Abstract
This research proposal is aimed at the determination of the effects of social media on the sales and marketing activities of companies. It provides a literature review on the significance of social media in the achievement of companies’ business objectives and also provides a review of some of the recent studies conducted about the subject matter. Given the lack of standards when it comes to the effective implementation of social media marketing strategies and the measurement of the effects of such strategies, this paper, based on the premise that social media does have a positive impact on businesses, proposes the conduct of an exploratory research, which would determine actual companies’ initial objectives in launching their social media marketing campaigns; the manner by which they successfully implemented such campaigns; the factors that contributed to the success of such campaigns; the results obtained from these campaigns; and whether unexpected results were also obtained. The research is proposed to be completed in 12 weeks. The Effects of Social Networking on Sales and Marketing Activities:
Literature
With the emergence of new media, companies are faced with more and more options for communicating with their customers and promoting their products (Kim, 2007). As such, companies have to determine how they can best allocate their marketing resources across both traditional media and non-traditional media such as new media, word-of-mouth, direct marketing, databases, and social networking sites. According to Brown (2012), a company’s implementation of a social media strategy will dramatically change the way they do business. She suggests that a company might not survive if they fail to adopt a new way of communicating with their partners and customers (Brown, 2012). Similarly, Qualman (2010) opines that companies don’t have the choice on whether or not they should implement social media marketing; rather, the choice is on how well they implement it. Moreover, a survey conducted by PriceWaterhouse Coopers (Shuen, 2008) indicated that 60 percent of CEOs considered networks as the most important factors in their strategies, even more so than technology and innovation. According to these CEOs, the factors that disrupt their businesses and that challenge their competitive leadership include global, social, cultural, and user-generated factors (Shuen, 2008).
In particular, social media enables companies to learn about what the customers think about the company’s brand (Brown, 2012). In turn, this will enable the company to make the necessary changes and improvements such as improving their customer service or changing the customers’ perception about their brand. Social media will also enable companies to identify and reach out to people who support and advocate for their brand (i.e. the influencers) so that their help may be enlisted for further promoting the company’s brand. Moreover, it allows companies to solve specific problems and to find out what their customers’ challenges are. In addition, it allows companies to network and connect with more people than is possible otherwise.
According to Shuen (2008), one of the impacts that social networks have on social media markets is that social networks – even informal groups – can either make or break a product through the spread of positive news about the product to other potential customers or conversely, through the potential customers’ recommendation of the competitor’s product. In addition, the growth of online social networks is spurred by people’s desire to meet others (Shuen, 2008), which means that social media websites and applications will allow companies to gain access to wider markets through the passage of time. In particular, members of social networking sites invite their friends to join a site. Joining comes at no cost and yet comes with direct and clear benefits for both the invitee and the inviter. This then allows people to easily form positive impressions of these sites, in turn making these sites grow at a rapid rate.
Divol, Edelman & Sarrazin (2012) name four ways by which social media can be used as a marketing strategy. These are for monitoring, responding to, amplifying, and leading consumer behavior. In turn, these are related to the decision making process that consumers undergo with regards to making a purchase. With information on how, when, and where social media influences consumers’ purchasing decisions, business leaders will be better able to develop effective social media-related business strategies and be better able to justify the importance or impact of such marketing strategies.
In particular, by using social media to monitor customer feedback, companies are able to make the necessary adjustments in their product design and marketing strategies, as well as anticipate and remediate any possible negative publicity (Divol et al., 2012). Social media also allows companies to respond to conversations at a personal level where responding to these conversations at the right time can be used as a way to manage crises, to discover sales leads, or to provide customer service. As well, social media can be used for amplification by continuously providing customers with content that they would want to share. This entails providing customers with great experiences that they would want to share.
Brown (2012) goes further to assert that social media can impact companies’ sales, allow companies to gain insight into market intelligence, and gather information directly from the customers. These will then allow companies to refine their logistics and improve their product development cycle. Similarly, Qualman (2010) suggests that social media can potentially reduce middlemen, as well as inefficient marketing. It can likewise lead to cost savings from advertisements as consumers now are influenced more by other consumers’ referral of products and services through social media than by advertisements. With social media, consumers have access to free product information and will no longer need to spend on newspaper subscriptions and the like. In addition, social media reduces the time that consumers spend on researching about a product. For example, if their friends have positive reviews about a product that they also need then they are likely to trust their friends’ reviews and go ahead with the purchase. According to a Nielsen report (Qualman, 2010), 78% of people trust their friends’ opinions.
Background
Despite the unquestionable importance of social media to a company’s business strategy, most executives really don’t know how to make the most of social media’s marketing potential (Divol et al., 2012). They lack understanding of how social media enables them to interact with customers, which can lead to the expansion of their product and brand recognition, the development of customer loyalty, and the increase in sales and profitability. Divol et al. (2012) suggest that one of the reasons for such a gap in knowledge is the vague or unclear nature of social media. Although it’s well known that consumers use online forums to talk about brands and products, as well as to offer and seek advice, it is often difficult for companies to determine how and where they can influence these conversations, especially with the vast number of platforms that are available to consumers and with the highly dispersed and diverse online communities that can suddenly form within a short span of time. Another reason for the knowledge gap is that there is no standard or single mechanism for measuring the financial impact of social media on businesses (Divol et al., 2012). As such, many companies find it difficult to justify the allocation of resources to social-media related marketing activities.
Nevertheless, researchers have continuously tried to seek information on the impact that social media has on businesses in order to help companies maximize the potential of this technology and be able to better integrate it with their business strategies.
In a study conducted by Stephen & Galak (2012) where they investigated the effects of both earned traditional media (e.g. press mentions and publicity) and earned social media (e.g. online community posts and blogs) on sales and on each other through the analysis of media activity and sales data from a microlending marketplace website, it was found that that the per-event effect of traditional earned media on sales was much greater than the effects of the corresponding per-event effects of social earned media. This was expected, considering that traditional earned media had a wider reach. However, because social earned media events were more frequent than traditional earned media events, the study showed that social earned media had significant effects on sales and on online community activities (Stephen & Galak, 2012). Although social earned media effects on sales are small, they become significant when accumulated in the long term. In addition, the study implied that social earned media (e.g. online communities and blogs) that discussed a particular brand selectively attracted audiences that were more involved and interested in the topic (Stephen & Galak, 2012). Unlike traditional earned media that targeted the general public, the people who participated in online communities or read blogs were more likely to take action than the former. Although traditional earned media has a wider reach, the consumers they target are not necessarily those that are most involved, interested, or likely to act. However, with the use of social earned media in reaching a more interested audience, the effectiveness of traditional earned media in increasing sales may be improved (Stephen & Galak, 2012). This is particularly helpful for products that have a specific niche. It should be noted, though, that the capabilities of traditional earned media are limited due to their lack of social interactivity whereas social earned media allow for a high level of consumer involvement, as well as social interactions between and among consumers, In turn, these can spur interest and influence behavior.
In another study, Chen, De & Hu (2011) determined how the broadcasting activities of artists on social media sites affected music sales. For this study, the researchers conducted the study on MySpace (Chen et al., 2011), which allowed artists and bands to create profile pages that were different from those for normal users. Findings showed that the social media activities initiated by the music artists had a significant effect on music sales when the artists had a large number of friends or followers (Chen et al., 2011). However, the same results were not obtained by artists who had fewer friends (Chen et al., 2011). The researchers also asserted that these results held true despite the impact of user-generated content, changes in the artists’ network sizes over time, and the artist’s popularity (Chen et al., 2011).
The same results were obtained by Dhar & Chang (2009) who examined the impact of user-generated content, such as those in social networking sites and blogs, on music industry sales. After keeping track of online activity on 108 albums within the span of four weeks before and after the albums’ release dates, they found that future sales were positively related to the number of blog posts about the album, as well as to traditional factors such as whether the album was reviewed by mainstream sources such as the Rolling Stone magazine and whether the album was released by a well-known label (Dhar & Chang, 2009).
Research Aims
Clearly, social media has a positive impact on the bottom line of companies, not only in their sales and revenues but also in the establishment of their brand image, as well as in the establishment of customer relations and in the curbing of negative publicity. Apparently, companies use social media for the promotion of their business in different ways. As well, they use social media for different purposes and achieve various outcomes.
Because of the newness of social media as a marketing tool, there is still a lack of research when it comes to its concrete effects on companies. There are also no standard mechanisms for measuring the ROI or financial impact of social media-related marketing activities. In addition, the effectiveness of a social media campaign is dependent on various factors such as the nature of a company’s business, the industry segment it belongs to, and the characteristics of its target market.
Given the unique needs and characteristics of companies and their target markets, a social media campaign that fails does not necessarily mean that social media marketing is ineffective in general. As such, this research does not want to limit the study on a particular company or on a particular social media marketing strategy. Instead, this research will be exploratory in nature, that is, it will aim to determine the manner by which actual companies have successfully implemented a social media marketing strategy, the purposes they intended for such campaigns, and the results they’ve obtained.
Most of the current researches are based on particular social media marketing strategies and involve small samples of the segments being studied. This is understandable as longitudinal studies need to be conducted in order to determine the actual effects of social media marketing on various industries. These, of course, will be quite exhaustive and challenging to implement. Similarly, very few, if any, formal studies have been conducted to investigate how various companies from various industries have effectively used social media marketing campaigns in growing their businesses. The current research will be an attempt in this direction.
With the results of this research, more information may be obtained about the specific social media marketing strategies that have worked for companies, which can serve as the basis for more in-depth studies about such strategies. Moreover, it is aimed that the results of this research contribute to the literature, particularly to that which is aimed at the standardization of measurements for the success of social media marketing strategies as well as to that which is aimed at determining the strategies that are most likely to return positive results for companies.
This research is based on the premise that social media has a positive impact on businesses that effectively implement them. In this regard, this research aims to answer the following questions:
- For the companies that have successfully implemented social media marketing campaigns, what were their initial objectives for launching such campaigns?
- How did they implement their social media marketing campaigns?
- What factors led to the success of their social media marketing campaigns?
- What results did these companies obtain from their social media marketing campaigns?
- Did they obtain other results from their campaigns aside from the ones they initially intended to achieve?
Research Methods
Unlike a quantitative study that is based on statistical information, a qualitative study in the form of a case study will be more appropriate for the current research as case studies allow for how or why questions to be answered. They are also appropriate when the researcher has limited control over the events being studied and when the phenomenon being studied is within a real-life context.
As Sexsmith and Angel (2011) suggested, a volume-oriented approach is not the best way to measure the effects or effectiveness of social media marketing strategies as this can lead to the notion that more is better (e.g. more comments, more posts, more followers). However, although such information can be useful, they do not present a holistic view of the effects of social media marketing. In particular, they cannot provide insight on qualitative information such as information on customer attitudes and needs, customer relations, and brand image.
Although Sexsmith and Angel (2011) propose that the use of a business impact model is the best method for measuring the effects of social media marketing strategies, this, too, will not be appropriate for the current research, given its exploratory nature and considering that no single company is being studied.
Timetable
References
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