Social Media’s Influence in Purchase Decision

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Social Media’s Influence in Purchase Decision 2008 14. Q17. What is the Tools Necessary to Live Your (Social) Life Online? 74.00% 80.00% 65.00% 70.00% 58.00% 56.00% 60.00% 46.00% 50.00% 39.00% 40.00% 30.00% 15.00% 14.00% 20.00% 10.00% 0.00% Photos Blogs Groups Mobile Videos IMs Bulletins Classified s Series1 65.00% 56.00% 58.00% 74.00% 46.00% 39.00% 14.00% 15.00% Series1 Inference:  74% users have chosen mobile and 65% have chosen Photos followed by other social activities like groups and blogs as tools that are necessary to live their (social) lives online Recommendation:  More and more marketers have started advertising in social media as a medium and blogs, groups, mobile etc in specific to reach out to their target audience  Marketers feel tapping the right medium will help them reach out and influence their TG. 15. Q18. What Kind of Social Networker are you? 50 46 43 32 24 23 19.31 18 17.76 17 16.60 12.36 9.27 8.88 6.95 6.56 6 2.32 Responses Percentage INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 Legend:  An Essentialist: Essentialists keep in touch with my friends and family, but don't bother with any of the other options on offer  A Consumer: Takers but not givers. Consumers engage and interact with networks etc without always putting something back in  A Connector: Always connecting people with other people/sites/ groups I feel they should know about and can enjoy)  An Early Adopter: Constantly on the lookout for what's new and net, before friends do. Often leaders  A Promoter: Promoters are always sending people things via my group, web ring, or friends network  A Collaborator: This creative group creates ideas, events and activities etc by collaborating with other people  A Netrepreneur: The business brains of social networking. They social networks to generate an income  A Cultrepreneur: In comparison to netreprenuers, this group generates creative and cultural capital and connection, not cash Inference:  19% have chosen ‘Connector’ who is always connecting people with other people.  17% have chosen ‘Essentialist’ who wish to keep in touch with friends and family, but don’t bother with of the other options on offer.  16% have chosen ‘Consumer’ who are generally takers but not givers. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 16. Q19. During the past week, approximately how many hours did you spend doing the following activities? 250 200 150 100 50 0 5 4 3 2 1 Total Mean Var 1 39 11 27 15 8 100 3.48 Var 2 11 6 13 42 28 100 2.08 Var 3 9 17 13 31 30 100 1.98 Var 4 4 14 18 25 39 100 1.73 Var 5 8 8 8 35 41 100 1.93 Var 6 3 8 2 13 74 100 1.68 Total 74 64 81 161 220 Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Total Legend: Going Online = Var 1 Watching TV = Var 2 Talking on cell phone = Var 3 Listening to Music = Var 4 Reading = Var 5 Playing games = Var 6 Inference:  39 users have said they spend > 12 hours Online or TV.  17 users spend around 9 to 11 hours either talking on the phone or listening to music.  Users who spend more time online are the ones who are more likely to make a purchase.  These users are also bound to have an online profile of their own on social media sites like Linkedin and Facebook to keep in touch with their colleagues/friends and network.  There are 74 respondents who say they spend hardly 2 hours to play games.  The reason being they are taking a break between work or they just do not have the time. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 17. Q20. What do you look for on a social network? Total 374 5.61 Var 9 21 15.78 Var 8 59 8.56 Var 7 32 8.29 Var 6 31 5.61 Var 5 21 17.38 Var 4 65 12.03 Var 3 45 12.30 Var 2 46 14.44 Var 1 54 0 50 100 150 200 250 300 350 400 Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 8 Var 9 Total Percentage 14.44 12.30 12.03 17.38 5.61 8.29 8.56 15.78 5.61 Responses 54 46 45 65 21 31 32 59 21 374 Percentage Responses Legend: Content on demand = Var 1 Whenever, wherever access = Var 2 Participate = Var 3 Share experiences = Var 4 Content I can play with and pass it on = Var 5 More Authority = Var 6 High levels of Interaction = Var 7 Usefulness = Var 8 More Links = Var 9 Inference:  17% respondents have said they look for sharing experiences online using a social network.  Almost 16% have opted for usefulness as criteria they look for while registering on a social network.  Followed by 14% who say they look for content on demand while on a social network. Recommendation:  There are loads of social networks out there.  It is time for them to take a note and start reacting to attract new users to their networks.  Marketers are always on the lookout for newer mediums to advertise to reach out to their TGs anyhow. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 18. Q21. Social Media, what motivates you? 400 350 300 250 200 150 100 50 0 Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 8 Var 9 Var 10 Total Responses 54 31 53 35 32 26 36 32 35 5 339 Percentage 15.93 9.14 15.63 10.32 9.44 7.67 10.62 9.44 10.32 1.47 Responses Percentage Legend: Creating relationships and friendships = Var1 Someone who cares about the same things they do = Var2 Entertainment and relaxation = Var3 Providing a place where they can freely share their ideas, opinion and not hold back = Var4 Providing a sense of community and mutual support = Var5 Sounding board for someone who cares about their interest = Var6 Providing access to information and advice they could not get anywhere else = Var7 Opportunity to be involved in a cae they cause they care about = Var8 Recognition, a place where they can share their intelligence = Var9 None = Var10 Inference:  Almost 16% have responded saying the idea of making friends and starting a relationship motives them the most and that is precisely the reason why everyone is hooked onto a social network.  15% have responded the entertainment and relaxation they receive online is what motivates them to get hooked on to social media.  Followed by 10% people saying the idea of receiving an advice, recognition, where they can share their intelligence and where they can share their ideas is what motivates them. Recommendation:  Marketers will need to take quick notes of these facts so that they can act accordingly.  Social network owners should police these networks in order to avoid any mishaps and maintain stickiness. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 19. Q22. How do you distribute content? Total 298 5.03 Var 10 15 13.76 Var 9 41 17.45 Var 8 52 11.07 Var 7 33 5.70 Var 6 17 7.72 Var 5 23 17.45 Var 4 52 3.02 Var 3 9 10.07 Var 2 30 8.72 Var 1 26 0 50 100 150 200 250 300 Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 8 Var 9 Var 10 Total Percentage 8.72 10.07 3.02 17.45 7.72 5.70 11.07 17.45 13.76 5.03 Responses 26 30 9 52 23 17 33 52 41 15 298 Percentage Responses Legend: Wiki's = Var1 RSS = Var2 DOPPLR = Var3 FACEBOOK = Var4 DEL.ICIO.US = Var5 TWITTER = Var6 iTUNES = Var7 YOUTUBE = Var8 FLICKR = Var9 None of the above = Var10 Inference:  17.45% respondents have said they use Facebook and YouTube to distribute content online followed by Flickr and iTunes.  What we infer from this is that social media networks are popular when it comes to sharing content along with music and videos.  There are some responses that either use these very scarcely or do not use them at all. Recommendation:  These Inferences can be used to select appropriate online marketing platforms. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 20. Q28. What do you look for on the Internet? 80 70 70 63 57 55 60 50 42 40 32 31 30 22 18 17.86 16.07 20 14.54 14.03 10.71 8.16 7.91 5.61 10 4.59 2 0.51 0 Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 8 Var 9 Var 10 Responses 22 70 42 31 18 55 32 63 57 2 Percentage 5.61 17.86 10.71 7.91 4.59 14.03 8.16 16.07 14.54 0.51 Responses Percentage Legend: Health - Medical information = Var1 News or Information = Var2 Information on politics = Var3 Information on religion/spiritual information = Var4 Make donations = Var5 Shopping = Var6 Pleasure = Var7 Education = Var8 Office work - Email etc. = Var9 Others = Var10 Inference:  17.86% say they look for news or information on the Internet  14.03% say they shop online  16.07% say they look for education related information  14% say they are busy with their office work checking emails etc. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 21. Q29. Social Media: Which of the following do you use? 70 65 60 48 50 38 40 27 30 24.71 24 23 22 18.25 16 20 14.45 10.27 9.13 8.75 8.37 6.08 10 0 Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 8 Responses 48 65 22 38 27 24 16 23 Percentage 18.25 24.71 8.37 14.45 10.27 9.13 6.08 8.75 Responses Percentage Legend: COMMUNICATE - BLOGS, PODCAST, VIDEO BLOGS, VIDEO SHARING, PODCAST SHARING = Var1 CONNECT - SOCIAL NETWORKS, MOBILE TEXT MESSAGING, IM, TWITTER, SKYPE = Var2 COLLABORATE - WIKIS, UGC, OPENSOURCE S/W, MASHUPS = Var3 COLLECT/CATEGRIZE - TAGGING, SOCIAL BOOKMARKING, SEARCH ENGINES = Var4 COLLECTIVE WISDOM - RATING SITES, WIKIS, SOCIAL NEWS = Var5 CUSTOMIZATION - RSS, WIDGETS, VISUAL WORLDS, AVTARS = Var6 COMMUNITIES - CREATED BY ALL OF THE ABOVE, FOSTERED BY COMMON INTERESTS, BUILT THROUGH CONVERSATIONS = Var7 COMMUNITY = Var8 Inference:  24.71% respondents use ‘Connect’ option which helps them connect with social networks, IMs, Twitter, Skype etc.  18.25% has said they use ‘Communicate’ option that helps them blogs, share videos, podcast etc  14.45% have opted for ‘Collect’ to search, tag and bookmark. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 22. Q30. How can Social Media influence or lead to change? 13.82 Var 6 42 13.16 Var 5 40 19.74 Var 4 60 10.53 Var 3 32 19.74 Var 2 60 23.03 Var 1 70 0 10 20 30 40 50 60 70 Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Percentage 23.03 19.74 10.53 19.74 13.16 13.82 Responses 70 60 32 60 40 42 Percentage Responses Legend: Building awareness, spreading the word = Var1 Providing social support and motivation = Var2 Coordinating unified approach = Var3 Helping people take action = Var4 Customizing messages = Var5 Humanizing the issue = Var6 Inference:  23% respondents have said building awareness, and spreading the word will lead to change  Social media is a good platform to spread the word and it should be used properly to ensure its influence makes a difference  When used properly its influence will certainly lead to change INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 23. Q31. What do you do with your social network profile? 3.05 Var 9 11 8.59 Var 8 31 6.65 Var 7 24 5.82 Var 6 21 14.13 Var 5 51 17.17 Var 4 62 12.19 Var 3 44 13.85 Var 2 50 18.56 Var 1 67 0 10 20 30 40 50 60 70 80 Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 8 Var 9 Percentage 18.56 13.85 12.19 17.17 14.13 5.82 6.65 8.59 3.05 Responses 67 50 44 62 51 21 24 31 11 Percentage Responses Legend: UPLOAD PHOTOS = Var1 UPLOAD VIDEOS = Var2 INSTALL APPLICATIONS = Var3 MESSAGE FRIENDS = Var4 BLOGGING = Var5 DATING = Var6 PROMOTE A BRAND = Var7 LISTEN TO MUSIC = Var8 NONE OF THE ABOVE = Var9 Inference:  18.56% respondents use or like to upload photos on a social network  17.17% like to keep in touch with their friends through chat etc.  14.13% prefer blogging  And 13.85% upload videos compared to the rest INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 24. Q32. Which of the following do you do prefer using more often? Var 9 Var 7 Var 5 Var 3 Var 1 0 50 100 150 200 Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 8 Var 9 Mean 3.98 3.03 3.08 2.13 2.33 2.68 2.98 5.18 4.43 Total 100 100 100 100 100 100 100 100 100 1 0 8 6 12 6 7 9 0 0 32 2 6 5 10 15 13 8 4 0 2 49 3 26 26 25 47 46 37 38 11 23 170 4 19 31 28 14 19 25 20 16 17 111 5 49 30 31 12 16 23 29 73 58 138 Mean Total 1 2 3 4 5 Legend: On a rating scale of 1 to 5 WATCH VIDEO CLIPS ONLINE – YOU TUBE = Var1 READ BLOGS, WEB LOGS = Var2 VISIT PHOTO SHARING WEBSITES = Var3 DOWNNLOAD A PODCAST = Var4 SUBCRIBE TO RSS FEEDS = Var5 LINKEDIN – PROF NET = Var6 FACEBOOK – SOCIL NET = Var7 EMAILS = Var8 CHAT = Var9 Inference:  49 respondents prefer watching videos online as well as uploading them on YouTube  30 prefer to read blogs and web logs  31 prefer photo sharing websites  47 are neutral when it comes to downloading podcasts. Sometimes they prefer and sometimes they don’t  Similar in the case of subscribing to RSS feeds and professional networks  38 prefer Facebook while 73 enjoy emails to the rest  58 likes chatting INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 25. Q33. What kind of reviews do you read online? Var 15 Var 13 Var 11 Var 9 Var 7 Var 5 Var 3 Var 1 0 10 20 30 40 50 60 70 Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 8 Var 9 Var 10 Var 11 Var 12 Var 13 Var 14 Var 15 Percentage 4.24 4.24 8.16 6.91 7.85 10.36 7.85 7.06 1.73 8.79 10.68 5.18 8.16 2.04 6.75 Responses 27 27 52 44 50 66 50 45 11 56 68 33 52 13 43 Percentage Responses Legend: PERSONAL DIARY SITES = Var1 FAMILY BLOGS = Var2 CURRENT AFFAIRS = Var3 OPINION ON PRODUCTS/BRANDS = Var4 MUSIC = Var5 TECHNOLOGY = Var6 COMPUTERS = Var7 BUSINESS IN GENERAL = Var8 SCIENCE = Var9 SPORTS = Var10 ENTERTAINMENT = Var11 GAMING = Var12 TRAVEL = Var13 INSURANCE = Var14 CELEBRITIES = Var15 Inference:  10.68% respondents read entertainment related reviews  10.36% read technology related reviews  8.79% prefer sports reviews  8.16% prefer current affairs  It is evident that respondents prefer reading entertainment and technology related reviews followed by sports INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 26. Q35. Does a social medium influence your purchase decision? 41% 50% 9% Yes No Total Inference:  41% respondents agree that social media influences their decision making process and hence their purchase  While 9% believe it doesn’t influence their purchase decision 27. Q36. If yes, how likely are you to purchase? 40 30 33.00 23.00 34.00 20 33 23 34 10 3.00 7.00 0 Percentage 3 7 Var 1 Var 2 Responses Var 3 Var 4 Var 5 Var 1 Var 2 Var 3 Var 4 Var 5 Responses 23 33 34 3 7 Percentage 23.00 33.00 34.00 3.00 7.00 Responses Percentage Legend: Will Definitely Purchase Will Purchase Not Sure INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 Unlikely To Purchase Will Not Purchase Inference:  33% respondents say they will purchase  23% say they will definitely purchase while 34% say they are not sure as in they may or may not purchase 28. FREQ. CROSSTABS: Crosstab between Q15 and Q1 Q15. Who did you purchase products for? X Q1. How net savvy are you? 35.70% 17.20% Var 3 25.00% 45.20% 58.60% Var 2 53.00% 76.20% 77.60% Var 1 77.00% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% Var 1 Var 2 Var 3 NOT purchase online 42 76.20% 45.20% 35.70% Purchase online 58 77.60% 58.60% 17.20% Total 100 77.00% 53.00% 25.00% NOT purchase online 42 Purchase online 58 Total 100 Legend: Purchased for yourself Purchased as a gift for someone Business Purchase Inference:  77.6% respondents purchased for themselves after going through the online reviews by experts and users and finally made up their mind to purchase.  This is a clear case of social media’s influence on purchase decision  58% respondents purchase a gift for someone after going through the reviews  35.7% respondents did not make a purchase after going through the reviews.  This is understandable as the decision making does not rest with one individual unlike in the earlier cases as seen above  There is no significant association between these two variables and they stand weak Recommendation:  Employees should be encouraged to make business purchases online INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008  The decision making can be shared here by forwarding the expert review links to the decision makers to help them make up their minds. 29. Crosstab between Q16 and Q1 Q16. How do you express yourself creatively? X Q1. How net savvy are you? Var 7 Var 5 Var 3 Var 1 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 8 NOT purchase online 42 54.80% 42.90% 47.60% 4.80% 4.80% 4.80% 0.00% 4.80% Purchase online 58 59.30% 59.30% 63.00% 0.00% 0.00% 0.00% 7.40% 0.00% Total 100 57.30% 52.10% 56.30% 2.10% 2.10% 2.10% 4.20% 2.10% NOT purchase online 42 Purchase online 58 Total 100 Legend: Blogging = Var1 Uploading videos = Var2 Sharing musical playlists = Var3 Mobile Internet User = Var4 Email/IMs = Var5 Regular working = Var6 Photography, Music in real life, not online = Var7 Writing = Var8 Inference:  59.3% respondents who blog to express themselves often purchase after going through the reviews  59.3% respondents who upload videos tend to purchase online after going through the reviews  63% of respondents who share music tend to shop as well  4.80% who express themselves in their regular work go through the online reviews but do not end up purchasing online INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 30. Crosstab between Q18 and Q1 Q18. What Kind of Social Networker are you? X Q1. How net savvy are you? 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 8 Var 9 Total 100 46.00% 43.00% 50.00% 32.00% 18.00% 23.00% 24.00% 17.00% 6.00% Purchase online 58 48.30% 46.60% 62.10% 36.20% 22.40% 25.90% 20.70% 15.50% 6.90% NOT purchase online 42 42.90% 38.10% 33.30% 26.20% 11.90% 19.00% 28.60% 19.00% 4.80% Total 100 Purchase online 58 NOT purchase online 42 Legend: An Essentialist = Var 1 A Consumer = Var 2 A Connector = Var 3 An Early Adopter = Var 4 A Promoter = Var 5 A Collaborator = Var 6 A Netrepreneur = Var 7 A Cultrepreneur = Var 8 None of these = Var 9 Inference:  Standing tall at 62.10%, ‘Connectors’ seem to be purchasing after reading online reviews  Followed by ‘Consumer’ and ‘Essentialist’  Essentialist in general like to keep in touch with their family and friends  Consumers are usually known to be takers but not givers  Connectors are always busy connecting people INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 31. Crosstab between Q28 and Q1 Q28. What do you look for on the Internet? X Q1. How net savvy are you? 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 8 Var 9 Total 100 22.00% 70.00% 42.00% 31.00% 18.00% 55.00% 32.00% 63.00% 57.00% Purchase online 58 19.00% 81.00% 50.00% 22.40% 22.40% 67.20% 32.80% 70.70% 50.00% NOT purchase online 42 26.20% 54.80% 31.00% 42.90% 11.90% 38.10% 31.00% 52.40% 66.70% Total 100 Purchase online 58 NOT purchase online 42 Legend: Health - Medical information = Var 1 News or Information = Var 2 Information on politics = Var 3 Information on religion/spiritual information = Var 4 Make donations = Var 5 Shopping = Var 6 Pleasure = Var 7 Education = Var 8 Office work - Email etc = Var 9 Inference:  81% respondents who look for news and information tend to purchase online  Closely followed by 70.70% people who look for information on education tend to purchase online  Closely followed by 67.20% people who look to read shopping reviews INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 32. Crosstab between Q33 and Q1 Q33. What kind of reviews do you read online? X Q1. How net savvy are you? 250.00% 200.00% 150.00% 100.00% 50.00% 0.00% Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 8 Var 9 Var 10 Var 11 Var 12 Var 13 Var 14 Var 15 NOT purchase online 42 26.20%21.40%54.80%45.20%54.80%59.50%47.60%42.90%26.20%45.20%66.70%23.80%50.00% 9.50% 42.90% Purchase online 58 27.60%31.00%50.00%43.10%46.60%70.70%51.70%46.60%39.70%63.80%69.00%39.70%53.40%15.50%43.10% Total 100 27.00%27.00%52.00%44.00%50.00%66.00%50.00%45.00%34.00%56.00%68.00%33.00%52.00%13.00%43.00% Total 100 Purchase online 58 NOT purchase online 42 Legend: PERSONAL DIARY SITES = Var 1 FAMILY BLOGS = Var 2 CURRENT AFFAIRS = Var 3 OPINION ON PRODUCTS/BRANDS = Var 4 MUSIC = Var 5 TECHNOLOGY = Var 6 COMPUTERS = Var 7 BUSINESS IN GENERAL = Var 8 SCIENCE = Var 9 SPORTS = Var 10 ENTERTAINMENT = Var 11 GAMING = Var 12 TRAVEL = Var 13 INSURANCE = Var 14 CELEBRITIES = Var 15 Inference:  70.70% respondents seem to read technology reviews and then purchase online  69% read entertainment reviews  Followed closely by sports and computers  What we infer is that people with sound technical knowledge are the ones who are purchasing online. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 33. Crosstab between Q15 and Q2 Q15. Who did you purchase products for? X Q2. Please indicate your age? 36 - 45 years 26 - 35 years 18 - 25 years Total 0 20 40 60 80 100 120 Total 18 - 25 years 26 - 35 years 36 - 45 years Business Purchase 25.00% 25.00% 21.30% 35.00% Purchased as a gift for someone 53.00% 62.50% 53.20% 40.00% Purchased for yourself 77.00% 62.50% 85.10% 80.00% Sample Base 100 32 47 20 Business Purchase Purchased as a gift for someone Purchased for yourself Sample Base Inferences:  62.50% respondents in the age group 18 – 25 years purchased a gift for themselves as well as someone  While 85.10% in the age group of 26 – 35 years purchased a gift or shopped for themselves  What we infer from the above chart is age groups 26 to 45 are able to purchase or shop for self while age group between 18 to 25 aren’t able to do so freely. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 34. Crosstab between Q18 and Q2 Q18. What Kind of Social Networker are you? X Q2. Please indicate your age? 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 8 Var 9 36 - 45 years 20 35.00% 35.00% 30.00% 25.00% 20.00% 20.00% 20.00% 5.00% 25.00% 26 - 35 years 47 48.90% 46.80% 59.60% 34.00% 17.00% 27.70% 19.10% 27.70% 2.10% 18 - 25 years 32 46.90% 43.80% 50.00% 34.40% 18.80% 18.80% 34.40% 9.40% 0.00% Total 100 46.00% 43.00% 50.00% 32.00% 18.00% 23.00% 24.00% 17.00% 6.00% Total 100 18 - 25 years 32 26 - 35 years 47 36 - 45 years 20 Legend: An Essentialist = Var 1 A Consumer = Var 2 A Connector = Var 3 An Early Adopter = Var 4 A Promoter = Var 5 A Collaborator = Var 6 A Netrepreneur = Var 7 A Cultrepreneur = Var 8 None of these = Var 9 Inference:  50% of the age group between 18 to 25 years are ‘Connectors’  The case being the same with age group 26 to 35 as well  Whereas the age group 36 to 45 is inclined towards being a ‘Consumer’ and ‘Essentialist’. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 35. Crosstab between Q21 and Q2 Q21. Social Media - what motivates you? X Q2. Please indicate your age? 250.00% 200.00% 150.00% 100.00% 50.00% 0.00% Var Var Var Var Var 1 Var 2 3 Var 4 Var 5 Var 6 7 Var 8 9 10 Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 8 Var 9 Var 10 36 - 45 years 20 35.00% 25.00% 40.00% 45.00% 15.00% 40.00% 35.00% 20.00% 10.00% 25.00% 26 - 35 years 47 63.80% 36.20% 40.40% 42.60% 42.60% 21.30% 36.20% 34.00% 42.60% 0.00% 18 - 25 years 32 53.10% 28.10% 81.30% 18.80% 28.10% 21.90% 37.50% 37.50% 40.60% 0.00% Total 100 54.00% 31.00% 53.00% 35.00% 32.00% 26.00% 36.00% 32.00% 35.00% 5.00% Total 100 18 - 25 years 32 26 - 35 years 47 36 - 45 years 20 Legend: Creating relationships and friendships = Var1 Someone who cares about the same things they do = Var2 Entertainment and relaxation = Var3 Providing a place where they can freely share their ideas = Var4 Providing a sense of community and mutual support = Var 5 Sounding board for someone who cares about their interest = Var6 Providing access to information and advice they could not get = Var7 Opportunity to be involved in a case they cause they care about = Var8 Recognition, a place where they can share their intelligence = Var 9 None of the above = Var 10 Inference:  At 81.30%, the variable 3 seems to be the motivation behind this age group 18 to 25  Creating relationships and friends seems to be the motivation behind the age group 26 – 35 age  Providing a place where they can share their ideas is another motivational factor for the age 36 to 45. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 Factor Analysis: Between Q11, 12 and 32 Q11. Rate the following decision factors you would consider before purchasing a product/service online. On a scale of 1 to 5, '1' being the lowest score and '5' being the highest score. 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. Q32. Which of the following do you do prefer using more often? Column1 Column2 Column3 Communalities Initial Extraction @11_1.Decision factors you would consider before purchasing product/service online? 1 0.6389103 @11_2 1 0.7994908 @11_3 1 0.5651176 1 0.8477792 @11_4 @11_5 1 0.8486976 @11_6 1 0.6991466 1 0.9239629 @12_1.How often do you carry out the following activities via Internet? @12_2 1 0.8707695 @12_3 1 0.6895954 @12_4 1 0.8003188 @12_5 1 0.6153902 @32_1.Which of the following do you prefer using more often? 1 0.6680823 @32_2 1 0.6613915 @32_3 1 0.7815191 @32_4 1 0.8004276 @32_5 1 0.7913128 @32_6 1 0.827107 @32_7 1 0.7688782 @32_8 1 0.7027718 @32_9 1 0.7603867 Extraction Method: Principal Component Analysis. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 Column1 Column Column Column Column Column Column Column Column Column 2 3 4 5 6 7 8 9 10 Total Variance Explained Component Initial Extracti Rotation Eigen on Sums Sums of values of Squared Squared Loadings Loadings Total % of Cumulat Total % of Cumulat Total % of Cumulat Variance ive % Variance ive % Variance ive % 1 6.85870 34.2935 34.2935 6.85870 34.2935 34.2935 4.20610 21.0305 21.0305 0428 0214 0214 0428 0214 0214 5806 2903 2903 2 2.12930 10.6465 44.9400 2.12930 10.6465 44.9400 2.97807 14.8903 35.9209 5656 2828 3042 5656 2828 3042 664 832 1223 3 1.82470 9.12354 54.0635 1.82470 9.12354 54.0635 2.33987 11.6993 47.6202 8089 0446 7087 8089 0446 7087 5245 7623 8845 4 1.58513 7.92567 61.9892 1.58513 7.92567 61.9892 2.11687 10.5843 58.2046 4597 2985 4385 4597 2985 4385 7125 8562 7408 5 1.43482 7.17411 69.1633 1.43482 7.17411 69.1633 2.04609 10.2304 68.4351 3696 8479 6233 3696 8479 6233 3518 6759 4167 6 1.22838 6.14191 75.3052 1.22838 6.14191 75.3052 1.37402 6.87013 75.3052 3481 7404 7973 3481 7404 7973 7613 8066 7973 7 0.90538 4.52694 79.8322 9159 5797 2553 8 0.76924 3.84623 83.6784 638 1899 5743 9 0.60535 3.02676 86.7052 3761 8805 2623 10 0.57770 2.88852 89.5937 5911 9556 5579 11 0.49055 2.45276 92.0465 3812 9059 2485 12 0.32978 1.64890 93.6954 1468 7338 3219 13 0.28922 1.44611 95.1415 3007 5033 4722 14 0.23276 1.16383 96.3053 6958 479 8201 15 0.21237 1.06188 97.3672 6385 1926 6394 16 0.13819 0.69098 98.0582 7975 9877 5382 17 0.12970 0.64850 98.7067 0652 3261 5708 18 0.11756 0.58781 99.2945 2889 4447 7152 19 0.07909 0.39547 99.6900 404 02 4172 20 0.06199 0.30995 100 1655 8277 Extraction Method: Principal Component Analysis. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 Column1 Column2 Column3 Column4 Column5 Column6 Column7 Component Matrix a Component 1 2 3 4 5 6 @11_1.Decision factors you would consider before 0.622012774 0.216823479 -0.04869358 -0.000454926 -0.447062178 0.052556274 purchasing product/service online? 0.569836733 0.039278641 0.253658301 -0.236425628 -0.505764914 0.311763296 @11_2 0.464296254 0.118045039 0.353803817 -0.367940451 -0.241758436 0.12886997 @11_3 0.494784417 0.490541381 0.517702353 -0.229847913 0.192425444 -0.066808752 @11_4 0.319599367 0.447044097 0.556213627 -0.115162285 0.432284968 -0.192870876 @11_5 0.35083506 0.062112854 0.179171124 -0.007627638 0.658157043 0.326913116 @11_6 @12_1.How often do you carry out the 0.763008807 0.072616081 -0.440094935 -0.264823966 0.13890855 -0.231076727 following activities via Internet? 0.656094921 0.054626337 -0.596673125 -0.204113865 0.169786615 -0.104000777 @12_2 -0.04817998 0.367556166 -0.416484755 0.12109957 0.318681264 0.51234181 @12_3 0.63349262 0.273798986 -0.356987984 -0.2116714 0.044314535 -0.387080187 @12_4 0.603488403 0.358349426 -0.180759683 -0.221394597 -0.195855122 0.052237339 @12_5 @32_1.Which of the following do 0.47436921 0.22191006 -0.006767745 0.572901945 -0.097675304 -0.23666261 you prefer using more often? 0.726440341 -0.294829577 0.049420812 0.157798035 0.045449441 -0.131693358 @32_2 0.739411521 -0.266445216 0.203238887 0.236428411 0.04910621 -0.253339306 @32_3 0.718288607 -0.389651123 0.247304172 0.246784946 0.035305694 -0.096708132 @32_4 0.771941774 -0.416122466 -0.04453751 0.1190076 0.077844032 0.007395207 @32_5 0.670168895 -0.40539487 -0.132274184 -0.18182081 0.127764309 0.383088361 @32_6 0.705457422 -0.38363899 0.099062487 -0.028233855 -0.001192826 0.336774659 @32_7 0.44497427 0.583230775 -0.038347262 0.289017515 -0.188708695 0.209759326 @32_8 0.353407977 0.303173428 -0.065816201 0.711307902 -0.019534767 0.181391969 @32_9 Extraction Method: Principal Component Analysis. a. 6 components extracted. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 Rotated Component a Column1 Column2 Column3 Column4 Column5 Column6 Component 1 2 3 4 5 6 @11_1.Decision factors you would consider before 0.188119949 0.329426789 0.594190174 0.363960996 -0.023227129 -0.094499435 purchasing product/service online? @11_2 0.277627872 0.039703735 0.844448277 0.062649807 0.041715578 -0.045597403 @11_3 0.177676077 0.083352323 0.645004552 -0.089866563 0.308947598 -0.083938565 @11_4 0.066802792 0.15382227 0.357740477 0.115364789 0.823585648 -0.008643423 @11_5 0.041869862 0.064857875 0.035777305 0.093857617 0.912291149 -0.019327736 @11_6 0.361583084 0.014991675 -0.090908806 -0.025464089 0.506476886 0.550225275 @12_1.How often do you carry out the 0.352148874 0.876506515 0.130637651 0.036344609 0.09666325 0.062924142 following activities via Internet? @12_2 0.295222899 0.852545869 0.057130664 0.04632986 -0.055474645 0.219751457 @12_3 -0.223857996 0.122474579 -0.079232203 0.201536176 -0.063305902 0.757351138 @12_4 0.126089457 0.839418839 0.116109961 0.154340703 0.179971976 -0.100517713 @12_5 0.061543108 0.53924608 0.506617215 0.202251412 0.121036469 0.092735166 @32_1.Which of the following do 0.250962941 0.181778372 -0.020253124 0.729563259 0.099891461 -0.171480331 you prefer using more often? @32_2 0.723551183 0.26321682 0.095838478 0.189533485 0.091830371 -0.12264296 @32_3 0.744833189 0.198294845 0.059980873 0.26468788 0.216012473 -0.259042507 @32_4 0.830283841 0.064046322 0.106815907 0.206191678 0.145657324 -0.178364095 @32_5 0.828594189 0.279861283 0.118587801 0.10964596 -0.013935727 0.011942185 @32_6 0.71401713 0.249070415 0.299240866 -0.174656542 -0.078653126 0.35918543 @32_7 0.763005324 0.075733949 0.378059611 -0.015572727 0.001837108 0.194397683 @32_8 -0.058001201 0.187153607 0.39018155 0.664140355 0.158325037 0.214453582 @32_9 0.177657654 -0.023660388 0.005920023 0.822325163 0.008369045 0.227905388 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 9 iterations. Component Transformation Matrix Column1 Column2 Column3 Column4 Column5 Column6 Component 1 2 3 4 5 6 0.67160837 0.499966813 0.399882103 0.282427844 0.240083615 0.040792864 1 -0.668736095 0.238085254 0.208570328 0.462438872 0.451967337 0.185692436 2 0.152510697 -0.644637702 0.236419018 -0.05435866 0.638313372 -0.308042113 3 0.202398963 -0.34067149 -0.381932517 0.815258625 -0.180139863 0.002855236 4 0.18068554 0.098956872 -0.647717011 -0.195016794 0.514264374 0.485307687 5 0.069728866 -0.389796491 0.418675287 -0.027418295 -0.183638795 0.7958848 6 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 Factor Attributes Factor 1 READ BLOGS, WEB LOGS,VISIT PHOTO SHARING WEBSITES,DOWNNLOAD A PODCAST, SUBCRIBE TO RSS FEEDS, LINKEDIN – PROFFESIONAL NET, FACEBOOK – SOCIAL NETWORK Factor 2 Pay utility bills, Online Banking, Other payment and purchases Factor 3 Product/ Service reviewed by an expert Factor 4 Watch Video Clips Online, Chat Factor 5 Screen Shots , Product Images Factor 6 E mails/ Chats Factor Factor Name Factor 1 Networking and Information Sharing Factor 2 Convenience in Payments and Purchases Factor 3 Expert Reviews Factor 4 Interactive Tools Factor 5 Visual Appeal Factor 6 E mails/ Chats Inference:  The output of the factor analysis is obtained by requesting the Principal Component Analysis (PCA)  We get the output in the above tables comprises the communalities for all the 3 questions and the Eigen values of all factors which have Eigen values of 1 or more than 1  The first step is to look at the factors extracted, which have an Eigen value of 1 or more than.  The last column in the table (cum. Pct.) shows that the 6 factors extracted together account for 75.3% of the total variance.  This is a good deal because with only 6 factors (reducing them from 20) we have lost only about 24.7% of the information content, while 75.3% is retained by the 6 factors extracted out of the 20 original variables.  We can now shift to interpret what these 6 extracted factors represent. This can be done with the help of rotated factor matrix.  Looking at the table we notice that variables have good loadings. This suggests that:  Factor 1 is a combination of READ BLOGS, WEB LOGS,VISIT PHOTO SHARING WEBSITES,DOWNNLOAD A PODCAST, SUBCRIBE TO RSS FEEDS,LINKEDIN – PROF NET, FACEBOOK – SOCIAL NET  Factor 2: Pay utility bills, Online Banking, Other payment and purchases  Factor 3: Product/ Service reviewed by an expert  Factor 4: Watch Video Clips Online, Chat  Factor 5: Screen Shots , Product Images  Factor 6: E mails/ Chats INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 Hence, these can be clubbed/grouped/termed as follows:  Factor 1: Networking and Information Sharing  Factor 2: Convenience in Payments and Purchases  Factor 3: Expert Reviews  Factor 4: Interactive Tools  Factor 5: Visual Appeal  Factor 6: E mails/ Chats These are basically the factors that drive users/respondents to social media networks. Cluster Analysis for Q11. Q11. Rate the following decision factors you would consider before purchasing a product/service online. On a scale of 1 to 5, '1' being the lowest score and '5' being the highest score. Agglomeration Schedule Stage Cluster Combined Coefficients Stage Cluster First Appears Next Stage Cluster 1 Cluster 2 Cluster 1 Cluster 2 Cluster 1 Cluster 2 1 28 100 .000 0 0 51 2 23 99 .000 0 0 58 3 22 98 .000 0 0 74 4 21 97 .000 0 0 60 5 20 96 .000 0 0 77 6 19 95 .000 0 0 65 7 18 94 .000 0 0 96 8 17 93 .000 0 0 54 9 16 92 .000 0 0 66 10 15 91 .000 0 0 73 11 14 90 .000 0 0 57 12 13 89 .000 0 0 82 13 12 88 .000 0 0 72 14 11 87 .000 0 0 79 15 10 86 .000 0 0 63 16 9 85 .000 0 0 74 17 8 84 .000 0 0 91 18 72 83 .000 0 0 29 19 6 82 .000 0 0 92 20 5 81 .000 0 0 95 21 4 80 .000 0 0 69 22 3 79 .000 0 0 76 23 2 78 .000 0 0 90 24 68 77 .000 0 0 33 25 67 76 .000 0 0 34 26 66 75 .000 0 0 35 27 65 74 .000 0 0 36 28 64 73 .000 0 0 37 29 7 72 .000 0 18 38 30 63 71 .000 0 0 38 31 61 70 .000 0 0 40 32 60 69 .000 0 0 41 33 59 68 .000 0 24 77 34 58 67 .000 0 25 83 35 57 66 .000 0 26 63 36 38 65 .000 0 27 42 INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 37 55 64 .000 0 28 52 38 7 63 .000 29 30 43 39 54 62 .000 0 0 43 40 52 61 .000 0 31 83 41 51 60 .000 0 32 53 42 38 56 .000 36 0 64 43 7 54 .000 38 39 45 44 50 53 .000 0 0 45 45 7 50 .000 43 44 47 46 44 48 .000 0 0 47 47 7 44 .000 45 46 50 48 34 41 .000 0 0 59 49 29 37 .000 0 0 50 50 7 29 .000 47 49 71 51 24 28 .000 0 1 73 52 31 55 1.000 0 37 62 53 36 51 1.000 0 41 61 54 17 47 1.000 8 0 84 55 42 46 1.000 0 0 60 56 39 45 1.000 0 0 61 57 14 40 1.000 11 0 59 58 23 32 1.000 2 0 69 59 14 34 1.333 57 48 67 60 21 42 1.500 4 55 67 61 36 39 1.500 53 56 64 62 30 31 1.750 0 52 75 63 10 57 2.000 15 35 70 64 36 38 2.000 61 42 71 65 19 35 2.000 6 0 86 66 1 16 2.000 0 9 88 67 14 21 2.150 59 60 68 68 14 43 2.556 67 0 78 69 4 23 2.667 21 58 76 70 10 33 2.800 63 0 75 71 7 36 3.000 50 64 78 72 12 25 3.000 13 0 80 73 15 24 3.000 10 51 85 74 9 22 3.000 16 3 80 75 10 30 3.067 70 62 81 76 3 4 3.600 22 69 81 77 20 59 4.000 5 33 88 78 7 14 4.039 71 68 79 79 7 11 4.424 78 14 82 80 9 12 5.167 74 72 85 81 3 10 5.455 76 75 87 82 7 13 5.457 79 12 84 83 52 58 6.000 40 34 96 84 7 17 6.541 82 54 89 85 9 15 6.600 80 73 87 86 19 49 8.000 65 0 91 87 3 9 8.657 81 85 89 88 1 20 9.667 66 77 92 89 3 7 11.527 87 84 93 90 2 26 12.000 23 0 94 91 8 19 13.000 17 86 93 92 1 6 14.375 88 19 94 93 3 8 16.033 89 91 97 94 1 2 19.300 92 90 95 95 1 5 20.692 94 20 97 96 18 52 23.000 7 83 98 INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 97 1 3 23.489 95 93 98 98 1 18 36.341 97 96 99 99 1 27 58.929 98 0 0 Initial Cluster Centers Cluster 1 2 3 @11_1.Decision factors you would consider before 1 5 5 purchasing product/service online? @11_2 1 5 5 @11_3 5 1 5 @11_4 2 1 5 @11_5 2 1 5 @11_6 2 1 5 Iteration History (a) Iteration Change in Cluster Centers 1 2 3 1 2.998 3.202 3.873 2 .306 .781 1.660 3 .328 .591 1.344 4 .277 .000 .569 5 .088 .479 .324 6 .120 .478 .270 7 .058 .771 .177 8 .000 .000 .000 a Convergence achieved due to no or small change in cluster centers. The maximum absolute coordinate change for any center is .000. The current iteration is 8. The minimum distance between initial centers is 7.141. Cluster Membership Case Number Cluster Distance 1 3 1.821 2 3 3.633 3 3 1.542 4 3 1.885 5 3 3.221 6 3 2.605 7 1 1.508 8 1 3.331 9 1 2.109 10 1 2.375 11 1 1.867 12 3 2.078 13 1 2.076 14 1 1.254 15 3 2.035 16 3 2.594 17 1 1.945 18 2 3.468 19 1 2.777 20 3 1.687 21 1 1.405 22 3 2.188 23 3 2.147 24 3 1.722 25 3 1.443 26 3 3.293 27 3 5.617 INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 28 3 1.722 29 1 1.508 30 3 1.772 31 1 2.101 32 3 2.454 33 1 1.436 34 1 1.315 35 1 2.546 36 1 .894 37 1 1.508 38 1 1.328 39 1 1.167 40 1 .904 41 1 1.315 42 1 1.097 43 1 1.455 44 1 1.508 45 1 .942 46 1 1.105 47 1 1.967 48 1 1.508 49 2 4.272 50 1 1.508 51 1 1.129 52 2 2.409 53 1 1.508 54 1 1.508 55 1 1.582 56 1 1.328 57 1 1.890 58 2 .831 59 3 2.639 60 1 1.129 61 2 2.409 62 1 1.508 63 1 1.508 64 1 1.582 65 1 1.328 66 1 1.890 67 2 .831 68 3 2.639 69 1 1.129 70 2 2.409 71 1 1.508 72 1 1.508 73 1 1.582 74 1 1.328 75 1 1.890 76 2 .831 77 3 2.639 78 3 3.633 79 3 1.542 80 3 1.885 81 3 3.221 82 3 2.605 83 1 1.508 84 1 3.331 85 1 2.109 86 1 2.375 87 1 1.867 88 3 2.078 89 1 2.076 90 1 1.254 INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 91 3 2.035 92 3 2.594 93 1 1.945 94 2 3.468 95 1 2.777 96 3 1.687 97 1 1.405 98 3 2.188 99 3 2.147 100 3 1.722 Final Cluster Centers Cluster 1 2 3 @11_1.Decision factors you would consider before 1 5 2 purchasing product/service online? @11_2 2 5 2 @11_3 2 4 3 @11_4 2 3 4 @11_5 2 1 4 @11_6 1 1 2 ANOVA Cluster Error F Sig. Mean Square df Mean Square df Mean Square df @11_1.Decision factors you 37.482 2 .825 97 45.431 .000 would consider before purchasing product/service online? @11_2 46.758 2 .721 97 64.863 .000 @11_3 15.772 2 1.115 97 14.144 .000 @11_4 48.596 2 .859 97 56.577 .000 @11_5 51.167 2 .473 97 108.120 .000 @11_6 11.071 2 .660 97 16.767 .000 The F tests should be used only for descriptive purposes because the clusters have been chosen to maximize the differences among cases in different clusters. The observed significance levels are not corrected for this and thus cannot be interpreted as tests of the hypothesis that the cluster means are equal.  Based on the significance values, we can say that all the attributes in Q11 drive the segmentation of respondents.  The other ‘p’ values given in the last column indicate that all the attributes are statistically significant as they all have p value less than 0.1. Number of Cases in each Cluster Cluster 1 57.000 2 9.000 3 34.000 Valid 100.000 Missing .000  Based on the above analysis, there are 3 clusters as described below.  Cluster 1: These respondents are not driven by any of the listed decision drivers/factors, so the inference is that these people are fence sitters and not necessarily influenced by any of the marketing tools.  Cluster 2: These respondents are very highly driven by ‘demo/trials’ and ‘expert, user reviews’.  They are not influenced by ‘product images or price’ INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008  Hence, it can be interpreted that these people are not very comfortable purchasing online and hence limit themselves to demos, trials and expert review where they see and understand the product better before they finally make a purchase.  Cluster 3: These respondents are not driven by ‘demo and trials, reviews or price.  There are highly likely to be driven by screen shots or product images  They can be broadly clubbed under ‘impulsive buyers’  They are likely to get attracted by POS and packaging in general Q12. Cluster Analysis 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. Agglomeration Schedule Stage Cluster Combined Coefficients Stage Cluster First Appears Next Stage Cluster 1 Cluster 2 Cluster 1 Cluster 2 Cluster 1 Cluster 2 1 24 100 .000 0 0 73 2 23 99 .000 0 0 83 3 86 98 .000 0 0 15 4 35 97 .000 0 0 53 5 20 96 .000 0 0 93 6 19 95 .000 0 0 85 7 90 94 .000 0 0 11 8 17 93 .000 0 0 91 9 16 92 .000 0 0 97 10 15 91 .000 0 0 85 11 14 90 .000 0 7 27 12 85 89 .000 0 0 16 13 70 88 .000 0 0 31 14 11 87 .000 0 0 82 15 10 86 .000 0 3 56 16 9 85 .000 0 12 61 17 8 84 .000 0 0 64 18 7 83 .000 0 0 92 19 6 82 .000 0 0 71 20 5 81 .000 0 0 70 21 4 80 .000 0 0 76 22 34 79 .000 0 0 54 23 32 78 .000 0 0 55 24 68 77 .000 0 0 33 25 67 76 .000 0 0 34 26 74 75 .000 0 0 27 27 14 74 .000 11 26 35 28 64 73 .000 0 0 37 29 63 72 .000 0 0 38 30 62 71 .000 0 0 39 31 12 70 .000 0 13 45 32 66 69 .000 0 0 35 33 59 68 .000 0 24 92 34 58 67 .000 0 25 78 35 14 66 .000 27 32 41 36 60 65 .000 0 0 41 37 55 64 .000 0 28 62 38 27 63 .000 0 29 57 39 53 62 .000 0 30 63 40 52 61 .000 0 0 45 41 14 60 .000 35 36 43 INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 42 56 57 .000 0 0 43 43 14 56 .000 41 42 49 44 28 54 .000 0 0 57 45 12 52 .000 31 40 48 46 48 51 .000 0 0 49 47 44 50 .000 0 0 86 48 12 49 .000 45 0 66 49 14 48 .000 43 46 51 50 39 41 .000 0 0 51 51 14 39 .000 49 50 60 52 29 38 .000 0 0 56 53 21 35 .000 0 4 58 54 3 34 .000 0 22 79 55 2 32 .000 0 23 62 56 10 29 .000 15 52 59 57 27 28 .000 38 44 88 58 21 25 .000 53 0 67 59 10 22 .000 56 0 69 60 14 18 .000 51 0 68 61 9 13 .000 16 0 69 62 2 55 1.000 55 37 75 63 42 53 1.000 0 39 74 64 8 46 1.000 17 0 80 65 36 43 1.000 0 0 72 66 12 40 1.000 48 0 70 67 21 33 1.000 58 0 71 68 14 31 1.000 60 0 77 69 9 10 1.000 61 59 75 70 5 12 1.143 20 66 78 71 6 21 1.200 19 67 83 72 36 37 1.500 65 0 73 73 24 36 1.667 1 72 79 74 42 47 1.750 63 0 81 75 2 9 1.900 62 69 77 76 1 4 2.000 0 21 95 77 2 14 2.327 75 68 82 78 5 58 2.333 70 34 98 79 3 24 2.600 54 73 90 80 8 30 2.667 64 0 81 81 8 42 2.900 80 74 88 82 2 11 2.939 77 14 86 83 6 23 3.714 71 2 84 84 6 26 4.667 83 0 87 85 15 19 5.000 10 6 91 86 2 44 5.029 82 47 90 87 6 45 5.200 84 0 89 88 8 27 5.333 81 57 89 89 6 8 6.000 87 88 96 90 2 3 6.098 86 79 93 91 15 17 6.500 85 8 94 92 7 59 7.000 18 33 94 93 2 20 8.044 90 5 95 94 7 15 11.400 92 91 98 95 1 2 12.426 76 93 96 96 1 6 12.560 95 89 97 97 1 16 15.467 96 9 99 98 5 7 18.417 78 94 99 99 1 5 33.021 97 98 0 Initial Cluster Centers Cluster 1 2 INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 @12_1.How often do you carry out the following activities via Internet? 5 1 @12_2 5 1 @12_3 2 1 @12_4 5 1 @12_5 5 1 Iteration History (a) Iteration Change in Cluster Centers 1 2 1 2.241 1.518 2 .400 .292 3 .056 .042 4 .000 .000 a Convergence achieved due to no or small change in cluster centers. The maximum absolute coordinate change for any center is .000. The current iteration is 4. The minimum distance between initial centers is 8.062. Cluster Membership Case Number Cluster Distance 1 2 2.376 2 2 .671 3 2 2.207 4 2 3.316 5 1 2.640 6 1 1.306 7 1 2.757 8 2 .949 9 2 1.534 10 2 .966 11 2 1.355 12 1 2.589 13 2 1.534 14 2 1.231 15 1 2.157 16 2 3.345 17 1 2.896 18 2 1.231 19 1 2.915 20 2 2.257 21 1 1.707 22 2 .966 23 1 1.422 24 2 1.596 25 1 1.707 26 2 2.811 27 1 2.333 28 1 2.333 29 2 .966 30 2 2.279 31 2 1.015 32 2 .671 33 1 2.082 34 2 2.207 35 1 1.707 36 2 1.646 37 2 1.732 38 2 .966 39 2 1.231 40 1 2.031 41 2 1.231 INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 42 2 1.787 43 2 1.092 44 2 2.024 45 1 2.785 46 2 1.750 47 2 2.533 48 2 1.231 49 1 2.589 50 2 2.024 51 2 1.231 52 1 2.589 53 2 1.951 54 1 2.333 55 2 .782 56 2 1.231 57 2 1.231 58 1 2.132 59 1 2.620 60 2 1.231 61 1 2.589 62 2 1.951 63 1 2.333 64 2 .782 65 2 1.231 66 2 1.231 67 1 2.132 68 1 2.620 69 2 1.231 70 1 2.589 71 2 1.951 72 1 2.333 73 2 .782 74 2 1.231 75 2 1.231 76 1 2.132 77 1 2.620 78 2 .671 79 2 2.207 80 2 3.316 81 1 2.640 82 1 1.306 83 1 2.757 84 2 .949 85 2 1.534 86 2 .966 87 2 1.355 88 1 2.589 89 2 1.534 90 2 1.231 91 1 2.157 92 2 3.345 93 1 2.896 94 2 1.231 95 1 2.915 96 2 2.257 97 1 1.707 98 2 .966 99 1 1.422 100 2 1.596 Final Cluster Centers Cluster INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 1 2 @12_1.How often do you carry out the following activities via Internet? 4 1 @12_2 4 1 @12_3 1 1 @12_4 4 2 @12_5 3 2 ANOVA Cluster Error F Sig. Mean Square df Mean Square df Mean Square df @12_1.How often do you carry 147.450 1 .672 98 219.407 .000 out the following activities via Internet? @12_2 178.228 1 .610 98 292.213 .000 @12_3 .720 1 .352 98 2.045 .156 @12_4 101.329 1 1.037 98 97.756 .000 @12_5 47.520 1 1.312 98 36.216 .000 The F tests should be used only for descriptive purposes because the clusters have been chosen to maximize the differences among cases in different clusters. The observed significance levels are not corrected for this and thus cannot be interpreted as tests of the hypothesis that the cluster means are equal.  The ANOVA table indicates that the factor # 3 is not statistically significant at 0.1 level of significance Number of Cases in each Cluster Cluster 1 38.000 2 62.000 Valid 100.000 Missing .000 Inference:  From the agglomeration schedule, it can be inferred that there are 2 distinct clusters as described below.  Cluster 1: These respondents perform most of their transactions online  Pay utility bills and other payments and purchases in specific  These respondents are very likely to be working in a private sector where they manage their social profile along with their regular work.  Cluster 2: These respondents are not very inclined to reading reviews online and less inclined transacting online  These are usually Students, self employed or un-employed respondents INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 Findings and Recommendations:  It is unmistakably clear that the 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’s been noted that most respondents are employed in the private sector followed by students and entrepreneurs.  It is also evident that the users who work in a private sector stay online longer compared to others.  It is clear that majority respondents are mainly from metros like Mumbai, Delhi, Bengaluru, Chennai and Hyderabad (upcoming metro).  Respondents have said they use the Internet personally. Only a small percentage of respondents have said they do not use Internet personally.  Age does not play a vital role in how often you purchase online after reading products after reading reviews by experts/users.  Majority of users purchased ‘Sometimes’.  There is no significant association between the age and how often they purchase online.  Online spends does play a very important role in how often you purchase online after reading products after reading reviews by experts/users.  The age group 26 to 35 years purchases 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.  Respondents spends touched a fairly high figure of 10,000 plus but these kind of purchases were made ‘sometimes’.  Respondents spend most of their time on Emails and Chats.  Respondents use online banking or transact online very often.  Respondents say they less often transact online. Efforts need to be put in to encourage more online transactions by them.  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.  Responded say their experience has not surpassed the online shopping experience.  Majority of the respondents have shopped for themselves online.  Majority of the respondents have said they share music, videos and blogs to express themselves creatively online  An Essentialist: Essentialists keep in touch with friends and family, but don't bother with any of the other options on offer  A Consumer: Takers but not givers. Consumers engage and interact with networks etc without always putting something back in  A Connector: Always connecting people with other people/sites/ groups he/she feel they should know about and can enjoy)  An Early Adopter: Constantly on the lookout for what's new and net, before friends do. Often leaders  A Promoter: Promoters are constantly sending people things via their group, web ring, or friends network. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008  A Collaborator: This creative group creates ideas, events and activities etc by collaborating with other people.  A Netrepreneur: The business brains of social networking. They social networks to generate an income.  A Cultrepreneur: In comparison to netreprenuers, this group generates creative and cultural capital and connection, not cash.  Respondents who blog to express themselves often purchase after going through the reviews.  The rest who upload videos tend to purchase online after going through the reviews.  Respondents who share music tend to shop as well.  Respondents who express themselves in their regular work go through the online reviews but do not end up purchasing online.  Standing tall, ‘Connectors’ seem to be purchasing after reading online reviews.  They use ‘Communicate’ option that helps them blogs, share videos, podcast etc.  Respondents have said building awareness, and spreading the word will lead to change.  Social media is a good platform to spread the word and it should be used properly to ensure its influence makes a difference. When used properly its influence will certainly lead to change.  Respondents read entertainment related reviews, read technology related reviews, prefer sports reviews, and current affairs  Respondents agree that social media influences their decision making development and hence their purchase.  What we infer here is that people with sound technical knowledge are the ones who are purchasing online.  It is seen that creating new relationships and friends seems to be the motivation behind the age group 26 – 35 age.  Providing a place where they can share their ideas is another motivational factor for the age 36 to 45.  Respondents spend > 12 hours Online or watching TV; while others spend around 9 to 11 hours either talking on the phone or listening to music.  Users who spend more time online are the ones who are more likely to make a purchase. These users are also bound to have an online profile of their own on social media sites like Linkedin and Facebook to keep in touch with their colleagues/friends and network.  Respondents chose mobile and photos followed by other social activities like groups and blogs as tools that are necessary to live their (social) lives online  More and more marketers have started advertising in social media as a medium and blogs, groups, mobile etc in specific to reach out to their target audience  Marketers feel tapping the right medium will help them reach out and influence their TG.  Respondents say the idea of making friends and starting a relationship motivates them the most and that is specifically the reason why everyone is hooked onto a social network.  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.  Marketing efforts may be targeted via e-mails and chats as 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 INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 requires tremendous development along with education like what SBI has started doing these days through newspaper advertising.  Website owners need to take a note of this point and make certain that they set up necessary customer support to help the user anywhere- anytime. They in turn need to take necessary action so as to draw critical mass and pull 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.  People like to sit home and transact online once they know for sure what they do online is secure. There is a need to figure out ways to drive our generation to better express themselves like encourage writing etc.  There are loads of social networks out there. It is time for them to take a note and start reacting to attract new users to their networks.  Marketers are always on the lookout for newer mediums to advertise to reach out to their TGs anyhow. Marketers will need to take quick notes of these facts so that they can act accordingly.  Social network owners should police these networks in order to avoid any mishaps and maintain stickiness.  Respondents have said they use Facebook and YouTube to distribute content online followed by Flickr and iTunes.  What is inferred from this is that, social media networks are in style when it comes to sharing content along with music and videos.  There are some responses that either use these very scarcely or do not use them at all.  These findings can be used to select appropriate online marketing platforms.  Employees should be encouraged to make business purchases online  The decision making can be shared here by forwarding the expert review links to the decision makers to help them make up their minds. Limitations:  Sample size could have been greater than 100 to match the diverse background of the respondents  Influence is difficult to measure properly, since a recommendation can be positive, and yet still have a negative impact on purchase behavior.  Customer feedback and the social network are often found overtaking price, and in some cases brand as a major factor in online purchase decisions.  Feedback and influence from your social network will become more significant factors in the purchasing decision cycle.  Until recently, many online purchase decisions were driven by brand and security concerns.  Smaller and lesser known brands soon begin to pick up loyal networks of customers that had come in direct contact as a result of influence from within their network.  Small companies are seeing becoming the champions of networks. INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision 2008 INDIAN INSTITUTE OF MANAGEMENT | INDORE

Social Media’s Influence in Purchase Decision

by Hassan Mirza on Apr 09, 2009

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Social Media’s Influence in Purchase Decision — Document Transcript

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