Social networks are gaining huge popularity among the contemporary business. In today’s contemporary and globalized business environment, the social networking sites are playing crucial role in bridging the gaps across their countries, which is helping the organization in managing close relationship with the customers (Aral, Dellarocas and Godes 2013). Marketers can get perfect opportunities towards promoting their brands through social networks, as it enhances the word of mouth regarding any particular brand. Customers are more likely to recommend their favorite brand to their close friends through these networking sites. It actually enhances the advertisement effectiveness of an organization. This literature review will identify both the advantages and disadvantages social networking sites on the performance level of business.
The literature review can provide huge information regarding the advantages and disadvantages of social networks on the performance level of business. The literature review can also act as effective secondary research project for the future research project relevant to same types of research topic.
Social network sites define the web-based services, which allow people to share their common interests with others on the same social network platform. As per Ellison et al. (2014), most of the people use social network sites towards being connected with their friends, families, clients, classmates and clients. Moreover, people can share similar personal interest, career interest, activities, real life connection and other backgrounds. Therefore, it can be seen that social network sites serve both for social purpose and business purpose. The mostly used social network sites are Facebook, Instagram, Google+, Pinterest, Twitter, YouTube and others.
According to Hajli (2014), marketers mostly use social network sites for promoting their brand indentify and enhance the loyalty level of the customers. In this way, these networking sites assist marketers towards making their brand more recognizable to the new and potential customers and more familiar to the existing customers. On the other hand, Ellison, Gibbs and Weber (2015) opined that social networking sites assist the marketers towards communicating the brand voice and content from one customer to others. In this way, it can help in enhancing the values of the brand to the customers. Furthermore, See-To and Ho (2014) opined that organizations can better communicate the offerings and discounts of their products and services, which can encourage the customers towards purchasing them. The major applications and benefits of social networks can be seen in the success of global businesses. Marketers can better communicate with the cross border customers across the globe for better promotion and sales of their products and services. The networking sites can also be applied for creating competitive advantage for organizations though conveying positive feedback of the customers.
According to Luo and Zhong (2015), there is an increasing popularity of social media sites among the consumers of Australia. Moreover, social media has become an integrated part of the consumers of Australia in their everyday life. Therefore, there is an increasing popularity and usage of social network sites among Australian organizations towards influencing the customers. However, there is sizeable gap between the social networking strategies of Australia business and behavior of the customers. Moreover, 27% small scale businesses use social network sites, whereas 34% medium scale businesses use social network sites for promoting their brand value. Furthermore, Verbeke, Martens and Baesens (2014) stated that there is an increasing spending of Australian businesses on social network sites. Small scale businesses have spent on average of $3,410 as compared to $16,920 and $100,000 spending of medium scale and large scale businesses. Among all the social network sites, Facebook is continuing to dominate in all three business sizes. Moreover, 97% businesses use Facebook as their social network site for business promotion. Apart from that, there is growing usage of Instagram, Google+ and others. Furthermore, YouTube and twitter have always maintained its popularity.
Figure 1: Social Network Usage in Australian Businesses
(Source: Wu 2016)
While considering the example of Coca Cola Amatil, it can be seen that the organization always use social media networks towards conveying their offerings to the customers. It has actually improved the business communication for the organization (Pinho and Prange 2016). On the other hand, while taking the evidence from Dick Smith Foods, it can be seen that the organization always use social network sites towards getting the feedback over their brands. It has enhanced the customer interaction level of the customers, which ultimately has contributed in customer satisfaction (Schivinski and Dabrowski 2016).
Over the past few decades, the shopping pattern of the customers has been changed and improved completely. They are now highly inclined towards searching for information regarding their required products and services online. According to Yu, Duan and Cao (2013), social network sites have huge scope in providing huge information to the customers regarding their required products. Moreover, the marketers place all the required information regarding their brands on the social network sites. Therefore, the consumers can get huge authentic information about their required products from these network sites. On the other hand, Ho and Vogel (2014) opined that social network sites also assist the consumers in evaluating the alternative brands towards choosing one brand over others.
Marketers are more likely post attractive videos and images of their products and services on these network sites. Apart from that, organizations also posts recent offerings and discounts of their products and services on social network sites. Therefore, the customers can compare the offerings of different brands and choose one particular brand towards taking purchasing decision. Furthermore, Trainor et al. (2014) opined that social network sites can also serve to the post-purchase evaluation of the consumer purchasing decision. Such network sites allow the customers to provide their feedback regarding any particular brand. Moreover, customers get scope to share their experiences regarding the products they have used. Consideration of customer feedback actually enhances the values of customers, which in turn enhances customer loyalty. In this way, customers become highly prone towards repeated purchasing of their favorite products. On the other hand, positive feedback shared the customers on social network sites encourage other customers toward purchasing a particular product or service.
Pinho and Prange (2016) pointed out that social network sites increasing brand exposure to the new and potential customers and enhances the familiarity of the brands to the existing customers. Such networking sites also enhance the effectiveness of the word-of-mouth of any particular brand. In this way, the social networking sites enhance the presence of any particular brand to wide customer groups.
According to Park and Kim (2014), social networking sites can access ample amount of data about the customers in real time. Moreover, such networking sites can gather huge information about the customers in regards to brand preferences, objections, suggestion and dislikes. In this way, social listening and active engagement of through these networks facilitate the customers in gathering deep insights about the customers. Therefore, organizations can frame smarter organizational decisions based on deep customer insights.
As per Shriver, Nair and Hofstetter (2013), organizations post advertisements on social network sites, which mostly contain high quality contents. Therefore, such high quality contents increase the targeted keywords for the organizations. Therefore, it increases the traffic website in online platform, which enhances brand presence. On the other hand, Schivinski and Dabrowski (2016) opined that social network sites also enhance the search ranking of a particular brand. Moreover, such network sites direct the customers towards main website of the brand, which enhances the search raking of the brand.
According to Hennig-Thurau, Hofacker and Bloching (2013), social network sites provide ample of new business opportunities to the organizations. Using such sites, organizations can ask for feedbacks from the customers regarding their brands. In this way, the organizations can better suggestion over their brand improvement. Moreover, the organizations can add unique values to their brands as per core business preferences. Therefore, the organizations can find new and improved business opportunities for gaining high level of business performance.
According to Jin and Phua (2014), social network sites enhance the advertisement effectiveness of the organizations. Moreover, customers are more likely to refer their preferred brand to their close relatives and friends. In this way, these networking sites enhance effectiveness of word-of-mouth of the brand. Moreover, social network sites enhance the advertisement effectiveness of the organization, which also reduces the advertisement cost of the organization and overall organizational cost. In this way, reduced organizational cost facilitates the organizations towards achieving cost leadership and gaining competitive advantage. On the other hand, Park and Kim (2014) opined that social networks facilitate the organizations in beating the competitors through adding unique value to the brands from deep customer insights.
The feedback received from the customers through social network sites helps the organizations in gaining deep customer insights. Moreover, the organization can better know about the customer preferences, dislikes and suggestion regarding any particular product or service. Ho and Vogel (2014) pointed out that such customer feedbacks facilitate the organizations aligning their business model with specific preferences of the customers. In this way, the organizations can provide customer business solution to the customers towards improved customer service.
Positive feedbacks shared by the customers encourage the other customers towards purchasing any particular brand. However, negative feedbacks shared by the customers on social network sites discourage the customers from purchasing any specific products. Negative feedbacks on such network sites actually damage the reputation of the organizations in the market (Pfeffer, Zorbach and Carley 2014).
Creating a social network profile requires just about 30 minutes. However, Wu (2016) opined that the organizations may need to invest huge time in posting attractive product information, interacting with customers and receiving feedbacks from the customers. All these activities may need adequate amount of valuable time of the organizations. On the other hand, Hajli (2014) opined that writing high quality advertisement content and posting those in the networks requires adequate money investment. It actually enhance overall organizational cost.
Social network sites can also lead the organizations towards facing legal risks. Moreover, Luo and Zhong (2015) opined that any false advertisement in the social network site may lead to legal obligation of the organizations. Apart from that, any intentional or even unintentional leak out of information regarding customer can also cause legal issue for the organizations.
The organizations should crucially choose social network platform for promoting their brand value. Moreover, the organizations should select most popular social network site, which can actually add to the business growth of the organizations. On the other hand, the organizations should post highly attractive advertisement content for gaining increased customer attraction. Apart from that, business organizations should crucially handle the negative feedback as soon as possible of the customers on social network sites (Ellison et al. 2014). Moreover, the organizations should positively answer to the negative feedbacks of the customers before it becomes the reason for customer dissatisfaction. It can protect the organizations from damaging their corporate image in the market.
Every literature research can have some possibilities towards facing some limitation, which can reduce the quality of ultimate research outcome. Likewise, this literature review has also some limitations. Moreover, this literature review can face time limitation, which can limit the access of the adequate secondary sources towards collecting authentic information about the research topic. On the other hand, the literature review has also face budget limitations, which has also led to limited access for secondary sources. Therefore, all such limitations have led to lack of critical analysis and penetration in the literature review.
Conclusion
While concluding the study, it can be said that social network sites can have both benefits and limitation on the performance level of the customers. Such network sites increases the brand exposure of the organizations to the customers. It can also enhance the advertising effectiveness of the organizations though increased word-of-mouth of the brands. Furthermore, the feedbacks gained from the social network sites facilitate the organizations towards providing customized business solution. However, negative feedback posted on social network sites can discourage the customers from purchasing any particular product or service. Therefore, the organizations should crucially maintain the social network sites towards effective promotion of their brands. Moreover, the organizations should choose only that social network sit, which can actually enhance their business growth level. Apart from that, the organizations should also positively handle the negative feedbacks of the customers on the social network sites.
Reference List
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Ellison, N.B., Gibbs, J.L. and Weber, M.S., 2015. The use of enterprise social network sites for knowledge sharing in distributed organizations: The role of organizational affordances. American Behavioral Scientist, 59(1), pp.103-123.
Ellison, N.B., Vitak, J., Gray, R. and Lampe, C., 2014. Cultivating social resources on social network sites: Facebook relationship maintenance behaviors and their role in social capital processes. Journal of Computer?Mediated Communication, 19(4), pp.855-870.
Hajli, M.N., 2014. A study of the impact of social media on consumers. International Journal of Market Research, 56(3), pp.387-404.
Hennig-Thurau, T., Hofacker, C.F. and Bloching, B., 2013. Marketing the pinball way: understanding how social media change the generation of value for consumers and companies. Journal of Interactive Marketing, 27(4), pp.237-241.
Ho, R. and Vogel, D., 2014. The impact of social networking functionalities on online shopping: an examination of the web’s relative advantage. International Journal of Business Information Systems, 16(1), pp.25-41.
Jin, S.A.A. and Phua, J., 2014. Following celebrities’ tweets about brands: The impact of Twitter-based electronic word-of-mouth on consumers’ source credibility perception, buying intention, and social identification with celebrities. Journal of Advertising, 43(2), pp.181-195.
Luo, Q. and Zhong, D., 2015. Using social network analysis to explain communication characteristics of travel-related electronic word-of-mouth on social networking sites. Tourism Management, 46, pp.274-282.
Park, H. and Kim, Y.K., 2014. The role of social network websites in the consumer–brand relationship. Journal of Retailing and Consumer Services, 21(4), pp.460-467.
Pfeffer, J., Zorbach, T. and Carley, K.M., 2014. Understanding online firestorms: Negative word-of-mouth dynamics in social media networks. Journal of Marketing Communications, 20(1-2), pp.117-128.
Pinho, J.C. and Prange, C., 2016. The effect of social networks and dynamic internationalization capabilities on international performance. Journal of World Business, 51(3), pp.391-403.
Schivinski, B. and Dabrowski, D., 2016. The effect of social media communication on consumer perceptions of brands. Journal of Marketing Communications, 22(2), pp.189-214.
See-To, E.W. and Ho, K.K., 2014. Value co-creation and purchase intention in social network sites: The role of electronic Word-of-Mouth and trust–A theoretical analysis. Computers in Human Behavior, 31, pp.182-189.
Shriver, S.K., Nair, H.S. and Hofstetter, R., 2013. Social ties and user-generated content: Evidence from an online social network. Management Science, 59(6), pp.1425-1443.
Trainor, K.J., Andzulis, J.M., Rapp, A. and Agnihotri, R., 2014. Social media technology usage and customer relationship performance: A capabilities-based examination of social CRM. Journal of Business Research, 67(6), pp.1201-1208.
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