The Role of Social Networks in Empowering Consumers - Literature review Example

? The role of social networks in empowering consumers Table of Contents The role of social networks in empowering consumers Introduction 3 Background of the study 3 Consumers and social networking sites 4 Mobile marketing: Aid for consumers 5 Organizations and social networking sites 5 Increased consumer interaction 6 Benefits of consumer engagement 8 Dissipation of information: Importance of search engines 8 Consumer protection and Sharing of best ideas 9 Community task perspective 10 Green consumers 11 Conclusion 12 Reference List 14 Literature Review Introduction The social media represents a whole lot of websites that allow customers and sellers to interact and this provides a wide opportunity for expanding in the future years (Merrill, et al., 2011). With the advent of Twitter (with more than 50 million account holders) and Facebook (with over 350 million users), social networking sites have now become an integral ingredient in modern lifestyle (Kahle and Valette-Florence, 2012; Evans, 2010). Organizations, as a part of the current global business forum, are increasingly feeling the need for engaging with the community to which it provides its service. Companies realize that the societies within which these companies operate and the communities to which their customers belong, are an important element in their business decisions. This shows that consumers are increasingly becoming an important stake holder for business firms. Companies are responding to this new status of the consumers by utilizing in all possible channels to engage in consumer interaction. Therefore they feel the need to assess their response to the changing consumer preference and also the efficiency with which they are utilizing the social media. Background of the study The growth rate of social media shows an exponential trend and the main features in this platform are blogs, Twitter, Facebook, MySpace and LinkedIn. If this information is matched with statistical data it would be found that by the beginning of the 2010, over 175 million users were already registered in the Facebook. This figure is slightly short of the total number of people living in Brazil (total Brazilian population was 190 million in 2009) and it is more than twice the German population (total population of Germany was 80 million in 2009) (Kaplan and Haenlein, 2010). During this period, a record amount of video content has been uploaded to the YouTube platform at the rate of 10 hours of content per minute. These platforms offer customers to receive variety of information and also join ongoing conversations with millions of other customers located in different parts of the globe. Hence rise of social networking sites have become a major topic of discussion in the business world. Consumers and social networking sites Tweets on Twitter and messages and updates on Facebook are the newest means of communication and the most convenient method of sharing news. These channels allow news to be shared in the structure of small bite-size messages. These message updates also allow the user to add links to various website pages or images to the message. Tweets are messages of less than or equal to 140 characters and the reader can get an overview of the message shared through the tweets by simply scrolling through the tweets. Any person can read these tweets (even if he or she is not an account holder on the Twitter) through their mobile phones or their computers. These Twitter tweets are short and precise and does not relate to the news at a deeper level, but, the reader can gain an overall broad knowledge about the happenings in the world in that particular day. This the most important use of the social networking sites these days. Consumers are careful about the choices that they make about their purchases but are not left with only limited amount of time to make purchasing decisions. Therefore more and more number of consumers are shifting their attention to the social media for gaining insights on the most recent trends, views and briefs of experiences of the fellow consumers around the world that have used similar products. A recent study shows that 23 per cent of the consumers in Australia are estimated to be active online and they are significantly attached to the various social networking sites that they use for gaining knowledge and gathering information (Commerce, 2010). The greatest benefit of this new channel of communication is that it offers customers from around the world to interact with one another irrespective of whether they are known to one another. They can converse on a common topic and the diversity of the location allows them to divulge different outlooks about the same topic. This helps easy dissemination of information. Information is not concentrated in some place or the other. This works in favor of customers in two ways; it helps them to remain informed about the various events occurring in the world daily and this in turn helps to protect them from frauds or being deprived or cheated (Merrill, et al., 2011). Mobile marketing: Aid for consumers Mobile phones have become a crucial element in the field of marketing. A large number of cellular service providers are competing with one another at the national level to provide diversified services; they have moved beyond the competition of offering cheap services, now they have embarked upon the strategy of attracting more customers by offering them free services (Shankar, Carpenter and Farley, 2012). Service related to the access of social networking sites are offered at very low rates, due to which a large majority of consumers nowadays depend on information received through push messages received on their mobiles. Organizations and social networking sites The conception of social media is one of the top agenda for business executives in the modern business setup. Decision makers and business consultants make efforts to identify the methods that firms can use for making profitable utilization of the social networking sites such as, the YouTube, Twitter, MySpace and Facebook (Kaplan and Haenlein, 2010). However, a large majority of the companies did not join the revolution brought about by the social media in the beginning of the twenty first century. This was because they were not convinced of the benefits of this approach and the effect it might cast on the consumers. After these companies spent a long time span observing the effect of this revolution from the side lines they have ultimately dived into this wave of social media marketing. This has been the effect of the anticipation that the social media possesses considerable benefits for the business. It is a new platform in which the customers’ personal, professional and commercial entities are merged into one holistic entity of ‘consumer’ and through these platforms businesses can reach out to a larger consumer base at a much lower cost (Merrill, et al., 2011). All agencies, both in the public and the commercial sector, can now recognize the benefits of the social media and the rising inclination of the consumers to engage in the social networking websites. Individuals, as consumers, are getting more interested in using these social media channels for assisting their purchasing habits, since these are the means by which they can stay directly connected with other consumers, and receive valid information at the most appropriate time. This imparts a sense of power to the consumers as they can make more informed choices and make such purchasing decisions that would maximize their utility. Increased consumer interaction Consumer interaction is a very important factor for consumers as well as companies. For engaging consumers effectively in the social media channels used by companies, they develop various applications that the consumers can install in their mobile phones through which they can directly communicate with the marketing team of the company (Singh and Diamond, 2012). Companies can listen to their consumers and help them to collaborate with the enterprises through these applications. Consumers are one of the largest stakeholders for business organizations and companies strive to engage them intrinsically with the activities of the company. The primary aim of companies in increasing their activities on the social media channels are: Joining consumer conversation — Through various consumer engagement applications, the marketers of companies can track customer behavior and the conversation put up by various customers. The company then responds back to customer behavior by joining this conversation through the consumer engagement applications. Consumers are attracted more towards those brands that are customer friendly and engage in good relationship with customers (Close, 2012). Communities and connections — Social networking sites are very active players in the field of marketing. Since consumers are active on these sites, the brand building activities done by companies on the social networking sites are easily spotted by customers. Therefore it helps in increasing the impact of these activities. Consumer communities are built through blog sites, MySpace, Twitter and Facebook, all of which help in distributing the content of news across the world. These communities are capable in pushing the most appropriate content at the accurate point of time to exactly the desired target audience. Staying connected irrespective of time and place — with the advancement of technology and the advent of smart phones, various social media applications are being developed that can be installed in the phones and other mobile devices. Therefore consumers can easily be notified of the recent developments in the world of consumer goods and services, irrespective of the place that they are located. These push activities for can be made at any point during the day or night. Hence flexibility of consumers and the companies are enhanced by the social media activities. Benefits of consumer engagement Increasing digital relevance - Consumer engagement through the social media is the result of increased digital relevance in the modern world. In this consumer driven world existing customers are nurtured by the companies on one hand and on the other new customers are created. These consumers are termed as ‘digital consumers’ and their purchasing decisions are termed as digital destinations (Savar, 2013). Connections across these consumers are valued by companies. The social media helps these consumers to reach their destinations of preference, adds value to their preferences, addresses their needs with rapid responses and enhances the overall “social media experience with rich brand content” (Infosys, 2013). Foster collaboration and co-creation — Social media empowers the consumers and allows them to nurture collaborative ideas and innovations. It involves customers with the brands by offering them personalized services such as customized product development (Infosys, 2013). Dissipation of information: Importance of search engines Information sharing has become easy and more lucid in the era of Twitter and Facebook. Information that is shared on Twitter appears in the results of searches placed on search engines, such as, Google or Yahoo. Although Facebook is increasing privacy of its users and the content shared on the walls of the Facebook users, access to information released on Twitter is unrestricted. This allows consumers that spent a major part of their time on the internet surfing to get information 24x7 even without having accounts on these social media sites. The global economic slowdown has increased the importance and power of search engines dramatically (Commerce, 2010). Since the economic condition in the developed countries including the United States and the countries in the Euro zone is frail, consumers make prior research on the products and services, before they spend their hard earned money on purchasing those items. Search engines are responsible for placing the audience into the context that they are searching for. Estimates show that approximately 2 billion searches are launched on the Google per day, which equates to almost 300 million internet users. Tweets are a source of free information for the internet users around the world. This provides a bonus to the consumers and captures the attention of the mass consumers that rely “on ‘free information’ available at the click of a mouse” (Commerce, 2010) or on mobile phones of the users that has connection to the internet. Consumer protection and Sharing of best ideas Consumers are facilitated by the presence of online media not only due to their enhanced capability to communicate with others very easily, but also due to the preservation of consumer interests and protection. Since the Twitter and the Facebook allows any account holder to publish information or news tough these channels and make it public in a matter of few seconds, consumers these days remain aware of the happenings around the world. News of any kind of injustice or breach of consumer rights gets circulated among the community members very fast. Facebook updates can be put in the form of video and audio clips and images accompanied by a four hundred word message. This arrangement is enough to provide brief but accurate information to online users, both community members and others outside the community. The Twitter additionally provides the opportunity to connect with international agencies that look after the rights of the consumer, such as, the “EU Consumer (Consumer Affairs in Brussels) and Consumer Protection WA” (Commerce, 2010). These bodies follow the events on Twitter and keep a tab on each other’s actions. Such strong regulatory practices and overseeing by international agencies would help prevention of consumer rights. This might also facilitate the development of good consumer practices and could possibly “lead to sharing of best practice and ideas” (Commerce, 2010). Community task perspective Community engagement has evolved as an important concept in the modern business world. It refers to the practice of developing a collaborative platform for working with individuals and/or groups of likeminded people or people that are engaged in similar projects (CDC, 2011). These people might be affiliated by special interest in some particular job, geographic proximity or similar other situations. Collaboration is made with the aim of addressing similar pattern of issues that arise for all these people and finding an all-inclusive solution that is capable of affecting well-being of these people in common (Minkler and Wallerstein, 2008; Anderson, 2010). These social networking sites provides the platform for developing a social bond among the users, such as, between friends, between parent and children living in faraway places, among co-workers, between the employer and the employee, between the teacher and the student and among neighbors (Qualman, 2010). All these relationships are based on social perspectives among the individuals, however, interaction among these participants lead to the flow of information among them. All these individuals are consumers in their personal lives and it creates a common platform for enhancing the seller to buyer relationship (Shannon, 2012). Users of social media are not individual users, but, represents community that survives online through the social media sites. This community lives just like the communities in the real world. Members of these communities take note of each other’s choices and also value the suggestions given by their community members when they make lifestyle decisions in their day-to-day lives. Industry experts advice corporate firms not to ignore these “virtual social worlds” (Kaplan and Haenlein, 2010). By ignoring these communities companies would forego a huge portion of potential customer base. Nowadays, the social media has become as costless as the word of mouth and is becoming as important as word of mouth (Richardson and Gosnay, 2010). Green consumers A survey conducted in 2010 has revealed that in every ten Internet users in Australia nine are addicted to the social networking sites and are active participants in the online communities. One important reason for being more active online is that a large majority of these consumers are aware of the harm caused to the environment by human activities. Direct mails or printed letters cause waste of paper. Online sharing of information minimizes the incidence of paper usage (Richardson and Gosnay, 2010). These users get useful information related to products and services and opinions about choice of brands from their fellow community members and other internet users via the social networking sites. This phenomenon is indicative of the fact that in the years to come, online communities are going to grow in importance and these would be the throbbing just like real would cities with the only difference that they would not be bound by any geographical boundaries. Hence they would play progressively more important role in decision making by consumers (Evans, 2012). Conclusion Global marketing is an important responsibility for consumers. It involves selling the products and service across the world. While the company is the same and the products offered are the same, these products are marketed in different societies that have diverse cultural and traditional backgrounds. Marketing of products in these communities require understanding of both the modern consumer preferences in these regions and the traditional and cultural background of these places. Cultural sensitivity can be gathered by overseas sellers only by communicating with the target market effectively (Lamb, 2012; Meyerson, 2010). The social media provides them with the golden opportunity to indulge in detailed communication with the target consumers. With the advancement of technology, access of internet has not only been restricted to computers or laptops, but users can also surf the internet on their mobile phones. This has enhanced flexibility of the consumers. The next generation internet and web platform, Web 2.0, has empowered consumers and facilitated their communication with other consumers. This is the first time that this platform allows consumers of the same brand to directly talk to one other, to the company and also to the entire virtual communities existing through the social networking websites. The businesses have also realized that these sites are a good tool that can be used for the purpose of businesses. Blogs are the best example of online communication; it has provided marketers with one of the best ways to connect with consumers (Powell, Groves and Dimos, 2011). Revenue earned by businesses all over the world from social media sites in the year 2012 has been estimated to be US$16.9 billion. The figure has increased from US$11.8 billion generated in the year 2011. According to the results of an industry analysis, by 2016, the total revenue earned by the corporate businesses around the globe would be around US$34 billion (Pitney Bowes, 2013). The largest factor that has lead to the generation of such a high volume of revenue is advertisement and social media advertising is a crucial part of it. In 2013, total revenue generated from advertising through various media, including the social media has been projected to be US$8.8 billion (Pitney Bowes, 2013a). Blogs allow consumers to talk to marketers directly and get their doubts clarified or get answers to their queries regarding products or services. This generates interest among the consumers about the company and higher levels of communication increases customers interest for its products or services (Pitney Bowes, 2013b). 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