"Word of Mouth Research 2007" collaborated with Prof. Nihei of Asia University in May 2007. The surveys have been taken place since 2003 annually, and this was the 4th execution in series. The purpose of this survey is to study the impact of word of mouth (WOM) marketing. Based on the Tsuzumi* model that the team has proposed, they had investigations over true figure of WOM such as the way WOM spreads, information carried by WOM, relation between WOM and media, and positive WOM vs. negative WOM. The feature in this edition is the elaborated study in two phases of WOM spreads.

1. September 2007 Word of Mouth Research 2007 Summary version in Japan KUCHI-COMI Report Research Report concerning purchasing decisions and influence of "WOM”

2. Objective One of the leading Japanese advertising agencies, KOKOKUSHA Co. Ltd., (Tokyo) conducted "Word of Mouth Research 2007" collaborated with Prof. Nihei of Asia University in May 2007. The surveys have been taken place since 2003 annually, and this was the 4th execution in series. The purpose of this survey is to study the impact of word of mouth (WOM) marketing. Based on the Tsuzumi* model that the team has proposed, they had investigations over true figure of WOM such as the way WOM spreads, information carried by WOM, relation between WOM and media, and positive WOM vs. negative WOM. The feature in this edition is the elaborated study in two phases of WOM spreads. We call WOM KUCHI-COMI in Japan. In sum, the study proved WOM is the ultimate personalized media, and strategic WOM marketing would be necessary to win the market share. The result of this survey is available at Kokokusha’s website(http://www.kokokusha.co.jp/service/kuchikomi.html). *Tsuzumi is a Japanese hourglass-shaped drum. ■ Execution period May 2007 ■ Research method Internet panel research ■ Coverage Men and women over 16 years old in Japan (total 800) ■ Design and analysis Kokokusha., Co Ltd. / Nihei laboratory(Asia University) ■ Cooperation Kishinami advertising office CONNECT YOU KK The report of this survey is available at: http://www.kokokusha.co.jp/service/kuchikomi.html

3. About TSUZUMI Target Target Aware Interested WOM Purchase WOM Target Target Consumers WOM Motivated Customer The spread of WOM *TSUZUMI is a Japanese hourglass-shaped drum 鼓 TSUZUMI is a traditional musical instrument of Japan. It is a instrument played with KABUKI. The KABUKI is the traditional stage drama in Japan, like your musical. TSUZUMI makes verious sounds depending on the person who play it.

6. KUCHI-COMI(WOM) Marketing Structure Analysis Get interested because of WOM purchase products because of WOM Share own testimonials by WOM Chapter 1 Influence and Spread of WOM Tell others Receive WOM Own experience Receive Spread Chapter 4 WOM Influence on purchase Chapter 2 Two phases of WOM Spread Chapter 6 Relation between WOM and Media Chapter 3 Positive WOM vs. Negative WOM Chapter 5 Customer Advocacy through WOM AWARENESS (Trigger for brand awareness) PURCHASE (Trigger to purchase) INTEREST （ trigger to interest ） person person WOM WOM First Spread of WOM person person WOM Second Spread of WOM Prospects Customers Potential customers 56.4%(SA) 59.6%(SA) Targets Consumers Motivated How do WOM transfers from one person to another? Contents of WOM Share someone's testimonials by WOM Third person’s experience Chapter 7 Change of lifestyle and media consumption Spread of WOM How often do consumers receive and/or release WOM?

9. Influence of WOM （ KUCHI-COMI ） Q6 How often did you receive WOM during past 6 months? Moreover, how large was the influence of WOM on your purchase decision making?(sa) *sa=single answer 21.0 39.5 25.8 13.7 Interested 15.1 39.5 29.8 15.6 Motivated 29.3 37.1 23.6 Purchase 25.8 40.0 27.7 Often Sometimes Rarely Never ＃ 800 800 800 800 10.0 6.5 Aware (past 6months) I received/released WOM. (past 6months) I got interested through WOM. (past 6months) WOM become the trigger for purchase. 76.4% (past 6months) WOM lead me to purchase eventually. 72.3% 86.3% 84.4% 1 2 3 4 Often Sometimes + Rarely TOTAL %

11. Who is your WOM giver? Q. Who gives you WOM mostly? （ ma) WOM from friends is outstanding.

13. Chapter 2 Two Phases of WOM Spread

14. Aspect of Analysis Source of WOM “ I shared my experience with other people by WOM.” First Spread 64.5% Second Spread 59.6% WOM from third-party and TV CM Target Target Aware Interested WOM Customer WOM Target Target Consumer WOM Motivated Two phases of WOM spread “ I shared another person’s experience with other people by WOM.” Purchase :

16. Two phases of WOM spread First Spread 64.5% Second Spread 59.6% ■ Who 1st Family, relatives 57.2% 2nd Friends 52.9% 3rd Friends with same interests 45.3% ■ How 1st Face to face 89.1% 2nd Over the phone 21.1% 3rd Post messages on online community 20.7% ■ Why (B/C:Because) 1st B/C I want to introduce good products. 64.7% 2nd B/C the listener wants to look good. 48.6% 3rd B/C It’s highly novel information. 28.5% ■ What 67.7% of panelists answered features and contents of service/ products. ■ Source of WOM 1st WOM from Friends 37.1% 2nd TV CM 35.6% 3rd Retail outlet promotions 21.2% 4th User’s opinion 20.8% 5th Online community 18.4% “ I have WOMed my experience to others before.” “ I have WOMed someone’s experience to others before.” ■ Who 1st Family, relatives 57.7% 2nd Friends 48.2% 3rd Friends of community 43.4% ■ How 1st face to face 88.7% 2nd over the phone 18.7% 3rd post messages in online community 15.7% ■ Why 1st B/C I want to introduce good products. 53.5% 2nd B/C the listener wants to look good. 47.8% 3rd B/C. It’s highly novel information 25.8%

17. First Spread of WOM Q11. How often do you WOM your experience to others?(sa) First Spread: to WOM OWN experience to others DID: 64.5 ％ Total 23.5 34.0 35.5 Male Total 21.3 31.3 40.8 10’s. 10.6 22.7 25.8 40.9 20’s 29.9 28.4 34.3 30’s 10.4 20.9 28.4 40.3 40’s 16.4 32.8 46.3 50’s 20.9 31.3 43.3 60 and over 16.7 40.9 39.4 Female Total 25.8 36.8 30.3 10’s 22.7 18.2 53.0 20’s 9.0 31.3 38.8 20.9 30’s 9.0 22.4 43.3 25.4 40’s 9.0 19.4 43.3 28.4 50’s 32.8 43.3 17.9 60 and over 25.8 33.3 36.4 Often Sometimes Rarely Never ｎ 800 400 66 67 67 67 67 66 400 66 67 67 67 67 66 7.0 6.8 7.5 4.5 4.5 3.0 7.2 6.1 6.0 4.5 Often Sometimes + Rarely DID

18. Second Spread of WOM -frequency Q11. How often do you WOM someone else’s experience to others?(sa) DID: 59.6 ％ Often Sometimes Rarely 34.0% Second Spread: to WOM THIRD PERSON’s experience to others Total 20.0 34.0 40.4 Male Total 19.0 31.0 45.3 10’s 22.7 25.8 45.5 20’s 29.9 26.9 38.8 30’s 9.0 17.9 25.4 47.8 40’s 13.4 35.8 47.8 50’s 19.4 29.9 49.3 60 and over 10.6 42.4 42.4 Female Total 21.0 37.0 35.5 10’s 18.2 19.7 56.1 20’s 29.9 38.8 26.9 30’s 17.9 41.8 32.8 40’s 9.0 16.4 43.3 31.3 50’s 25.4 46.3 20.9 60 and over 18.2 31.8 45.5 Often Sometimes Rarely Never ｎ 800 400 66 67 67 67 67 66 400 66 67 67 67 67 66 5.6 4.8 6.1 4.5 3.0 1.5 4.5 6.5 6.1 4.5 7.5 7.5 4.5 Often Sometimes + Rarely DID

21. Chapter 3 Positive WOM vs. Negative WOM

22. Positive WOM vs. Negative WOM Q31. Did you discourage anyone to buy a product/service based on your bad experience with it past 6 months? Moreover, did you tell anyone about someone’s bad experience which were WOMed by third person past 6 month? (sa) First Spread of Positive WOM Second Spread of Positive WOM Q11 POSITIVE Yes =64.5 ％ Fist Spread of Negative WOM Q. Have you WOMed YOUR bad experience to others? Yes: 37.3 ％ N=800 Yes: 35.5 ％ Second Spread of Negative WOM Q. Have you WOMed SOMEONE’s bad experience to others? Often Sometimes Sometimes Rarely Rarely 34.0% n=800 n=800 Yes ＝ 59.6 ％ Often 4.0% Sometimes 8.0% Rarely 25.3% Never 62.7% Often 3.8% Sometimes 6.6% Rarely 25.1% Never 64.5%

23. Chapter 4 WOM Influence on Purchasing

27. Chapter 5 Customer Advocacy through WOM

29. Chapter 6 Relation between WOM and Media

31. Relation between WOM and Mass Media Potential Customers Customer Contribution to brand awareness Contribution to brand interest Contribution to brand purchase Consumers Targets Over –the-counter 23.5% WOM from friends 17.5% TV ads 22.3% WOM from friends 18.9% Over-the-counter 22.5% WOM from friends 13.1% Company website 11.4% Over-the-counter 26.4% WOM influenced purchasing 71% WOM Influence purchasing decisions Spread of WOM TV ads 18.6% WOM source Each 3 figures in A,B and C indicates the ratio of the products customers who think those information source were lead of "Awareness", "Interest" and "Purchase" on shopping in the past 6 months. Experience of giving WOM advocacy 54.9% Total WOM*: 39.9% Total WOM: 44.2% Total WOM: 38.0% A) Aware B) Interested C) Motivated Prospective Customers wom wom wom

34. Chapter 7 Changes in Lifestyle and Media Consumption

36. Changes in Media Consumption last year 84.6% 36.3% 34.4% 67.8% 86.7% 86.5% 83.4% 67.7% 98.8% 78.0% 84.4% 52.6% 80.3% 43.3% 49.0% Q36. How did you change the consumption of media this year compared with last year?(sa) Watch analog-broadcasted TV 23.6 54.9 15.4 Watch Digital-broadcasted TV 19.9 13.8 63.7 Watch TV subscriptions (BS, CS, cable TV etc) 20.5 65.6 Listen to radio 12.3 47.6 32.3 Read newspapers 12.4 10.9 63.4 13.4 Read magazines 11.4 19.8 55.3 13.6 Check newspaper fliers 11.9 13.9 57.6 16.6 Read free magazines ( R25, Saikei Living City Living etc) 12.8 44.9 32.4 Surf the Internet on PC 46.3 50.0 View SNS website on PC 29.6 39.6 22.0 Watch online videos 36.4 40.5 15.6 Surf the Internet on cell phone 17.3 30.0 47.5 Watch DVD’s 25.4 12.1 42.8 19.8 Play games on home game consoles ( Wii, Playstation etc ) 9.1 14.2 20.0 56.6 Play games on portable game consoles ( Nintendo DS, PSP etc ) 18.5 21.5 51.0 Increased Decreased No change Do not use # 800 800 800 800 800 800 800 800 800 800 800 800 800 800 800 6.1 2.6 8.5 5.4 7.9 10.0 2.5 1.3 8.8 7.5 5.3 9.0

39. Contacts Masayuki Nakajima Senior Marketer KOKOKUSHA Marketing Dept / WOM Research 2007 team Tel: 03-3775-0085 Fax: 03-3575-0086 E-mail: mnaka@kokokusha.co.jp *translation cooperation Chiyoe Yamamoto KOKOKUSHA Network Sales Dept / WOM Research 2007 team (Proofreader) KOKOKUSHA Co.,LTD KOJUN Building 7F 6-8-7 Ginza,Chuo-ku,Tokyo Japan, 104-8111 http://www.kokokusha.co.jp *Translation supervision Rainer Jeske CONNECTYOU K.K., President AIG Building Suite B1 1-1-3 Marunouchi, Chiyoda-ku, Tokyo 100-0005, Japan Tel: 03-5288-5227 Fax: 03-5288-5353 Mobile: 090-7247-7959 E-mail: rainer@connectyou.biz