An Exploratory Study of Word-of-Mouth Communication in a Hierarchy of Effects Context Eric R. Spangenberg Joan L. Giese Washington State University Washington State University Word-of-mouth (WOM) communication is introduced within a hierarchy-of- effects context. The results of a laboratory experiment suggest that amount of WOM information about products is less important than valence of that information. Counter to previous research implying a disproportionate influence of negative information on product evaluation, negative WOM information in the experiment reported resulted in less familiarity with the mentioned brand. Further, a somewhat surprising finding indicated that brand-specific negative WOM communication can have the effect of decreasing primary demand for an entire product category. Word-of-mouth (WOM) communication has long heen regarded as an important factor in consumer decision making (e.g., Leonard-Barton, 1985; Price & Feick, 1984; Richins, 1983), and it has been shown to have substantial influence on product evaluations and purchase decisions (Brown & Reingen, 1987; Price & Feick, 1984). Herr, Kardes, and Kim (1991), for example, suggested that WOM information may have a greater impact on product evaluations than printed information. Regarded as critical to success (or failure) in service industries, firms are often encouraged to undertake specific actions to generate positive WOM communication regarding their offerings (Zeithaml, Parasuraman, & Barry, 1985); other often prescribed strategies for "managing" WOM information include: (1) stimulating sales through WOM referrals, (2) simulating WOM commvmication in advertising via slice-of-life ad techniques, and (3) discouraging unfavorable WOM information (Wilkie, 1994). Although many of these techniques are frequently embraced Eric R. Spangenberg, (Ph.D., University of Washington, 1990) is an assistant professor in the Department of Marketing, and Joan L. Giese, (Ph.D., Washington State University, 1995) is an assistant professor at Washington State University, Pullman, WA 99164-4730 COMMUNICATION RESEARCH REPORTS, Volume 14, Nimiber 1, pages 88-96