Social Media and the Price of Perception - Literature review Example

Social Media and the Price of Perception Introduction According to the 2009 Nielsen Global Consumer Behaviour Research, 90 per cent of all buying decisions begin online. That means if a business don’t have a visible online presence, only 10 per cent of the market would consider it as an option. For a Small and Medium Enterprise (SME), that could mean their entire business. That buying process usually starts with the consumer searching for a product or a service either through any of the existing search engines or by asking for recommendations from friends. Once there is a shortlist, the consumer will make a more detailed investigation by checking the company website, looking for reviews, and, more importantly, asking friends about the products or services (Filoux, 2010). In every step of this process, social networking is front and centre regardless if the product or service is retail or Business-to-Business (B2B). Contrary to popular belief, social networking is not synonymous to sites like Facebook, Twitter and Google+. Social networking involves all channels, venues, platforms, applications, and websites that allow consumers or users to directly interact with other users either actively or passively. Social networking is a relatively new but powerful economy. In the UK alone, the International Telecommunications Union or UTI (2010) estimates that there is a total of 51,442,100 internet users as of June2010, 10 million more than the estimate of the Office for National Statistics Office. That accounts for 82.5 per cent of the population. Of this, Nielsen (2008) states that 97 per cent has shopped online. The Office for National Statistics Office (2011) estimates that there are 66 per cent of all users bought products and paid for services online. Comscore (2011) also states that UK internet users are the most involved as they spend the most time online and 73 per cent rely on social media for everything they do including shopping according to InSites Consulting, a research firm, in their 2011 study. The message is clear. Consumers are online and highly reliant on social media. It presents itself as a tool and a venue for small businesses to establish and expand their business. However, it is natural for a glamourized medium as social media to be pictured as the be-all and end-all of sales and marketing. This paper will examine how exactly SMEs can utilize social networking to grow their business. It’s a Stimulant Not a Purchase Fulfilment Row Perfect is a cardio exercise machine that simulates rowing. They used to do trade shows and retail selling. They are now selling purely online and are more successful doing so. The strategy is simple, they use tweetdeck to scan for mentions of products and brands similar to theirs. They directly tweet the people looking to check out a similar product. That was it. They simply used social media to make other people aware of their product. No special offers, no discounts are offered. They are able to swing customer that are going to buy the product of their competitors and they do these several times a week. The fundamental thing to remember is that they have a superior product and that all they needed was to connect their product to a customer, a first move, a pick-up line and that is what social media provided them. Heather Bestel is another case in point. Bestel is the creator of Magical Meditations 4 Kids, a children’s book that helps children relax and sleep easier. Aside from the UK, she has also marketed her product to the U.S. and Canada. Sales have been steady but not enough for her to make a living off her product (Wakeman, 2011). She decided to embrace social media and she landed a publishing deal that launched her CDs in UK and Europe in 2010 and eventually in other markets like US & Canada and Australia/New Zealand. She is also being offered to license her brand to develop items like toys and apparel. Her strategy was simple. She knew she had a great product and she simply needed the market to notice it so she connected with people that have high influence in the same industry she is in. She followed Janey Lee Grace, a natural health expert. She eventually got Grace to review her product and endorse it via reviews on facebook and twitter. That got other influencers to notice her product. Eventually, she not only met new people and but got free personal endorsement without spending a dime. Social networking gives each product or service that one chance to get noticed, form a persona and have a venue to reach out to customers (Tan, 2011). It provides a level playing field. It does not require millions of Euros just to have 30 seconds on air. The air is always open, it’s just a matter of knowing how to use it wisely. However, it is not a sales venue. In both cases mentioned above, social media served the same purpose as advertisements do, only more personal (Babski, 2010). Targeted Marketing Not Sure Sales As controversial as it may seem, one of the biggest value of social media is the access to personal data and direct contact to relevant consumers. It allows you to find people that is already interested in the product or service you are selling. On Twitter, for example, you can scan any mention of the brand of you competitor or product you are selling. For example, if you are selling beds, you can find anyone talking about “buying a bed”, “looking for a bed”, “new bed sheets”, “need to get better sleep”, and other variations you desire. You can then send a direct message to them. The same principle works on Facebook. This was proven by the Voice of Library, an organization of librarians and book lovers operation in the UK. They wanted to start a national movement that would call for the continuous government support on libraries. They knew that the only way the government will listen and for philanthropists to donate to their cause is through mainstream demand but they don’t have the money to start a campaign through traditional media. They started on Twitter summer of 2010 by posting several messages alluding to how libraries are becoming extinct and is being replaced by the internet. BBC’s Newsnight got hold of the tweets and reported the low numbers of public libraries. This further aroused the interest of other librarians all over UK and, eventually, Europe. Ideas started pouring in on how libraries can survive and by September, Voices for the Library was formally launched as a non-profit organization that aims to reinforce the value of libraries (Barron, 2011). With zero budget, hundreds of volunteers work to recruit members that developed new marketing ideas, plan and stage events, all to get donations and support for the continuous support and growth of libraries. Through the volunteers, the twitter account, facebook page and other accounts are manned 24/7. The power was clearly demonstrated when, on January 16 of this year, #savelibraries trended worldwide with over 5000 tweets. Except for direct mail, no other media has the capacity to target consumers with that level of relevance. There is, however, one thing that is important to note. The effort was highly successful in getting people to work together but is yet to result to actual donations. Social Network is exactly what it claims to be, a social network. It connects people to work together. How that connection may be utilized to lead to sales is a different discipline (Tan, 2011). From Endorsement to Research According to Nielsen (2008), at least 90 per cent of consumers don’t trust advertising. Instead they believe and trust their friends. They ask their personal and social media friends for advice when they want to buy something. Then there’s the 70 per cent that turns to social media for information on brands, companies and products. DEI Worldwide (2008) plotted the consumer buying process. Assume that a consumer wants to buy a computer: 1. Consumer will post a message on your facebook wall or a personal message to all friends in the network asking what brand they are using, how much they paid and how happy they are. 2. The consumer will then go to a site that figures out MSRP, the dealer’s price, the bonuses dealers get for hitting sales targets, the total cost of ownership, and exactly how much profit the dealer stands to make. 3. Consumer then searches the prices in different European countries and when the next upgrade is going to be (Filoux, 2010). 4. Once all pieces of information are in, they decide whether they want to buy online or go to the physical store. Social media turns friends to endorsers. Recommendation from friends becomes the most trusted and most credible piece of advertising. It also goes a step further. Social media offers a venue where consumers can act on the endorsement through sites that pulls in sites that sell the product being researched with all pertinent information. Today consumers know more about profit margins and service quality than advertisers know about the consumers. Free Advertising and Marketing Burger King’s “Whopper Sacrifice Your Friends” is a facebook application that gives away one free whopper to anyone who will delete 10 of their facebook friends. The campaign was launched in the US but the case is a relevant study. BK said that they wanted to prove that a whopper is more important to their customers than their friends are. Participants are asked to sacrifice 10 friends. These friends will get the notification on their wall which means it will be visible to their friends. The campaign purely leveraged on social media. They didn’t release any TV, print or radio commercial. They relied purely on their current customers telling their friends about the campaign. The campaign ran for only 10 days and a total of 232,566 friends were sacrificed. Burger King spent $50,000 for the Facebook Whopper Sacrifice application (Arrington, 2009). To quantify the success, take the cost of each Whopper which is $2.95. About 82,000 claimed their coupons. Each ordered a drink to go with the whopper and fries – so each customer spent about $7 after getting their free whopper. Those sales returned BK’s investment on the campaign. However, the real value was in the branding exposure. The app got 32 million clicks. If this was a Facebook Ad, it would have cost anywhere between $.020 to $.75 per click. Take the average, $0.47. To have your brand seen 32 million times just like BK did, would cost over $15 million. Then there is all the branding value received from the myriad of media exposure from the likes of – FOX, CNN, Time, Newsweek, Businessweek, and other TV channels and print media that featured the campaign. This value is in the tens of millions, and BK got all absolutely Free. This BK campaign has even been dubbed the future of social media advertising. All it took was creative thinking. It was fun and engaging and that’s all it took to motivate others to engage with the brand. Conclusion There is no lack of case studies that proves how SMEs can use social media to establish and grow their business but none of these cases implies it is an easy thing to do. Like any marketing venue, it takes enough knowledge about the market, proper strategy, time to let the strategy roll and, more importantly, a product or service that is relevant and has an edge over its competition. It is important to note that even with the proven cases, only 48 perc ent of UK SMEs use Social Media to growth their business according to the research conducted by HP early this year with 1000 participants. Another research by IFF Research through the SME Omnibus (2011) revealed that only five per cent fully exploits the potential of social networking sites. These two surveys prove that the awareness on how Social Media can help SMEs is help but the ability to utilize it is low. The Managing Director of IFF, Mark Speed, theorize that the clog is a result of SMEs’ lack of time and resources to run an efficient social media campaign. Naturally, these businesses are so focused on their core competencies and day to day operations. In fact, 62 percent of the respondents stated that although they are doing the right thing, they are not doing enough. It is, however, clear that there is a divide between the businesses that are on social media and those that are not. Social media costs no more than what one pays for in internet connection. On the other hand, it require one thing that not even big companies always have, creativity. References Arrington, M., 2009. Facebook Blows A Whopper Of An Opportunity. Tech Crunch. [online] Available at: [Accessed 22 November 2011]. Babski, C., 2010. Social media and the price of perception. Insead Edu. [online] Available at: [Accessed 22 November 2011] Barron, S., 2011. A Social-Neworking Success Story, Org Zine. [online] Availabe at: [Accessed 22 November 2011] DEI Worldwide, 2008. The Impact of Social Media On Purchasing Behavior. Los Angeles: DEI Worldwide Filloux, F., 2010. Will the Internet and increasingly intelligent users mean the end of advertising?. Washington Post. [online] Available at: [Accessed 22 November 2011]. Channel Advisor, 2011. Global Consumer Shopping Habits Survey. IFF Research, 2011. SME Omnibus 2011. UK: IFF Research Jones, H., 2011. SMEs not making effective use of social media, Inspires Me. [online] Available at: [Accessed 22 November 2011]. National Statistics Office, 2011. Internet Access - Households and Individuals, 2011, Office for National Statistics. [online] Available at: Nielsen Global Online Consumer Survey, 2008. Global Advertising Consumers Trust Real Friends and Virtual Strangers The Most. New York: Nielsen Research Center Nielsen Global Online Consumer Survey, 2009. Global Advertising Consumers Trust Real Friends and Virtual Strangers The Most. New York: Nielsen Research Center. Tan, K., 2010. Why Social Media Are ‘Absolutely Crucial’ To Businesses, Insead Edu. [online] Available at: < http://knowledge.insead.edu/contents/networking-social-media-crampton-100513.cfm?vid=415> [Accessed 22 November 2011]. The Marketing Blog, 2011. Have you got a 'Social Media Success Story' that beats this one?, The Marketing Blog. [online] Available at: [Accessed 22 November 2011] Wakeman, D., 2011. Heather Bestel's Social Media Success Story, Build a Better Blog. [online] Available at:< http://www.buildabetterblog.com/2011/01/heather-bestel-social-media-success-story-.html> [Accessed 22 November 2011]. Read More