Factors that Drive the Use of Social Media Marketing among Australian Start-Up Companies - Research Proposal Example

Research Proposal: Factors that Drive the Use of Social Media Marketing among Australian Start-Up Companies 1. Background of the Problem Marketing is one of the most important organisational functions. Companies use marketing as a means of reaching out to new markets as well as maintaining the customers who are already buying their products. To achieve these two related objectives, companies normally use various channels to communicate to their current and potential customers. In general marketing channels are divided into two: traditional channels such the print or digital media as well as new channels, the most important example being social media sites (Schultz, Patti & Kitchen 2013, p. 25). Furthermore, it has pointed out that companies are constantly changing their preferred mode of communicating their marketing messages to their customers, subject to varying market demands (Owen & Humphrey 2009, p. 3). The main objective is to use the most effective methods of communicating with existing and potential clients. Given that the effectiveness of the marketing function of any organisation is one of the most important determinants of how successful the organisation is, it follows that organisations devote a considerable amount of resources to effectively communicate with their current and potential customers. In the recent past, social media marketing, which essentially is the use of social media marketing as the preferred marketing channels instead of the traditional marketing channels, has gained prominence (Cox 2012, Cowden 204 & Rudloff & Frey 2010, p. 7). Big as well as small companies are increasingly developing social media marketing strategies as a way of using integrated marketing practices to increase their market performance (Gurau 2008, p. 172). In academia, the use of social media platforms as an alternative marketing channel has received a considerable level of attention. The focus of many studies is on how effective the social media marketing strategies of companies are (Chanthinok, Ussahawanitchakit & Jhundra-Indra 2015). In other cases, the focus of studies is on the particular social media marketing strategies that companies develop (Arca 2012). However, it is clear that little research has been done on the subject of the use of social media marketing by start-ups in general and within the Australian context, in particular. Start-up companies are unique in various ways. In the first place, start-ups usually have little capital to invest (Powell 2012, p. 268). The capital constraints mean that the companies have to make compromises in all their operations. On the other hand, start-ups usually attempt to gain a foothold in their markets by disrupting the manner in which a product or service is used (Powell 2012, p. 268). The essence of start-ups is to introduce to the market a product that is either revolutionary because it is entirely new or a product that is not new but has been repackaged in a manner that delivers more value to the customers (Cowden 2012, p. 6). Based on this rationale, start-ups often focus on using a novel value proposition to compete with established companies in the industry. Hence, start-ups attempt to use new marketing methods such as social media marketing as a way of effectively gaining a market share for their new products. It is within this context that the proposed study shall be conducted. The research will specifically examine the factors that drive the use of social media marketing among start-up companies in Australia and the impact of the factors on the success of the start-up companies. 2. Objectives of the Study The overall objective of the research will be to examine the factors that drive the use of social media marketing among start-up companies in Australia and the impact of the factors on the marketing success of the companies. The following are the specific objective of the proposed study. i. To assess the impact of the need to use cost-effective means as a factor that drives the use of social media marketing among start-up companies. ii. To evaluate the role of client relationship as a factor that drives the use of social media marketing among start-up companies. iii. To measure the impact of growth in the use of social media as a factor that drives the adoption of social media marketing among start-up companies. iv. To examine the need to reach new markets as the driving force behind the adoption of social media marketing use by start-up companies. It is important to note that these objectives fall into two main categories of factors that drive start-up companies to adopt social media marketing: market and social factors. Market factors are based on the business needs of companies and they include the need to reduce costs, reach out to new markets and retain existing customers. Social factors, in this case, cover the growing trend in which many people are using social media for communication and general engagement. 3. Research Questions The following will serve as the primary research question for the proposed research: do market-based and social-based factors affect the adoption of social media marketing by start-up companies in Australia? The following are the specific research questions that shall be used for the proposed research: i. What is the effect of the need to reduce operational costs on the adoption of social media marketing by start-up companies? ii. What is the effect of the need to retain existing customers via engagement on the adoption of social media marketing by start-up companies? iii. What is the effect of the need to access new markets on the adoption of social media marketing by start-up companies? iv. What is the effect of the growing popularity of the use of social media on the adoption of social media marketing by start-up companies? 4. Significance of the Study Findings of the proposed study will be helpful to various parties and in different ways. Primarily, the findings of the research will contribute to the growing field of knowledge about the use of social media marketing by companies in general and the use of social media marketing by new companies in particular. Given that the study will identify the various factors that drive the adoption of social media marketing among start-up companies, its findings will add to the growing body of knowledge about social media marketing among start-ups. More so, the study will measure the extent to which the various factors contribute to the adoption of social media marketing and how the factors help companies to perform in the markets in which they operate. These findings will add to the growing body of knowledge about the impact of various factors that drive the use of social media marketing by new and established companies. The findings of the study will also fill the gap that exists in the body of knowledge about the use of social media as a marketing channel by companies. In general, studies on the subject that exist focus on how established companies use social media as an alternative form of marketing to complement their traditional marketing activities. Also, the focus of other studies on the subject that exist is in the manner in which companies use social media for their marketing activities. Studies that take this angle attempt to describe the particular strategies that companies use to market their products on social media sites. Other studies assess the effectiveness of the strategies and how they contribute to the market performance of the companies. It is clear that there is a dearth of knowledge on the particular factors that drive social media marketing use among start-ups in Australia. Since the primary objective of the proposed research is to examine the factors that drive Australian start-ups to use social media marketing and how the factors affect the market performance of the companies, the findings of the study will fill the gap that exists in the body of knowledge about this subject. The findings of the study will also have practical significance. For example, knowledge about the factors that drive the use of social media marketing among start-up companies in Australia will be helpful to the federal government. The federal government seeks to identify, mentor and develop entrepreneurs in the country (Hassan et al. 2015, p. 4). Knowledge on how new companies use social media in their marketing activities will inform the policies that the government develops. Apart from the government, existing and yet-to-launched start-ups will benefit from the findings of the study. Managers of new companies will use the findings of the study to streamline their social media marketing operations to improve the performance of their new firms on the market. 5. Literature Review and Hypothesis Development One of the issues related to the use of social media marketing by new companies relates to the reasons as to why such companies resort to using social media for their marketing activities as opposed to other methods. Skoumpompoulou, Vlachos and San Jose (2014, p. 2) point out that the major factor that motivates small and new companies to use social media as a channel of their marketing communication activities is the need for the companies to use their resources effectively in the process. It is pointed out that small companies, just like big companies, always seek high Returns on Investments for their marketing activities (Skoumpompoulou, Vlachos & San Jose 2014, p. 3). Given that social media marketing provides a relatively cheaper alternative to the other forms of marketing, new and small companies prefer using social media marketing to the other methods. Similarly, Ciprian (2012, p. 94) conducted a study on the use of social media marketing among companies in Romania. The results of the study indicated that many companies in the country attributed their preference for social media marketing to the manner in which the process is less costly and highly effective (Ciprian 2012, p. 96). Eighty-five percent of the business professionals who participated in the study indicated that social media marketing is an effective marketing method that their companies rely on to cut down their marketing costs (Skoumpompoulou, Vlachos & San Jose 2014, p. 3). Although this study was not entirely focused on new companies, its findings still emphasise the importance of effectiveness and low costs as the main attractive features of social media marketing. On the other hand, some studies indicate that the need for companies in general and new ones in particular to use social media marketing arises from the growing importance of social media among the general population. Recent statistics indicate that the popularity of social media sites in the world has been increasing in the recent past and is set to continue increasing in the foreseeable future (Perrin 2015). In view of these predictions, some researchers have attempted to tie the importance of social media marketing to the changing social trends in which people are increasingly using social media as opposed to the traditional media. Jagongo and Kinyua (203, p. 215) point out that social media has changed the manner in which businesses operate and that businesses have to leverage on social media for their market success. Neti (2011, p. 2) observes that the particular characteristics of social media, make it an ideal platform that companies can use to successfully market their products and brands. The emphasis in Neti (2011) is that companies use social media marketing to take advantage of the interconnectedness and public reach that social media sites provide. The view that companies nowadays use social media marketing in response to the growing popularity of social media among people has been explained using various theories. For example, Dahl (2014, p. 85) uses the Uses and Gratification Theory to explain how businesses, in response to social changes related to the use of social media, have been forced to adopt new marketing methods. The Uses and Gratification Theory is based on the assumption that people actively choose media that helps them achieve their goals and that media channels compete to be chosen by people (Dahl 2014, p. 86). Therefore, Dahl (2014, p. 87) argues that the manner in which companies have to use social media marketing nowadays is in response to the changing patterns of behaviour in people. Similarly, Artikel and Artikel (2010), while emphasising the rising importance of social media and how companies can take advantage of the trend, links social media to the need for companies to engage with their customers. From the preceding discussion, it can be seen that studies indicate that the need to respond to current social changes regarding the use of social media is one the factors driving the use of social media among companies. The way companies use social media to win new clients and retain the existing ones has also received considerable academic attention. It appears that there is a consensus among researchers that companies can use social media marketing to successfully engage with their potential and current clients (Brady & Bigham 2014; Oyza & Agwu 2015; Rupin 2015). Brady and Bigham (2014 p. 52) observe that companies attempt to take advantage of the universal and interconnected nature of social media communications to identify potential clients and engage with them. Hence, the need to engage with potential and current clients is identified as the main factor that is driving companies to create and maintain corporate pages of identities on social media platforms (Brady & Bigham 2014, p. 53). Oyza and Agu (2015) note that one of the main advantages of social media marketing for companies is that it allows companies to engage with their customers. Engagement, in this case, is defined in terms of how a company can effectively use social media to respond to client complaints, provide accurate information about its products and effectively manage its brand image by relying on social media as the channel of communication (Oyza & Agwu 2015). In the same vein, Rupin (2015, p. 19), argues that companies can successfully use social media to access new customers as well as retain the existing ones by using a structured form of engagement. It is argued that structured engagement allows companies to collaborate with the clients even after the clients have bought and consumed a product (Rupin 2015, p. 20). Hence, via structured engagement, companies can gauge the level of client satisfaction and make their customers loyal to their particular products (Rupin 2015, p. 20). From these perspectives, it is clear that many researchers agree that social media marketing provides a highly effective means that companies can use to engage with their customers, increase loyalty and access new markets for their products. Theoretical framework Various theories have been developed to explain the reasons as to why people use social media sites and the manner in which people engage with each other when using the sites. Many of the theories are applicable to the proposed research. However, only a few can be used to adequately explain the subject of the proposed research. Two of these theories, the Social Exchange Theory and the Social Network Analysis Theory, will form the theoretical framework of the proposed research. The Social Networks Theory states that social media sites function as communities of individuals who are interconnected to each other (Pan & Crotts 2012, p. 10). Under this model, the course of development of social media can be explained using mathematical models. Using this approach, social media can be explained as a highly sophisticated web of interconnectedness among individuals, based on various factors. Based on the model, the level of closeness frequency of communication or connectedness of the members of any social media site can be analysed (Pan & Crotts 2012, p. 10). Therefore, this theory is important for the proposed research because it provides an explanation for the development of social media sites and how companies, as participants, can be part of the network. The social exchange theory explains why people participate in the activities that take place on social media sites. The essence of the theory is that people contribute content on social media sites because they believe that they will get various benefits as a result (Pan & Crotts 2012, p. 8). The theory uses the idea of cost-benefit analysis to explain why people form bonds with others on social media sites. It is stated that people engage with others on social media sites with the expectation that they will gain influence over others or that others will engage with them in return (Pan & Crotts 2012, p. 8). This theory is important for the proposed study because it helps to explain the manner in which individuals behave when they are on social media platforms. Research model The following model will be used to conduct the proposed research. Hypothesis development The following hypotheses shall be used in the proposed research. The hypotheses are based on the objectives of the research and the findings from the review of literature related to the subject. Hypothesis 1: the need to minimise marketing costs drives the adoption of social media marketing among start-ups in Australia. Hypothesis 2: the need to acquire new clients drives the adoption of social media marketing by start-ups in Australia. Hypothesis 3: The need to retain existing clients via engagement drives the adoption of social media marketing among start-ups in Australia. Hypothesis 4: The growing use of social media in the current times drives the adoption of social media marketing among start-ups in Australia. 6. Methodology The proposed study falls under the quantitative survey type of research. In theory, quantitative surveys use quantitative data to test the truthfulness of particular statements of hypotheses (de Vaus 2013, p. 5). The defining characteristic of quantitative surveys is that they make use of quantitative data collection and analysis methods to provide answers to the particular questions used in the research (de Vaus 2013, p. 5). The use of quantitative data differentiates this form of studies from those in which qualitative data and qualitative data analysis methods are used. In this particular study, quantitative data shall be used to answer the research questions. The quantitative data shall be in the form of the responses of the persons who shall be interviewed in the course of the study to the particular questions in the questionnaire. The quantitative data that shall be used in the research shall be collected using the survey method. Under this method, a specially-prepared questionnaire shall be distributed to a sample of participants. The questionnaire shall be distributed to the respondents via email. The respondents will be required to complete the questionnaire and mail the completed questionnaire back to the researcher within a given period. The respondents shall be top-level managers in start-ups in Australian. In practice, many start-ups are owner-managed, meaning that during their early stages, the owners are fully responsible for the managerial function of the organisations. Therefore, it will be easy for the researcher to get accurate information from owner-managers of randomly selected start-ups within Melbourne area of Australia. The sample of respondents shall be composed of 300 senior managers of start-up companies in Melbourne area. Random sampling technique shall be used to determine the 300 individuals who will be asked to complete the questionnaire that shall be used in the research. The sampling frame for the proposed research is defined by the particular type and location of the companies that will be used in the course of the study. In this case, the focus will be on companies that have been set up in the recent past and can, therefore, be categorised as start-ups. Second, the start-up companies that will be used in the proposed research are those ones which are found within the Melbourne city in Australia. Finally, statistical methods will be used to analyse the data collected from the respondents. In particular, regression analysis will be used to answer the four research questions that will be used in the research. The research questions are derived from the objectives of the research. Therefore, from the results of the regression analysis, the overall question of the research will be answered. References Arca, C 2012, Social media marketing benefits for businesses: why and how should every business create and develop its social media sites? (Master’s thesis, Aalborg University, Aalborg), viewed 4 March 2017, . 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