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How has social media impacted consumer behavior
- 1. How has SocialMedia impacted Consumer Behavior? 3rd Dec 2013 Rawan Aloul | @1108020835 | Consumer Behavior Marketing
- 2. 1/4 of yourday is spent on Social Media!
- 3. Shift into theDigital World!
- 4. Shift into Self-Publishing! Before1999 2010 Onwards
- 5. Today you areempowered!
- 6. WOM Before Known asBandwagon or Snowball Effect Social Media Amplified Word of Mouth! WOM Today • • • • Social Media has revolutionized the reach & impact of WOM Its no longer an act of intimate 1-to-1 communication Users can now disseminate information at a click of a button Shift from content users in to content creators
- 7. Example of AudiSearch Search before Social Media Results mainly limited to company’s website Search after Social Media Wikipedia, news pages, Facebook, pictures from social networks, etc..z
- 8. Rise of Influencers •Consumers empowered to share information, and become influencers • Law of the Few by Malcolm Gladwell explains different types of influencers who can make ideas go viral today. • He classifies them into three types of people: CONNECTOR Connects people to each other MAVEN Connects people through sharing knowledge SALESMAN Uses knowledge to engage and persuade
- 9. Rise of Influencers,cont’d • Websites such as Klout, Kred or PeerIndex measure the level of social influence of an individual & assign a score out of 100. • Based on how people engage with the content he/she creates. • Brands & Marketers use this information to seek and hire influencers to be their word-of-mouth transmitters. 99 92 86 Klout.com Barack Obama has active Twitter & Facebook profiles & the most important Wikipedia page online. J.B. has one of the most engaged Twitter accounts, but his Wikipedia ranking is much lower than President Barack Obama’s. Zooey Deschanel highly active on Facebook, Twitter and other SM channels.
- 10. Consumer Decision Journey •Traditional Purchase Decision Journey – Linear approach; Funnel analogy – Based on pushed Marketing driven by companies – Assumes initial large set of potential brands which narrows down to one according to consumer’s needs and preferences
- 11. Consumer Decision Journey,cont’d • Revised Purchase Decision Journey – – – – Consider initial set of brands Add or subtract brands as they evaluate what they want Ultimately select & buy a brand Express and share their experience online • Dynamic, influenced by others, cyclical • Loyalty loop; contribute opinions and experiences thru social media • Based on Pull or Consumer-Driven marketing strategies
- 12. Consumer Decision Journey,cont’d • Consumer driven marketing (part of which is Social Media, such as Internet reviews & WOM recommendations) now takes up 2/3s of the touchpoints in the purchase decision making process (unlike traditional marketing or mediums which make up 1/3).
- 14. Shifts in Communication •Degree of Separation – Shift from six degrees of separation to almost half (3.74 degrees as per study by Facebook) – Friendship norms redefined & friendship circles expanded – Average Facebook friends reached 318 for the Millennial generation • Degree of publicity – Tendency for people to become public with their personal information and day-to-day activities – Social graphs becoming public • Five Degrees of Social Relationships – Constructed new degrees of relationship between people – Relationships of different dynamics and characteristics
- 15. Shifts in Communication,cont’d Category Description Inner Circle Personal contacts with frequent personal interaction such as friends, family, neighbors, work peers. Social Friends Frequent personal contact, mostly online interaction, video chats, social networks etc. Acquaintances Infrequent contact via social networks, mainly focused on business relationships, e.g. business colleagues on LinkedIn Followers Colleagues Impersonal remote relationship. Two-way activity, e.g. reading each other’s blogs, followers on Twitter, etc. Followers Competitive Impersonal remote relationship. One-way activity where one monitors the actions of another such as competitive analysis
- 16. Start your ownbusiness today!
- 17. Easy Access toEntrepreneurship Instagram • One of the fastest growing social media outlets with 150+ million monthly active users & 55 Million photos shared every day. • The new gateway for Entrepreneurs.
- 18. I know whatyou ate last night!
- 19. Brands are nowempowered! New Facebook Graph Search allows users to search for activities, check-ins, status updates, events attended, likes and dislikes, etc. e.g. People who like Horror Movies Social graphs can be traced online to determine a person’s likes and dislikes!.
- 20.
Editor's Notes
- #7 Social media is merely the platform and tool that emerged with web 2.0 however word of mouth remains the essence of the medium. D. Brown and S. Fiorella referred to the traditional word of mouth marketing as the bandwagon effect, because in earlier times the path consisted of: (1) marketers who used to influence (2) key individuals within a community to present a certain belief or opinion in a service or product, in hopes for (3) others in the community to later on adopt and support this belief or in other words “jump on the bandwagon” too. They also referred to it as the snowball effect. However due to social media and the way consumers are easily interconnected today on a local and global scale, any kind of message is unlikely to roll down a one-way path. In contrast, the snowball today is subject to numerous disruptions that will alter its path, or magnitude or speed. As described by Brown and Fiorella, what used to flow in a unidirectional path from brand to influencer to rest of the community in an attempt to influence a particular course of action or decision, is now flowing in multidirections, where any person or comment can now alter the direction of the source brand message or public perception. The figure below portrays the changes in the word of mouth communication pre and post social media was introduced.Today’s consumers are more empowered than ever before; social networking, blogging, and the availability of digital devices—such as tablets and smartphones—allow consumers to connect with one another, discuss brands and products, and interact with brands quickly and easily.This is because social media is reach and has given its users more options and capabilities to communicate. These new capabilities that came with the advent of social media such as sharing, commenting, tweeting, voting...etc have undermined the way information is dis- seminated in the traditional media. As social media has enabled users to simply disseminate information at a click of a button and collaborate more with their community, this has in turn given the ordinary citizens the opportunity to transform from content users in to content creators. (Impact of social media on traditional mktg.pdf)http://www.tgi.co.za/word_of_mouth.pdfUnlike traditional media, social media marketing is designed to reach audience onlineNot free but relatively cheapTools are free, but expertise, time and effort is what it’ll cost for marketersAs consumers overwhelmed by product choices tune out the ever-growing barrage of traditional marketing, word of mouth cuts through the noise quickly and effectively.Indeed, word of mouth1 is the primary factor behind 20 to 50 percent of all purchasing decisions. Its influence is greatest when consumers are buying a product for the first time or when products are relatively expensive, factors that tend to make people conduct more research, seek more opinions, and deliberate longer than they otherwise would. And its influence will probably grow: the digital revolution has amplified and accelerated its reach to the point where word of mouth is no longer an act of intimate, one-on-one communication. Today, it also operates on a one-to-many basis: product reviews are posted online and opinions disseminated through social networks. Some customers even create Web sites or blogs to praise or punish brands.A consumer-driven worldThe sheer volume of information available today has dramatically altered the balance of power between companies and consumers. As consumers have become overloaded, they have become increasingly skeptical about traditional company-driven advertising and marketing and increasingly prefer to make purchasing decisions largely independent of what companies tell them about products.This tectonic power shift toward consumers reflects the way people now make purchasing decisions.2 Once consumers make a decision to buy a product, they start with an initial consideration set of brands formed through product experience, recommendations, or awareness-building marketing. Those brands, and others, are actively evaluated as consumers gather product information from a variety of sources and decide which brand to purchase. Their postsales experience then informs their next purchasing decision. While word of mouth has different degrees of influence on consumers at each stage of this journey (Exhibit 1), it’s the only factor that ranks among the three biggest consumer influencers at every step.“Word of Mouth” has always been the most effective form of marketing. PEOPLE HAVE ALWAYS TRUSTED THEIR FRIENDS OPINIONS.When MASS MEDIA became popular last century brands could rely on advertising to broadcast their message at the world and word of mouth didn’t seem as important any more.
- #8 Vertical searchWhen comparing the two figures, the contrast is evident. The search results back then were limited to the company’s website and its different divisions. On the other hand, in today’s search social media clearly plays a major role. Among the yielded results there is a link for Wikipedia, open news-pages, Facebook, let alone the pictures that are retrieved from and posted on social networks. This contrast indicates that information online is no longer controlled by a single entity (Weinberg, 2009). Consumers today have the option to post their own opinions, experiences, praise or rant about products and services through social media means.
- #9 Connectors: Folks who know lots of people who occupy many niches and subcultures., sociable people, bring the world togetherMavens: Collectors of information who want to be helpful, and use that information for others benefit, sharing & trading of infoSalesmen: People who are the great persuaders and push people off the ledge on ideas.The Tipping Point is a fascinating book about epidemics. Not epidemics like H1N1, but rather social epidemicsMalcolm Gladwell examines how and why some ideas, products, messages and behaviours spread just like viruses do.Hire People to Advertise Products. Hiring individuals with a high following count on Instagram (starting at around 5k to 10k followers) to promote products is a great business strategy. Many companies do not get a large following easily, so incorporating other companies or users who do have a high following count to promote products will be good for business. In addition to gaining more customers, a business can gain more online exposure through this popular social network.Using Instagram to AdvertiseKnown largely as a picture and video app, Instagram is the go-to mobile app for sharing photos with friends, family and new acquaintances. For individual accounts, people share personal experiences such as vacations and family moments.Businesses can use this popular social network as a gateway for advertising through the use of photoshttp://communities.washingtontimes.com/neighborhood/tech-tips-10-minutes-or-less/2013/sep/10/using-instagram-promote-your-business/
- #10 Identifying leaders on instagrams (highest # of followers) of the different industries (find out why)Based on factors such as number of daily visits on a blog, number of times a post is shared, or number of followers on Twitter or Facebook. (Impact of social media on traditional mktg.pdf)such as the ratio of reactions you generate compared to the amount of content you share. For example, generating 100 retweets from 10 tweets will contribute more to your Score than generating 100 retweets from 1,000 tweets. We also consider factors such as how selective the people who interact with your content are. The more a person likes and retweets in a given day, the less each of those individual interactions contributes to another person's Score. Additionally, we value the engagement you drive from unique individuals. One-hundred retweets from 100 different people contribute more to your Score than do 100 retweets from a single person. SOCIAL RANKINGOne benefit of being able to see how ‘influential’ a person is, is that when you follow or are connected to a large number of people on sites such as Twitter, it allows you to cut through the noise, and find what is most relevant and trusted from your peers. From a brands point of view, when looking to engage with individuals on a one-to-one basis, or event conduct blogger outreach, it’s a great tool, as it allows you to really see who will be able to amplify your brand message, and to who.Ford did this through PeerIndex in 2012, giving free Ford holograms to those most influential about cars and the auto industry. In exchange for this, the user would tweet about the hologram using a specific hashtag, boosting the reach of the Ford Fiesta campaign, whilst also ensuring that message was being amplified by a person who is trusted within the right context.http://socialmediatoday.com/willpscott/1689426/social-influencer-sites-how-relevant-are-they
- #11 Marketing used to be driven by companies, pushed on to consumers through traditional advertising, direct marketing sponsorships, etc….Marketing first makes consumers aware of different purchasing options through exposure to ads and other forms of push marketing. Consumers start a purchase process by considering a wide variety of options, then continually narrow their options—accordingto their needs and preference—until they ultimately make a decision to purchase. In this traditional model, the post-purchase experience focuses on use.Funnel analogy suggest that consumers systematically narrow the initial consideration set as they weigh options and make decisions and buy products,Funnel metaphor, linear nature - assumes that consumers initially have a large number of potential brands in mind, Touchpoints are defined as any form of communication such as human interface or physical interaction that consumers experience with a particular organization before, during and after a transaction (Brigman 2004) (or during their relationship lifecycle). Whether its through an ad, website, store servicescape or a sales person, touchpoints are important because they accumulate and create the basis on which consumers form perceptions of the brand and the organization. (Brigman 2004).While the funnel metaphor was of a linear nature, suggesting that consumers gradually narrow their initial-consideration set as they evaluate, weigh options and make product decisions, today’s decision journey is much more interactive and circular, consisting of four primary stages: (Court et all, 2009)Initial considerationActive evaluation, defined as the process of seeking information and researching potential purchasesClosure, defined as the actual purchase of the productPost-purchase, defined as the consumer’s experience with the productHowever with the profusion of product choices and the emergence of social media and digital channels, the funnel metaphor is no longer applicable in today’s world as it fails to account for all the interaction points (i.e. touchpoints) consumers are subject to. “New research shows that rather than systematically narrowing their choices, consumers add and subtract brands from a group under consideration during an extended evaluation phase. After purchase, they often enter into an open-ended relationship with the brand, sharing their experience with it online.” Edelman also emphasized on the significance of the post-purchase experience and how this particular touchpoint is not addressed in the funnel analogy. Having easy access to Internet, consumers today remain strongly engaged even after they have completed their purchase. They resort to the online- search and social networks whether to post reviews and express their experience or to look up troubleshooting inquiries and advice. If they had a pleasant experience they are likely to advocate the product or brand online, and if they had a disappointing one they are likely to express their frustration and post complaints. In either case they are spreading word of mouth, which will be used as input sought by other consumers during their evaluation stage (Edelman, 2010). This was supported by a research conducted by McKinsey, which revealed that 60% of facial skin-care consumers carry out an online research about the products they have just purchased (Edelman, 2010). Unlike the linear funnel analogy, the modified consumer-decision journey introduces loops, and states that as the consumer develops a strong bond with the product, he is expected to go through a shorter loop in future purchases, skipping product consideration and evaluation stages and navigating straight through Buy-Enjoy-Advocate-Bond loop (Edelman, 2010).
- #12 In terms of the classic “purchase-funnel” model, the current study underlined that today’s consumers do not make decisions in a linear manner but rather in a way that more closely resembles a trial-and-error approach. Consumers now enter the purchase path at various points, depending on whether they first engage with a brand, research a product, or hear about a product from their social networks.With the availability of customer reviews, discussion forums, and other information sharing, the purchase process is more dynamic, influenced by others, and cyclical. Edelman’s Customer Decision Journey still includes consideration and evaluation phases, but the nature of those phases is different: consumers continually add and subtract options as they research online. Additionally, his model suggests that the kind of information consumers seek is changing. Consumers are more likely to seek out and trust information from other consumers rather than form their opinions based on the information marketers push to them.The cyclical nature of the Customer Decision Journey also includes activities that occur after a sale. Different from the traditional model,the post-purchase period includes a “loyalty loop,” in which consumers engage in a dialogue with the brand and contribute opinions and information on their experience. While not every consumer participates in content contribution, those who do may demonstrate a deep connection with the brand and have the ability to greatly influence other’s perceptions of it. When they do contribute, consumers post reviews, ask questions, and share their experiences through social media channels such as Facebook, Twitter, and discussion forums.Based on a research conducted by Mckinsey, it was noted that the number of brands considered at the outset of the consumer’s decision journey has dropped due to the proliferation of products and abundance of choices and communications. Nonetheless, in contrast to the funnel analogy, as the consumer moves to the subsequent stage of active evaluation the number of brands may actually expand this time rather than narrow down (Court et all, 2009). This means that brands that are in the initial consideration stage do not take priority nor do they necessarily take their status for granted. Marketers hence have an opportunity now to add touchpoints and interject the decision making process at any time, Another change attributed to the modified purchase decision journey is the move from push marketing to pull marketing strategies. In the past, marketing was driven by organizations and pushed onto consumers via the traditional communication means such as advertisements, direct marketing and sponsorships (Court et all, 2009). But with consumers now having access to Internet and the digital medium, they seize control of the process and are capable independently of selecting and “pulling” information of interest to them. This was evident in McKinsey’s research results which indicated that traditional marketing only made up one-third of the touchpoints at any stage throughout the purchase decision journey; whereas consumer-driven strategies or pull marketing were actually far more influential, making up two-thirds of the touchpoints. These were represented as past experiences, word-of-mouth recommendations, online reviews, and in-store interactions.
- #13 Social media constitutes as a primary component in the consumer decision journey and its unique in the sense that it’s the only form of marketing that can connect with and influence the consumer at each and any stage throughout the journey. It’s used to play four major roles in the consumer behavior, and that is to: (1) Monitor, (2) Respond, (3) Amplify, and (4) Lead (Divol, 2012, Demystifying social media).
- #15 In 1930s theory of 6 degrees of separation was advocated by FrigyesKarinthy, and later tested in 1960s by Stanley Milgram,basically suggesting that the social distance between any two individuals worldwide is a maximum of six people. In 2011, a group of students and employees in Facebook conducted a study on Facebook active members to test the degree of separation. The test concluded that the average distance between any two users was 3.74 degrees, and hence social media had in fact shrunk the 6 degrees rule into almost half. Thanks to social media and tools such as Facebook, the gap between any two individuals is now observed to be of three degrees. Due to the profusion of social media technologies, wireless networks and mobile devices, people nowadays are much more closely connected to one another than before. Where once a high school student used to have a close connection with an approximate of 25-30 people, students of today know about and regularly converse with 100s of people whom they claim as friends and family.Social technologies have redefined friendship norms and expanded friendship circles. In the past, friendships were mostly built with people of close proximity to one another and who interfaced in regular basis. Today, on the other hand, friendships are more likely to be based on remote communications and involve people who have never met physically before. Social media made it possible to reconnect with old high school friends on Facebook, reconnect with lost business contacts on LinkedIn, and create new social friends with our followers on Twitter, Instagram and other tools.Before social media got popular and the social graph was conceptualized, marketers would be looking at a two-degrees graph, which comprises of: (1) the consumer’s personal network (2) the larger and general community.However with the proliferation of connections and relationships out there on the Internet today, marketers must account for the nature and context of the different relationships when constructing their brand messages and shape each one differently to suit and stimulate the different relationships. (When considering how to craft messages and tactics that might assert influence within those communities)social norms of today’s culture are gradually shifting from one that used to emphasize confidentiality and privacy to one that is less reserved and has a tendency of accepted openness. For example, in a report by Pew American Life and Internet Project it was stated that 40% of social media users have set no privacy settings on their social media profiles, effectively enabling the public at large to view their content and profiles (PewAmerican Life and Internet Project, 2012). The change to openness and a more relaxed view on privacy has been largely fostered by social media, with sites like Facebook asking its users to share more information.Photo sharing networks like Instagram are populated with pictures and comments about the food we eat and with whom we eat it. Geonetworking sites like Foursquare or Facebook Places allow us to report to the world the stores we shop at, the cities we visit, or the airports we connect through. Presentation sharing networks like SlideShare announce what presentations we download to our Facebook connections.Websites like Yelp.com encourage us to publicly document and share personal experiences about the hotels we stay at and the restaurants we frequent.
- #16 In 1930s theory of 6 degrees of separation was advocated by FrigyesKarinthy, and later tested in 1960s by Stanley Milgram,basically suggesting that the social distance between any two individuals worldwide is a maximum of six people. In 2011, a group of students and employees in Facebook conducted a study on Facebook active members to test the degree of separation. The test concluded that the average distance between any two users was 3.74 degrees, and hence social media had in fact shrunk the 6 degrees rule into almost half. Thanks to social media and tools such as Facebook, the gap between any two individuals is now observed to be of three degrees. Due to the profusion of social media technologies, wireless networks and mobile devices, people nowadays are much more closely connected to one another than before. Where once a high school student used to have a close connection with an approximate of 25-30 people, students of today know about and regularly converse with 100s of people whom they claim as friends and family.Social technologies have redefined friendship norms and expanded friendship circles. In the past, friendships were mostly built with people of close proximity to one another and who interfaced in regular basis. Today, on the other hand, friendships are more likely to be based on remote communications and involve people who have never met physically before. Social media made it possible to reconnect with old high school friends on Facebook, reconnect with lost business contacts on LinkedIn, and create new social friends with our followers on Twitter, Instagram and other tools.Before social media got popular and the social graph was conceptualized, marketers would be looking at a two-degrees graph, which comprises of: (1) the consumer’s personal network (2) the larger and general community.However with the proliferation of connections and relationships out there on the Internet today, marketers must account for the nature and context of the different relationships when constructing their brand messages and shape each one differently to suit and stimulate the different relationships. (When considering how to craft messages and tactics that might assert influence within those communities)social norms of today’s culture are gradually shifting from one that used to emphasize confidentiality and privacy to one that is less reserved and has a tendency of accepted openness. For example, in a report by Pew American Life and Internet Project it was stated that 40% of social media users have set no privacy settings on their social media profiles, effectively enabling the public at large to view their content and profiles (PewAmerican Life and Internet Project, 2012). The change to openness and a more relaxed view on privacy has been largely fostered by social media, with sites like Facebook asking its users to share more information.Photo sharing networks like Instagram are populated with pictures and comments about the food we eat and with whom we eat it. Geonetworking sites like Foursquare or Facebook Places allow us to report to the world the stores we shop at, the cities we visit, or the airports we connect through. Presentation sharing networks like SlideShare announce what presentations we download to our Facebook connections.Websites like Yelp.com encourage us to publicly document and share personal experiences about the hotels we stay at and the restaurants we frequent.
- #20 Who liked page x like what other pagesDigital representation of an individual, depicted from his online personal details, connections and information developed or shared by him.People develop relationships with objects that they become a fan of, follow, like or dislike, e.g. videos, images, places, brands, pages, celebrities or other popular online figures.E.g. Facebook uses “API” (i.e. the like button) and embeds it in external websitesReduced PRIVACYThe utility of Open Graph is not restricted to Facebook advertisers. Open Graph is an important tool for users to see all of the things that their friends are doing. Although Open Graph stories are published automatically in the News Feed, users also can search for actions in Open Graph using the newly introduced Graph Search:Graph Search, launched in beta in January 2013 and rolled out to most users in March 2013, is a Facebook-centric search engine located at the top of each user’s Facebook page. Graph Search allows users to search for friends’ activities on Open Graph, including check-ins, status updates, and events attended.If you want to find someone to see the Finding Nemo sequel with you, you can search for “Friends who like Finding Nemo who live in San Francisco.” If you are planning a trip to Morocco and want some help with your itinerary, you can search “Photos of my friends taken in Morocco.” Or if you want to hear a friend’s review of a newly opened restaurant, you can query “Friends who have been to Central Kitchen.”