Marketing: Social Commerce - Research Paper Example

? Social Commerce Social Commerce, falls under the umbrella of electronic commerce with the notable feature of social media or online networks assisting, recommending or supporting the buying and selling of products. The entire idea of social commerce aims at harnessing the power of “word of mouth marketing”. During the year 2010, BlendTec increased its sales by over 500 percent with social commerce. Social Shopping, forums and communities, recommendations and referrals, social media optimization, social ads and ratings and reviews are the few forms that social commerce might take. Introduction Social Commerce, falls under the umbrella of electronic commerce with the notable feature of social media or online networks assisting, recommending or supporting the buying and selling of products. The origin of the term social commerce can be traced back to November 2005, where an article at Yahoo! first used the term social commerce to refer to the phenomenon of user ratings, pick lists and user generated content on the internet. Particularly, “Facebook, Groupon, Pinterest, LivingSocial, Tabjuice, Cafepress, Etsy and others are examples of social commerce websites” (Pearson & Zehr, p. 429). Importance of Social Commerce The entire idea of social commerce aims at harnessing the power of “word of mouth marketing”. There is much theoretical and empirical evidence about the power of “word of mouth marketing” and those customers are willing to trust the recommendation of their friend more than the advertising of a product running on prime time television (Gibbons, p. 27). This is true because, in the past few decades, the number of advertisements and promotions targeted to individual customers have increased individually. Customers do not even notice most of these promotions, let alone buying the products and services based on those promotions (Davies, p. 108). On the other hand, in the recent past, corporations, businesses and their marketers have been accused of deceptive, manipulative, and deceitful techniques to promote their products in their pursuit of profits, something that has led to a widespread distrust on the advertising messages of corporations. A research from Nielsen, conducted in the year 2010, revealed that when purchasing cars over 90 percent of the customers trust the recommendations and advice of their friends. Only 33 percent of the customers appeared to be trusting advertisements and 59 percent of the customers rely on the input from the side of experts. In fact, another study from Wantlet revealed that just over 82 percent of the customers seek social input while purchasing goods and services (Pearson & Zehr, p. 429). Consider the fact that according to the statistics of March 2011, over 3.5 million businesses had their pages on facebook and a significant percentage of these businesses had created their business models around facebook, which meant that they did not have any physical presence (Kotler, Armstrong, Wong & Saunders, p. 37). Consider the example of BlendTec, a blend manufacturer, connects with customers using social media. The company maintains a channel on YouTube, with more than 0.5 million subscribers and statistics indicate that its videos have been viewed at least 181 million times. Furthermore, at least 85000 customers on Facebook and 7300 consumers on twitter read the tips and tricks provided by the company (Gibbons, p. 27). The company believes that maintaining a rigorous presence on the social media converts into added sales because it allows dissatisfied customers to find the solutions of their problems and satisfied customers to recommend the products of the company to other friends. In order to account that whether a particular like of facebook converts into sales, the company provides special coupon codes to its customers and then tracks the whereabouts of the redemption of those coupons (Davies, p. 108). Furthermore, the social media and social commerce efforts of the company are acutely much in line with the marketing goals and other efforts, which is to promote the brand of the company because only if the customers were aware of the brand, they would prefer to engage in purchasing the products. In fact, during the year 2010, the company reported a 500 percent increase in sales, primarily because it kept on posting amusing videos, on its site and on the websites of other leading video sharing sites, which assisted in directing much traffic towards the company pages and developed a recall for the brand name (Clapperton, pp. 10-11). Dimensions of Social Commerce With the passage of time, the dimensions of social commerce have magnified and have increased in number. Following are a most debated and discussed dimensions that fall within the umbrella of social commerce. Social Shopping Social shopping, falls under the umbrella of social commerce, where the social network of shoppers, along with their friends, aim at enjoying the shopping experience. Essentially, social shopping is the combination of the social web and the activity of shopping. Social Shopping attracts many users from all over the world because it offers certain advantages over traditional web shopping and even physical shopping. With traditional web shopping, users have to go to different sites to find and compare products, whereas, with social shopping, they are likely to find everything at one place (Roetzer, p. 106; Sterne p. 248). Furthermore, not only it allows users to compare prices but browse through dozens of recommendations and reviews from other shoppers, which means that they no longer have to rely on the statements and claims of the shopkeeper or the salesman. Important here to note is that many experts draw a fine line between social shopping and social commerce by saying that when social commerce is the collaboration of online vendors and businesses, essentially, social shopping is the collaboration of online shoppers (Pearson & Zehr, p. 429). Forums and Communities The aim of online forums and communities is to allow people to connect with each other and the business or its products and services in a moderated and controlled environment. Online forums and communities may take many forms such as user forums, user galleries, brand communities, question, and answer forums, idea boards and others (Gibbons, p. 27). Regulating, monitoring, and managing forums and communities may require extensive resources in terms of human resource and time over an elongated period. For example, Starbucks has employed over 40 people to moderate and manage its idea forums. On the other hand, since customers can easily contact and connect with the company with their problems and ideas, the cost of customers support, customer service and innovation may be reduced (Kotler, Armstrong, Wong & Saunders, p. 37). Ratings and Reviews Quite understandably, ratings and reviews refer to the evaluation of certain products and services by a third party. It provides users with an opportunity to discuss and debate about certain products, share, and explore their experiences and opinions about the product or services. Ratings and reviews may take up the form of customer rating and reviews, expert ratings and reviews, sponsored reviews and customer testimonials (Roebuck, p. 142). Various experts regard ratings and reviews as the essential element of social commerce because it is through which the “word of mouth marketing” takes place. This explains why they also regard ratings, reviews, and “word of the mouse”. Research reveals that positive reviews can boost up the conversion by up to 25 percent (Clapperton, p. 41). Recommendations and Referrals Often rewarding referrers for their extensive efforts, recommendations and referrals aim at using product or service recommendations as a tool to induce purchases. The tool set of recommendations and referrals would include social bookmarking, referral programs and social recommendations (Clapperton, p. 41). The fact is that recommendations and referrals are more effective and are likely to have a higher ROI as compared to anonymous ratings and reviews because a recommendation from the friend will not only have more weight, but it would also exert more peer pressure (Roebuck, p. 142). On the other hand, recommendations and referrals are only applicable for products and services that are worth recommending, which means that those products and services must be costly, exciting, innovative, and technologically advanced. Products of daily use and low cost products are less likely to be referred (Clapperton, pp. 10-11). Social Media Optimization (SMO) Social Media Optimization refers to the efforts aimed at promoting and publicizing the websites and its content through social media, in an attempt to attract more visitors. The tools used for SMO include news feed, media sharing, social media events, and link building. Therefore, with the help of SMO, marketers aim at increasing the traffic at e-commerce websites (Roetzer, p. 106). Social Ads Social ads and social apps refer to the branded content that is present in social media through paid advertisements. The main idea behind social ads is to induce purchases through consistency and reciprocity. However, the problem with social ads and social apps is that they have very low Click through rate (CTR) (Kotler, Armstrong, Wong & Saunders, p. 37). References Clapperton, G. This Is Social Commerce: Turning Social Media Into Sales. John Wiley and Sons, 2012. Clapperton, G. This Is Social Media: Tweet, Blog, Link and Post Your Way to Business Success. John Wiley & Sons, 2009. Davies, N. How to Be Great at the Stuff You Hate: The Straight-Talking Guide to Networking, Persuading and Selling. John Wiley & Sons, 2012. Gibbons, J. Monkeys with Typewriters: Myths and Realities of Social Media at Work. Triarchy Press Limited, 2009. Kotler, P., Armstrong, G., Wong, V., & Saunders, J. A. Principles of Marketing. Pearson Education, Prentice Hall, 2008. Pearson, B., & Zehr, D. Pre-Commerce: How Companies and Customers Are Transforming Business Together. John Wiley & Sons, 2011. Roebuck, K. F-Commerce: High-Impact Strategies - What You Need to Know: Definitions, Adoptions, Impact, Benefits, Maturity, Vendors. Lightning Source Incorporated, 2011. Roetzer, P. The Marketing Agency Blueprint: The Handbook for Building Hybrid PR, Seo, Content, Advertising, and Web Firms. John Wiley & Sons, 2011. Sterne, J. Social Media Metrics: How to Measure and Optimize Your Marketing Investment. John Wiley & Sons, 2010. Read More