entrepreneurship and social media marketing: evidence from french small business
TRANSCRIPT
386 Int. J. Entrepreneurship and Small Business, Vol. 16, No. 4, 2012
Copyright © 2012 Inderscience Enterprises Ltd.
Entrepreneurship and social media marketing: evidence from French small business
Walid A. Nakara* Groupe Sup de Co Montpellier Business School, Montpellier Research in Management, 2300 avenue des Moulins, Montpellier, 34185, France E-mail: [email protected] *Corresponding author
Fatim-Zohra Benmoussa Center of Management Research, University of Toulouse 1-Capitole, 2 Doyen Gabriel Marty Street, Toulouse Cedex 9, 31042, France E-mail: [email protected]
Annabelle Jaouen Groupe Sup de Co Montpellier Business School, Montpellier Research in Management, 2300 avenue des Moulins, Montpellier, 34185, France E-mail: [email protected]
Abstract: The purpose of this paper is to analyse the social media marketing practices of SMEs. Social networks are profoundly transforming the way customers use the web and thus challenging SME business practices. Although the social media provide affordable channels for marketing and are thus appropriate tools for firms with limited resources, some SMEs and entrepreneurs still question their credibility and sustainability. Based on seven semi-structured interviews with web marketing consultants, an online survey with 104 owner-managers of tourism SMEs, and a netnographic study, this research analyses the place of social media in SMEs. It describes their practices, shows that SMEs underuse these tools, and proposes some managerial recommendations to small business owner-managers.
Keywords: social media; small and medium enterprises; marketing practices.
Reference to this paper should be made as follows: Nakara, W.A., Benmoussa, F-Z. and Jaouen, A. (2012) ‘Entrepreneurship and social media marketing: evidence from French small business’, Int. J. Entrepreneurship and Small Business, Vol. 16, No. 4, pp.386–405.
Biographical notes: Walid A. Nakara is an Assistant Professor of Entrepreneurship and Innovation in the Department of Management at the Groupe Sup de Co Montpellier Business School. He teaches international entrepreneurship and strategic management. His research and consulting specialises in innovation in small businesses, corporate governance and new forms of entrepreneurship.
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Fatim-Zohra Benmoussa is a Teaching Assistant in the Department of Marketing at the University of Toulouse 1 Capitole where she teaches marketing, management and theories of organisations. Her research is concentrated on consumer behaviour, consumer culture theory, and consumer identity projects. She works on consumer sensitivity and its evolution in life projects. She is preparing her PhD thesis on this subject at the Management Research Center of Toulouse.
Annabelle Jaouen is an Associate Professor of Entrepreneurship at Groupe Sup de Co Montpellier Business School. She specialises in small and very small business strategies and she teaches entrepreneurship and project management. Her research topics are microfirms, entrepreneurs’ profiles, networks and strategic alliances.
1 Introduction
The internet is presently experiencing an unprecedented rate of growth thanks to social media (Facebook, 700 million members; Twitter, 145 million members; a worldwide average of 5’30 hours per web user spent on social media every day). These social networks are not only profoundly transforming how people use the web (Qualman, 2009), but they are also challenging the way entrepreneurs and managers do business (Postman, 2009). Big firms are well aware of the huge opportunity that these platforms have to offer: whether on MySpace, Facebook or YouTube, brands are everywhere (Mangold and Faulds, 2009). In fact, the top ten French advertisers have injected more than three billion euros into online advertising, according to Kantar Media. The internet has now become second only to television as a marketing power.
This paradigm shift has given rise to several studies on web business benefits [e.g., Sterne (2001) and Miller (2010)] and the social media [e.g., Zarrella (2009) and Safko (2010)] as new perspectives in marketing strategy. Yet the social media as marketing tools still have much to prove before gaining credibility in all business spheres. Two positions have been identified:
On the one hand, those who are in favour of integrating social media into their marketing strategy. The firm case developed by Dutta (2010) seems to be a good example of this position: Tom Dickson, CEO of Blendtec, an US SME, became famous through a series of videos shared on YouTube showing his products.
On the other hand, those who have doubts about the so-called ‘power’ of social media and are clinging to their traditional marketing tools. Social networking is considered here as a non-serious tool, a sort of marketing fad that will lose steam quickly and come to an early end (Dunn, 2010).
The position of small and medium enterprises (SMEs) is quite interesting from a social media marketing perspective and is worth exploring, especially when social media channels are considered as ‘affordable’ marketing tools (Dutta, 2010) for SMEs and companies with limited resources in general. This change in perspective has given rise to a rich literature devoted to marketing practices in SMEs. Our research intends to deal with the integration of social media into marketing strategy and aims to answer the following questions: Do SMEs use social media in their marketing practices? If so, how so? What is the impact of social media on SME marketing strategies?
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We first review the literature. Our theoretical framework includes both SME marketing specificities and the social media as marketing tools. We then present the empirical study, crossing three methods: interviews, an online survey, and a netnographic study. Last, we discuss the results around three major themes.
2 SME marketing specificities: conceptual background
The topic of ‘marketing in SMEs’ has been around for quite some time now [e.g., Neil (1986), Morris and Paul (1987), Joyce et al. (1990) and Weinrauch et al. (1991)]. Yet this line of research has chiefly sought to determine the role of marketing in the development of SMEs. In fact, two major views can be distinguished.
2.1 From marketing theory to SME practices
The first approach investigates marketing in SMEs through its traditional conception. Here, the fundamental underlying objective is to identify the role of marketing in SMEs. Given the absence of a dominant theoretical framework, Romano and Ratnatunga (1995) classified SME marketing into three categories following the three facets of marketing identified in organisations (Webster, 1981): First, marketing as culture refers to the central role of the consumer in the organisational structure. Second, marketing as strategy emphasises segmentation, targeting and positioning as competitive choices. Third, marketing as tactics focuses on mix marketing through its 4P’s.
In addition to this classification, two assumptions are generally accepted: Indeed, marketing has an overall positive impact on firm performance, and marketing
procedures are efficient tools. When an SME lacks a marketing strategy, it is more vulnerable in competitive markets [e.g., Tsai et al. (1991) and Peterson (1991)].
However, there is a gap between the theoretical view of marketing and its practice in SMEs. Carson and McCartan (1995) distinguished two categories of SMEs: those that do not undertake any marketing actions whatsoever, due to costs and the absence of ROI visibility or its measurement, and those that have a more or less marketing function that is nevertheless unsophisticated and disorganised, therefore contributing little to firm performance. These SMEs focus their marketing actions on the product and price (Carson, 1999), use somewhat ‘extemporised’ advertising campaigns (Patten, 1989), and imitate big firm strategies.
Given the latest developments in marketing theory, however, the relevance of these assumptions should be examined. Moreover, the assumption of an opposition between marketing practices in SMEs and large firms is not always appropriate (Ford and Rowley, 1979): unconventional marketing practices are not always the rule in SMEs (Torrès and Julien, 2005) and the marketing in large firms is not necessarily in line with the practices described in marketing textbooks (Carson and McCartan, 1995; Grenley and Bayus, 1994). Last, marketing today is no longer considered as merely transactional, but instead far greater attention is given to its relational aspects (Benavent and Evrard, 2002). This is at the core of our research.
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2.2 From SME specificities to their marketing procedures
From this perspective, the focus is on marketing practices with respect to SME specificities [e.g., Coviello et al. (1997) and Gilmore et al. (2001)]. Researchers examine how SMEs deal with marketing issues in practice and do not assume that “the small firm is… a ‘scaled-down’ version of a large firm” (Hill, 2001). Previous research tried to take into account the specificities of SMEs, especially their preoccupations (Carson and Cromie, 1989) and indeed a wide literature has been devoted to these issues (Carson, 1999). Several characteristics have been identified as influential in SME management and marketing strategies.
First, size is considered to be a salient and distinctive feature that has an important impact on SME management and marketing procedures [e.g., Andrus and Norwell (1990)]. Marketing strategy planning in SMEs is thus distinct from that of large firms (Shipley and Jobber, 1994) as their (SMEs) practices tend to be more informal (Mohan-Neil, 1995). The owner-managers still retain control despite the developmental stages that lead the medium-sized firm to become more structured and formalised (Pacitto et al., 2006). The characteristics of owner-managers thus seem to have an important influence on SME management. Most of the time, owner-managers have general skills but lack sufficient (if any) expertise in marketing. In addition, they have absolute power of decision over the firm (Scase and Gofee, 1980).
Second, since owner-managers hold great power and a central position in the SME (Leppard and McDonald, 1991), their ability to develop personal contacts is crucial to the firm (Coviello and Munro, 1995; Hansen, 1995). Indeed, given the informal and non-structured SME marketing style, networking is considered to be an efficient strategy for environmental scanning activities (Mohan-Neil, 1995), collaboration (Levenson, 1986), cooperation (Dean et al., 1997), and so on. Networking refers to the use of a variety of networks (Gilmore et al., 2001), such as personal contact networks, business networks, industry networks and marketing networks. Personal contact networks are relevant in the case of SMEs as the owner-manager holds a central position. Personal contact networks can be defined as “the relationships or alliances which individuals develop, or indeed, may seek to develop between themselves and others in their society” (Hill and McGrowan, 1996). This type of network is developed randomly and usually depends on spontaneous and fortuitous contacts. This assertion should, however, be moderated: social or business networks on the web may allow the individual/manager to construct a network by selecting the contacts, even though the contacts have never met. In this case, networking is assumed to be an appropriate tool for SME marketing (Piercy and Cravens, 1995). Marketing by networking affects SME relations through two types of actors: competitors and customers (Gilmore et al., 2001).
Maintaining relations with competitors gives SMEs a better view of – and better visibility in – the market and networking with customers and/or other firms is essential for SME survival.
Consequently, SMEs are characterised by three main limitations (Gilmore et al., 2001):
• limited resources in terms of financial situation, time and marketing skills
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• the manager’s lack of expertise in marketing, which cannot be compensated by his or her general knowledge
• the low visibility and impact of the SME in the market.
Given these specificities and limitations, SME marketing can indeed be described as “haphazard, informal, loose, unstructured, spontaneous, reactive, built upon and conforming to industry norms” (Gilmore et al., 2001). It may even be described as managerial ‘fiddling around’. We therefore wondered whether there is a particular marketing conception that small firms can adopt and that suits their specificities. One is tempted to say yes, or at least to assume that there are marketing procedures that can be more efficient for SMEs (Pacitto et al., 2006).
The efficiency of marketing procedures in SMEs should be understood with respect to a relational marketing view (Pacitto et al., 2006). The definition of entrepreneurial marketing proposed by Kraus et al. (2010, p.26) is relevant for developing a global vision of SME marketing. For the authors, entrepreneurial marketing is “an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders, and that is characterized by innovativeness, risk-taking, pro-activeness, and may be performed without resources currently controlled”. It consists of marketing with an entrepreneurial mindset; for instance, by using innovative channels such as web or mobile marketing. This is thus typically appropriate for SMEs.
Although traditional forms of networking enable SMEs to adopt a relational approach, doing so over the internet can dramatically improve their marketing efficiency (Bulearca and Bulearca, 2010). Internet social networking offers more possibilities for SMEs to develop their marketing actions and reinforce their visibility in the market.
3 Marketing changes through social media
The growth of the internet has changed marketing philosophy: the consumer has become the starting point for marketing activities. With this in mind, several studies have examined the consequences of e-marketing from either a consumer-oriented or a company-oriented view [e.g., Sharma and Sheth (2004)]. The internet has obviously caused major shifts in how companies market their goods and services: marketing has shifted from a transactional conception to a relational one, mass production has been greatly replaced by the customisation of products, and interactive marketing has become far more prevalent than direct marketing (Deans et al., 2003). Therefore, a substantial number of studies have examined the impact of the internet on SMEs and their marketing practices [e.g., Anghern (1997), Webb and Sayer (1998), Adam and Deans (2001) and Schmengler and Kraus (2010)]. Table 1 illustrates the changes in online advertising from Web 1.0 to Web 2.0.
These changes in marketing practices are even more salient with the technological progress of Web 2.0. The interactivity of Web 2.0 and social networks has opened more windows full of opportunities for e-marketing and SMEs, as we will see.
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Table 1 Forms of online advertising
Principle 1.0 practices 2.0 practices
Organic advertising
Promoting the brand at a minimal cost via
low-cost channels
Corporate site, press releases picked up by
websites and blogs Optimisation of search
results
Profile on a social network, creation of a
virtual community, content sharing
Traditional advertising (media)
Conveying a message (generally identifying a brand), preparing the target consumer for a
future purchase, i.e., not necessarily immediate
Displays (banners, etc.) and rich media
(video) formats Sponsoring
Sponsoring of widgets and 2.0
applications
Customer-driven marketing
Initiatives aimed at allowing consumers to
find a vendor themselves
Sponsored links, directories, affiliate networks, ads and
auctions
Formats to be invented
Direct marketing and promotion
Putting a target customer in direct contact with
commercial offers
E-mailing Formats to be invented
Source: IDATE
3.1 The development of social networks
The internet contributes to nearly 3% of French GDP (McKinsey & Company, 2011). This is a key figure as it implies successful businesses. Indeed, let us first recall some of the developments in e-commerce: in 2009, online sales grew by 26% in France (particularly in the SME category) and reached 25 billion euros. According to the McKinsey & Company report (2011), one euro invested in internet technology brings in two euros, and for one euro invested in online marketing the company earns 2.5 euros. However, the e-commerce figures for French SMEs are still quite poor: only 47% have a website, only 42% use an intranet, and only 48% of the employees use the internet.
Yet the number of internet users has been increasing in the last decade. There are 35 million users in France, with the youngest generations being the most prominent (Cachia et al., 2007). The emergence of Web 2.0 and the social media (including blogs and social networks) has accelerated this trend. The number of personal blogs has increased and 78% of French internet users say they are members of (at least one) social network(s) (McKinsey & Company, 2011).
Web 2.0 refers to applications that are based on sharing and exchanging information and content. Whereas Web 1.0 is based on a market approach, Web 2.0 focuses on people and communication (Singel, 2005). According to Lai and Turban (2008), the social media include social networks, blogs, RSS, podcasting, wikis and so on, and they are now virtually a part of the everyday life of consumers. As Ganley and Lampe (2009) noted, social networking satisfies the human need for sociability. Consumers do not hesitate to share their experiences, videos, links, opinions and advice as members of communities (Muniz and O’Guinn, 2001).
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Figure 1 Definitions of key concepts
WEB 2.0
“A platform whereby content and applications are no longer created and published by individuals, but instead are continuously modified by all users in a participatory and collaborative fashion”
“Various forms of media content that are publicly available and created by end-users”
User Generated
Content
Social Media
“Social Media is a group of internet-based applications that build on the ideological and technological foundations of web2.0 and that allow the creation and exchange of UGC”
Source: Kaplan and Haenlein (2010)
Social media, Web 2.0 and user generated content are three concepts that need to be defined and distinguished. Figure 1 summarises these definitions. We can classify social networks into four categories:
a Business orientation (i.e., LinkedIn, Viadeo, etc.). These networks would be relevant for SME owner-managers to build their personal networks.
b Staying in touch with friends (i.e., Facebook, Twitter, Hi5, etc.). For SME managers, this category should be exclusively for contact with friends (Bulearca and Bulearca, 2010) or for consumer interaction.
c Connecting users with the same interests, like music (i.e., MySpace, WordPress.com). These networks could be important for SMEs to monitor because they assemble a consumer community.
d Romantic relationships (i.e., Match.com, Meetic.com).
In Web 2.0, the social media are growing rapidly and having a significant impact on business and marketing practices. Firms can now manage customer relationships online (Payne and Frow, 2005), which puts great pressure on them to find better ways of coping with all these new consumer relationships.
3.2 Social media as a new marketing tool for small businesses
The interactivity between consumer and company is one of the most prominent features of the web (Ghose and Dou, 1998). What has changed recently is the degree of interactivity: although firms have always produced their messages, the communication process is quite different with Web 2.0. Consumers now react and share their points of view about brands, ads, products, consumption experience, and so on. Corporate values are thus also changing and employees are expected to be able to talk with customers, give them more and more regular information, be more confident and improve the firm’s e-reputation.
In this sense, consumers have become ‘co-producers’ or ‘prosumers’ (Tapscott and Williams, 2006) along with the company. They are also increasingly gaining power.
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Web 2.0 has given web users the opportunity to create communities and share information online. Consumers can also now become ‘fans’ of a company and promote its products or services. Conversely, networks are used by marketers to track down information about customers’ behaviours and preferences. Thus, social media and websites can potentially be used by companies to influence online consumer attitudes (Bart et al., 2005; Schlosser et al., 2006). Consumers see themselves given an unprecedented opportunity to express their needs and desires and assume that companies will be attentive to them. While the literature on consumer behaviour in this context is substantial, empirical research from a corporate perspective is still lacking, and few studies have specifically focused on SMEs. Therefore, we questioned whether it is relevant for SMEs to use these networks.
As noted, one of the main limitations of SME marketing is their limited resources. Several studies have thus examined the problems of SMEs when they try to adopt web technologies, and many explanations for their difficulties have been suggested:
For example, we notice the lack of a well-defined internet strategy (Anghern, 1997; Webb and Sayer, 1998)
There are also difficulties in dealing with the technical aspects and limited resources to maintain websites, for example Blackburn and Athayde (2000).
Thus, many CEO are reluctant to use these tools as they fear losing control and increasing the customer’s power.
Indeed, in the context of web marketing, it is hard for a company to have full control over its image. Consumers, especially when they are not satisfied with the product/service, can easily express and share their complaints by posting their comments on a variety of platforms. This is bad news for companies that are not reactive (enough), as social media can be a double-edged sword.
Yet, according to Dutta (2010), social media offer SMEs some great opportunities. First, SMEs do not need to expend great resources on fostering customer loyalty, promotion, advertising and so on. Social media can be used to ‘outsource’ some of these: the firm then establishes relationships with consumers and encourages community members to share ideas and add value to the community (e.g., BMW asks internet users to imagine the BMW series 1). Thus, social media help firms to keep their web-marketing efforts to a minimum with fewer resources (economies of scope).
In addition, the social media let SMEs draw closer to their consumers with a more intimate and interactive relationship. Marketers are thus more able to grasp the ‘profile’ of the consumer, and the firm can then differentiate its offer. Social media are also valuable marketing tools for interacting with current customers, improving communication (internal and external), exploring new markets, reinforcing and enhancing image and reputation, and exchanging knowledge. Today, every CEO should be in touch through social media: “you don’t exist if you’re not on LinkedIn. Facebook is a way of building a community. Twitter increases your communications with individuals. YouTube is the No. 2 search engine” [E. Robinson, President and Founder of Volume Public Relations in Britt (2011)].
The literature shows that networking is a common and appropriate marketing strategy for small businesses. Moreover, the literature underlines that social media are a powerful means for SME owner-managers to build their networks (Bulearca and Bulearca, 2010), even if each owner-manager has a personal manner of developing the network, and even if the type of contacts with whom the manager interacts also influences the network construction (O’Donnel, 2004). But we assume that networking also depends on how the
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social media have been integrated and used by the firms according to their resources and competencies. We thus intend to describe how SMEs use social media and to show to what extent these channels can be efficient tools for SME marketing strategies.
4 Methodology
The present research examines the efficiency of social media in SME marketing practices. The research method was deployed in three stages:
a seven semi-structured interviews with web marketing consultants
b an online survey with 104 SME owner-managers
c a netnographic study with direct longitudinal observation on social media sites.
For this purpose, we chose to analyse firms from the tourism industry and, more specifically, the hotels, cafes and restaurants that are collectively known as HCR.
Our choice is primarily justified by the observation that this industry is particularly affected by social media channels as they can dramatically influence the firms’ reputation and image. For example, consumer behaviour in this context is powerfully influenced by word of mouth (Garcia, 2011). The traditional reputation of HRC was built by guidebooks (‘Le Guide du Routard’ is one of the most famous in France), but today reputations are built by websites (e.g., Cityvox.com) and social media, where consumers ask questions about the various offers and compare and share their opinions about their experiences. Another important point is that the French tourism industry is characterised by high entrepreneurship: 280,550 new firms have been created in this sector since 2003 (report from the French Ministry of Tourism). Yet, most of the businesses are SMEs and very small enterprises1, many of which are destined for failure. It therefore may be instructive to investigate how this industry uses social media as tools to improve their marketing strategies.
The multi-method crossed interviews, online survey, and netnographic survey (see Figure 2) were used to handle multiple sources of data (most of them collected via the web) with a level of reliability as satisfying as that of the traditional data collection tools (Cooke and Buckley, 2008). Table 2 Consultant interviews
Consultant Post Duration
C1 Director, web marketing agency 1:30 C2 Associate director, online communication agency 1:10 C3 Director, digital experience agency 1:09 C4 Media planner, communication agency 1:00 C5 Director, communication agency 00:58 C6 Consultant, SME communication agency 1:13 C7 Consultant, e-reputation agency 1:15
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First, in an exploratory step, we interviewed seven consultants in web marketing and communication (Table 2). The purpose of these semi-structured interviews was to obtain consultants’ opinions about SME use of social media. These consultants shared their experiences with SME managers and highlighted some of the difficulties they had encountered. The interviews were conducted following guidelines structured around three main points: SME owners’ practices regarding social media, their difficulties in adopting social media practices, and future trends.
Second, an online survey was developed to determine SME marketing practices regarding social media. The questions sought information on the web practices and marketing procedures of SMEs, and they particularly focused on social media as marketing tools.
The online survey was e-mailed to 939 managers of French SMEs in the tourism industry. The SME size was between 1 and 100 employees. We collected a total of 162 responses. Of the 162 responses, 104 SMEs managers were using social media and were considered for the netnography study.
Third, to explore the social media activities of these SMEs, we also adopted a netnography methodology for six weeks. This method of qualitative inquiry and longitudinal observation applies ethnography to the internet by using it as a source of data (Denzin and Lincoln, 1994; Kozinets, 2002). According to Fuller et al. (2007), there are four steps in structuring the netnography method:
a determine the research objectives and the community profile
b identify and select the communities
c collect data
d analyse the data and interpret the results.
We, thus, closely observed several social networks (e.g., Viadeo, Facebook, Twitter, LinkdIn, etc.) and SME blogs to analyse their practices.
Figure 2 Methodological steps
Semi-structured interviews:
seven web marketing consultants
Questionnaire: 939 addressed
104 owner-managers responded
Netnography study: social media
activities of 104 SMEs
The data collected was analysed with a focus on the main research question: How do SMEs use social media in their marketing practices? An inductive approach was privileged. Content analysis of the consultant interviews allowed us to identify three main themes, which were determined across a double-analysis by the researchers. The results from the online survey and the netnographic study were processed with both descriptive statistics (Microsoft Excel) and content analysis for the owner-managers’ testimonials.
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5 Results and discussion
The crossing of methods resulted in a rich and varied set of data on the utilisation and perception of social media by SME owner-managers in the tourism industry. The analysis brings out three main results that are detailed below.
5.1 The place of social media in SMEs
The internet has profoundly changed the marketing orientation and overall strategies of SMEs. This change can be observed in many SME practices. A first point about the web in general and social media in particular is that the web seems to be a necessity more than an option for SME survival. Indeed, 87% of French consumers consult websites before making purchases, so SMEs simply cannot ignore web power.
“What we explain to our clients, and particularly the SME managers, who have a hard time believing this, (…) is that the consumer comes to your restaurant, for example, has an experience and forms an opinion… and the word of mouth after her experience is very important… If she doesn’t have a good experience, she is going to make it known (…) forums, social networks are here for that reason… the firm must anticipate this… firms must be present on the web, ready to counterattack…” (C3)
With the exception of 7% of the SME respondents, all have websites. For most, the website is considered as a showcase for their activity. Indeed, only 20% have a commercial site.
As observed through the netnography study, websites in the tourism industry are used mainly for two marketing procedures: consumer information and contacts booking. However, the SME managers reported using the web for other marketing practices, as well.
It should be noted that the 7% of SMEs without websites are nevertheless present on social media channels. The managers gave two reasons for their position, both worthy of our attention: First, a website requires resources that a new SME often does not have. Second, it requires a website requires skills for updating information.
Given these limitations, the use of social networks becomes more relevant.
Figure 3 Principal SME marketing practices on the web
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The SME managers that were interviewed are mostly present on social media channels (72%), or they at least consult them occasionally. They are present in a variety of social networks (Figure 4): some dedicated to business (e.g., Viadeo or LinkedIn), some whose initial purpose was staying in touch with friends (e.g., Facebook or Twitter), others linked directly to their industry (e.g., Cityvox) and last, personal blogs for posting their activities.
Figure 4 SME presence on social media
Regarding the reasons that motivate SME managers to use social media in their marketing practices, two main points can be identified.
On the one hand, they consider that these media are easy to use and do not require special skills. This point is linked to the financial limitations of new enterprises: entry cost is low.
“I’ve just created my business. I have to be visible in the market, among my competitors. I’d like to create my own website, but I have to pay attention to my expenditures. I don’t have the skills to create a site myself, and it’s easy to be present on a social network. It doesn’t cost much either, except for time…” (Restaurant manager)
On the other hand, managers are aware of the developments and importance of social media. Indeed, 62% of internet users consult consumer opinions and evaluations before making major purchases (Mediametrie Netratings). Also, visits increase by 55% when a firm creates its own blog.
“Consumers are in the habit of going on the web every day and then going to these networks. We have to be present. It is an obligation if we want to be visible…” (Hotel manager)
Once SME managers start using the social media, they show different practices and tactics (Figure 5). We will detail the three most important ones.
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Figure 5 Main marketing practices on social media channels
First, one of the main marketing actions is using the social media for advertising (79%). Some SMEs create their own group on social networks and communicate by posting activity news (e.g., promotions of hotels, new menus of restaurants, etc.) or regional news in order to attract more consumers (tourists, for instance). Sometimes, loyal consumers are the ones who create a dedicated group for the SME (usually for restaurants).
“My communication is less strict, friendlier.” (Restaurant manager)
“Social media help us to become known to consumers who are difficult for us to reach. They offer us a pleasant context to get in touch with customers.” (Brasserie manager)
Second, networking is considered to be an important marketing tool for SMEs, and the social media seem to facilitate this process (74%). Managers are able to make new contacts in a more spontaneous way. Indeed, the netnographic study reveals that these managers create their own profiles, giving their names and managerial status. It is important to note that the social media let managers make personal contacts, even if it is only virtual for some: these contacts do not remain anonymous firm customers.
Finally, e-reputation is the result of firm presence on the web. Social media are platforms for sharing and consumers share their opinions and evaluations of SMEs. A negative evaluation could be disastrous for a firm, and SMEs need to anticipate these difficulties.
“This firm I worked with did not react… They did not react and then suddenly they become aware that their reputation was dramatically poor. They couldn’t understand why because they had 95% customer satisfaction. They couldn’t imagine that the last 5% could create a negative reputation…” (C7)
The online survey results reveal that 77% of the owner-managers consider the social media to be efficient tools: they believe that these media allow them to improve their activity, even though efficiency has not been measured. However, the netnography study also reveals that, contrary to the SME managers’ reports, many SME groups or blogs are not updated and have only a token role. This lack of attention could ‘backfire’ on them. Thus, is their presence in social media channels really effective and efficient?
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5.2 The underuse of social media in SMEs
In order to explore the conditions for efficient social media use, it seems relevant to first emphasise the reasons why some SME owner-managers have rejected this tool. Indeed, even though they have websites, these managers totally reject the idea of using social media.
“There are businesses that spend a lot of money in these networks… this seems crazy to me.” (Hotel manager)
When we observe this manager’s profile, he is approaching his sixties and seems hostile to change. The netnography study reveals that this SME website is very simplistic and had been contracted out to an agency. In contrast to big firms, there is a real lack of skills in the firm that would enable it to develop a web strategy: as long as the firm ‘survives’, there is no need and no urgency to introduce change. In response to an item from the online survey, another hotel manager declared:
“Social media are not important for me. They’re so useless and I don’t understand why I have to spend time on the web, when I can directly take care of my customers. It’s friendlier. I prefer the face-to-face contact.”
This statement indicates a certain resistance to the technologies and changes of the Web 2.0 revolution. But it also highlights a lack of understanding of how the social media can be used and the opportunities that they offer. In this sense, the statement suggests that when SMEs disregard this marketing tool, they lose the opportunity to find new customers and earn their loyalty.
In addition, these managers declared that spending time on social media is synonymous with wasting time. This position points to how some SMEs use this tool. Because the social media are important, some managers feel that they need to be present and visible. However, as the results of this tool cannot be not directly measured, they grow tired of using and being involved in these media. The netnography study reveals that only some SMEs update their blogs/groups; for most of them, their recent posts date back several months. Moreover, the posts are mainly related to their activities: presenting products and giving contact information. And since there are no new products or offers, they stop posting. In contrast, the SMEs that keep their sites updated have posts that are not totally linked to their activity. They also post industry news and thus signal their involvement in a much larger sphere.
“SMEs that use these networks are heading in the right direction but there are a lot that are attached to the old pattern, and in France this is the case. The English-speaking countries always have an edge. French firms have a hard time with change and with integrating the social web into their strategy. They want… they first want results… but you can’t quantify and measure these benefits as you can for the traditional media… it is still unpredictable.” (C1)
This observation emphasises that when the social media are introduced into SME marketing strategies, efficiency will depend in part on the ‘stamina’ of the enterprise.
“SME managers tend to canvass when their businesses are going bad or when they have the time. Their presence on the web and on social networks is improvised… whereas it should be planned, with a consistent methodology and a global strategy… SME managers must seize this opportunity because the social media are a marketing tool whose cost fits their budget.” (C2)
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Last, the lack of an SME’s activity in the social media could be misunderstood by consumers. Consumers who observe the SME’s passivity on its own blog/group may interpret this position as a lack of involvement and attention toward them, what was initially assumed to be an efficient tool for building a good image of the firm.
5.3 Recommendations for an efficient use of social media in SMEs
The underuse of social media is a problem for managers, both in SMEs and big firms that are not yet fully present on these platforms (Dutta, 2010). Consequently, SMEs should develop their web strategy by consistently using the web, developing e-commerce, and integrating social media. And the social media clearly seem to be a source of profits. The online responses indicate that 77% of the SME managers who are present on social media channels are satisfied with their use. They note an increase in the number of consumers due to personal contacts on social networks and communications through blogs and networking groups.
“When I started my hotel, I had a hard time targeting customers. I didn’t think that the social media would help. But they do. Contacting customers through the social media is easier and more spontaneous.” (Hotel manager)
These results concur with Dunn’s idea (2010): “If a company, or even its chief executive, doesn’t have a presence on social networks today, that company risks not being in the conversation at all. Over time, I believe, that can be fatal to a business”.
In addition, SME managers have to be aware of the fact that the consumer position toward firms has changed. In other words, firms have become less powerful. Henceforth, consumers not only express their opinions but also share their evaluations with others, which could create a buzz on the web. Integrating social media is a good point for SMEs, but managers need to know that it is double-edged: it is essential to use social media channels but it is even more important to use them well. Indeed, the results reveal that many SME owner-managers dislike being present on social networks because they dread customers’ poor evaluations. They also worry about false postings by competitors. For these reasons, SMEs managers should learn how best to react through social media in order to regain consumers’ confidence.
“We are in an era of influence and no longer in the era of control. Today, when you’re a brand, you’re not only that... that is to say, what you say is not worth more than the Internet user who criticizes your product but it is worth even less because everyone assumes that because you’re the brand, you have a commercial aim while the Internet user who criticizes you… and nobody knows if this person is really there, or sent by a competitor… the one who criticizes you has more weight than you.” (C7)
The use of social media does not mean the end of traditional marketing tools, but instead suggests the value of combining these tools into an overall vision. Hence, SME owner-managers should have a clear marketing strategy for using social media, with a firm understanding of the consumer’s new position. In order to adopt an efficient strategy, they should consider some recommendations:
First, they have to define the aim of social media use and target the networks because each network has its own rules. Owner-managers need to distinguish business social networks (e.g., Viadéo, LinkedIn) from private social media (e.g., Facebook, Twitter). This does not mean that they cannot integrate the two categories; however, they have to
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develop clear strategies in line with their aims. In addition, in the tourism industry where the target could be global, the presence of SMEs on social media channels has to take into account the specificities of regional platforms (e.g., Cityvox) versus international networks (e.g., Facebook).
They should also determine the financial resources (computer hardware, internet access, investment in training managers in web and social media use) and skills (webmaster recruitment, the manager’s personal investment on social media channels).
Managers have to be involved daily in the SME group/blog: social networks can be powerful tools if the manager is active, honest and authentic. These qualities are vital to build a good e-reputation for the firm.
They must change the position toward the consumer: SME managers need to be more connected and valuable to consumers. Because of the importance of consumers’ virtual communities, managers should be present on social networks in order to keep up with changing expectations.
Finally, they should pay attention to the information posted on social networks because this information may quickly spread. It is also very important to control the security of data and confidential internal information. SME managers who create their own profiles may become known to many; for this reason, their image should be carefully planned.
5 Conclusions
The literature indicates that marketing is considered as one of the keys to the survival, development and success of small and/or new ventures (Kraus et al., 2010; Carson and McCartan, 1995). But SME marketing is usually described as unstructured and informal (Gilmore et al., 2001). The results of the present study point out that the introduction of social media into SME practices follows the same pattern. The use of social media channels seems to be unplanned and improvised. It is considered to be a managerial fad that must simply be adopted, and thus little advanced planning is involved. For most owner-managers, the use of social media is reactive and subject to a resistance to change. Indeed, the results suggest that despite their presence on social media, many SMEs do not make the most of these channels, although they should definitely be considered as efficient marketing tools. This perspective is still relatively unknown to SME managers, who therefore do not always handle their presence on the internet well, a finding that is complementary to previous research (Blackburn and Athayde, 2000). The results also show that social media are important and appropriate tools for SME marketing strategies and those who do not simply use this as a buzz word and who spontaneously integrate social networks and create groups declare they have gained a better image and e-reputation. From a theoretical point of view, this descriptive research provides new insight into SME practices and contributes to a better understanding of the marketing strategies implemented by small businesses.
This research has also several managerial implications. It underlines the risks that SMEs face if they do not use social media ‘strategically’, such as a loss of control or a decrease in e-reputation. It then makes some recommendations to small business owner-managers, especially in the tourism industry with its high number of very small businesses. These businesses need to target their social media carefully, determine the resources and competencies that they will need (internal and/or external), prepare to have
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a regular and sustainable presence on their chosen social media channels and pay close attention to keeping their data secure.
Of course, this survey has the methodological limitations inherent to all qualitative methods. The results should be confirmed by a robust quantitative survey with greater reliability so that they may potentially be generalised to other sectors.
Indeed, future research is needed to complete our understanding of the social media marketing practices of SMEs. First, according to Gruber (2004) and Kraus et al. (2010), one of the key marketing challenges for new ventures is building enough trust to win over their first customers, as their products or services are as yet unknown to the public. Thus, a future perspective would be to determine to what extent the use of social media can enhance customer trust in young firms, while still keeping costs down with respect to the limited financial resources. Second, Carson and Gilmore (2000) showed that SME marketing development follows a stage model, with gradual professionalisation and formalisation. In the start-up stage, business activity is focused primarily on the product and marketing tends to be dominated by reactions to customer demands. As the firm grows, it develops its own marketing style and practice and better controls the marketing process through proactive actions. Another research perspective would therefore be to determine whether a particular stage in the firm’s lifecycle is most appropriate and efficient for optimal use of social media channels. The social media are promising tools for SMEs and entrepreneurial marketing research thus many perspectives open for exploration.
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Notes 1 Very small enterprises: ten employees or less.