2008
Social Media’s Influence in Purchase Decision

 INDIAN INSTITUTE OF MANAGEMENT | INDORE




   Social Media’s Influen...
Social Media’s Influence in Purchase Decision                         2008


     Contents:
       1. Executive Summary
  ...
Social Media’s Influence in Purchase Decision                         2008

       15. Participation is Marketing
       1...
Social Media’s Influence in Purchase Decision                                                     2008




     Executive ...
Social Media’s Influence in Purchase Decision                                             2008


     Introduction
     So...
Social Media’s Influence in Purchase Decision                                        2008


     Openness: Most social med...
Social Media’s Influence in Purchase Decision                                             2008


     Basic forms of socia...
Social Media’s Influence in Purchase Decision                                             2008




     How social media w...
Social Media’s Influence in Purchase Decision                                             2008




     A popular type of ...
Social Media’s Influence in Purchase Decision                                             2008

     MySpace has built a l...
Social Media’s Influence in Purchase Decision                                                2008




     Perhaps the mos...
Social Media’s Influence in Purchase Decision                                                2008

     further informatio...
Social Media’s Influence in Purchase Decision                                                 2008

     bias (across the ...
Social Media’s Influence in Purchase Decision                                               2008




     Reading blogs
  ...
Social Media’s Influence in Purchase Decision                                              2008


     Wikipedia
     The ...
Social Media’s Influence in Purchase Decision                                               2008


     Trying out wikis
 ...
Social Media’s Influence in Purchase Decision                                                   2008

     subject, for sh...
Social Media’s Influence in Purchase Decision                                                 2008




     Digg is a news...
Social Media’s Influence in Purchase Decision                                                 2008


     How micro-bloggi...
Social Media’s Influence in Purchase Decision                                               2008

     media. They will de...
Social Media’s Influence in Purchase Decision                                                2008

     I think I am a fus...
Social Media’s Influence in Purchase Decision                                                  2008

     We shudder at th...
Social Media’s Influence in Purchase Decision                                             2008


     Social networking
  ...
Social Media’s Influence in Purchase Decision                                                  2008


     So what's the d...
Social Media’s Influence in Purchase Decision                                                2008




     Recently social...
Social Media’s Influence in Purchase Decision                                                2008

          Compliance: ...
Social Media’s Influence in Purchase Decision                                                2008

     2. Aggregate infor...
Social Media’s Influence in Purchase Decision                                                2008

     messages directly ...
Social Media’s Influence in Purchase Decision                                             2008


     Participation is mar...
Social Media’s Influence in Purchase Decision                                                 2008

     conversations tha...
Social Media’s Influence in Purchase Decision                                               2008

     creating “people-po...
Social Media’s Influence in Purchase Decision                                             2008

     4. Purchase Decision:...
Social Media’s Influence in Purchase Decision                                                 2008

     4. For every ques...
Social Media’s Influence in Purchase Decision                                                  2008

     data they need t...
Social Media’s Influence in Purchase Decision                                               2008

     4) Conversational C...
Social Media’s Influence in Purchase Decision                                                                             ...
Social Media’s Influence in Purchase Decision                                                                       2008

...
Social Media’s Influence in Purchase Decision                                                                             ...
Social Media’s Influence in Purchase Decision                                                                             ...
Social Media’s Influence in Purchase Decision                                                                             ...
Social Media’s Influence in Purchase Decision                                                                             ...
Social Media’s Influence in Purchase Decision                                                2008

             From the ...
Social Media’s Influence in Purchase Decision                                                         2008

            9....
Social Media’s Influence in Purchase Decision                                                           2008

     Recomme...
Social Media’s Influence in Purchase Decision                                                    2008

            11. Q14...
Social Media’s Influence in Purchase Decision                                                              2008

         ...
Social Media’s Influence in Purchase Decision                                                                             ...
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Social Media’s Influence in Purchase Decision
Social Media’s Influence in Purchase Decision
Social Media’s Influence in Purchase Decision
Social Media’s Influence in Purchase Decision
Social Media’s Influence in Purchase Decision
Social Media’s Influence in Purchase Decision
Social Media’s Influence in Purchase Decision
Social Media’s Influence in Purchase Decision
Social Media’s Influence in Purchase Decision
Social Media’s Influence in Purchase Decision
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Social Media’s Influence in Purchase Decision

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The objective of this study is to understand the influence of social media in purchase decision making. The focus of the study is to understand the consumer buying behavior and influence of social media’s in decision making. The sample size taken for this study was 100 qualified respondents with diverse backgrounds across the country. An exploratory research was done to understand the nature of social networking and online consumer behaviour followed by a primary research where questionnaire were administered both personally and online.

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  • Hello Hassan - can you share this with me at murugan.sarangapani@gmail.com as I am working on a Ph.D in social media with Alagappa University. I would like to use it for literature review. Pls help. Thanks
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  • sir kindly send me this work of yours as i am working on this topic in pakistan. email id hafizahmad470@gmail.com
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  • sir , i am working in the same field so can you please mail me a copy of your project with project proposal . MY id is yagnikparth@hotmail.com
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  • Dear Hassan Mirza i am working on the same project if it is feasible for you then kindly send me this project of yours on my id hafizahmad470@gmail.com thanks
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  • I am student of university of jaffna ,sri lanka. i do my research in the similar area. i would like your work for my literature review. can you sen me this to my mail. chamal.ishan@gmail.com . thank you advance
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Social Media’s Influence in Purchase Decision

  1. 1. 2008 Social Media’s Influence in Purchase Decision INDIAN INSTITUTE OF MANAGEMENT | INDORE Social Media’s Influence in Purchase Decision Submitted to Prof. Rajeev Kumra By: Hasan Mirza | CAF ID: 60605070083 2008 INDIAN INSTITUTE OF MANAGEMENT | INDORE
  2. 2. Social Media’s Influence in Purchase Decision 2008 Contents: 1. Executive Summary 2. Introduction a. So how big a deal is social media? b. What is social media? i. Openness ii. Conversation iii. Community iv. Connectedness c. Basic forms of social media i. Social networks ii. Wikis iii. Podcasts iv. Content communities v. Microblogging 3. How Social Media Works 4. How Social Networks Work 5. How Blogs Work a. Different Types of Blogs b. Mainstream Media Blogs c. Reading Blogs 6. How Wikis Work a. Wikipedia b. Trying out Wikis 7. How Podcasts Work a. Getting Started with Podcasts 8. How Forums Work 9. How Content Communities Work 10. How Micro-blogging Works 11. How Second Life works 12. What Next? 13. Related Case study 14. Social Networking a. So what's the downside of using social media? b. Word of Mouth c. Why social influence marketing matters to us? INDIAN INSTITUTE OF MANAGEMENT | INDORE
  3. 3. Social Media’s Influence in Purchase Decision 2008 15. Participation is Marketing 16. Social Tools for Social Media 17. The Role of Marketing 18. Consumer Buying Behaviour Process 19. What's Next for Social Platforms? 20. Conclusion 21. Research Design 22. Research Objective 23. Research Methodology a. Sample Design b. Field work plan and dates c. Analysis / expected outcome plan d. Questionnaire copy 24. Analysis a. Simple tabulation b. Cross-tabulation c. Any specific analysis 25. Findings 26. Limitations INDIAN INSTITUTE OF MANAGEMENT | INDORE
  4. 4. Social Media’s Influence in Purchase Decision 2008 Executive Summary: The objective of this study is to understand the influence of social media in purchase decision making. The focus of the study is to understand the consumer buying behaviour and influence of social media’s in decision making. The sample size taken for this study was 100 qualified respondents with diverse backgrounds across the country. An exploratory research was done to understand the nature of social networking and online consumer behaviour followed by a primary research where questionnaire were administered both personally and online. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  5. 5. Social Media’s Influence in Purchase Decision 2008 Introduction So how big a deal is social media? Very big indeed! To give you an idea of the numbers, when last updated there were: More than 110 million blogs being tracked by Technorati, a specialist blog search engine, up from 63 million at the beginning of the year An estimated 100 million videos a day being watched on video sharing website, YouTube More than 200 million profiles created by users on social network MySpace What is social media? Social media is best understood as a group of new kinds of online media, which share most or all of the following characteristics: Participation: social media encourages contributions and feedback from everyone who is interested. It blurs the line between media and audience. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  6. 6. Social Media’s Influence in Purchase Decision 2008 Openness: Most social media services are open to feedback and participation. They encourage voting, comments and the sharing of information. There are rarely any barriers to accessing and making use of content. Password-protected content is usually frowned on. Conversation: while traditional media is about ‘broadcasting’, (content transmitted or distributed to an audience) social media is better seen as a two-way conversation. Community: Social media allows communities to shape up quickly and communicate successfully. Communities share common interests, such as a love of photography, a political issue or a favourite TV show. Connectedness: Most kinds of social media flourish on their connectedness, making use of links to other sites, resources and people. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  7. 7. Social Media’s Influence in Purchase Decision 2008 Basic forms of social media There are basically six kinds of social media commonly seen and found today. Social networks: These kinds of websites often allow people to build personal web pages and then connect with friends to share content and communication. The biggest social networks are MySpace, Facebook and Bebo. Blogs are perhaps the best known forms of social media. Most blogs are in the form of online journals, with entries appearing with the most recent first. Wikis: These websites permit people to add content to or edit the information on them, acting as a communal document or a database. The best-known is wiki; which stands for Wikipedia; an online encyclopedia which has over 2 million English language articles. Podcasts: These are audio and video files that are available and accessible by subscription, through services like Apple iTunes. Forums on the other hand are areas for online discussions, often done around specific topics and interests. Forums came about before the term ‘social media’ emerged and is a powerful and popular element amongst online communities. Content communities: These are basically communities which organize and share particular kinds of content. The most popular content communities tend to form around photos (Flickr), bookmarked links (del.icio.us) and videos (YouTube). Microblogging: These are social networking blogs combined with bite-sized blogging, where small amounts of content ('updates') are distributed online and also through the mobile phone network. Twitter is the clear leader in this field. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  8. 8. Social Media’s Influence in Purchase Decision 2008 How social media works Now let’s take a look at each of the main types of social media, and how they work. These explanations are calculatedly very general, because with social media every rule seems to have an exception. In fact, among the defining characteristics of social media are the blurring of definitions, rapid innovation, reinvention and mash-ups. Each explanation also has a section on how to try out that form of social media yourself, with pointers on both how to find social media that’s significant to you and how you might go about creating it. If you want to really understand how social media works, there’s no better way than to take part in it. Mash-ups: the combination of two or more pieces of content (or software, or websites) is one of the phenomena in social media that make it at once so exciting, dynamic and sometimes puzzling. Mash-ups are possible because of the openness of social media – many websites and software developers support people to play with their services and reinvent them. There are literally hundreds of mash-ups of the Google Earth service, where people have attached information to parts of the maps. For example there is a UK rail service mash-up where you can track in real time where trains are on the map. Fans of the TV series 24 have mapped locations from the shows‟ plotlines on to a Google Earth map. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  9. 9. Social Media’s Influence in Purchase Decision 2008 A popular type of mash-up cannibalizes different pieces of content, typically videos and music. Popular videos on YouTube can generate hundreds of imitations, homage’s and (frequently) comic reinterpretations. In communities like this, the number of mash-ups a piece of content spawns is often an indicator of its popularity. Some marketers have cottoned on to the power of this and it makes it a point to encourage people to reinterpret their content. How social networks work Social networks on the web are like controlled versions of the extensive blog network. People joining a social network usually create a profile and then build a network by connecting to friends and contacts within the network, or by engaging real-world contacts and friends to join the social network. These communities preserve the interest of their members by being useful to them and providing services that are pleasurable or help them to expand their networks. MySpace, for instance, allows its members to craft vibrant, chaotic home pages (they've been likened to the walls of a teenager's bedroom) to which they can upload images, videos and music. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  10. 10. Social Media’s Influence in Purchase Decision 2008 MySpace has built a lot of its popularity around its music services. There are said to be over three million bands and musicians registered on it, trying to attract a fan base from the 200 million registered accounts. According to Hitwise, in September 2006 MySpace was the 8th largest referrer of traffic to HMV.co.uk, more even than the MSN search engine. In 2007, Facebook a social network that originated in US colleges became available for public use in the UK. It’s popularity rapidly sky-rocketed. Part of Facebook's success is its creators' decision to 'open up' and allow anyone to develop applications and run them on Facebook - without charging them. This has seen Facebook users able to play each other at Scrabble and Chess, compare each others' tastes and send 'virtual gifts', among any number of new ideas vying for attention. Bebo, which is popular among school-age children, actually has the most members, perhaps helped by the fact that it is grouped around schools and colleges. Crucially, the growth in the use of social networks by young people in recent years has come at the expense of their consumption of traditional media such as TV and magazines. This switch in behaviour was one of the drivers behind the biggest deal in social media to date, when Rupert Murdoch bought MySpace for US $580 million.5 Marketers have also increasingly begun to experiment with trying to reach the members of MySpace and other social networks. Bebo hosts pages for many children’s authors for instance, while MySpace has seen a rush of marketing efforts from Toyota to the US Army. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  11. 11. Social Media’s Influence in Purchase Decision 2008 Perhaps the most 'grown-up' of the popular networks is LinkedIn, which allows users to put up their business and professional contacts into an online network. It has been criticised for not being open enough and for charging for too many of its services – but next to Facebook it is still the most popular online social network among people aged 25 and over. The huge success of the 'opening up' of Facebook, as mentioned above, could be a dare to LinkedIn's 'closed' approach in the future. How blogs work At its simplest, a blog is an online journal where the entries are published with the most recent first. There are a number of features that make blogs noteworthy and different to other websites: Tone: blogs tend to be written in a personal, conversational style. They are usually the work of an acknowledged and renowned author or group of authors. Topic: blogs tend to define what it is they are writing about. They can be as explicit as a blog about a book in evolution or as wide in scope as books such as ‘My musings on life and stuff’. Links and trackbacks: the services people employ to write blogs make it very easy for them to insert links to other websites, usually in reference to an article or blog post or to provide INDIAN INSTITUTE OF MANAGEMENT | INDORE
  12. 12. Social Media’s Influence in Purchase Decision 2008 further information about the subject they are writing about. Comments: each blog post has a comments section, effectively a message board for that article. On blogs with large audiences the debates in these sections can run to hundreds of comments at a time. Subscription: blogs can be subscribed to, usually via RSS technology, making it easy to keep up with new content. Blogs are easy to set up using any of a number of services. One of the simplest is the free Blogger service from Google. Different types of blogs With millions of people around the world of different ages and backgrounds blogging about whatever they feel like, it is about as easy to generalize about ‘bloggers’ as it is to make sweeping statements about ‘human beings’. Here, we have discussed some of the key kinds of blogs one usually comes come across: Personal blogs: Millions of people around the globe maintain blogs about their everyday lives, much like public diaries. These sometimes become very popular indeed, especially those anonymous, slightly risqué ones. You know the sort: they are the ones which get written about in the Sunday Times and become best-selling novels all of a sudden. One of the best-known personal blogs is Dooce. Political blogs are found especially in the US, but increasingly found in the UK as well these blogs are being written on politics. Often professed as a reaction to media INDIAN INSTITUTE OF MANAGEMENT | INDORE
  13. 13. Social Media’s Influence in Purchase Decision 2008 bias (across the political spectrum) they tend to comment on the news, giving closer analysis on issues they feel have been misrepresented, distorted or buffed over by the mainstream media. In United States of America, most if not all of the contenders for the presidency in 2008 already have bloggers on staff to advice on reaching political bloggers and their readers. We are not quite at that stage in the UK, but blogging has been playing a part in the rebirth of grassroots of Conservative politics. Significant examples from the political left include MediaLens and Harry's Place. Business blogs: Many professionals and businesses now have blogs. This allows companies to communicate in a less formal style rather than the customary style that’s found in newsletters, brochures and press releases, which help to give a human face and voice to the organisation. For individuals in business, a blog can develop into a very efficient way of building a network of like-minded individuals and raising their own profiles. Blog Maverick is a good example. Some blogs are unashamedly media businesses in their own right, taking advertising and employing a blogger or a group of bloggers full-time. Effectively, they are start-ups that are taking advantage of the new blogging technologies and opportunities to build communities of readers in new or niche subject areas. These are generally to be found covering news and opinion in the technology and media industries. Mainstream media blogs Most national newspapers in the UK – not to mention the BBC – now have blogs for some of their reporters and editors. These provide useful insights into the news gathering and reporting processes, but also give vent to personal views that the journalist may otherwise have kept to themselves. For example, see BBC business editor Robert Peston's blog. It’s worth noting that while many journalist blogs are hosted on newspaper sites themselves, a large number are independent, personal blogs with a major focus on their professional interests. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  14. 14. Social Media’s Influence in Purchase Decision 2008 Reading blogs The easiest way to read blogs is to subscribe to the ones you find interesting using the Bloglines, Rojo or Newsgator newsreader services. A newsreader is a website or piece of software where one can go to read a newsfeed that you are subscribed to via RSS. All blogs and most news websites have RSS feeds attached to them. You can find blogs on topics that you’re interested in by using search engines like Technorati or Google Blog Search. If you find a blog which is predominantly fascinating or pertinent to you, have a look for its 'blogroll' (list of recommended blogs) – it’s a great way of exploring the networks of blogs. How wikis work Wikis are websites that let people to contribute or edit content on them. They are great for collaborative working, for example creating a large document or project plan with a team in several offices. A wiki can be as private or as open as the people who create it want it to be. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  15. 15. Social Media’s Influence in Purchase Decision 2008 Wikipedia The most famous wiki is of course Wikipedia, an online encyclopedia that was started in 2001. It now has over two million articles in English alone and over a million members hooked on to it. In 2005, the respected scientific journal Nature conducted a study into the dependability of the scientific entries in Wikipedia and Encyclopedia Britannica. No one was surprised that Encyclopedia Britannica was the more reliable of the two – what was remarkable was that it was only marginally more precise. Wikipedia has a 2,500 word articles on Encyclopedia Britannica, its history and methodology. But Wikipedia is more than a reference source. During a major breaking news story, especially one which affects large numbers of people directly, such a natural disaster or political crisis, Wikipedia acts as a collective reporting function. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  16. 16. Social Media’s Influence in Purchase Decision 2008 Trying out wikis Everyone knows Wikipedia. Let’s discuss here some other examples of large wiki projects that you can take a look at and even involve yourself in: Wikia A community of wikis on different subjects WikiHow A practical ‘how to’ manual for everything from making coffee to writing business plans Wikinews Wikipedia’s news project How Podcasts work Podcasts are audio or video files that are published on the internet and that users can subscribe to. Sometimes 'vodcast' is used to specifically describe video services. It is the subscription feature that makes a podcast so powerful as a form of social media. People have long been able to upload audio content to the web, but the subscription feature means that people can build regular audiences and communities around their shows. It effectively puts private individuals or brands on a level playing field with traditional media organizations when it comes to competing for people’s attention with AV content online. Podcasts, like personal video recorders (PVRs), are part of a shift in media consumption patterns, which increasingly sees people watching or listening to content when and where it suits them. This is sometimes known as time-shifting. When a new podcast is posted to the web, all the subscribers‟ podcast services (such as iTunes) are automatically notified and download the programme to their computer’s hard drive. The podcast can then be either listened to on the computer or downloaded onto an MP3 player, such as an iPod. Getting started with podcasts: If you already have an iPod and use iTunes you can click on the Podcast icon in the left-hand toolbar to access podcasts and subscribe to them. Other good places to find and start listening to podcasts are Podcast Alley and Yahoo! Podcasts. If you fancy trying your hand at creating your own podcast, download the free audio editing tool Audacious or have a look at the 'how to' guide at wikiHow. How forums work Internet forums are the longest time-honored and an age-old form of online social media. It most commonly survives around specific topics and interests, for example cars or music. Each discussion in a forum is known as a thread, and many different threads can be active at the same time. This makes forums good places to find and engage in a variety of detailed discussions. They are often built into websites as an added feature, but some exist as stand- alone entities. Forums can be places for lively, vociferous debate, for seeking advice on a INDIAN INSTITUTE OF MANAGEMENT | INDORE
  17. 17. Social Media’s Influence in Purchase Decision 2008 subject, for sharing news, for flirting, or simply for whiling away time with idle chat. In other words, their huge variety reflects that of face-to-face conversations. The sites are moderated by an administrator, whose role it is to remove unsuitable posts or spam. However, a moderator will not lead or guide the discussion. This is a major difference between forums and blogs. Blogs have a clear owner, whereas a forum's threads are started by its members. Forums have a strong sense of community. Some are very enclosed, existing as 'islands' of online social activity with little or no connection to other forms of social media. This may be because forums were around long before the term 'social media' was coined, and in advance of any of the other types of community we associate with the term. In any event, they remain hugely popular, often with membership in the hundreds of thousands. How content communities work Content communities look a bit like social networks – you have to register, you get a home page and you can make connections with friends. However, they are focused on sharing a particular type of content. For example, Flickr is based around sharing photography and is the most popular service of its kind in the UK. Members upload their photos to the website and choose whether to make them public or just share with family and friends in their network. Thousands of groups have formed on Flickr around areas of common interest. There are groups dedicated to particular graffiti artists, towns, sports and animals. As evidence to its enormous success, Flickr was bought by Yahoo! in 2005 for an estimated US $30 million. YouTube is the world’s largest video sharing service, with over 100 million videos viewed every day. Members of YouTube can upload videos or create their own “channels” of favourite videos. The viral nature of YouTube videos is enhanced by a feature that makes it easy for people to cut and paste videos hosted by YouTube directly into their blogs. There are many clips from TV shows and movies hosted on their service. Some people also use this service to record video blogs. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  18. 18. Social Media’s Influence in Purchase Decision 2008 Digg is a news and content community. Members submit links to news stories that they think will be of interest and these are voted on by other members. Once a story has garnered about a critical number of votes (the number varies according to how busy the site is) it is moved to the front page where it receives wider attention from members as well as more casual visitors to the website. Digg claims to receive 20 million unique visitors every month, and certainly the volume of traffic via popular links from the service are so great that it can cause smaller companies' servers to crash. Folksonomies Content communities often display characteristics of what are known as folksonomies. The term folksonomy refers to the way that information is organized – it is a play on the word taxonomy, a classification system. In a folksonomy the information or content is “tagged” with one-word descriptors. Anyone can add a tag to a piece of content and see what other people have tagged, too. For instance, del.icio.us, a bookmark-sharing service that replaces the favourite’s folder on your web browser, is a prime example of a folksonomy. Content communities such as Flickr, YouTube and blogs generally make use of the folksonomy approach of tagging content to make it more easily found. Music folksonomies have proved particularly popular. Services such as last.fm let you tag tracks as you listen to them, and search and link to music based on other people’s tags. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  19. 19. Social Media’s Influence in Purchase Decision 2008 How micro-blogging works Micro-blogging is tool that combines elements of blogging with instant messaging and social networking. The clear leader in the micro-blogging field is Twitter with over 340,000 users. Other notable micro-blogging players comprise of Pownce and Jaiku, which offer various different features, but for the purposes of this e-book it makes sense to focus on the Twitter format. Twitter users can send messages of up to 140 characters instantly to multiple platforms. 90% of Twitter interactions are not made via the Twitter website, but via mobile text message, Instant Messaging, or a desktop application such as Twitterific. Its flexibility is further enhanced by the ability to subscribe to updates via RSS. Uses of Twitter vary. It's popular among homeworkers and freelancers, who use it in part as a 'virtual watercooler'. Other people use it simply to stay in touch with a close network and share thoughts or start conversations. Its suitability as a vehicle for breaking news has encouraged the BBC and CNN to introduce Twitter feeds. How Second Life works One of the biggest online marvels to capture the imagination of the traditional media is Second Life. It's an online computer game, but is perhaps better understood as an online virtual world. By registering and downloading the software, you can enter the game world and create an 'avatar' – an in-game representation of yourself. As Second Life encourages community and social interaction, some believe it to be a form of social media; although like so much in the new forms of online media, it could very well be considered as a category of its own. Over 1 million US dollars is spent in Second Life each day. This is made possible by the ability to own private property within the game and by setting an exchange rate between the game’s currency and the US dollar (approximately 270 “Linden dollars” to the US dollar). In fact, Second Life created its first millionaire in November 2006, when Anshe Chung amassed virtual assets worth one million US dollars. Marketers are beginning to experiment with the game world too. Without a doubt, a large part of the marketing benefit from these in-game presences really comes from the publicity in the non- virtual world that these generate, but these are intriguing precedents for marketers. What next? Whether we are still using MySpace or Second Life in two, five or ten year's time is anyone's guess. The unique way that the internet continually improves in response to user experience is driving innovation on an unprecedented scale. There will doubtless be exciting new variants on current formats and perhaps innovations that come to be thought of as new forms of social INDIAN INSTITUTE OF MANAGEMENT | INDORE
  20. 20. Social Media’s Influence in Purchase Decision 2008 media. They will develop in response to our appetite for new ways to communicate and to the increasingly flexible ways that we can go online. That's the detail – impossible to predict. What is beyond doubt is that social media – however it may be referred to in the future – be a genie that will not be disappearing back into its bottle. Case Example: How social media helped me choose between Firefox; LA Sovereign; Hercules and Hero bicycles and what this means for marketers! I have been eager to write this post, but wanted to complete the loop before I actually wrote it down. Day-before, I finally picked up a LA Sovereign bicycle as part of my new exercise regimen to replace yoga, thanks to the neck injury that I caused myself at class. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  21. 21. Social Media’s Influence in Purchase Decision 2008 I think I am a fussy buyer - the entire purchase experience, and not just the product, matters to me. In this case, I was going back to something that I grew up doing with a lot of intensity and passion and was fairly involved in the process of this purchase. Whether I made the right decision remains to be seen, but it allowed me to witness some of our own theories play out quite nicely: Layers of Influence: I had put together this simple model, capturing the core of conversational marketing, as we see it. With some changes from case-to-case, I think it holds true. We believe, that over and above the layer of traditional channels, is a complete new layer of social media that is playing a very crucial role in the decision making process. There was a time when we saved that newspaper clippings/ ads/ flyers of anything that we found of interest or were hoping to buy. What is happening today? The Internet is now my 'clipping'. It is my central repository where I go to look for information, when I need it. The three important players on the new layer: 1. The peer: the increasing clutter; uncertainty about transparency/ unbiased reportage, among a large section of the traditional media, has meant that the original circle of trust- friends, family and peer opinion has an enhanced value. 2. The expert: the 'traditional' experts are increasingly publishing content online; new experts are emerging, thanks to the enabling micro-publishing environment of the Internet/ Web 2.0 today. 3. The marketer: needs to engage stakeholders through transparent conversations, for, 'brochure speak' of the traditional media doesn't work anymore. I came back having tested the Hercules Ryder and a couple of Firefox bikes. My heart was set on buying a Firefox Fusion - it served my purpose quite beautifully - 40 mins to 1 hour ride, mornings, on fairly smooth roads. It also fell within my budget. A quick search on Google landed me on Shree's blog post - cautioning me 'Buy Firefox at your own risk!' What I witnessed was quite remarkable - there was a whole conversation happening on this single post. There were some 85 comments already: There were peers, of course, there were also experts - offering advice, managing communities and events/ initiatives. And lo, what do I see!! The marketer too has joined the conversations - taking feedback, sharing thoughts; not defending his product but offering solutions. I left a comment, asking if my choice was a good one. The Firefox team was prompt in jumping in, leaving a comment and then someone from their team wrote me an email requesting me to get in touch with him on his hand phone, which I did. They were transparent, stood their ground (no discounts). The only gap, a significant one, one could say - they were not good at closing a deal. I bought a competitor's product when I was absolutely sold on Firefox! Confidence? Over-confidence? Flawed Customer Service Focus? Who is to say...but a sale lost. Lesson in this for all of us, including me! More on this later. Who is scared of negative comments? Simple answer: all of us! INDIAN INSTITUTE OF MANAGEMENT | INDORE
  22. 22. Social Media’s Influence in Purchase Decision 2008 We shudder at the thought of quot;what if there are negative comments?quot; and yet, they happen to all of us. I learnt a lesson rather early into my blogs journey and made it a case-study on the 3rd day (after spending the initial 2 days in absolute shock and mourning). Many learning’s came my way from this episode. Many, if not most, brands are scared to embrace blogs & social media for fears of quot;What if?quot; No amount of convincing might be able to showcase to them what this one bike post does. In real life, different people have different experiences, good is peppered with bad, and that negative makes it REAL. A significant number of comments in the Firefox post are negative, and YET, I was convinced about the quality of the bikes and nearly bought one. The posts allowed me to make 'an educated decision'. That's what the customer is looking for on the net. The attitude of the marketer in this situation would be critical: 1. Is the marketer unnecessarily defensive? 2. Or, is the marketer open to feedback and suggestions? Is the marketer listening? Participating? Still sitting on the fence, Mr. Marketer? Having tasted success from this episode, should Firefox (and others in the category) not be embracing social media more pro-actively? 1. Setting up their own blogs, spaces where customers could engage with them directly? Firefox does have a club. 2. Should they not be involving the customer in the very process of crafting & testing the bikes? 3. Creating evangelist programmes and more? Still scared to test the waters? Go, take the plunge, but do show it the reverence it deserves. Do invest into rigor and discipline - think it through, for there are no 'One Size Fits All' solutions. In the end, however, it's Customer Focus that matters most. Proactive interactions on blogs, email but missing on closure - the difference between 'nearly sold' to 'actually sold'. The reasons I finally went with LA: 1. ' Perceived' value for money: Perceived still, and I will soon discover if it is 'real'. 2. Last mile: I called their office in Punjab for numbers of local dealers, which they promptly messaged back on my hand-phone. I ended up speaking with Gaurav of Supreme Cycle Co. - he had a rap number set as his caller tune; I landed at the store to find an intelligent looking young man, dressed in grunge; stud in one ear, blue tooth headset in the other ( I advised him to remove it when dealing with customers), laptop open on his desk - I could see he was using it to manage his stocks, as also listen to music; passionate about bikes, he was treating his customers with warmth. He knew his product and took me through the entire line- up, without showing any signs of impatience. Negotiated well but also made me feel like I got a deal. I was sold. He made a sale. Happy biking the social media roads! INDIAN INSTITUTE OF MANAGEMENT | INDORE
  23. 23. Social Media’s Influence in Purchase Decision 2008 Social networking One of the most common misperceptions about community is that it can be had simply by enabling some level of participation or contribution. Marketers ought to filter ideas and objectives about building true community through questions like:  Can you hang out there?  Can you carry on a winning dialogue?  Can you meet people and form significant relationships? The right level of social networking holistically ties together contributions and contributors across one’s website. In fact, this dependence is actually co-dependence; just like user- generated content on its own doesn't equal community; social networking too never succeeds when it's done purely for its own sake. In order to generate value, social networking must be quot;aboutquot; something. Your brand and the constellation of attributes and values that encircle it are as good a connective tissue as any for long-lived and purposeful social networking. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  24. 24. Social Media’s Influence in Purchase Decision 2008 So what's the downside of using social media? The most common concern that’s heard from marketers often is in relation to content risk. With any social media venture, it's important to find the right balance between openness and oversight. The three core principles of user-generated content, user-enhanced content and social networking as I've laid them out here should serve as building blocks around which to organize your concept development and planning. It's important to point out that there is no right or wrong prescription for weighting the elements of social media, and the specific combination of capabilities that's right for your business is heavily dependent on a multitude of factors. So the possible questions are: Just because ten people recommend something to you, it doesn't mean that one needs to listen. But if one person does, and you trust them (trust being a key factor here), then you'll be more inclined to listen. But what will drive action? Sometimes it's a tipping point thing -- if your best friend tells you, maybe you just nod your head. But when your girlfriend tells you too, then you go out and buy. Unless your mom tells you the same thing -- then you trash the idea. Social networks are huge, tangible (and measurable). Word of Mouth pits: word of mouth has been a well known buying trends influencer. The difference here is that you can reach the potential audience. Thus all this has a huge impact on buying trends that keep boosting or killing sales. It is not by sheer coincidence that many big companies have started watching all sorts of social networks searching for negative and positive buzz on their brand and products. Many companies have learned this the hard way, and some are only starting to take some advantages of the huge potential such networks have. There are some big risks in trying to influence such networks. The quot;massesquot; are very sensitive to cheap sales pitches and half-thought initiatives can backfire in the worst of ways. Word of Mouth: Word of mouth is not easily distinguishable to one or even two sources; however one can easily group influential media on purchase decisions by merchandise category’s and other factors. In a customer centric media plan, the influence of media to make a purchase becomes a key component in determining the allocations to the various options, as marketers refine their focus on consumers. Media planning requires more insight on how consumers behave and less on gross audience estimates. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  25. 25. Social Media’s Influence in Purchase Decision 2008 Recently social influence marketing was introduced – or employing social media as part of the entire lifecycle of a marketing campaign, even beyond it. But the question is why does social influence marketing matter to you, and does social influence marketing translate into real digital marketing tactics? The answers to both those questions fundamentally point to the future of social media for marketers. So it’s imperative to examine them carefully. Why does social influence marketing matter to us? Consumers have always been heavily influenced by each other when they make purchasing decisions. They ask each other for advice, they observe and mimic each other’s decision making, and frankly they let peer pressure notify their decisions whether they like to admit it or not. What’s changed is that digital behavior has caught up with the offline behavior – and that’s why social influence marketing matters to anyone who has a future in marketing. Communication technologies such as social networks, prediction markets, micro-blogging solutions, location-based networked mobile phone applications, and even virtual worlds make it possible for consumers to influence each other far more directly and dramatically than ever before. This influence occurs in three ways: INDIAN INSTITUTE OF MANAGEMENT | INDORE
  26. 26. Social Media’s Influence in Purchase Decision 2008  Compliance: an individual agrees with a point of view and acts in a specific way in order to achieve a favorable reaction among his or her peers.  Identification: a person acts a certain way in front of a group because she believes in what she says, and belonging to a group is important to her.  Internalization: your views are truly altered beyond the relationship with the group. Aside from making for good copy in behavioral psychology text books, these concepts do translate into tactics for a digital marketing program or platform. Let’s dig deeper into how this really works! Building compliance, identification, and internalization is in many ways the holy grail of marketing. Here are some points to consider as you take advantage of social influence marketing to do so. 1. Become your consumer: The rise of social networks and blogs has allowed consumers to stay far more closely connected with each other. As a result, consumers are more intimately watching each other transact online and offline. They want to be in conformity. To influence consumers, you need to become like them and participate honestly in those same conversations in an ongoing basis. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  27. 27. Social Media’s Influence in Purchase Decision 2008 2. Aggregate information for your consumer: Social media has empowered consumers to form stronger opinions and express them more broadly. More people are blogging, commenting and rating than ever before. Approximately 120,000 blogs are created every day. These contributors are providing a richer base of knowledge for other consumers to use while going through a purchasing process. Consumers who tap into these blogs know more about your brand than you probably do. Rather than trying to control the message, serve as the aggregator of all information regarding the brand. Let your website become the amphitheatre for the conversation. 3. Articulate product benefits better: Recent research by eMarketer highlights how influential customer reviews are. Approximately, 22% of US online buyers always read customer reviews before making a purchase. 43% of US online buyers read customer reviews at least most of the time before making a purchase. That's social influence at play. The best thing that one can do about it is to recognize that your consumers are more informed and make sure you sell a strong product and articulate its benefits in a more digestible manner. This is one way of creating happier customers who’ll then do the marketing for you instead of the other way round. 4. Align your organization into multiple, authentic voices: Social Influence Marketing is about providing the space for consumers to influence each other during the purchase process. As a brand, you want them to positively influence each other. Do this by aligning your entire organization into a network of multiple, authentic voices. Don’t leave customer interactions to the sales and marketing teams. Empower other internal constituents across the organization to serve as brand ambassadors maybe via blogs. They’ll talk about your brand in their own voices to their own communities. They may not be totally on message but they’ll be authentic and it’ll have a strong, positive influence. Trust them. 5. Amplify the favorite business stories: So you can’t control the message anymore. Your consumers would rather listen to each other than to you. But you still have messages that you want to disseminate. You can do that by shaping, influencing and amplifying business stories that play to your brand’s strengths. Remember; just because your consumers are more interested in talking to each other, it doesn’t mean you have no voice at all. It’s essential that one publishes their favorite business stories as widely as possible and also directs it’s consumers to the individuals or groups already inclined to your products. 6. Let consumers shape and share the experience: Your consumers don’t necessarily want to participate in the conversations on your own website. Rather than just focusing on creating strong brand experiences that can then be shared among consumers, also think in terms of creating assets that allow consumers to shape and extend the brand experiences however they want to. Furthermore, let them shape and share those experiences wherever they want to. 7. Participate where your consumers are: If you see that your consumers are spending time on social sites interacting with their peer groups; don’t try to disrupt those social dynamics by dragging them to your website at every opportunity you get. Instead, provide them with the INDIAN INSTITUTE OF MANAGEMENT | INDORE
  28. 28. Social Media’s Influence in Purchase Decision 2008 messages directly on those social sites themselves. Go to your consumers rather than continuously trying to pull them to you. In fact, even de-emphasize the website if you have to. 8. Don’t do it all at once: Your consumers are probably smarter than you think. Don’t try too hard to come across as clever, participatory and cool. Rather than trying every social strategy at once, focus on strong ideas and only use the channels that are most appropriate for them. In other words, don’t feel obliged to have a Facebook page, a CEO Blog, a wiki, a MySpace page and a YouTube channel simply because everyone else has one. Focus on an engaging way to interact with your consumers as a participant and then choose the channels to use. After all your consumers maybe suffering from social networking fatigue as it’s happening in the UK. It is early days for social influence marketing. We’re only just beginning to understand how consumers are influencing each others’ purchasing decisions online and what role brands should play in this. Behavioral psychology helps us understand influence to a certain extent. But no one brand has really figured this out as yet. If you’re smart, sensible, pragmatic and mindful of your consumers’ sensitivities, you may be one of the first to do so. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  29. 29. Social Media’s Influence in Purchase Decision 2008 Participation is marketing Social Media represents an entirely new way to reach customers and connect with them directly. It adds an outbound channel that complements inbound customer service and traditional PR, direct marketing and advertising, placing companies and their customers on a level playing field to discuss things as peers. Most importantly, it transcends the process of simply answering questions to creating a community of enthusiasts and evangelists. For the most part, the only way companies know that customers have questions, comments, or concerns, is if they contact customer service, make the news, form a public group, or if buying patterns, stock value, and sales trends suddenly shift. You can bet that for every inbound customer inquiry, that there is a significant percentage of existing and potential customers actively discussing the same topic out in the open, simply looking for guidance, feedback, acknowledgment, and/or information. And usually, these discussions transpire without company participation, leaving people to resolve issues and questions on their own. Companies must engage or they place themselves on the long road to inevitable obsolescence. It's like the old adage, out of sight, out of mind. Or, quite simply, engage or die. Nowadays participation is marketing. Conversations are a form of marketing. Companies, first need to listen in order to accurately analyze how, where, and when to participate. Social Media forces companies to look outward to proactively find the INDIAN INSTITUTE OF MANAGEMENT | INDORE
  30. 30. Social Media’s Influence in Purchase Decision 2008 conversations that are important to business and relationships. And it's not just the responsibility of PR; it requires the participation by multiple disciplines across the organization in order to genuinely provide meaningful support and information. Again, we're not talking about messaging or sales propositions. If you stop to think about it, we're talking about fusing marketing, PR, community relations, and customer service in an entirely new socially-aware role. Social Tools for Social Media It’s also important to search and comb through services that track conversations and relevant topics such as Technorati, Blog pulse, Bloglines, b5, Google Blog Search, Blog Catalog, and also MyBlogLog. These tools allow you to proactively monitor memes and determine your level of engagement. Social Media isn’t limited to blogs and communities. Social Media is also fueling social networks and the ability to find and host conversations related to brands and products. For example, Creating Facebook groups as well as searching other related groups are incredible opportunities to have conversations with people and as well, influence groups of people in the process. Another way to help customers is to bring them to you through your own company blog as well as hosting an integrated social network/discussion forum. Companies such as Satisfaction are INDIAN INSTITUTE OF MANAGEMENT | INDORE
  31. 31. Social Media’s Influence in Purchase Decision 2008 creating “people-powered” customer service forums where companies and customers can create a channel dedicated to helping people use products more effectively by solving their problems and answering questions all in one place. In many cases, services such as Satisfaction are complementary to all other campaigns. In the case of Twitter, companies can create an account where they can proactively update their customers aka “followers” with new updates, answers, etc. Customers can also contact them through “direct” messaging or public @companyname posts. #hashtags is a growing trend within the service that allows users to callout topics such as #customer+service for others to locate through a dedicated search tool. Jaiku integrated channels last year, for example, allowing anyone, in this case, companies, to create a dedicated pipe to share and reply to users looking for specific information and conversations. User groups and forums haven’t gone away. They’re still thriving, and, determining which communities host conversations that matter to your business in critical in maintaining customer service and also instilling satisfaction and fostering enthusiasm. Monitoring the culture of each community and the sociology of the interactions, can only tell one how they can participate. Whatever you do, don’t’ engage as a marketer and don’t participate from a top down approach – meaning be helpful, not “put out” from having to answer the same things over and over again. The Role of Marketing Marketing’s role in an organization is changing. It is no longer enough to push a product or service at a customer, thinking it will meet that customer’s need because they fit into a certain demographic. Knowing which magazines I subscribe to, which TV shows I watch and what kinds of products I purchase do not really tell you my story, either. It is marketing’s role to truly understand the customer’s need from a psycho-graphic and behavioral aspect. In order to do that, marketers are Inference it necessary to view their company, its products and services, and even each place a customer touches that company from the customer’s perspective. Only then can we begin to understand the underlying needs of a customer. Consumer Buying Behaviour process Consumer Buying Behaviour is the decision making process she/he undergoes while choosing for a product or a service. The basic steps to the process are as follows: 1. Need Recognition: Identifying the need for which the product or service is required 2. Alternative Search: Doing a search on the alternatives that are available in the market today 3. Alternative Evaluation: Evaluating and comparing all the alternatives on various factors INDIAN INSTITUTE OF MANAGEMENT | INDORE
  32. 32. Social Media’s Influence in Purchase Decision 2008 4. Purchase Decision: Choosing the most preferred alternative and buying it 5. Post Purchase Evaluation / Dissonance: Evaluating the benefits of the product/service after using it and forming an attitude about it. Social media are the online practices that people use to create and share opinions, insights, experiences, and perspectives with each other. In terms of the process of decision making, a social media plays a role in searching for alternatives and doing a comparison amongst them, after which the user's inputs help him to review the product/service for others to benefit from it. Hence, for the study of understanding the buying behaviour and social media's effect on it, we need to study two constructs – alternative search and alternative evaluation, or simply search and evaluation. Regarding search, the construct can be broken down further into: 1. Types of search mediums and their recall (top of mind, aided and unaided) 2. Preference based on time consumption, ease and convenience, reach, relevant and reliable information 3. Belief in the social media as a medium (reliability, how much time willing to spend, would you use it given a chance, etc.) vis-à-vis other mediums such as telephone, yellow pages, product brochures, etc. 4. Product or Service categories preferred across different search mediums (which medium used for which service/product?) 5. What specific in social media attracts a user for a product search (TOM, aided, unaided; rating of helping tools on social media, etc.) Regarding product/service evaluation, the construct can be broken down further into: 1. Evaluation techniques 2. Level/Extent of evaluation 3. Product evaluation preferred across relevant mediums 4. Most preferred search and evaluation tools/techniques on the digital medium 5. Reliability issues (community, blogs and tools involving third party participation) Based on the above mentioned ten factors, we can open up the floor for a FGD. The key questions to guide the FGD can be: 1. Stages of decision making 2. At which stages do you require assistance? 3. What helps you during a purchase? 4. What do you look for, in terms of information, access and reliability when you look forward to a medium? Once you are through with the FGD, set up your questions and do a descriptive study on it. The key things to look after are: 1. Type of sampling and the sample size 2. The sample needs to be spread across geographical locations and across age brackets. 3. Do not aid the user to answer questions and provide Don't Know/Can't Say (DKCS) as options. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  33. 33. Social Media’s Influence in Purchase Decision 2008 4. For every question, do keep in mind the type of answers (rating, ranking, etc.) you will get which can be broken down in SPSS and can be helpful in answering your objective What's Next for Social Platforms? On a panel this morning, representatives from Facebook , MySpace , Bebo, Orkut/OpenSocial, and Six Apart talked about what we can expect in the coming year with regard to third-party applications, data portability/data sharing, monetization, and, of course, keeping the users happy slappy. The end result was clear from the start: Everyone is still a little fuzzy on where to go from here. User data and data portability Dave Morin, senior platform manager at Facebook spoke a lot about data portability and Facebook's emphasis on giving users control of their data going forward. quot;Our intent is to enable users to take data with them and to enable the user and developer to have access to INDIAN INSTITUTE OF MANAGEMENT | INDORE
  34. 34. Social Media’s Influence in Purchase Decision 2008 data they need to create great experiences,quot; he said. quot;Our responsibility [as developers] is to work together to define the future, whether it’s called data portability... or privacy portability.quot; On the flipside of giving users quot;controlquot; of their data, Morin also said one of Facebook's quot;core focusesquot; going forward is to keep a closer eye on what their users are doing at all times (i.e., beef up their already-perfected stalking capabilities.) quot;The recent actions you’ve taken or your friends have taken -- those things matter most each time you stop by somebody’s profile.quot; Conclusion If there's one constant in digital media, its change. Every 12 to 18 months the landscape expands. New channels seem to join existing, more mature formats that only started to dot the horizon a few months earlier. For example, consider that in 2005 blogs was the single most important. As we begin 2008, the lines have truly blurred between the mainstream sources that we have years of knowledge in how to engage and quantify and a digital landscape that is more dynamic. As the pace of change continues and the generation that grew up with the web enters adulthood, it ensures that measuring influence will continue to become even more complex and challenging. Still, there is some basic truths have emerged that are grounded in human nature and can guide the PR professional accordingly. First, even as they use their digital presences to coalesce audiences into communities, the basic ethos of the traditional press remains grounded in information. People visit media sites to stay informed, even as the way reporter’s work is becoming far more open and collaborative. This means that, for now, that the traditional methods of measuring the influence of the media remain largely the same. In the social sphere meanwhile, whether it is a dispersed community (e.g. blogs) or a more centralized one (MySpace), a different spirit has evolved. This one is grounded in open collaboration toward a shared outcome. The agenda here could include everything from information to entertainment to connections, social change and virtually thousands of others. Communicators who desire to build and measure influence need to think about the ethos of each venue, devise the right kinds of appropriate programmes and set up methodologies for measuring the impact of their efforts. Arguably, marketing communications spans two different continua. Programmes are at one end or the other or somewhere in between. This is depicted in the schematic below. Programmes can either be closed or open (Y axis) or they can be designed for communication or collaboration (the X axis). The result is four distinct quadrants: 1) Controlled Communication: One-way tactics such as TV advertising, online advertising and media relations that are great for branding and visibility, but are seldom collaborative 2) Open Communication Online initiatives, such as viral videos, that are designed to generate discussion, but not necessarily produce a shared outcome 3) Controlled Collaboration Programmes that facilitate participation but are more controlled, for example numerous efforts to solicit consumer generated ads INDIAN INSTITUTE OF MANAGEMENT | INDORE
  35. 35. Social Media’s Influence in Purchase Decision 2008 4) Conversational Collaboration Win-win initiatives that open a dialogue toward reaching a broader goal. Currently, most marketing communication programmes sit in on the left hand side of this matrix. However, as companies and organizations become more aware of the tenor of each venue and what works, we believe they will begin to mix in strategies and tactics from the right side. As a result, the outcome is that programmes on the left will measure online influence through metrics like impressions, conversations, in-bound links, friends and more. Meanwhile, the right hand side - particularly Conversational Collaborative programmes - will adopt entirely new methodologies that measure based on outcomes. For example, this could include ideas generated, donations or other means of measuring advocacy and so forth. This is fertile ground and one that has not been the dominion of marketers, but it will be going forward. The future of communications is in the mixing of these quadrants and understanding how they work together to influence the public. Research Design: Research: Descriptive Research Data sources: Primary and secondary data Research instrument: Questionnaire Type of questionnaire: Structured non-disguised Type of questions: close-ended questions Sample unit: Users who use social media Sample unit: 100 qualified users Sampling procedure: Simple random procedure Contact method: personal and online Mode of collecting data: The respondents will be chosen randomly and requested to grant interviews. The questions will then be asked in a firm Determined sequence. The secondary data will be collected from various books, journals, reports - both published and unpublished. Data processing: SPSS and inferences will be drawn from the data collected. Research Objective The objective is to find out the influence of social media in purchase decision. The respondent’s demographics, their preferences and their habits. Research Methodology a. Sample Design b. Analysis / expected outcome plan Analysis c. Frequencies and Cross-tabulation d. Factor analysis e. Cluster analysis INDIAN INSTITUTE OF MANAGEMENT | INDORE
  36. 36. Social Media’s Influence in Purchase Decision 2008 SPSS DATA ANALYSIS The below questions are in no particular order: 1. Cross tabulation between Q1 X Q2 Q1. How Net savvy are you? X Q2. Please indicate your age? 36 - 45 years 26 - 35 years 18 - 25 years Less than 18 years 0 5 10 15 20 25 Less than 18 18 - 25 years 26 - 35 years 36 - 45 years years Do you search/review and NOT 0 16 22 4 purchase online: Do you search/review AND 1 16 25 16 purchase online Do you search/review and NOT purchase online: Do you search/review AND purchase online Inference:  The chi-square test revealed there is no significant association between the variable age and variable net savvy.  From the chi-square test output table we see that a significant level of .112 (Pearson’s) has been achieved.  This means the Chi-square test is showing no significant association between the above two variables.  It is evident from the above chart that users’ between the age group 26 to 35 are more net savvy and tend to search/review products/services before they make a purchase.  It is also interesting to note that the trend continues as they mature starting from 18 years to 25 years.  One thing is clear, that respondents between 26-35 years read reviews by experts and users before they purchase online or not.  It is also interesting to note that as they mature they tend to trust the online medium more than the offline as they tend to purchase more online compared to offline.  The chi-square test revealed there is no significant association between age and being net savvy because the significant value was above 0.050  This leads us to conclude that age does not play a vital role in purchasing the products after reading reviews by experts/users.  More crosstabs have been done to understand its association with other questions INDIAN INSTITUTE OF MANAGEMENT | INDORE
  37. 37. Social Media’s Influence in Purchase Decision 2008 2. Q2. Please indicate your age. 47 32 67 20 1 Less than 18 years 18 - 25 years 26 - 35 years 36 - 45 years Inference:  Out of the total qualified sample size of 100  47% users are between the age group 26 to 35 years followed by  32% in the age group of 18 to 25 years.  The age group of 36 to 45 years followed by 18 to 25 is close and catching up fast with others who are more active socially compared to them. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  38. 38. Social Media’s Influence in Purchase Decision 2008 3. Q3. Please indicate your occupation 11 Self-employed 6 Employed in the public sector 72 Employed in the private sector 11 Student 0 20 40 60 80 Employed in the Employed in the Student Self-employed private sector public sector Frequency 11 72 6 11 Frequency Inference:  We infer that 72 of users are employed in the private sector followed by students and entrepreneurs who are at 11 each.  It is also evident that the users who work in a private sector stay online longer compared to others.  This leads us to conclude that 72 of these respondents tend to manage/juggle their social life with their professional life i.e. stay online during work. 4. Q4. Please indicate the City/Metro/Town you live in 120 100 100 80 60 43 40 19 13 12 10 20 2 1 0 Mumbai New Delhi Kolkata Chennai Bengaluru Hyderabad Guwhati Total Frequency 19 12 1 10 13 43 2 100 Frequency Inference:  It is clear from the above table that majority users are mainly from metros like Mumbai, Delhi, Bengaluru, Chennai and Hyderabad (upcoming metro). INDIAN INSTITUTE OF MANAGEMENT | INDORE
  39. 39. Social Media’s Influence in Purchase Decision 2008 5. Q5. Do you personally use the Internet? 2% 98% Yes No Inference:  98% of respondents have said they use the Internet personally.  Only a small percentage of respondents have said they do not use Internet personally 6. Cross tab between Q1 X Q9 Q1.How Net savvy are you? X Q9.How often do you purchase products/services after reading their reviews online? 4 None of the above 2 6 Seldom 9 14 Sometimes 19 6 Often 18 11 Usually 7 1 Consistently 3 None of the Consistently Usually Often Sometimes Seldom above Do you search/review and NOT 1 11 6 14 6 4 purchase online: Do you search/review AND purchase 3 7 18 19 9 2 online Do you search/review and NOT purchase online: Do you search/review AND purchase online INDIAN INSTITUTE OF MANAGEMENT | INDORE
  40. 40. Social Media’s Influence in Purchase Decision 2008 Inference:  The chi-square test revealed there is no significant association between the variable how net savvy are you and variable how often do you purchase online after reading reviews.  From the chi-square test output table we see that a significant level of .183 (Pearson’s) has been achieved.  This means the Chi-square test is showing no significant association between the above two variables.  This leads us to conclude that age does not play a vital role in how often you purchase online after reading products after reading reviews by experts/users.  The chi-square test revealed there is no significant association between age and being net savvy because the significant value was above 0.050  Majority of users 19% purchased ‘Sometimes’  Followed by 18% of users who purchased ‘Often’  It is interesting to know that 14% of the users did not purchase online even after going through reviews by experts/users.  Followed by users 11% users who said they did not purchase usually like other did.  More crosstabs have been done to understand its association with other questions 7. Crosstab between Q2 X Q9 Q2. Please indicate your Age? X Q9. How often do you purchase products/services after reading their reviews online? 20 12 9 8 8 8 7 5 44 3 2 222 11 1 1 0 0 0 0 0 Consistently Usually Often Sometimes Seldom None of the above Less than 18 years 0 0 1 0 0 0 18 - 25 years 1 9 8 5 7 2 26 - 35 years 1 8 12 20 4 2 36 - 45 years 2 1 3 8 4 2 Less than 18 years 18 - 25 years 26 - 35 years 36 - 45 years The objective of this tabulation is to find out if age plays a role in influencing the user to purchase online. Inference:  The chi-square test revealed there is no significant association between the variable age and variable how often do you purchase online after reading reviews.  From the chi-square test output table we see that a significant level of .270 (Pearson’s) has been achieved. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  41. 41. Social Media’s Influence in Purchase Decision 2008  This means the Chi-square test is showing no significant association between the above two variables.  This leads us to conclude that age does not play a vital role in how often you purchase online after reading products after reading reviews by experts/users.  The chi-square test revealed there is no significant association between age and being net savvy because the significant value was above 0.050  It is clear from the chart above that users in the age group of 26 to 35 years purchase products/services online more than the users falling in other age groups  In this age group users purchase sometimes/often after reading the reviews online  The users in the age group 18 to 25 are online and active but do not spend as much as their colleagues in the age group 26 to 35.  One reason being most of these users are either students or have just started their careers  It is also clear that there is no significant association between the age and how often they purchase online. This is because the chi-square result gave no significant association and hence it is weak. 8. Crosstab between Q10 X Q9 Q10. How much did you spend online to purchase anything last year? X Q9. How often do you purchase products/services after reading their reviews online? Above 10,001 8,001 - 10,000 Rupees 6,001 - 8,000 Rupees 4,001 - 6,000 Rupees 2,001 - 4,000 Rupees 1,001 - 2,000 Rupees Up to 1,000 Rupees None 0 2 4 6 8 10 12 1,001 - 2,001 - 4,001 - 6,001 - 8,001 - Up to 1,000 Above None 2,000 4,000 6,000 8,000 10,000 Rupees 10,001 Rupees Rupees Rupees Rupees Rupees None of the above 6 0 0 0 0 0 0 0 Seldom 3 9 1 1 0 1 0 0 Sometimes 3 0 3 6 5 3 2 11 Often 3 0 0 2 8 2 3 6 Usually 4 5 0 2 1 3 0 3 Consistently 0 0 0 1 0 1 0 2 None of the above Seldom Sometimes Often Usually Consistently Inference:  The chi-square test revealed there is a significant association between the variable how much did you spend last year and variable how often do you purchase online after reading reviews. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  42. 42. Social Media’s Influence in Purchase Decision 2008  From the chi-square test output table we see that a significant level of .000 (Pearson’s) has been achieved.  This means the Chi-square test is showing a strong significant association between the above two variables.  This leads us to conclude that your online spends does play a vital role in how often you purchase online after reading products after reading reviews by experts/users.  The chi-square test revealed there is a strong significant association between how much you spent last year and being net savvy because the significant value was less than 0.050  It is clear from the chart above that users in the age group of 26 to 35 years purchase products/services online more than the users falling in other age groups  In this age group users purchase sometimes/often after reading the reviews online  The users in the age group 18 to 25 are online and active but do not spend as much as their colleagues in the age group 26 to 35.  One reason being most of these users are either students or have just started their careers  Respondents spends touched a fairly high figure of 10,000 plus but these kind of purchases were made ‘sometimes’  Around 9% respondents spent upto Rs. 1000 online last year  Around 8% users spent between 4,000 to 6,000 online INDIAN INSTITUTE OF MANAGEMENT | INDORE
  43. 43. Social Media’s Influence in Purchase Decision 2008 9. Q12. How often do you carry out the following activities via Internet? Rate it on a scale of 1 to 5, ‘1’ being the lowest score and ‘5’ being the highest score. 250 200 150 100 50 0 5 4 3 2 1 Total Mean Var 1 42 15 24 2 17 100 3.63 Var 2 47 8 21 6 18 100 3.88 Var 3 82 10 8 0 0 100 5.63 Var 4 32 23 22 6 17 100 3.13 Var 5 33 32 17 5 13 100 3.18 Total 236 88 92 19 65 Var 1 Var 2 Var 3 Var 4 Var 5 Total Legend:  Pay utility bills = Var 1  Online banking = Var 2  E-mail/Chats = Var 3  Other payments and purchases = Var 4  Read reviews and shop for products/services = Var 5 Inference:  82% respondents spend most of their time (very often) on Emails and Chats  47% users use online banking or transact online very often. This could also mean that these users are more likely to make a purchase as they are familiar with transacting online.  18% respondents said they less often transact online. Efforts need to be put in to encourage more online transactions by them.  Many users seem to refrain themselves when it comes to using the Internet for paying utility bills or making any kind of payment online.  There is a misconception that has been built which needs to be corrected by educating them. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  44. 44. Social Media’s Influence in Purchase Decision 2008 Recommendation:  Marketing efforts may be targeted via e-mails and chats as 82% respondents spend most of their time (very often) on Emails and Chats.  Banks should encourage their clients to transact online more often as this may reduce their inconvenience.  Many respondents have opted to stay neutral which means they are neither comfortable nor dissatisfied with the service as such but not too happy to transact online.  This is an area that requires tremendous development along with education like what SBI has started doing these days through newspaper advertising. 10. Q13. Will you recommend the websites you visited to others based on your satisfied past experiences? 120 100 100 80 60 48 37 40 11 20 4 0 Will definitely Likely to Unlikely to Neutral Total recommend recommend recommend Frequency 48 37 11 4 100 Frequency Inference:  48% users have said they will definitely recommend the websites they have visited in the past to other colleagues and friends based on their past experiences.  37% are close to definitely recommending the same but they are not very sure about the same.  This could be due to the dissatisfaction that they may be experiencing while transacting online or interacting online.  11% of the users are neutral. Recommendation:  Website owners need to take a note of this point and ensure they set up necessary customer support to help the user anywhere anytime. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  45. 45. Social Media’s Influence in Purchase Decision 2008 11. Q14. Has your online shopping surpassed your off-line shopping (in-store shopping) 46% 54% Yes No Inference:  46% have responded saying their online shopping experience has surpassed their offline experience.  Whereas 54% have responded saying their experience has not surpassed the online shopping experience. Recommendation:  Website owners need to pay attention to these points and take necessary action to draw critical mass and allure them to shop online by offering them some discounts if shopped online.  Banks also have an important role to play; they need to educate as well as encourage their clients to use their online banking feature more often to grow this service.  E.g. recently due to the oil prices sky rocketing, most online shopping companies in the US have revealed that their online sales has gone up due to the oil price hike.  People like to sit home and transact online once they know for sure what they do online is secure. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  46. 46. Social Media’s Influence in Purchase Decision 2008 12. Q15. Who did you purchase products for? 25 Business purchase 53 Purchased a gift for someone else 77 Purchased for yourself 0 20 40 60 80 Purchased a gift for Purchased for yourself Business purchase someone else Responses 77 53 25 Responses Inference:  77 respondents have shopped for themselves online.  53 have purchased for someone else or gifted someone.  25 said they shopped online on behalf of their company.  This is generally to purchase a white papers etc. for their organization. INDIAN INSTITUTE OF MANAGEMENT | INDORE
  47. 47. Social Media’s Influence in Purchase Decision 2008 13. Q16. How do you express yourself creatively? 1.17 Writing 2 2.34 Photos 4 1.17 Regular work 2 1.17 Email/IM's 2 1.17 Mobile internet user 2 31.58 Sharing musical playlists 54 29.24 Uploading videos 50 32.16 Blogging 55 0 10 20 30 40 50 60 Sharing Uploading Mobile Blogging Email/IM's Regular work Photos Writing musical videos internet user playlists Percentages 32.16 29.24 31.58 1.17 1.17 1.17 2.34 1.17 Responses 55 50 54 2 2 2 4 2 Percentages Responses Inference:  Majority of the respondents have said they share music, videos and blogs to express themselves creatively online  Of these some of them have included their ‘regular work’ that has something to do with spending most of their time online  Almost 2% have written creative writing Recommendation:  We need to figure out ways to drive our generation to better express themselves like encourage writing etc. INDIAN INSTITUTE OF MANAGEMENT | INDORE

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