Social Media Impact on Online Consumer Behavior - Term Paper Example

Social Media Impact on Online Consumer Behaviour: The Effect of Brand Awareness and eWOM Name Institution Table of Contents Table of Contents 2 Introduction 3 Objective of the selected topic 4 Sample profile: Armani 4 Importance of Consumer Behaviour 5 Model of Consumer behaviour 6 1. Marketing and other stimuli: 6 2. Buyer’s black box: 7 Factors affecting the consumer decision process 9 Marketing Implication 11 Conclusion 13 Introduction During the last decade, social media have evolved into innovative hybrid elements of integrated marketing communications (IMC). Today, they enable businesses to interact and create lasting relationships with their consumers (Ioanăs & Stoica, 2014). Among the beneficiaries of social media in this respect is the Italian fashion house Armani. Alamgir et al (2009) define the social media as ‘a group of online applications that rely on the technological and ideological foundations of Web 2.0. Social media users use a range of internet-based formats, such as wikis, social networking sites, podcasts, bulletin boards, and blogs for communication and sharing of ideas regarding certain brands, products, services, as well as to keep contacts with the consumers (Ghodeswar, 2008; Ioanăs & Stoica, 2014). The unique aspects of social media that have revolutionized marketing practices at Armani include their interactive ability in advertising and promotion. Additionally, the social media has influenced consumer behaviour due to their capacity for rapid information acquisition and dissemination (Severi et al, 2014). More importantly, communication using the social media also influences the marketing strategies that Armani uses and its target consumers’ decision-making processes. As Severi et al (2014) also shows, advertising on social media also builds new forms of consumer behaviour. Consequently, consumers do make their purchase decisions based on information acquired from the social media. Therefore, it has enabled customers to share their perceptions regarding brands already in the public domain. In that order, the concept of electronic word-of-mouth communication (eWOM) comes into perspective (Lin et al, 2013). Alamgir et al. (2009) define eWOM as negative or optimistic statements made regarding a brand, company, or a media personality, which are made widely available through Internet applications, such as the social media. This paper explores the impact of social media on Online Consumer Behaviour within the context of Armani. Objective of the selected topic Severi et al (2014) explain that when customers are knowledgeable about the positive aspects of a brand, they tend to trust the brand name based on the perception that the brand offers the good qualities that keep them satisfied. Indeed, this is the premise of social media use in leveraging online consumer behaviour at Armani. Armani’s customers tend to be loyal to the brand based on the positive features expressed through the blogs, which are associated with the brand (Anon 2004; Blythe, 2013). The primary objective of this project is, therefore, to examine the influence of social media on Armani’s online consumer behaviour and purchase decision. The supportive objectives include exploring consumer decision-making processes, particularly with the Armani brand. Sample profile: Armani Giorgio Armani, or just Armani, refers to an Italian fashion house established in 1975 by Giorgio Armani. The company designs, makes, distributes and sells ready-to-wear, haute couture, jewelry, shows, belts, cosmetics, eyewear and watches (Borgonuovo, 2012). Its brand markets are under several tag names, such as Armani Collezioni, Giorgio Armani, Armani Prive, Armani Exchange, and Armani Jeans. For instance, Giorgio Armani consists of high-end label that specializes in women and men's accessories, watches, ready-to-wear, cosmetics, perfumes and glasses. Giorgio Armani fashion line is available strictly in Giorgio Armani boutiques. It also selects high-end department stores and specialty clothiers. The brand is valued at $3.1 billion (Forbes, 2015). Importance of Consumer Behaviour Consumer behaviour refers to the behaviours that consumers exhibit while searching for brands, purchasing brands, using products, or assessing products they expect will satisfy their needs. It is focused on the manner in which people make decisions to use up their existing resources, such as effort, money, and time on consuming related products (Vinerean, 2013). Knowledge on consumer behaviour is significant for Armani before it launches its haute couture products. The company surveys the trends its customers values, based on the reviews of its blog and social media accounts to come up with responsive designs. If the company fails to examine how customers are likely to respond to their fashion brands, it is likely to experience low sales and losses (Severi et al, 2014). Consumer behaviour is relatively complex, as each individual consumer has different attitude towards consuming a product. Knowledge of the online consumer behaviour enables the company to market its products effectively (Alamgir et al, 2009). Since there is a constant shift in people’s living standards, fashion trends, as well as shift in technology, the attitude of consumer towards purchasing the brand varies. This can be learnt online. At the same time, knowledge of these factors is of significant, as marketing of the Armani brand is largely contingent on the fashion and preferences of the consumer (Ioanăs and Stoica, 2014). Knowledge of online consumer behaviour also provides an insight into the buying decisions and decision-making processes that customers go through while selecting the brand. It also provides an understanding of how customers look for a product (Vinerean, 2013). Model of Consumer behaviour The consumer market refers to the user market or the Business to Consumer (B2C) markets. Armani operates in the B2C market. The basic model of consumer decision-making process consists of three key elements: marketing and other stimuli (which function as influences), the buyer’s black box (which relate to the consumers), and the buyer responses (which is the response part) (Patel & Schlijper, n.d.). 1. Marketing and other stimuli: Stimuli confront the buyers of high-end clothes in the environment (Patel & Schlijper, n.d.). Armani’s marketers trigger stimuli through the marketing mix, such as promotion, place, price, and product. The product features that influence the company’s customer include the quality attributes of the clothes, their appearances, and the exquisite packing feature. The price features include the high cost and value derived from the fashion line, including the prestige (Belch & Belch 2003). Place include the convenience of Armani fashion retail’s in strategic high-end malls, as well as online. Promotion includes the company’s advertisement strategies, such as direct marketing to high-end customers who have been targeted through the social media. For instance, Facebook and Twitter messaging can be used to send them direct messages (Vinerean, 2013). Within the context of Armani, the need to attain prestige, status symbol, social acceptance, and romance demote emotionally driven motives. Typical Armani consumers are fashion buyers, who make purchases to satisfy these emotionally driven needs. Majority of the buyers show readiness to pay high prices for the status and prestige benefits. For instance, Armani’s couture creations are in this category (Anon, 2004). 2. Buyer’s black box: This includes the stimuli that the marketers provide to the consumers. It is made up of two sub components. These include the characteristics of the buyer and the decision-making process of the buyer (Patel & Schlijper, n.d.). The characteristics of the buyer may be psychological, personal, and social. a) Personal features include the targeted buyers’ and –age, marital status, economic situation and personality. Armani targets high-end buyers who target achieving self-concept, or those who are fashion-aware. Since Armani products have personality, as they give the wearers a sense of rich personality, high-end consumers select the brand, as the personality of the brand matches theirs. Figure 1: Age Group Segments Within the context of Armani, consideration of the age group is also significant, as the fashion varies based on different age groups. Hence, the company segments its age groups into six, namely children, teenagers, Yong adults, Young middle-aged, older middle aged and the elderly (Anon, 2004). This allows it to target for fashion merchandise based on their particular buying preferences. Of these groups, Armani mostly targets the Young Adults and Young Middle-Aged with its haute couture. The young adults are those in the college or early years into their careers. They have significant needs for fashion, specifically those for social occasions. Armani places their clothing at specialty shops. However, Armani relies more on the young middle-aged group (Blythe, 2013). This group consists of those with the highest income and includes business executives, business owners, as well as professionals. Their high incomes, as well as high-end lifestyles make them the key target for Armani. This group patronises high-end department stores and prestigious specialty stores (Anon, 2004). b) Psychological aspects include the motivation factors, which urge consumers to buy Armani products. They also include behaviours resulting from experience in using the products, which can be learnt based on consumer reviews on social media. They specifically relate to memory. Here, the learning may be experiential and rooted in the direct experience of using the product or indirect experience. Consumer learning may also be rooted in the social media data provided by Armani’s marketing communication efforts (Blythe, 2013). The psychological aspects are wide and include the beliefs or subjective perceptions that Armani’s customers feel towards the brand. The attitudes may also be favourable or unfavourable (Blythe, 2013). Additional psychological aspects include the cultural factors. Here, culture consists of the sum total of beliefs, knowledge, myths, values, beliefs, and customs governing a society (Belch & Belch 2003). Of the psychological aspects, culture is the broadest that the company has to contend with. It includes the cultural influences on clothing, as well as lifestyle. Mostly, they are passed on through generations and are acquired or taught (Severi et al, 2014). Social class is another psychological aspect. It consists of the ordered and comparatively permanent divisions within the society. These include the upper-, middle-, and lower-class. Usually, members within any of the three classes share the same behaviours, values, lifestyles, and interests. Armani targets the upper class. 3. Buyer responses: The buyer also makes a decision regarding the product, the timing, the amount and the seller. Factors affecting the consumer decision process The decision-making concept is made up of five stages. Familiarity with how customers make choices enables fashion merchants, such as Armani to gain deeper insight into how their customers’ needs can be satisfied. Several factors in the model are relevant in this regards (Boonlertvanich, 2009). a) Needs awareness based on stimuli and psychological factors – stimulus, such as advertising and visual presentation through Armani’s blogs is significant in this respect. Consumers may offer good reviews about Armani watches as perfect gifts for newlyweds, on the social media. This may inspire a need to buy the watch for an individual who desires to buy a present for a friend’s wedding (Boonlertvanich, 2009). b) Information gathering would be based on psychological factors. Once a high-end consumer is determined to buy the Armani watch, he will start gathering relevant information with the hope of satisfying the need. He may examine further reviews on the social media, as well as ask other people who have previously bought the watches (Belch & Belch 2003). He may need to purchase the watch, buy it for himself, or buy it as a wedding gift for the newlyweds. He may want to know more places where he can buy the watch from the internet, recollections of stores, catalogues, or broadcast advertisements. c) Evaluation of the Choices: Usually, there are many Armani watches from which to select (Boonlertvanich, 2009). The man will need to evaluate each of the options before he makes his final decision. Usually, he may visit Armani’s online blogs to examine user reviews. d) Decision-making: The man will then carefully measures each watch against the established criteria that may comprise attractiveness, price of the product, as well as its alternate applications. Once the man has examined the items in question, he will decide whether to buy it or not. In case he has not made a positive decision to buy the watch, he will continue with the process until he satisfies the need (Boonlertvanich, 2009). At this point, Armani retailers play a significant role. When they have an understanding of the principles of consumer decision-making, they may apply varied approaches to assist the buyer with the selection. e) Satisfaction with the Decision is based on ‘buyer response’ factors. Once the man buys the Armani watch to take to the wedding as a gift, he may consider examining whether he made an appropriate decision or not. Some questions he may consider at this stage include whether the silver Armani watch he bought is as practical as the gold one he left behind. Next, whether the price he paid for the watch was reasonable for the upper class event or he overspent (Boonlertvanich, 2009). In addition, whether the watch will satisfy his emotional needs or satisfy that of the recipient of the gift. Hence, the answers the Armani retailers will provide through the company’s blog will make the customer to be either loyal to the brand or not (Ioanăs and Stoica, 2014). Marketing Implication Consumer behaviour change through the social media has vast implications on the Armani’s marketing efforts. Typically, online marketers at Armani would be interested in influencing consumer behaviour to boost demand for the fashion products in order to increase sales. The need to influence consumer behaviours on social media would have several implications on the company’s marketing strategy (Vinerean, 2013). Knowledge of psychographics of consumers has significant impacts on the message that Armani uses on the social media. Psychographics of consumers refer to the consumer attributes, which identify consumer interests, attitudes, and opinions. Studying consumer behaviour through their reviews online enables Armani to gain an understanding of the fashion interests of the consumers and their opinion. It enables Armani’s marketers to identify the right marketing messages that can engage the social media users, and which can influence, as well as leverage their prevalent opinions. The same would apply to understand the moods and sentiments of the consumers, which also have an impact on the decisions that consumers make regarding whether to buy the brand (Vinerean, 2013). In which case, if Armani’s marketers fail to feel the pulse of the consumers, they are likely to go wrong on designing the right message and assuming the right tone. Understanding the moods of the consumers as evident in the social media enables them to fine-tune the marketing strategies (Severi et al, 2014). Since the marketers at Armani can use testimonials from users on the company’s blogs to strengthen its brand identity and loyalty, the eWom can have a powerful influence on the consumers’ buying behaviours. Additionally, the marketing strategy can be designed to capitalise on the word-of-mouth advertisements (Vinerean, 2013). In this case, application of social media can help the company’s marketers to capitalise on the reference groups to assist in spreading the message regarding their products and services. The Elaboration Likelihood Model (ELM) comes in handy in leveraging the social media impacts on consumer behaviour and the subsequent marketing strategies. The model is relevant within the marketing circles. It enables Armani’s marketers to establish whether a peripheral or key route of communication is suitable for a specific audience contingent on their levels of connection or loyalty to the brand (Ioanăs and Stoica, 2014). The central route can help communicate with consumers who are highly engaged with the brand. The peripheral route of communication is proper for influencing the less-involved customers. Hence, determining the consumer behaviours through the social media enables Armani to identify the group of consumers who are more engaged. Therefore, the central route would entail creating social media messages targeting the more loyal segment, while attempts to influence consumer attitudes would involve the peripheral means (Alamgir et al, 2008). On the other hand, understanding the consumer decision-making process also has several significant implications on marketing. It helps determine the likelihood that a particular consumer segment will buy a certain product. As a rule, consumers tend to increase pleasure and minimise pain. Therefore, they desire to reduce the risk of making wrong decisions and may tend to prioritise on seeking information on the purchase decisions, which represent a high- level risk. For instance, low-involvement and low-cost Armani products, such as perfume will call for greater effort on the part of consumers compared to the high-cost, high-involvement products like the Armani watches. Knowledge of this enables Armani’s marketers to invest more in communicating in detail with online consumers (Vinerean, 2013). Conclusion The social media allows Armani and its consumers to share experiences, information, opinions as well as perspectives through the blogs and social networking sites. When Armani;s customers are knowledgeable about the positive aspects of a brand, they tend to trust the brand name based on the perception that the brand offers the good qualities that keep them satisfied. Armani’s customers tend to be loyal to the brand based on the positive features expressed through the blogs, which are associated with the brand. Armani’s online markers know that others influence the company’s consumer base. Hence, they use testimonials from users on the company’s blogs to strengthen its brand identity and loyalty. The eWom can have a powerful influence on the consumers’ buying behaviours. Additionally, the marketing strategy can be designed to capitalise on the word-of-mouth advertisements. In this case, application of social media helps the company’s marketers to capitalise on the reference groups to assist in spreading the message regarding their products and services. Knowledge on consumer behaviour is significant for Armani before it launches its haute couture products. The company surveys the trends its customers values, based on the reviews on its blog and social media accounts to come up with responsive designs. Consumer behaviour change through the social media has vast implications on the Armani’s marketing efforts. Typically, online marketers at Armani would be interested in influencing consumer behaviour to boost demand for the fashion products in order to increase sales. The need to influence consumer behaviours on social media would have several implications on the company’s marketing strategy. Knowledge of psychographics of consumers also has significant impacts on the message that Armani uses on the social media. Studying consumer behaviour through their reviews online enables Armani to gain an understanding of the fashion interests of the consumers and their opinion. It also enables Armani’s marketers to identify the right marketing messages that can engage the social media users, and which can influence as well as leverage their prevalent opinions. The company is also able to understand the moods and sentiments of the consumers, which also have an impact on the decisions that consumers make regarding whether to buy the brand. On the other hand, understanding the consumer decision-making process also has several significant implications on marketing. It helps determine the likelihood that a particular consumer segment will buy a certain product. References Alamgir, M., Nasir, T. & Shamsuddoha, M. (2009). Influence of Brand Name on Consumer Decision Making Process- an Empirical Study on Car Buyers. Retrieved: Anon (2004). The Fashion Consumer: Identification and Analysis. Retrieved: Belch, G. & Belch, M. (2003). Advertising and Promotion. New York: McGraw-Hill Blythe, (2013). The importance of understanding consumer behaviour. Retrieved: Boonlertvanich, K. (2009). Consumer Buying and Decision Making Behavior of a Digital Camera in Thailand. RU. Int. Journal 3(1), 57-66 Borgonuovo, V. (2012). 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