Impact of Social Media marketing on Business Performance - Essay Example

Impact of Social Media marketing on Business Performance Table of Contents Table of Contents 2 Introduction The entryof the internet in the world has revolutionalized the communication sector. Initially, businesses used traditional media to reach their target market. However, with the increasing levels of competition in the local and international markets, the costs of advertising had risen beyond the reach of many small and medium enterprises. Many firms opted to use world of mouth to pass the message of the existence of the products or services in the market. However, with the expanding market and the risks and uncertainties associated with focusing on a single market, many companies have opted to open their subsidiaries in different parts of the world. This has a posed a greater challenge especially with the fact that the new markets have different cultures. In order to penetrate these markets, some of which have barriers of entry which have been erected by the dominant firms, the companies are forced to use international media which are highly expensive. The costs are derailing the expansion strategy. However, with the entry of social media, more firms are opting to use these channels to reach the target market. This is because it’s cheap and more reliable. Nevertheless, questions have been raised concerning its effectiveness, especially putting into perspective that the users must have some ideas on how to use modern technology. Research Questions Can businesses increase their profit margin through the use of social media to advertise their products or services? Research Objectives To determine whether social media is effective in reaching the target market To determine whether social media plays an important role in enabling the firm to increase its overall sales To determine whether social media is an effective tool to conduct research Literature Review Currently, the market has become very dynamic with new challenges arising each day. With the increasing levels of globalization resulting from liberalization of markets, efficient flow of information, and integration of economies, the level of competition in the local and international markets has increased tremendously. This is as a result of the entry of multinational companies that have a huge financial base to segment the market, attract the loyalty of the customers towards their products, and position their products strategically in the market. This aspect has made it very hard for the small and medium businesses to increase their customer base (Barefoot & Szabo 2010). Therefore, these businesses are using all means possible to minimize the costs of operations. One of the strategies they are using is reducing the costs of advertising which has been taking a huge chunk of the firms’ profits. However, in order to maintain their competitive advantage, the companies are forced to look for other alternatives. Social media has become a critical alternative which is cheap, effective, and reliable. With the changes in the technological sector, many people have internet enabled devices such as phones, laptops, and tablets (Bodnar & Cohen 2012). As a result, they have access to the social media. Many of them have shifted their attention towards this channel in search of products or customer views concerning their products of choice. This has attracted the attention of the markers, who are using the channel to reach the target market. Young people form the largest market segment. Initially, companies were taking the market as a single unit. However, nowadays, market segmentation has become an important concept towards understanding the needs of the customers (Charlesworth 2009). Nevertheless, with the changing tastes and preferences of the customers, it has become very hard for the company to understand these changes without conducting an in-depth marketing research. Social media has closed this gap by enabling the business to collect the views of the customers. This is critical in understanding factors that affect the consumption behavior of the target market. This is more critical when the company is dealing with products or services that are consumed by the young generation (Evans 2008). The reason is that this segment is swayed easily by the substitutes in the market. Therefore, the company should keep up with their demands in order not to lose them to the competitors. Methodology In order to get in-depth information concerning the topic under study, a semi-structured interview was conducted. The interviewees were selected randomly in order to avoid any form of biasness that would affect the overall results of the study. The sample to be used in the study was determined using the following formula which was developed by Kothari in 1989: n= Z2.p.q.N e2 (N-1) + Z2.p.q Where: n= desired sample size z2= is the standard variate at the required confidence interval (C.I). p= is the target population q= 1-p N=size of the whole population e2=acceptable error In this study, the whole population to be studied was taken as 4985. Therefore, n= 1.962× 0.05×0.95×4985 0.052 (4985-1) + 1.962 ×0.05×0.95 n= 72 Confidence level was 95% P value of 0.05 and acceptable error of 0.05 Data was collected from 35 samples that responded to the request for information. It was then analyzed using excels and descriptive methods such as mean, median, and standard deviation. Discussion of Findings According to the results, 25 respondents have used social media to search for their products of choice. However, 20 of these respondents are at an age of 18-35. This is an indication that social media is popular among the young people. In addition, they check for reviews from other customers regarding the quality of the product and services. This plays a critical role in enabling them to make well informed decisions on whether to make a purchase or not. Out of 35 respondents, only five stated that they have participated in a survey that was conducted by a company which wanted to learn about their purchasing behaviors. This is contrary to research that indicates that social media is the most research tool that is being used for research by multinational companies. The results indicate that companies still depend on the traditional methods of conducting research. This is through the use of marketers and other personnel who collect data to be used in the company during the decision making process. However, it is an expensive process that requires a lot of human resources and application of the modern technology. According to Tuten (2008), social media platform provides an opportunity for the companies to understand different factors that affect the consumption behavior of the target market. However, 20 respondents state that they rarely share their information with the rest of the viewers. Instead, they spend much of their time chatting and other social activities. However, many of the respondents stated that they always check for adverts that pop out of their social pages. Furthermore, they keep on checking for any updates from the companies of their choice. This is to become aware in case the company releases a new product or introduces a new service in the market. Therefore, businesses have an opportunity to draft a message that will reach the target market through the social media. However, unlike other information that stated that social media is cheap and effective, the costs of drafting the message and posting it several times is pushed up by the need to have several employees who will conduct a follow-up to determine whether the message has reached the correct target market (Kabani 2013). This is significant in ensuring that the message is not deleted or compromised by the competitors in order to reduce its force. Conclusion According to the research findings, social media plays a significant role in reaching the target market. Multinational companies are expanding their operations to different parts of the world in order to reduce the risks and uncertainties associated with focusing on a single or few markets (Rohm 2014) However, marketing in a global market characterized by having diverse customers has become a major challenge. However, this research has identified that social media can play a significant role in cutting the advertisement costs (Evans 2010). The reason is that many potential customers are shifting towards this medium in order to get information about the products or services of their choice. Therefore, the reputation of the company and its products in the market is becoming a critical component towards its success (Tuten & Solomon 2013). Social media has a direct impact on the overall sales of a business. The respondents stated that they use the platform to check the status of the products and services from other customers’ reviews. As a result, they are likely to shift their attention towards the new products. Furthermore, through intensive advertising, the company can be able to convince these customers that the products meet the expectations of the target market. As a result, the customers are likely to test the products and later become loyal to them. Lastly, there is a huge potential in social media as a tool for research (Kerin, Hartley & Rudelius 2013). Customers are willing to offer their views concerning their purchasing behaviors. Although it has not been well utilized, it can play a significant role in reducing the overall costs of operations. References Barefoot, D., & Szabo, J. (2010). Friends with benefits: A social media marketing handbook. San Francisco, CA: No Starch Press. Bodnar, K., & Cohen, J. L. (2012). The B2B social media book: Become a marketing superstar by generating leads with blogging, Linkedin, Twitter, Facebook, email, and more. Hoboken, NJ: Wiley. Charlesworth, A. (2009). Internet marketing: A practical approach. Amsterdam: Butterworth-Heinemann. Evans, D. (2008). Social media marketing: An hour a day. Indianapolis, IN: Wiley. Evans, D. (2010). Social media marketing: The next generation of business engagement. Indianapolis, IN: Wiley Technology Pub. Kabani, S. H. (2013). The zen of social media marketing: An easier way to build credibility, generate buzz, and increase revenue. Kerin, R. A., Hartley, S. W., & Rudelius, W. (2013). Marketing. New York: McGraw-Hill/Irwin. Rohm, A. (2014). Herding cats: A strategic approach to social media marketing. New York: Business Expert Press. Tuten, T. L. (2008). Advertising 2.0: Social media marketing in a Web 2.0 world. Westport, CT: Praeger. Tuten, T. L., & Solomon, M. R. (2013). Social media marketing. Boston: Pearson. Read More