion and place have effect
on word of mouth communication with different impacts significantly.
Keywords: word of mouth communication, accounting offices, marketing mix.
Introduction
8
In the past, consumers used to talk to other people
when looking for opinions on a particular brand,
product or company. This became known as word of
mouth (WOM) in the marketing literature (Pollach,
2006). WOM is probably the oldest mechanism by
which opinions on products, brands, and services
are developed, expressed, and spread (Lau and Ng,
2001). A spate of recent articles and books in popu-
lar press already notes an increasing interest in word
of mouth (Ozcan, 2004). File et al. (1992) define
WOM as recommending the firm and the service to
others. Specifically, Anderson (1998) refers to posi-
tive WOM as relating pleasant, vivid, or novel ex-
periences, recommendations to others, and even
conspicuous display. Numerous research reinforced
the contention that positive WOM is a cherished
outcome in marketing. In 1955, Katz and Lazarsfeld
found positive WOM seven times more effective
than newspaper and magazine advertising, four
times more effective than personal selling, and twice
as effective as radio advertising in influencing con-
sumers to switch brands. In 1983, Morin uncovered
that referrals from others accounted for three times
as many purchases as did advertising when consum-
ers were asked what factors influenced their pur-
chases of 60 different products. WOM communica-
tion is an important source of consumer information.
It forms the basis of interpersonal communications
and significantly influences product evaluations and
purchase decisions (Mahajan et al., 1990). In fact,
WOM has been shown to be more powerful than
printed information (Borgida and Nisbett, 1977),
primarily because WOM information is considered
to be more credible. Another reason for the power
WOM marketing is that WOM is always relevant
and timely, it is driven by customer needs and it
grows exponentially, for example, one tells a story
to five people, they each tell it to five more, who tell
© Ekrem Cengiz, Hilmi Erdoan Yayla, 2007.
it to five more after that. WOM also makes use of
human nature, feeding on the fact that many people
like to consider themselves experts (Jerram, 2003).
The marketing mix is, as also known as the 4Ps,
summarily, the product, price, places and promotion
(Koontz, 2004). The 4Ps framework is widely used
by marketers as the underpinning of their marketing
planning is based on the high degree of acceptance
of the marketing mix by marketing practitioners as
the universal marketing paradigm. Grönroos (1997)
argues that the 4Ps framework has won an over-
whelming acceptance among marketing practitio-
ners, noticing that “…Marketing in practice has, to a
large extent, been turned into managing this tool-
box…”, a point shared by Goldsmith (1999) who
argues that the “…time-honoured concept of the 4Ps
the marketing mix…” is the heart of the contempo-
rary marketing management (Constantinides,
2002a). In a competitive situation, a firm has to
prioritize marketing mix elements. This does not
mean concentrating only on a few elements and
ignoring the others. Prioritizing emphasizes the need
to recognize the fact that some elements may be
important than others at a given point in time
(Kumar, 2002). On the other hand, in recent years
some scholars in marketing literature increase the
marketing mix to the “5 Ps”, to include people.
Besides, some discusses “7 Ps”, to include physical
evidence and process.
This paper may be of interest for several reasons.
Firstly, despite the interest in WOM, no research has
been done yet about the marketing mix contribution
towards WOM communication. Based on a synthe-
sis of the literature, this paper develops a conceptual
framework of the factors that contribute to WOM.
Eight factors are identified that contribute to
WOM’s significance. Four of these factors (cus-
tomer loyalty, customer satisfaction, perceived
value, perceived quality) are known as the determi-
nants of WOM but four of them (price, place, promo-
tion and product) hadn’t been explored. Our research
Innovative Marketing, Volume 3, Issue 4, 2007
75
is important to fill this gap. Secondly, except for
some papers discussing on segmentation of business
clients of CPAs (i.e. Walt et al.,1994) and level of
service quality clients recieved from CPAs (i.e.
Yayla and Cengiz, 2006; Woodside et al.,1992), no
one has seriously aimed to marketing of CPAs, ac-
counting services and offices. Thus, this study is
devoted to analyse clients’ perceptions of the mar-
keting components (marketing mix and word of
mouth communication relations here) accounting
offices use.
The rest of this paper is organized as follows . In
section 1, we offer a brief outline of accounting
offices in Turkey. Section 2 provides the theoretical
framework which specifies constructs of marketing
mix, WOM and WOM’s determinants like customer
loyalty, customer satisfaction, etc. In section 3 a
model is introduced to investigate relationship be-
tween marketing mix components and WOM com-
munication. After dealing with the model test, this
paper discusses the results of the empirical study
that was undertaken to test our research hypotheses.
1. Accounting offices in Turkey
Since 1989, the establishment and the operations of
professional accounting offices in Turkey are ar-
ranged with the Law Number 3568 of “Independent
Accountancy, Certified Public Accountancy and
Sworn-in Certified Public Accountancy”. The Law
establishes accounting and auditing as a profession
and defines those who are rendering services in
these fields as professionals. The Law creates and
defines three categories of accounting and auditing
professionals (TURMOB, 2006b):
independent accountant (IA);
certified public accountant (CPA);
sworn-in certified public accountant (Sworn-in
CPA).
According to the Law, the persons who are entitled
to operate the accounting offices are the persons
who fulfil the private and general conditions stated
in the Law and have the title of Independent Ac-
countant (IA) and Certified Public Accountant
(CPA). Sworn-in Certified Public Accountants are
prohibited from the enterprising of the accounting
office and they can only execute the auditing and the
attesting duties as specified in the Law. The real
persons who have the titles of Independent Ac-
countant (IA) and Certified Public Accountant
(CPA) can start their accountancy activities by reg-
istering in the occupational chamber which is apper-
tained to the Union of Certified Public Accountants
of Turkey (TÜRMOB) in the city where they carry
on their own activities. As of the year 2006, there
are 16.219 Independent Accountants and there are
19.289 Certified Public Accountants in Turkey
(TÜRMOB, 2006a) who are registered in the Union
of Certified Public Accountants of Turkey.
The 2nd, 44th and 46th articles of Law number 3568
handle the product, promotion and the price from
the marketing mix elements and indicate the use of
the same by the accounting offices. There is no ar-
rangement in the Law regarding the place element
and there is no restriction regarding the place for the
establishment of the accounting offices.
The 2nd article of the Law defines the profession
subject to the Independent Accountant (IA) and
Certified Public Accountant (CPA), in other words,
it defines the services and the products of the ac-
counting offices. According to this article, the work-
ing subjects of the accounting offices are as shown
in the following 3 paragraphs:
to carry out the works of bookkeeping, to ar-
range the balance sheets and profit-loss sheets
and their statements and similar works of the
real persons and corporate bodies as per gener-
ally accepted accounting policies and the provi-
sions of the relative legislation;
to establish the accounting systems of the real
persons and corporate bodies and to develope
the same, to arrange the relative works for the
enterprising, accountancy, financial legislation
and to arrange the works in relation with their
applications, and to provide consultancy ser-
vices in these subjects;
based on the documents: to do examinations,
analyses, audits based on the subjects stated in
the above paragraph, to provide written opinion
standpoint for the financial sheets and state-
ments, to arrange reports and the similars and to
do arbitration, expertising and similar works.
According to Law number 3568, Certified Public
Accountant (CPA) can achieve all works stated in
the above areas while the Independent Accountant
(IA) can only achieve the activities indicated in the
above stated paragraph (Law No 3568, Article 5).
The 44th article of the Law refers to promotion from
the marketing mix elements and it
states:“Profession members can not do the activities
which can be considered as advertisement. In their
signboards or printed papers they can not use any
other designation being other than their own occu-
pational titles determined with the licence.” And
with this provision, the advertisement activities of
the accountant offices are prohibited. Nonetheless,
the 46th article of the Law makes detailed arrange-
ment to the price of the marketing mix elements:
Innovative Marketing, Volume 3, Issue 4, 2007
76
“Fee means the amount for the payment
against profession members’ services. The
minimum amount of the fee is determined with
the price tariff. The acceptance of any work
with the fee being charged under the price
tariff is prohibited and acting on the contract
of this provision requires discipline penalty.
The board of directors of every chamber pre-
pares the price tariffs for the fees to be paid
against each of the works and processes to be
carried out by Independent Accountants, Cer-
tified Public Accountants and Sworn-in Certi-
fied Public Accountants to be effective from
January of each year and they send this to the
Union. The Board of Directors of the Union
prepares the tariffs to be applied in the
groups by taking the proposals of the cham-
bers into consideration and by determining
the groups and sends the same to the Ministry
of Finance and Customs. Ministry of Finance
and Customs attests the tariff being the same
or attests according to the changes which are
deemed to be necessary. Tariffs become effec-
tive after being published in the Official Ga-
zetta and the existing tariff remains effective
until the attestment of the new tariff.”
2. Theoretical framework
Marketing mix: The Marketing Mix is a term used
to describe the combination of tactics used by a
business to achieve its objectives by marketing its
products or services effectively to a particular target
customer group (CIM, 2004). It is also referred to as
the 4 Ps: Product, Price, Promotion and Place. The
four Ps of the marketing are briefly described as
follows (Copley, 2004): Product, the item or service
being marketed, through its features, quality, bene-
fits and quantities; Price, this includes the price of
the item and product assortments and lines, price
changes and payment methods; Place, the location
where the product or service is available to the cus-
tomer, including distribution channels; Promotion,
market communication is achieved by personal sell-
ing, advertising, direct marketing, public relations
(PR), sales promotion and sponsorship. As Bennett
(1997) observed, it is now just over 40 years since
McCarthy (1964) offered the marketing mix, often
referred to as the 4 Ps, as a means of translating
marketing planning into practice: product, price,
place and promotion. On the other hand, the short-
comings of the 4Ps marketing mix framework, as
the pillar of the traditional marketing management
have frequently become the target of intense criti-
cism. A number of critics even go as far as rejecting
the 4Ps altogether, proposing alternative frame-
works (Constantinides, 2002b; see Kotler, 1967;
Bennet, 1997; Grönroos, 1997 for example).
Word of Mouth: Arndt (1967) defines Word of
Mouth (WOM) as oral, person to person communi-
cation between a receiver and a communicator
whom the receiver senses as non-commercial, re-
garding a brand, product or service. Instead, accord-
ing to Stern (1994) WOM differs from advertising
in its lack of boundaries. WOM comprises the inter-
change of shortlived oral or spoken messages be-
tween an adjacent source and a recipient who com-
municate directly in real life (Stern, 1994). Actually,
it has been asserted that WOM can be more influen-
tial than neutral print sources such as consumer
reports (Herr et al., 1991). Besides, according to
Sheth (1971) WOM was more important than adver-
tising in developing awareness of an innovation and
in securing the decision to try the product. In accor-
dance with Day (1971) this was due to source reli-
ability and the flexibility of interpersonal transmis-
sion. WOM is supposed to be of two types: negative
WOM and positive WOM. Less unanimity, how-
ever, exists with regard to the extent of the informa-
tion being transferred; in conceptualizations and
operationalizations of the WOM construct, some
authors underline manifest counsels (see Fullerton
and Taylor, 2002; Gremler and Brown, 1999; Har-
tline and Jones, 1996), while others view WOM as
an activity that contains sharing notion about a
commercially based experience (see Maru File et al.,
1994; Mikkelsen et al., 2003; Westbrook, 1987).
Perceived Quality: In a broad sense, perceived value
of a service can be developed by delivering better
service (Ravald and Grönroos, 1996). Supplement-
ing value to the service at a competitive price is a
potent source of competitive advantage. Generally,
customers sense higher value in the service when
they comprehend the quality of service as passing
away the costs they have given away to get the ser-
vice. In paralel, there is a body of empirical evi-
dences to support the view that quality is positively
related to perceived value (see Brady and Robert-
son, 1999, for example). Furthermore, perceived
quality of service is dependent on a comparison
between expected and perceived service, and is thus
the consequence of a comparative evaluation proc-
ess (Gronross, 1984). Particularly, Parasuraman et
al. (1985) describe service quality as the degree and
direction of discrepancy between a customer’s per-
ceptions and expectations, while perceived service
quality is the gap between a customer’s expectations
and perceptions as a measurement of service quality.
When the gap is smaller, the quality of service is
better and the customer satisfaction is greater. The
actual quality of service is difficult to characterize
and measure (Gavin, 1983; Parasuraman et al., 1988;
Brown and Swartz, 1989). However, there is a una-
nimity that service quality should be characterized
Innovative Marketing, Volume 3, Issue 4, 2007
77
and measured from the customer’s view. Perceived
service quality definition that is the most widely
accepted is that symbolizes the discrepancy between
customers expectations and their perceptions of the
service performance (Lewis and Booms, 1983;
Grönroos, 1984).
Customer Satisfaction: A body of literature has been
the subject of attention on consumer satisfaction and
its potential effects on consumer behavioral inten-
tions and customer retention (e.g. Anderson and
Fornell, 1994; Cardozo, 1965; Cronin and Taylor,
1992; Olson and Dover, 1979; Rust and Oliver,
1994). Hunt (1977) defines satisfaction as an
evaluation of a feeling, suggesting that it reflects the
grade to which a consumer believes that the posses-
sion and use of a service awake positive feelings
(Rust and Oliver, 1994). Arguably, according to
Churchill and Surprenant (1982) customer satisfac-
tion is a result of purchase and use resulting from
the buyers’ comparison of the rewards and costs of
the purchase in relation to the expected conse-
quences. Besides, customer satisfaction has also
been regarded as an emotional state that appears in
response to the evaluation of a service (Westbrook,
1981). Woodruff et al. (1991) claim that customer
satisfaction can be defined as an emotional re-
sponse, that arises from a cognitive process of
evaluating the service received against the costs of
getting the service. On the other hand, customer
satisfaction has been proposed to be the resulting
determinant of loyalty (e.g. Anderson and Fornell,
1994; Bitner, 1990). Customers’ loyalty to a service
provider is affected by their overall satisfaction with
that provider. Most prior research has found quali-
fied support for a positive “satisfaction-customer
retention” relationship (McDougall and Levesque,
2000; Olsen, 2002). Rust et al. (2000) propose that
the relationship between satisfaction and loyalty is
positive, for example, the more satisfied customers
are with a service provider the more loyal they are
to the service provider.
Customer Loyalty: Stank et al. (1999) specify cus-
tomer loyalty as a customer’s attitude to the service
where loyalty has been described as repeat purchase
behavior impinged by proper attitudes or as a con-
sistent purchase behavior arising from the psycho-
logical decision-making and evaluative process.
According to Jacoby and Kyner (1973) customer
loyalty is shaped by a customer’s cumulative (long-
term) experience with the service over time, not by a
specific service encounter. It’s a clear fact that, cus-
tomer loyalty can lower costs and increase profit-
ability. The cost of recruiting a new customer is said
to be five times more than the cost of keeping an
existing customer (Barsky, 1994; Reichheld, 1996).
Fornell et al. (1987) have asserted that the costs of
customer retention are in fact less than the relative
costs of customer acquisition, and loyal customers,
if served correctly, are said to generate increasingly
more profits each year when they stay with a com-
pany (Lam and Burton, 2006). Customer loyalty
should be realized through customer satisfaction,
ground on the perceived performance of the service
product; therefore service quality and customer sat-
isfaction are two prerequisites of loyalty (Cronin
and Taylor, 1992; Shoemaker and Lewis, 1999;
Mclroy and Barnett, 2000). Further, in the last dec-
ade researches on loyalty have emphasized its posi-
tive effects on customer satisfaction (Ganesh et al.,
2000; Jamal and Naser, 2002). Perceived service
quality has also been found to have a positive asso-
ciation with customer loyalty (Lam and Burton,
2006) and has even been said to be a key determi-
nant of service loyalty (Lee and Cunningham,
2001). Besides, according to Hennig-Thurau et al.
(2002) though satisfaction is modeled as the only
immediate antecedent of loyalty, other key drivers
of loyalty include service quality and customer ex-
pectations (Ehigie, 2006). Also Payne and Rickard
(1993) specify that service quality has measurable
impact on customer retention (Ehigie, 2006).
Perceived Value: Zeithaml’s (1988) research of the
value construct determines four unique definitions
upon which consumers appear to base their evalua-
tions of service exchanges. However, Zeithaml’s
summed the four definitions into a single unique
definition “perceived value is the consumers overall
assessment of the utility of a product based on per-
ceptions of what is received and what is given”
(Zeithaml, 1988). Some researchers examined the
role of perceived value in consumption contexts. For
instance, Zeithaml (1988) supplies evidence sup-
porting an infuential role of value in consumers’
purchase decision making. As per the means-end
model asserted by Zeithaml (1988), perceived value
is a direct antecedent of a purchase decision. By
Dodds et al.’s (1991) work perceived value is con-
ceptualized as a tradeoff between perceived quality
and perceived psychological as well as monetary
sacrifice and Dodds et al.’s model points that per-
ceived value is a direct antecedent of consumer pur-
chase intention. On the other hand, Woodruff (1997)
put forward a perceived value hierarchy model in
which perceived value was received as a hierarchi-
cally structured construct at degrees of consumption
goals, consequences, and attributes. Besides, ac-
cording to Woodruff, perceived value stands in
every level of customers’ expectancy-
disconfirmation process. Furthermore, prior studies
determined perceived performance or perceived qual-
ity as a direct antecedent of value and repurchase in-
tention and these studies support the general concept
Innovative Marketing, Volume 3, Issue 4, 2007
78
that perceived value leads to customer loyalty (Gre-
wal et al., 1998; Voss et al., 1998 for example).
In the light of stated knowledge in the theoretical
background, the article’s hypotheses are as shown
below.
H1. Price component of marketing mix will
have positive effect on word of mouth com-
munication of Accounting Offices in Turkey.
H2. Product component of marketing mix will
have positive effect on word of mouth com-
munication of Accounting Offices in Turkey.
H3. Promotion component of marketing mix
will have positive effect on word of mouth
communication of Accounting Offices in Tur-
key.
H4. Place component of marketing mix will
have positive effect on word of mouth com-
munication of Accounting Offices in Turkey.
A conceptual path model is now presented as Figure1.
PRICE
PERCEIVED
QUALITY
PRODUCT
PROMOTION
PLACE
PERCEIVED
VALUE
CUSTOMER
SATISFACTION
CUSTOMER
LOYALTY
WORD OF
MOUTH
Fig. 1. Research model
3. Research method
3.1. Measurement of constructs. Marketing mix
component items are adapted from Bradley (2001).
Product construct is measured with 7 items, each of
promotion and place constructs include 4 items,
price construct is scaled with 5 items. Perceived
value is measured through three indicators ‘good
value for money’, ‘acceptable price’ and ‘to be a
good buy’ (Cronin et al., 2000). The latent variable
customer satisfaction is measured through three
indicators, ‘overall satisfaction’, ‘to fulfil expecta-
tions’, ‘to be perfect in all aspects’ (Ryan et al.,
1995). Other two indicators describe the latent vari-
able customer loyalty: ‘Resubscription intention’
and ‘New services subscription intention’ (Juhl et
al., 2002). Other constructs and constructs’ items
can be seen in Appendix A.
3.2. Survey method. A survey was conducted to
512 customers of 23 Accounting Offices in Turkey
(in cities of Ankara, stanbul, zmir, Trabzon,
Giresun, Diyarbak?r, Antalya, Kayseri) from
January 22 to March 30, 2007. A self-administered
questionnaire was distributed to customers of these
Accounting offices who were asked to express
his/her agreement with the items, based on a seven-
point Likert-type scale with anchors ranging from
“inferior performance” (1) to “superior perform-
ance” (7). Respondents were asked to rate how
much they agreed with each item on the scale
(Appendix A). A total of 512 questionnaires were
collected. Of these, 9 questionnaires were deleted
due to unanswered items and 503 questionnaires
were finally used in the analysis.
4. Results
4.1. Measurement model. The proposed research
model in this study is composed of nine constructs
with interrelated dependence relationships or causal
paths among themselves, requiring a structural
equation model (SEM) analysis (Bollen, 1989; Hair
et al., 1998) which can estimate multiple causal
relations simultaneously. SEM analysis usually re-
quires that the constructs should first be assessed
and measured rigorously by confirmatory factor
analysis (CFA) (Fornell and Larcker, 1981; Hair et
al., 1998; Segars and Grover, 1993). In order to
generate statistically reliable estimates on causal
paths among constructs, the minimum sample size
for reliable SEM analysis ranges from 100 (Bollen,
1989) or 150 (Anderson and Gerbing, 1982) to 200
or more (Boomsma, 1982). Given that the research
model is relatively simple with ten constructs, the
sample size of 503 collected in this study is consid-
ered adequate. Seven common model-fit measures
were used to assess the model’s overall goodness of
fit: the ratio x2/(d.f.) = 3.259, adjusted goodness-of-
fit index (AGFI) = 0.93, normalized fit index (NFI)
= 0.96, non-normalized fit index (NNFI) = 0.94,
comparative fit index (CFI) = 0.97, relative fit index
(RFI) = 0.98 and root mean square error of ap-
proximation (RMSEA) = 0.069. All the model-fit
indices exceeded the respective common acceptance
levels suggested by previous research, demonstrat-
ing that the measurement model exhibited a good fit
with the data collected. Therefore, we proceeded to
evaluate the properties of the measurement model in
terms of reliability, convergent validity.
Table 1 shows the results of CFA from undertaking
by AMOS 5.0. As shown in Table 1, convergent va-
lidity of CFA results should be supported by item
reliability, construct (composite) reliability and aver-
age variance extracted (Chau, 1996; Hair et al.,
1998). Item reliability denotes the amount of variance
in an item due to the underlying construct, t-values
for all the standardized factor loadings of items were
Innovative Marketing, Volume 3, Issue 4, 2007
79
found significant (p < 0.05), assuring item reliabil-
ity. Hair et al. (1998) proposed construct reliability
estimates as being greater than 0.70. In this study
construct reliability estimates range from 0.879 to
0.982, which is satisfactory. The average variance
extracted, which should be above 0.50, measures
the amount of variance explained by the construct
(Chau, 1996; Hair et al., 1998). Table 1 shows that
the average variances extracted are between 0.916
and 0.995. These results indicate that the meas-
urement items have high reliability and validity.
In this research, alternative factor based procedure
for assessing discriminant validity was used pro-
posed by Fornell and Larcker (1981). In this
method, the researcher concludes that constructs
are different if the average variance extracted
(AVE) for one’s constructs is greater than their
shared variance. That is, the square root of the av-
erage variance extracted (AVE) for a given con-
struct should be greater than the absolute value of
the standardized correlation of the given construct
with any other construct in the analysis. In the
analysis the biggest correlation value is 0.562 be-
tween customer loyalty and customer satisfaction.
Other correlation values are smaller than this. So
when we look at AVE values (Table 1), it is obvi-
ous that no correlation values can exceed square
root of AVE values.
Table 1. Confirmatory factor analysis results
Constructs Items (MLE) sd t
Construct
reliability
Average var.
extracted
P1
.982 .086 10.84
P2 .823 .073 10.46
P3 .916 .102 8.34
P4 .911 .053 16.79
P5 .889 .031 27.74
P6 .954 .086 11.51
Product
P7 .932 .039 24.58
.953 .971
PRO1 .908 .171 5.12
PRO2 .926 .115 7.84
PRO3 .954 .053 17.52
Promotion
PRO4 .827 .076 10.46
.944 .957
PL1 .825 .077 10.43
PL2 .897 .025 30.83
PL3 .844 .093 8.75
Place
PL4 .892 .105 8.33
.981 .995
PR1 .862 .015 45.33
PR2 .743 .027 29.87
PR3 .895 .023 30.83
PR4 .964 .182 5.21
Price
PR5 .857 .023 34.23
.982 .994
PQ1 .885 .023 38.47
PQ2 .893 .043 20.76
PQ3 .992 .101 9.82
PQ4 .990 .089 11.12
PQ5 .798 .031 25.45
PQ6 .821 .111 7.39
Perceived quality
PQ7 .943 .078 12.08
.923 .954
WM1 .874 .045 19.42
WM2 .934 .096 9.72 Word of mouth
WM3 .918 .112 8.19
.912 .931
PV1 .792 .038 20.84
PV2 .889 .096 9.26 Perceived value
PV3 .876 .117 7.48
.896 .923
CL1 .923 .099 9.32
Customer loyalty
CL2 .897 .056 16.01
.905 .916
CS1 .887 .026 34.11
CS2 .815 .017 47.94
Customer satisfaction
CS3 .821 .074 11.09
.879 .928
4.2. Structural model. A similar set of fit indices
was used to examine the structural model. Compari-
son of all fit indices, with their corresponding rec-
ommended values, provided evidence of intermediate
model fit (X2/d.f. = 6.891, AGFI = 0.85, NFI =
0.89, NNFI = 0.86, CFI = 0.90, RFI = 0.91, RMSEA
= 0.099) (see Figure 2). After that, we wiped unsig-
nificant path and then we run structural equation
Innovative Marketing, Volume 3, Issue 4, 2007
80
procedure again. New situation fit indices have good
fit (X2/d.f. = 2.154, AGFI = 0.92, NFI = 0.96, NNFI
= 0.94, CFI = 0.97, RFI = 0.97, RMSEA = 0.071)
(Figure 3). Thus, we could proceed to examine the
path coefficients of the structural model.
In the model, direct and indirect effects (Table 2) and
total effects (Table 3) can be seen.
Table 3 shows total effect of marketing mix compo-
nent on other research constructs. As can be seen from
Table 3, promotion and price components have strong
positive effects on word of mouth communication.
Product was found to show intermediate effect on
word of mouth. On the other hand, place has little
influence on word of mouth.
H1. Price component of marketing mix has
positive effect on word of mouth communication
of Accounting Offices in Turkey (r = 0.719,
ACCEPTED).
H2. Product component of marketing mix has
positive effect on word of mouth communication
of Accounting Offices in Turkey (r = 0.442,
ACCEPTED).
H3. Promotion component of marketing mix has
positive effect on word of mouth communication
of Accounting Offices in Turkey (r = 0.869,
ACCEPTED).
H4. Place component of marketing mix has
positive effect on word of mouth communication
of Accounting Offices in Turkey (r = 0.108,
ACCEPTED).
Fig. 2. Structural equation analysis results
Fig. 3. Repeated structural equation analysis
Table 2. Direct and indirect effects on constructs
Perceived
value
Perceived
quality
Customer
satisfaction
Customer
loyalty
Word of
mouth
D
i
r
e
c
t
I
n
d
i
r
e
c
t
D
i
r
e
c
t
I
n
d
i
r
e
c
t
D
i
r
e
c
t
I
n
d
i
r
e
c
t
D
i
r
e
c
t
I
n
d
i
r
e
c
t
D
i
r
e
c
t
I
n
d
i
r
e
c
t
Price .712 - - - - - - .354 .531 .188
Product - .184 .475 - - .218 .315 .345 - .442
Promotion - - - - .634 - - .213 .485 .384
Place .412 - - - - - - .205 - .108
P. quality .359 - - - .461 - .381 .348 - .583
P. value - - - - - - .498 - - .264
C.satisfaction - - - - - - .337 - .429 .178
C. loyaly - - - - - - - - .531 -
Table 3. Total effects on constructs
Perceived
value
Perceived
quality
Customer
satisfaction
Customer
loyalty
Word of
mouth
Price .712 - - .354 .719
Product .184 475 .218 .660 .442
Promotion - - .634 .213 .869
Place .412 - - .205 .108
P. quality .359 - .461 .729 .583
Innovative Marketing, Volume 3, Issue 4, 2007
81
Table 3 (continued). Total effects on constructs
P. value - - - .498 .264
C. satisfaction - - - .337 .607
C. loyaly - - - - .531
Conclusion
Word of mouth is a way of communication between
people regarding product and service performances.
It is considered an unofficial form of communication
and there are various expressions as to how people
and academics refer to it. Words like “buzz”, “grape-
vine” or “customer talking” are often used to describe
this communication activity people engage in.
Based on extant literature, seven factors can be
thought of as contributing towards the pervasiveness
of WOM. Firstly, WOM is a global phenomenon,
although individualist and collectivist cultures may
engage in WOM to a different extent. Secondly,
WOM operates across all industries. WOM’s impor-
tance stretches across diverse industries encompass-
ing corporate services, personal services, basic
goods and complex goods. Thirdly, the proportion
of consumers engaging in WOM has been found to
be very high. Fourthly, the proportion of consumers
relying on WOM has been found to be very high.
While the precise proportion is disputed, it is clear
that the majority of consumers often rely on WOM
for decision-making. Fifthly, WOM can spread
quickly. Sixthly, one of the key factors in allowing
WOM to spread quickly is the fact that WOM may
be retransmitted. That is, WOM may be received by
a consumer who then passes the message onto an-
other consumer and so forth. Lastly, one of the most
powerful facets of WOM is that it can be shared
with more than one person, i.e. multiple dyads.
As a result it can be seen that word of mouth is the
most powerful communication way to reach cus-
tomer. Accounting offices are not exception. So we
research how word of mouth communication em-
powered. Firstly, we investigate literature on word
of mouth communication and we find that five fac-
tors affect word of mouth that are customer satisfac-
tion, customer loyalty, customer expectation, per-
ceived quality and perceived value. Beside these
factors we put forward that marketing mix (price,
place, promotion and product) affects word of
mouth via foregoing five factors. We did an empiri-
cal research based on a model on customer of ac-
counting offices of Turkey. Finally we found that
marketing mix especially product and promotion
components have important influence on word of
mouth communication indirectly.
Managerial implication
From the clients point of view, it is of paramount
importance that accounting offices have a good un-
derstanding of customer responses and thought
about them, and use this knowledge to provide a
personalized high quality service. In this regard,
marketing mix may help to realize this aim. This
research has shown that by doing so, accounting
offices can increase significantly their clients loyalty
and word of mouth activities by using marketing
mix. Hence, policies and decisions of accounting
offices must favor an in-depth knowledge of cus-
tomer needs, goals and expectations. Recent techno-
logical advances have helped to make this objective
achievable. Rapid improvements in information
technology allow accounting offices and their front-
line staff to track customer characteristics more
easily and respond with appropriate marketing of-
fers. Businesses are no longer restricted to market-
ing at segment level, but can now tailor offers to
individual customers. Accounting offices can also
benefit from new information technologies to de-
velop an image of good and effective service, given
that this factor was found to affect word of mouth.
In that respect, account managers should seek refer-
ences from clients who they think are very satisfied.
This strategy could prove to be very beneficial be-
cause positive word of mouth has been identified as
a powerful factor in the purchase of accounting ser-
vices.
Although the tariff has been restricted by the 46th
article of the Law 3568, it is seen by the research
results that Turkish accounting offices’ price com-
ponent of marketing mix has positive effect on the
customer loyalty model components. The reason of
that the competition between accounting offices in
Turkey has gone too far and the non-competitive
regulations of the UNION seem unreasonable to
applicants. So, accounting offices in Turkey are
illicitly using price component as a tool of attracting
clients’ loyalty. We suggest that Turkish regulators
should either enhance inspection on the price using
accounting offices as a marketing tool or the union
should set a new market regulation on the price
component which gives the opportunity of setting
own tariffs to accounting offices.
Every business, either knowingly or unknowingly,
generates word of mouth that is either positive –
which helps build their business, or negative –
Innovative Marketing, Volume 3, Issue 4, 2007
82
which hurts it. There are even some fortunate (but
relatively few) businesses that rely entirely on word
of mouth to generate more business than they can
handle. When someone says good things about a
business to someone else, it serves as a real-life
testimonial, which is much more believable than
when owner of that business saying good things
about it. Studies have shown that the vast majority
of dissatisfied customers and prospects will not
voice complaints to responsible persons in a busi-
ness which they have experienced some dissatisfac-
tion with, but will quietly take their business else-
where. And since they will likely spread negative
word of mouth about their experience to others, not
only does the business lose future business from the
dissatisfied customer or prospect, but also from
others that may be repelled by hearing such negative
word of mouth. Here are some tips on generating
positive word of mouth advertising for accounting
offices:
1. Accounting offices should use experts (for ex-
ample, advisory groups of agents, professional
association representatives or careers counsel-
lors) in marketing (Jerram, 2003).
2. Internet offers a significant potential for market-
ing accounting services. IAs and CPAs should
harness the power of web sites into marketing of
services.
3. Accounting offices actively should seek feed-
back in the form of questions, comments, and
even complaints from customers and prospects.
It should be viewed as opportunities to improve
firm’s services and customer support (Foley,
2007).
4. IAs and CPAs shouldn’t forget the importance
of internal staff in talking about accounting of-
fices and providing a “virtual experience” (Jer-
ram, 2003).
5. Another key for positive word of mouth com-
munication is delivering excellent customer ser-
vice. Even if customers are not satisfied with
firm’s business, they can have been neutral by
excellent after selling services (Foley, 2007). In
other words, accounting offices should provide
quality service.
Limitations
Our study was based on a descriptive perspective,
rather than on a longitudinal one, which limits the
knowledge of the long-term impact of the factors in
our model. Would a longitudinal research produce
different results from ours? Wilson (1995) argued
that some determinants are very important at certain
stages of the relationship development, but may
become latent in others. In that respect, it could
prove interesting to study the phenomenon under a
long-term horizon. Such a study would also increase
our understanding of the development process of a
relationship. Do the results of our study apply to
other business sectors? Would we obtain the same
results at the international level? To answer these
questions, researchers could eventually test the
model presented in this paper, but under a com-
pletely different angle. Studies could, for example,
be conducted in another industry (e.g. telecommuni-
cations), for a particular type of clientele (e.g. the
government) or in another region (e.g. Asia). The
results that we have obtained, although interesting,
constitute only a spring-board for future investiga-
tions in a domain growing in theoretical and practi-
cal importance.
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Appendix A
Table 1
Marketing mix items (Bradley, 2001)
Product
P1. Wide range of services
P2. Very high standard of services
P3. Excellence of services
P4. Comply rigidly with technical specifications
P5. Innovativeness
P6. Incorporation of new technical developments
P7. Adaption of services to user needs
Place
PL1. Good residential area
PL2. Closeness to business centers
PL3. Open hours
PL4. Accessibility
Promotion
PRO1. Active dissemination of new information on services
PRO2. High quality of content in bureau communications
PRO3. Truthful communications
PRO4. Imaginative/creative bureau adver.
Price
PR1. Good value for money
PR2. Good discounts
PR3. Good credit terms
PR4. Competitively priced
PR5. Imaginative use of nonprice factors
Innovative Marketing, Volume 3, Issue 4, 2007
86
Table 1 (continued)
Customer loyalty model items
Perceived quality (Stafford, 1996)
PQ1. Atmosphere
PQ2. Relationships
PQ3. Avaliable services
PQ4. Convenient service
PQ5. Reliability
PQ6. Honesty
PQ7. Tellers
Perceived value (Cronin et al., 2000)
PV1. Good value for money
PV2. Acceptable price
PV3. To be a good buy
Customer loyalty (Juhl et al., 2002)
CL1. Resubscription intention
CL2. New Services subscription intention
Customer satisfaction (Ryan et al., 1995)
CS1. Generally satisfied
CS2. Fulfil expectations
CS3. Perfect in all aspects
Word of mouth (Maxham, 2001)
WM1. Intent to recommend
WM2. Spreading firm good reputation
WM3. Inform others about firms services
Note: 1: inferior performance…..7: superior performance.
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