Social media's role in redefining brand and customer relationships

¶ … business, from the largest enterprise to the smallest start-up, has to face the continual challenge of staying in touch with customers so to continually earn their trust and business.Social media is the catalyst that is continually changing customer relationships and making 'them more interactive, open, and collaborative. Today's customers have more options than ever before in terms of how they choose to learn about that new products and services as well as gain insight into areas of interest.For marketers to be successful, they need to realize that their customers' preferences are changing quickly.Agilityas opposed to formal, often static, processes from a marketing and selling standpoint are essential if a company is to survive in an increasingly competitive global economic environment. The purpose of this dissertation is to show how the foundational elements of social media, including its core building blocks of presence, sharing, conversations, identity, groups, relationships, and reputation, combine to redefine the brand of any business, large or small. How these elements are synchronized around a common marketing and sales objective is what matters most. This dissertation also provides insight into how quickly the value chain of businesses are shifting to become more customer-centric as a result of social media's pervasive influence. No longer can the traditional methods of marketing be relied on, weeks or months of lag time often existing between the completion of a program and its results being reported. Social media, due to its digital nature, reports the return on investment (ROI) immediately through the use of analytics. Small businesses have the speed and time tovalue this advantage is due to the fact that analytics and agility arebeing emphasized over the sheer size of a given business.

TABLE of CONTENTS

ivTABLE of FIGURES

1 CHAPTER ONE: THE PROBLEM

Problem Background

Purpose of the Study

Research Question

Definitions of Terms

Limitation and Delimitation

Significance of the Study

13 CHAPTER TWO: REVIEW of LITERATURE

Marketing and Advertising

Word-of-mouth (WOM) Marketing

Social Media Marketing

Benefits of Social Media Marketing

Social Media as a Viable Marketing Strategy for Small and Medium-sized Enterprises (SMEs)

Social Media and Large Enterprise Businesses

32 WOM Marketing Strategies via Social Media Platforms

Return on Investment

Resource Distribution

Facebook

Twitter

YouTube

LinkedIn

Flickr

Social Media Usage among Consumers

Marketing by way of Social Media

47 CHAPTER THREE: METHODOLOGY

Theoretical Framework

Research Method

Population

Instrumentation

Anticipated Difficulties

Limitations and Delimitations

Significance

Data Analysis

57 CHAPTER FOUR: RESULTS and MAJOR FINDINGS

Interview Results

Question 1

Question 2

Question 3

Question 4

Question 5

Question 6

Question 7

Themes

Tactics

Word-of-mouth

Communicating with Customers

Influence

Considerations

67 CHAPTER FIVE: DISCUSSION, CONCLUSIONS, and RECOMMENDATIONS

Implications to Organizations

Attract New Customers

Engage Customers

Outsmart Competition

Offer a Range of Incentives

Other Outcomes

Recommendations and Future Research

Conclusion

75 REFERENCES

95 APPENDICES

A. 96 Axial Coding Model

B. 98 Selective Coding

C. 100 Codebook and Category List

TABLE of FIGURES

Figure

1. 23 Barriers to social media adoption according to U.S. brand marketers and ad agencies (Equation Research, 2009)

2. 38E-mail consumption levels by segment

3. 39 Social media sources and usage

4. 40 Social media statistics for Twitter and facebook used by companies for promotions

5. 43 Core indicators, optional indicatorsand other related statistics

6. 44 Social media use among U.S. effluents

7. 58 Social networking sites use by the new generation

CHAPTER ONE: THE PROBLEM

Problem Background

Marketing is extremely expensive for businesses and in many cases is too expensive for small businesses that rely on small margins or profits to remain competitive. As stated in a Business Week article, "Marketing may be considered an expense on your P&L, but the brand it supports is your greatest asset" (McKee 2011, p.1). In today's world, technology is continuing to dramatically affect the modern role of marketing. New innovations in technology have changed how individuals see the world, interact within it, and even communicate with one another. One of the latest trends in the modern environment is the explosion of social media, as online and viral communications and networking are forever changing how businesses relate to the consumer.

Social media refers to forms of electronic communication, such as websites for social networking and micro-blogging, through which users create online communities to share information, ideas, personal messages, and other content such as videos. Yet, it goes past other forms of online communication that have been seen in the past. Social media is not just an e-mailing or messaging platform, but alsoa new way to build and maintain entire networks that streamline multiple conversations in its synergy.

For small businesses, social media represents both an opportunity and a threat. It is imperative for today's smallbusiness leaders to understand social media, how it affects them, and how they can use it to their advantage. Kietzmann, Kermkens, McCarthy, and Silvestre (2011) outlined the building blocks of social media. Social media consists of various platforms where consumers can use to communicate with one another. Due to the diverse ecology" of social networking sites, social networks helps users to perform their functions through this sites (Kietzmann et al., 2011). The diverse ecology of social networks differ in terms of their functionality and scopes. Because this form of communication takes control of the message out of the hands of the company, it represents a risk to small businesses. The Consumers can post something negative about the company on the Internet, and the audience can range from a few friends to an audience of millions (Kietzmann et al., 2011). While the latter is a crisis for any business, small businesses can face strong negative effects particularly when consumers post information that tarnishes a company's image. The company can suffer negative public image that can jeopardize its business undertakings.

Kietzmann et al. (2011) outlined the seven building blocks of social media: presence, sharing, conversations, identity, groups, relationships, and reputation. For a small business, understanding these distinct building blocks and how to leverage the company's social media presence around each block is essential to success. Jonscher (2012) outlined the potential of social media for small and medium-sized businesses. Often, smaller businesses face marketing barriers due to the high cost of advertising -- it is expensive to produce, and airtime can be costly as well. As a result, small businesses are at a strategic disadvantage when compared with a larger firmbecause they lack of economies scale in their promotional capabilities.

Jonscher (2012) argues that social media can help to erase boundaries that traditional marketing creates. Many small-business leaders, however, do not feel significant potential exists to use social media marketing tactics to close the promotional capabilities gap with large enterprises. Jonscher (2012) argued that smallbusiness owners need to become better-educated about what social media is, how it works, and why it is so appealing to consumers. By understanding the nature of social media's success, perhaps through the Kietzmann et al. (2011) framework, the problem of the marketing disadvantage for small companies can be overcome by using social media.

Smith and Zook (2011) argued that the companies must make social media a centerpiece of their marketing communications strategies. Because social media is so revolutionary with respect to its impact on communication, companies cannot afford not to participate in social media. Large competitors also use social media by having a social media presence may not provide much of a competitive advantage, but small- business owners can still gain an advantage from the superior use of social media. As Jack Welch, a business executive and an author, once pointed out the ability to get things done more quickly than the competition can be a source of competitive advantage (Slater, 2003). This highlights one advantage of social media for small businesses -- the decisionmakers receive the feedback so they can act on that feedback immediately.

Small companies face high marketing costs when choosing to use standard advertising channels. Social media can be a solution to this problem because the costs are lower and sometimes free. Social media, however, can pose a threat to small businesses because the message control is not as good as it is with the conventional marketing (Smith and Zook, 2011). It is important for smallbusiness leaders to understand the ways in which social media affects their businesses in order to create optimal social media strategies.

This emerging trend impacts various avenues of business as it continues to gain speed. For instance, social media is increasingly becoming a viable marketing strategy that seems to outweigh more traditional forms of marketing. According to Pride & Ferrell (2011, p.4), the AMA (American Marketing Association) defines traditional marketing as "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large." Traditional advertising includes messages or commercials communicated through historically established media, such as television, radio, outdoor media (e.g., billboards), print media, and direct mail. This is quickly becoming an outdated form of marketing, especially for small and mediumsized enterprises (SMEs) that have been adopting a much more cost-effective strategy of utilizing social media within their marketing strategies. Social media forces those who use traditional marketing and advertising to re-evaluate their business models and techniques.

Despite such rave reviews regarding the use of social networking as a marketing platform, many companies have not readjusted their strategies to incorporate such elements into their execution of marketing techniques. This means missed opportunities and cost savings. Even worse, many SMEs are continuing to spend too much money on the execution of traditional advertising, which is essentially limiting their ability to compete with larger businesses. This creates a situation where marketentry barriers are high, as are the potential failure rates for many new start-ups and small businesses around the country.

Viral marketing affects customers' brand consciousness, information purchase behavior, purchase actions, postpurchase conversations, and assessments (Mangold & Faulds, 2009; Palka, Pousttchi, & Wiedemann, 2009). The use of social media is not devoid of issues, not least of which is that it allows consumers to freely swap details about services and products among themselves, skipping any business control of the information (Palka et al., 2009). Within this quickly developing and sophisticated atmosphere, the leaders of organizations need an awareness of the way in which the social networking resources as well as technologies can lead the way of developing relationships with and among their clients.

This kind of understanding is especially appropriate within the 21 stcentury because the substantial utilization of portable technologies is causing marketers to change how they advertise their products and services (Clarke, 2001). The primary benefits of transactions by way of portable technologies tend to be: ubiquity (i.e., accessible everywhere), localization (i.e., location-founded marketing), customization (i.e., tailored toward a particular person), and comfort (i.e., anytime and anyplace as well as improved standard of living; Clarke, 2001). These benefits can also affect social networking usage as improvements in portable technology offer enhanced consumer interfaces for acquiring brand new media information whenever needed (Kim et al., 2010).

Research Question

The research question that guided this study was: Is social media a viable strategy for increasing SMEs' advertising competitiveness will that allow them to compete with larger enterprise businesses and what are some of the processes that can be used?

A well-established research question is vital to any study. Without it, the reader does not know what is really being addressed or how the researcher plans to use the question to show that a "good" answer exists forwhat is being studied. Some studies have several questions that must be answered, but the current study's focus was on one question.

While more could be asked of this study, marketing is complex. A large number of facets mustbe explored, and attempting to address too many of them would have caused the researcher to struggle with the study. Too much data in a study can be just as troubling as too little data, and separating the information and analyzing it correctly is often difficult when it has simply become overwhelming. Each study must have a strong focus, or too much information that is unneeded for the actual study will be generated. A study that stays focused on just one research question, especially within such a broad topic as marketing, is often a better choice.

Definitions of Terms

Classifications of what constitutes an SME differ by marketplace and state. This research used the European Union concept of defining an SME by the quantity of workers as micro (under 10 employees), small (under 50), and medium (under 250; European Commission, 2003).

Social media refers to forms of electronic communication, such as websites for social networking and micro-blogging, through which users create online communities to share information, ideas, personal messages, and other content such as videos (Merriam-Webster 2011). Yet, the term goes past other forms of online communication that have been seen in the past. Social media is not just an e-mailing or messaging platform, but rather, it is a new way to build and to maintain entire networks that streamline multiple conversations in synergy.

The AMA defines traditional marketing, " as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large (Pride & Ferrell, 2011, p.4) Limitation and Delimitation

The primary limitation of this study concerns its strict reliance on secondary resources. In this regard, Dennis & Harris (20o2) pointed out, "Finding the information needed to answer a particular research question from secondary data avoids the need to spend time and money on primary research, but the likelihood of an ideal match is remote" (p. 39). Notwithstanding this sole limitation, the study's design and research question were deemed viable.

The advantages of social networking are located in the capability of companies to communicate with clients as observed by the anticipation of the drive in the direction of consumer value or relationship marketing (Ravald & Gronroos, 1996; Woodruff, 1997). To increase their capability of understanding the advantages that come from social networking, organizations will have to plan ways to create connections that strengthen consumer commitment (Ravald & Gronroos, 1996). This involves an awareness of the difficulties and outcomes of utilizing cellular social networking to guide as well as to inform strategic planning. As the growth and development of e-business has motivated more managerial competence in SMEs' planning as well as in the implementation of it, the actual strategizing capabilities of SMEs continue to be proportionally lower in comparison with that of bigger companies (Dyerson, Harindranath, & Barnes, 2009). E-business endeavors are not usually viewed as strategically practical or desirable in spite of their effective utilization of the Internet for elementary tasks such as e-mail