Social Media Retailing Applications: Opportunities and Threats
How Has Social Media Developed and What are the Benefits and Downsides of Using Social Media for Retailers Today?
This study examines social business in general, how it developed and the benefits of using social media in particular. Second, this study provides a discussion concerning the potential positive as well as the effects of social business in the retail sector which is followed by a description of optimal business strategies for social media applications, the pros/cons of using these tools in the industry, and some representative case studies concerning companies that succeeded and some that recently failed in their use of social media. Finally, the study provides a summary of the research and important findings is followed by a series of recommendations concerning how retailers should use social media technologies in their own businesses in the concluding chapter.
Social Media Business Applications
The past half century has witnessed a growing recognition among the world's population that despite sometimes-massive international relief efforts, at least a billon people in the world today remain mired in poverty and another billon-and-a-half lack easy access to clean water. In this environment, it is clear that governments around the world need all of the help they can get from the private sector in addressing local issues that may have international or global origins. Notwithstanding a groundswell of "think globally, act locally initiatives," the world's population continues to increase at an alarming rate, and many experts predict that peak oil will occur sooner than later, if it has not already been reached. Further, even as these fossil fuels are being depleted, though, their use continues to contribute to accelerated levels of global warming. Taken together, it is apparent that the world has a multitude of problems that can be addressed through informed applications of public-private partnerships and corporate-sponsored initiatives, and these issues are discussed further below.
Statement of the Problem
Despite the growing recognition that organizations of all types and sizes must pursue business models that take into account the triple-bottom line, the use of social business by retailers has been mixed. In some cases, the efforts by smaller retailers to introduce social business principles and practices were relatively inconsequential (Nee 2011). Furthermore, even larger retailing organizations have been uncertain in developing their social business responses based on a lack of experience in these areas (Nee 2011). According to Nee (2011, p. 4), though, "Lately, however, there has been a groundswell of interest and activity by business leaders seeking creative ways to leverage their core business to do well and do good." In other words, it is possible to earn a decent profit while giving back to the community in which companies compete, as well as by making efforts to address issues of global importance as they are able to do so.
Because there is no question that retailers are incorporating social media into their business models, it is important to identify best practices to take advantage of the strengths of these tools while minimizing their potential downsides to achieve social business goals. To this end, this paper provides a review of the relevant peer-reviewed, scholarly and commercial literature to better understand the potential downsides of using social media described by Morris (2013) in his article, "2012?s Ten Worst Social Media Disasters." Using contemporary illustrative examples from academic literature and reputable business publications, this paper provides a discussion concerning the concept of 'Social Business' and the resultant opportunities and challenges that are currently being faced by the retail industry globally using the aims and objectives described below.
Aims and Objectives
This study's overarching aims and objectives were to provide:
1. A comprehensive analysis concerning social business in general, how it developed and the benefits of using social media as well as a discussion concerning the effects of social marketing for businesses in the retail sector;
2. A timely description of optimal strategies for social business in the retail industry; and,
3. A series of recommendations in the concluding chapter concerning how retailers should use social media technologies in their own businesses to achieve their social business goals.
Overview of the Study
This study uses four chapters to achieve the above-stated aims and objectives. Chapter one provides a statement of the problem, the study's aims and objectives and this overview. Chapter two examines social business in general, how it developed and the benefits of using social media to promote and achieve social business goals. A discussion concerning the effects of social businesses in the retail sector is followed by a description of optimal business strategies for social media applications and the pros/cons of using these tools for social business purposes. Chapter three provides representative case studies concerning companies that succeeded and some that failed in their use of social media for social business applications and chapter four presents a series of recommendations are provided concerning how retailers should use social media technologies in their own businesses to achieve their social business goals. This report will not provide any peer-review feedback and use only academic literature and reputable business publications.
Social Business and Retailing
By any measure, the Internet was a real game-changer for the retail sector. Not only have new opportunities for retailing been introduced, sophisticated multimedia platforms now provide new ways of communicating directly with customers and potential customers. Against this backdrop is the growing recognition by companies of all sizes and types that businesses are being held to higher standards by the general public today compared to the past, and it just makes good business sense to identify best industry practices from industry leaders. Indeed, Schwartz (2010) suggests that the need for integrating social business political and practices into existing business models is truly compelling and urgent on an equal basis as generating a profit. According to Schwartz (2010, p. 18), there is a need for "social business to be at least as well managed as any profit-maximizing business" and cites "the importance of speed, planning regular reevaluation of plans, and understanding one's market."
Social business principles and practices are redefining business success today. Rather than having a single source of motivation to earn a profit, a growing number of businesses are currently subscribing to the concept that they have two fundamental motivations; the first to earn a profit in order to stay in business and provide a return on investment to their shareholders, but also a second that requires giving back to the communities and world in which they compete (Ghalib & Hossain 2009). According to Ghalib and Hossain (2009, p. 2), "Each type of motivation will lead to a separate kind of business: The first type of business a profit-maximizing business, and the second type of business as a social business which are created to do good to people, rather than operating with the sole intent of making private gains." This point is also made by Nicholls (2006, p. 42) who advises, "Young people must learn that they have a choice to make about which kind of entrepreneur they would like to be. If we broaden the interpretation of capitalism even more, they will have a wider choice of mixing these two basic types in proportions that are just right for their own personal objectives." This broadened definition of capitalism may appear to be a watered-down version for struggling companies that are already being forced to operate on razor-thin profit margins. In this regard, Kreitzer (2012, p. 103) emphasizes that, "Social business is designed and operated as a business enterprise, with products, services, customers, markets, expenses, and revenues -- but with the profit-maximization principle replaced by the social-benefit principle. Rather than seeking to amass the highest possible level of financial profit to be enjoyed by the investors, the social business seeks to achieve a social objective."
For start-ups in an increasingly competitive and globalized marketplace, social business goals may be a hard sell. With the overwhelming majority of new businesses failing each year, there must be some compelling reasons for businesses of any type to elect to forego a purely profit-making business model in favor of a more a ltruistic model that may place them at a competitive disadvantage. In reality, though, businesses do not have to forego their profit-making agendas, but they must change their way of thinking to accommodate this new direction in social business. In this regard, Nicholls (2006, p. 42) emphasizes that, "Making profit will not disqualify an enterprise from being a social business enterprise. The basic deciding factor for this will be whether the social goal remains the enterprise's overarching goal, and it is clearly reflected in its decision-making." Indeed, a growing number of companies are finding the right balance between social business and their conventional business models using social media resources which are discussed further below.
Social Media and Retailing
Despite a growing body of evidence that social media sites are valuable additions to the marketing mix, a number of corporate executives remained mired…