The Advantages and Disadvantages of Social Media Marketing for Business Entrepreneurs - Assignment Example

?The Pepsi Refresh Project Evaluate the reasons Social Media Marketing has become exceedingly popular among businesses of all sizes. Social media is an online platform or a medium that facilitates interactions, collaborations and sharing of content (Coyle, Smith & Platt, 2012). It has been defined by Kaplan and Haenlein as “a collection of Internet-based applications that allow for the creation and exchange of user-generated content” (Abrahams, 2012). Several social media platform such as wikis, blogs, micro blogging sites like Twitter, bookmarking sites like del.icio.us, video sites like YouTube, virtual worlds like Second Life, and social networking sites like Facebook, MySpace, and LinkedIn are being extensively used by businesses of all sizes (Sashi, 2012). Social media marketing entails using these social media platforms for direct marketing. Corporate blogs have become an important medium for enhancing communication with the internal and external customers (Cox, Martinez & Quinlan, 2008). Viral transfer of messages through corporate blogs reduces advertising costs while disseminating new about products and services (Scammel, 2006). The social media, being interactive in nature, has enabled customer involvement in content creation and value generation, which helps businesses to understand and serve their customers better (Abrahams, 2012). This enhances customer engagement thereby enabling the organization to build long-term customer relationship. Engaging the customer has become important in the turbulent business environment today. Apple or its iPod and iPad, CNN and Starbucks have been extensively using social media marketing for building brand awareness and brand community (Palmer & Koenig-Lewis, 2009). The number of active FaceBook users reached 500 million by 2010 with over 70% users being outside the US. More than 10 million Tweets or messages had been sent by March 2010 since its launch in 2006 (Baird & Parasnis, 2011). These have now reached a state that consumers and their virtual networks drive the conversation, which poses challenges for businesses. Companies are increasingly becoming engaged in social media marketing because they believe they will be “out of touch” if they do not do so. However, consumers have their own reasons for being engaged in social media platforms. They expect tangible benefits such as discount coupons for sharing their opinions. Thus, while social media marketing has a wider reach and great potential to engage and build customer relationship, it also poses challenges. It is also not known to what extent businesses are ready for using this platform as this is a shift from the traditional marketing media such as advertising through television and magazines. Moreover, the users might be increasing but many use social media merely to connect with family and friends. 2. Analyze the advantages and disadvantages of Social Media Marketing for business entrepreneurs. Social media marketing has several advantages such as that it allows business to gather information about their clients, create communities and encourage participation (Champoux, Durgee & McGlynn, 2012). Entrepreneurs that have been able to incorporate the social media into their business model have been able to increase brand awareness (27%), boost sales (15%) and improve customer service (11%) (Tuttle, 2010). They use the social media marketing to achieve a high level of search engine optimization (SEO) and natural search generate more sales. Increased brand awareness, increased customer acquisition and spread of information and other links is very fast through linking systems. This facilitates stakeholder communication but the disadvantage here is that the company has no control over the content (Aula, 2010). Both small and big businesses have been harnessing the potential of social media marketing. Big businesses such as IBM own more than 100 blogs, several official Twitter accounts and a popular forum called developerWorks (Zarrella, 2010). Dell too has tapped the potential of social media with its IdealStorm website where users can add their idea for new product lines, cast their vote or comment on submissions. Burger King uses innovative vital marketing campaigns and through “Whopper Sacrifice” they offered their customers a Whopper discount coupon if they ‘unfriend’ ten of their social network connections. However, small businesses do not have the readiness for social media marketing and this can lead to direct and indirect losses (Aula, 2010). Even if the organization has the readiness, information posted on its blog can contain malicious information that can damage corporate reputation that could have taken years to build (Cox, Martinez & Quinlan, 2008). Wal-Mart took advantage of the corporate blogosphere and started astroturfing. They employed pair participants to spread news about the company but this was discovered. The public reaction was negative and such incidences can damage reputation. A small business - Kryptonite bike Lock Company – was ill equipped to handle the social media and nor did they have dedicated staff to manage social media marketing. Thus, as consumers discovered that the company bike locks could be picked up with a disposable pen, the message went viral through blogs and other social media platforms (Cox, Martinez & Quinlan, 2008). This news even reached the mainstream media but since this was a small company and not prepared for such publicity, they were slow to respond to the posts. This hit their reputation and in addition they had to spend million to replace the bike locks. Therefore, while social media marketing has definite advantages, the benefits can be optimized only when the organization has the right talent to handle the new marketing technology. An innovative culture and the willingness to learn are more important than the size of the company. The smaller businesses can derive great mileage out of social media marketing by linking accounts, so that messages posted in one account are automatically posted on other social media sites. 3. Assess how Social Media Marketing is helping Pepsi gain more customer insight than it would have otherwise. Through the traditional media it is not possible to generate the responses and interact with customers. At best one can get statistics of viewership of advertisements. However, through the use of social media and through demonstrating social responsibility, Pepsi has been able to gain more customer insight. Through this project they have demonstrated what viral marketing can achieve. They invest one-third of their marketing budget in social media. Through tools and technology it is possible to gather statistics on visitors to the website and videos posted on the social media. It is now possible to determine the numeric rank in terms of views per month, linkages to the blog post, the frequency of posts, the social aggregate rate (or the level of participation on the social web such as Twitter etc), and the related posts (Booth & Matic, 2011). The Pepsi Refresh Project brought in 800% traffic gain to the website and the number of Twitter feeds also grew tremendously. Pepsi demonstrates that it had set objectives and goals in pursuing the Refresher Project. They had clearly defined parameters of their activities and determined a strategic approach in initiation to key events and contests, all of which are essential in using the social media, according to Booth and Matic (2011). Engaging customers was a clearly identified event as they could introduce the topic and explain the relevance. Communication through social media has become highly interactive and customer engagement establishes bond between seller and customer (Sashi, 2012). The roles of the seller and customer converge as the focus is on creating value. The social media tools and technologies allow developing, sharing and exchange of information. Through this project, existing and new customers formed communities online which enabled generating user content. The customers of Pepsi have not just added value but have also been advocates for the seller’s products as this has influenced purchase by peers. The added advantage of this project was that people hoping to win set up their own blogs and content on Facebook and Twitter which gave the company enhanced publicity. These contestants and the celebrity became the influencers who were “nobodies” of the past but these “somebodies” now influenced traditional target audiences as they helped the company to establish effective outreach strategies (Booth & Matic, 2011). The basic idea of the project was based on the belief that great ideas can come from anyone, anywhere, anytime (PRNewswire, 2010). This project helped them enhance relationship with the customers, with the social media and enhance sales. The Pepsi Refresher Project is part of the crowd sourcing effort to engage customer with the brand. Pepsi has been successful in their efforts as consumers participate in picking flavor names or voting for the user-submitted ad campaign. 4. Research two (2) other businesses that have used Social Media Marketing to their advantage. Discuss how each of these businesses has utilized Social Media Marketing and provide examples with your discussion. Small businesses can create big brand names through social media marketing. The CEO of Blendtec, selling high-performance blenders for restaurants, created a viral video showing blending of everyday objects such as glow sticks, iPhones and television remote controls (Zarrella, 2010). This was posted on YouTube and has been viewed more than 100 million times giving the company brand awareness and customer acquisition. On the Facebook Blendtec has 105, 663 Likes (http://www.willitblend.com/). The company has been able to harness the potential of social media marketing as their sales grew 700% in two years (Borges, 2008). Apart from the exposure in the social media, this also gave them national media coverage which is equivalent to millions of dollars in advertising. They received at least 10 television appearances (NBC, CBS, Fox, WGN, History Channel, Discovery Channel, etc) and 10 other television publicity events (Food Network, ABC Australia, BBC World, CNBC News, etc). In addition, they received the CLIO Interactive Viral Award, YouTube Awards, Ernst&Young Utah (Briggs, 2009). It has not only created brand awareness but their brand strength has increased. In fact, their SEO value from their videos drives more traffic to their website. Their viral videos were nicely aligned with brand of high-quality, technically sophisticated blenders. They also succeeded in engaging their customers. Another small organization, a small bakery, Pink Cake Box, specializes in wedding cakes, cupcakes and cookies, individually made out for special events (http://www.pinkcakebox.com/). They opened their shop in 2005, build their own website and started the blog also in the same year (McGee, 2008). The majority of their customers originate through the web and they have made successful media contacts while also managing spot on CNN, several magazines and newspapers. They did not rely on a static website but focused on attracting customers through their blog. They promoted their cakes and attracted customers through contests. They posted videos and their goal was to stay connected with their customers. They even included thumbnail images of their cakes and cookies along with the blog posts. Their strategy paid off as they could establish links with hobbyists which enhanced their search engine visibility translating into more customers. This company focused on using the WordPress which has enhanced SEO capabilities. They have also harnessed the potential of using Flickr as an outlet for their cakes. This is an example of a small company creating brand equity using social media marketing right from the beginning. 5. Speculate what impact Social Media will have business over the next decade and identify what skills you need to improve to take advantage of the changes. Social media is going to impact businesses in several ways. Customer engagement and involvement is the essence of social media marketing. This can generate huge amount of data but to take advantage of this, the organizations must be able to extract information and use the data effectively. Through the social media companies should also be able to tap into the collective knowledge of cohorts, which Snabe (2012) refers to as ‘Intelligence Business Web’. It would also be possible to optimize value chains and maintain both upstream and downstream connections through the entire supply chain. All these suggest that organizations must have clearly defined goals and maintain quality engagement. All this should be done on a long-term perspective and not with short-term gains in mind. Sales may not be immediate and in fact that should not be the objective. Training of people in social media is also essential so that mileage can be derived from social media marketing platforms. Backlash and negative posts are also highly likely and the company must not shy away from such comments as it serves to damage reputation. Managing such situations may require maturity and training of the social media marketers. While organizations have to be equipped to handle the media, the pitfalls have to be taken care of. For example, misuse of the platform has been found and people are known to create fake profiles and pages. They even post malicious content which can damage corporate reputation. Secondly, privacy issues are also likely which can prevent people from posting honest information. References Abrahams, S.W. (2012). Milk and Social Media : Online Communities and the International Code of Marketing of Breast-milk substitutes. Journal of Human Lactation 28 (3), 400-406 Aula, P. (2010). Social media, reputation risk and ambient publicity management. Strategy & Leadership 38 (6), 43-49. Baird, C.H., & Parasnis, G. (2011). From social media to social customer relationship management. Strategy & Leadership 39 (5), 30-37 Booth, N., & Matic, J.A. (2011). Mapping and leveraging influencers in social media to shape corporate brand perceptions. Corporate Communications: An International Journal 16 (3), 84-91 Borges, B. (Nov 13, 2008). Viral Video Pays Big at Blendtec. Retrieved from http://www.findandconvert.com/2008/11/viral-video-pays-big-at-blendtec/ Briggs, C. (2009). BlendTec Will It Blend? Viral Video Case Study. Social Lens. Retrieved from http://www.socialens.com/wp-content/uploads/2009/04/20090127_case_blendtec11.pdf Champoux, V., Durgee, J., & McGlynn, L. (2012). Corporate Facebook pages: when "fans" attack. Journal of Business Strategy 33 (2), 22-30 Coyle, J. R., Smith, T., & Platt, G. (2012). “I’m here to help”: How companies’ microblog responses to consumer problems influence brand perceptions. Journal of Research in Interactive Marketing 6 (1), 27-41 Cox, J. L., Martinez E. R., & Quinlan K. B. (2008). Blogs and the corporation: managing the risk, reaping the benefits. Journal of Business Strategy 29 (3), 4-12 McGee, M. (Mar 13, 2008). A Small Business Marketing Success Story: Pink Cake Box. Retrieved from http://searchengineland.com/a-small-business-marketing-success-story-pink-cake-box-13567 Palmer, A., & Koenig-Lewis, N. (2009). An experiential, social network-based approach to direct marketing. Direct Marketing: An International Journal 3 (3), 162-176 PRNewswire. (March 22, 2010). The Pepsi Refresh Project Awards $1.3 Million to Support the Public's Favorite Ideas to Refresh the World. Retrieved from http://www.pepsico.com/PressRelease/The-Pepsi-Refresh-Project-Awards-13-Million-to-Support-the-Publics-Favorite-Idea03222010.html Sashi, C.M. (2012). Customer engagement, buyer-seller relationships, and social media. Management Decision 50 (2), 253-272 Scammell, A. (2006). Business writing for strategic communications: The marketing and communications mix. Business Information Review 23 (1), 43-49. Snabe, J.H. (May 16, 2012). Social Networking and the Future of Business. Retrieved from http://www.ft.com/cms/s/0/d9b331e0-9f7e-11e1-a255-00144feabdc0.html#axzz24eiclIkc Tuttle, M. (2012). Entrepreneurs Are Taking Advantage Of Social Media. Retrieved from http://www.webpronews.com/entrepreneurs-are-taking-advantage-of-social-media-2012- Zarrella, D. (2010). The Social Media Marketing Book. Retrieved from http://books.google.co.uk/books?hl=en&lr=&id=chd3yfExXMEC&oi=fnd&pg=PA1 &dq=social+media+marketing +AND+entrepreneurs&ots=u5L5v2z2U1&sig=Yq9LX5zII3T3wMMmeuyxepcE6Zo#v=onepage&q=social%20media%20marketing%20AND%20entrepreneurs&f=false Read More