ASSIGNMENT FRONT SHEET

Course Title: Business Portafolio

Faculty: Mr.Tustain

Student Class: E76 Group: N/A

Assessment Title: Business Report

Due Date: October, 30th 2013 Due Time: 3:00 pm

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procedures. To this effect, I have uploaded my work onto Turnitin and have ensured that I have made any

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GLION INSTITUTE OF HIGHER EDUCATION

Evaluation and Analysis of

social media benefits for

business

Megan Rebeca Hernández Martínez

30/10/2013

3

Executive summary

Social media have become an important tool for companies marketing, due to, the benefits that

the use of it. The report is about how social media helps in some aspects of the brands. It

presented a small background to understand what social media is, and what the channels are. The

paper It consisted in the analysis of some examples about companies that integrated social media

as a marketing social tool, understanding the benefits that it provides; Also is presented some

negative aspects to considerate about the tool. The conclusion highlight that social media is a

good option for companies and, in addition, includes recommendations for companies that want

to use social media.

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Index

Introduction ................................................................................................................................................... 5

1. Social media definition .......................................................................................................................... 6

1.2. Channels ........................................................................................................................................ 6

1.3. Who use social media? .................................................................................................................. 8

2. Evaluation of social media benefits ....................................................................................................... 9

2.1. Improves the product ..................................................................................................................... 9

2.2. Develop Customer relationship management. ............................................................................. 10

2.3. Increment word-of mouth-communication .................................................................................. 11

3. Negative aspects to considerate of social media ................................................................................. 12

Conclusion and recommendations ............................................................................................................... 14

References ................................................................................................................................................... 16

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Introduction

Since the internet apparition, the way that business interacts with the customer has been

changing day by day. However, the fast evolution of this communication tool in the last years,

have transformed in a complete form the relationship with the customer, owing to, the

involvement of social media as a marketing tool. In the last years, the increase on the usage of

social media for business has grown extremely fast, as well as, the increase on the number of

persons using it.

Nowadays, customers go thought social media in order to get more information about a

product, being influenced by this tool toward a brand. According to Advertising Bureau UK, 80%

of costumers tend to buy a product of a specific brand because the influence of the presence’s

brand in the social media (Wight, 2013); Making the tool attractive for business.

Social media can help companies in the next aspects:

• Improves the product

• Improve Customer Relationship management.

• Increment word-of mouth-marketing

However, social media have significant aspects to considerate that may turn against the

brand, given that, mismanagement of customer complaints causing a big damage in the brand’s

image.

The purpose of this paper is to demonstrate that social media is a good marketing tool for

business. Through analyzing the cases of companies that use social media, showing how the tool

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impact in some aspects, allowing the company enjoy the benefits of this tools. As well as,

highlight the negative effects that companies must take in account.

1. Social media definition

Social media are defined as “web-based software and services that allow users to come together

online and exchange, discuss, communicate and participate in any form of social interaction”.

(Ryan & Jones, 2012).

As the definition says, social media allow the interaction between people going through these

platforms. Many companies are using it to promote and advertise the brand, as well as, looking

for go deeper to understand the customers’ needs and develop a close relationship. Today,

companies starts realize that social media have great benefits and, in consequence, day by day

more enterprise are adding this tool as a part of social marketing. According to Constant Contact

(2013), a social marketing agency, social media use have exploded during the last 5 years,

finding that on 2009, companies just used a 10% this tool meanwhile on 2013 this number

change into 87%, increasing an 870%.

1.2. Channels

Social media have many different channels but, nowadays the ones that are used the most are

social networks sites. In these sites, people can create public or demi-public profiles, where can

be publish content, such as, videos, photos and commentaries (Boyd & Ellison, 2007). These

profiles may be view for people, who have an account in the same site. Examples of these sites

are Facebook, twitter and YouTube, which are the most used in these days both for individuals

and companies.

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Companies use these channels mainly to have constant communication with customers,

owing that, have the characteristic of which is updated in real time. This provides the opportunity

to develop the customer relationship 24 hours 7 day a week.

The figure 1.1 illustrates how many percentage companies using social media sites for

marketing purpose, which includes Facebook, Twitter, YouTube and the total of social media

(blogs, micro blogging, photo- and video-sharing, podcasting, ratings and reviews, social games,

social networks, virtual worlds, widgets and applications, wikis, etc.), plus the total of social

media. This chart shows the growth in the use of these platforms between 2010, as well, a

prediction of the percentage of usage on 2014.

As is shown in the graphic, on 2013 Facebook is the platform most used for companies with a

percentage of 86%; meanwhile Twitter and YouTube has a percentage of 59% and 39%,

respectively. On between the years 2013 to 2014 is predicted an increase of the usage of all the

media platforms, however, this development will be less in comparison of the period between

the 2012 to 2013.

Figure 1.1.

Source: (Narayanan, Asur,

Nair, & Rao, 2012)

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1.3. Who use social media?

In order to know if a marketing tool is effective for reach customers, the company must identify

if the segment of customers is using social media platforms. Companies could think that social

media is used just by young people; although, the 92% of the segment from 18 to 29 years are

actively involved in social media(Crain, 2013) , today people of all ages integrate the social

media phenomenon. In the Figure 1.1 illustrate the increase in the adoption of social media by

among adults segment from 2006 to 2012. Firstly, on 2006 the segment from 50 to 64 years old

have a 4% in the adoption of social media, which increase on 2012 to 57% having an exponential

increasing of 1425%. In the other hand, the segment of 65+ had a 1% of adoption of social

media on 2006; however, on 2012 this segment has an increasing of 3800% giving a percentage

of 38%.

Figure 1.2

Whichever the segment of a company, this one must attend the numbers of increase in the

use, and also take actions to involve people through the brand by social media. Clearly the

57%

68%

4% 1% 0%

20%

40%

60%

80%

50-64 65+

Ipe

rce

nta

ge o

f In

cre

ase

of

use

so

cial

me

dia

Age

Adoption of social media

2006

2012

Source: (Crain, 2013)

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content published is not going to be the same for young people than for adults about 65+, so

companies must make segment also on social media to understand the customers’ social

behavior.

2. Evaluation of social media benefits

Many business are starting to use social media as a part of marketing, this because the

substantial benefits that the tool provide. This benefit helps the company in the next aspects:

Improves the product

Improve Customer Relationship management.

Increment word-of mouth-marketing

The next part of the paper is to evaluate the benefits that social media provides as a marketing

tools, with the analysis of situations experimented by some know companies.

2.1. Improves the product

In April 2009, Domino’s pizza decided to open a Twitter account to monitor customer

comments about the brand and product. Unfortunately, by several negative comments Domino’s

found that the taste of the Pizza was not really good. The company looked for improve the

product by doing some focus groups and social media monitoring. The information obtained was

analyzed, and Dominos created new better-tasting pizza that better goes according with the

customers’ likes (Luton, 2013). That was how social media helped Domino’s to improve the

quality of the product.

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Given that, social media let the company obtain feedback directly from customers, the brand

improves the quality of the product more according to the likes and needs of the customer. In

addition, hearing the customers opinion makes feel them that their petitions were really taking in

account. Domino’s Pizza, really made the effort to improve the quality of pizza and always

looked for cover the customer needs. This not just gives them more sales, in addition, built the

brand’s image as a company that really cares people.

2.2. Develop Customer relationship management.

In last years, Pizza Hut recently launched a social media campaign Through Foursquare, for

sales promotion and loyalty. Customers use foursquare for make check-in in, every time them be

in the pizza store. People with most check in’s in the establishment have the opportunity to get

free breadsticks with the purchase of a large pizza. Foursquare, allows users to become mayors of

the place, to the person with the most check in’s at a location in the last 60 days. As a promotion

Pizza Hut, rewards the mayor of the location, as well as, the customers with more check-ins.

(Luton, 2013)

By this promotion Pizza Hut, is developing the loyalty of the customers, doing them to

participate in a funny competence to get rewards. In this point can be identify that social media

have the power to engage the customer with the brand, and also, allows the development of

Customer Relationship management.

Customer relationship management is based on the actions done to retain the customer

before the first purchase. This concept has become a primary objective for some companies,

owing that, is easier and cheaper retain the customer, rather than, find new ones. Thereby, the use

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of social media between this concept has been appeared a term called Social Customer

relationship Management. This term is focus on the transmission of experiences and to have an

open interaction with the customer. (Baird & Parasnis, 2011).

The development of Consumer relationship management main points are:

• To collect information, in order to, analyses data to better know the customer's profile.

• To develop the customer relationship through active interactions with the customers.

(Castronovo, 2012)

Social media provide the opportunity to develop these points in a huge manner. Firstly, some

social networks show the personal information of the user on the profile, such as, age, gender,

place of residence, and some of the people’s likes. Furthermore, these platforms provide personal

information to other companies. An example of this is Facebook, where people’s information is

showed in a public or semi-public profile and, in addition, Facebook’s privacy policy establishes

that people’s information is provided to closer partnerships of this social media platform.

Secondly, as is analyzed on the Pizza Hut example, social media create interactive relationships

through dynamic actions.

2.3. Increment word-of mouth-communication

Social media have the characteristics of viral propagation, which means that, the circulation of

information is faster and in real time (Nalty, 2010). People that start talking in these platforms

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about a topic, induce more people to talk about the same topic influencing other and so on,

improving the Word- of-mouth communication (Coulter & Roggeveen, 2012).

. Companies use this characteristic to spread notices and promotions about the brand, through

a social profile or also through influential customers how is already involved with the brand in an

emotional way.

After Domino’s pizza improves the product, the company launched a campaign called Pizza

Turnaround, which included television advertising, videos, podcasts and pizza reviews on

popular shows. This campaign helps to create a buzz with people that Domino’s pizza had

changed the taste of the food and where much better. The response in social media was

immediately, on Twitter were created hashtags like #newpizza and #pizzatournaround, which

many people use on publications for share the new experiences that Domino’s provided. (Luton,

2013)

In this case we can observe that Domino’s used different marketing tools to change the

customer’s perception of the brand, but social media helped to influence people with people that

already know the new experience. Hashtags on Twitter increased the word-of-mouth

communication about Domino’s, owing to, millions of people were using them, and influence to

other people to know about the brand.

3. Negative aspects to considerate of social media

Even though the great benefits that social media give to the companies, this tool also could cause

serious damages, if is not correctly handle. Social media platforms provide the customer the

opportunity to share experiences lived with the brand and the feelings toward the brand.

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Unfortunately, not all the experiences shared have a good final, and here is when social media

could be mortal for the business. (Tuten & Angermeier, 2013)

On July 6, 2009 David Carrell posted a protest music video on YouTube called United Breaks

Guitars, recounting their negative experiences with United Airlines. This video explains the

situation that united employees broke his guitar but, in addition, the bad services that he received

in response of his complain during 9 months. This video attracted the attention of many people

in multiple social media platforms like, Twitter, Facebook, and other networking sites. By

midday on July 8 the video had been viewed 137,896 times on YouTube, a relatively large

number of views for that amount of time. But the viral momentum of United Breaks Guitars had

just begun. After the story hit mainstream media, it racked up 1,706,988 views by the end of July

10. During this period, more than 2,000 relevant tweets were also recorded. From those tweets,

over 86% linked to either the original video on YouTube or a related website. Some days after,

United contacted David Carrell and offered a payment to make the video go away, however, was

too late and David Carrell did not accept. This tsunami of bad public relations has certainly had

an effect on people’s decision in choosing an airline. The BBC reported that United’s stock price

dropped by 10% within three to four weeks of the release of the video, a decrease in valuation of

$180 million. (Media Miser, 2011)

United Breaks Guitars is just one of many cases where brand’s reputation has been damaged

by the rapid spread of complains. As is said, Social media has the characteristic to be viral, which

is a good, until these types of problems appear. Good news and bad news go through these

platforms and spread quickly, but sadly bad news has more power of diffusion. Although, the

amazing success that the tool provides companies must know that the benefits of social media

may also turn against the company; in consequence of a bad complain handle.

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Conclusion and recommendations

In last years, the use of social media for marketing purposes has been increasing, and

today plays an important part in the marketing campaign of many companies. Social networking

sites are the channels most used to interact with the customer, with the purpose of know their

feelings and perceptions of the brands.

Social media provide the opportunity to improve the product, trough the feedback that

customers give to the brand on social networking’s profile. In addition, the customer relationship

is developed with the use of these sites.

The recommendations for the use of social media as a marketing tool are the following:

•Take in account and analyze the commentaries that customers give to the brand. These

commentaries are such valuables to know if the quality of the product is enough to cover the

customer’s satisfaction. Furthermore, people are going to feel heard, and brands reputations will

increase.

•Create activities on social media to involve the customer with the brand. Activities must be

attractive and must look to have a direct interaction with the customer. This may increase the

customer loyalty.

•Understand that social media are not the only channel of marketing that must be used; in

addition, company must integrate other marketing tools.

•The characteristic of social media to being viral has two faces, the good one, where people

transmit favorable information about your brand and the bad one, where brand’s reputation is

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damaged by customer’s complaints. Companies must pay attention to information giving on

social platforms, as well as, have a correctly management of customers’ complaints.

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References

Baird, C. H., & Parasnis, G. (2011). From social media to social customer relationship

management, 39(5), 30–37. doi:10.1108/10878571111161507

Constant Contact (2013). Small businesses then & now. Retrieved f

rom http://news.constantcontact.com/sites/constantcontact.newshq.businesswire.com/files

/research/file/Small_Business_Week_eBookFINAL.pdf.

Boyd, D. M., & Ellison, N. B. (2007). Social Network Sites: Definition, History, and

Scholarship. Journal of Computer-Mediated Communication, 13(1), 210–230.

doi:10.1111/j.1083-6101.2007.00393.x

Castronovo, C. (2012). Social Media in an Alternative Marketing Communication Model, 6(1).

Coulter, K. S., & Roggeveen, A. (2012). “Like it or not”: Consumer responses to word-of-mouth

communication in on-line social networks. Management Research Review, 35(9), 878–899.

doi:10.1108/01409171211256587

Crain, S. (2013). Social Media from an Integrated Marketing and, (February), 85–93.

Narayanan, M., Asur, S., Nair, A., & Rao, S. (2012). Social Media and Business, 37(4), 69–112.

Luton, T. (2013). Social media marketing. New Jersey, United Estates: Pearson Education Inc.

Ryan, D., & Jones , C. (2012). Understanding digital marketing: Marketing strategies for

engaging the digital generation. (2nd ed.). London, United Kingdom: Pearson Education

Inc. (Ryan & Jones , 2012)

Tuten, T., & Angermeier, W. (2013). Before and Beyond the Social Moment of Engagement :

Perspectives on the Negative Utilities of Social Media Marketing.

Wigth E. (2013, August 29). Small business tips: how to use social media to boost business. The

Guardian . Retrieved from http://www.theguardian.com/small-business-

network/2013/aug/29/social-media-boost-business-tips