How has Social Media impacted Consumer Behavior?

3rd  Dec  2013  Rawan  Aloul  |  @1108020835  |  Consumer  Behavior  Marke@ng  

1/4 of your day is spent on Social Media!

Shift into the Digital World!

Before  1999   2010  Onwards  

Shift into Self-Publishing!

Today you are empowered!

WOM  Before  Known  as  Bandwagon  or  

Snowball  Effect  

WOM  Today  

Social Media Amplified Word of Mouth!

•  Social  Media  has  revolu@onized  the  reach  &  impact  of  WOM  •  Its  no  longer  an  act  of  in@mate  1-­‐to-­‐1  communica@on    •  Users  can  now  disseminate  informa@on  at  a  click  of  a  buNon  •  ShiO  from  content  users  in  to  content  creators  

Search  before  Social  Media  

Search  a"er  Social  Media    Wikipedia,  news  pages,  Facebook,  pictures  from  social  networks,  etc..z  

Results  mainly  limited  to  company’s  website  

Example  of  Audi  Search  

Rise of Influencers •  Consumers  empowered  to  share  informa@on,  and  become  influencers  •  Law  of  the  Few  by  Malcolm  Gladwell  explains  different  types  of  

influencers  who  can  make  ideas  go  viral  today.  •  He  classifies  them  into  three  types  of  people:  

CONNECTOR  Connects  people  to  

each  other  

MAVEN  Connects  people    through  sharing  knowledge  

SALESMAN  Uses  knowledge  to  

engage  and  persuade  

•  Websites  such  as  Klout,  Kred  or  PeerIndex  measure  the  level  of  social  influence  of  an  individual  &  assign  a  score  out  of  100.  

•  Based  on  how  people  engage  with  the  content  he/she  creates.  •  Brands  &  Marketers  use  this  informa@on  to  seek  and  hire  influencers  to  be  

their  word-­‐of-­‐mouth  transmiNers.  

Rise of Influencers, cont’d

Barack  Obama  has  ac@ve  TwiNer  &  Facebook  profiles  &  the  most  

important  Wikipedia  page  online.  

99  

J.B.  has  one  of  the  most  engaged  TwiNer  accounts,  but  his  Wikipedia  ranking  is  much  lower  than  President  

Barack  Obama’s.    

92  

Zooey  Deschanel  highly  ac@ve  on  

Facebook,  TwiNer  and  other  SM  channels.  

86  

Klout.com

•  TradiIonal  Purchase  Decision  Journey  –  Linear  approach;  Funnel  analogy  –  Based  on  pushed  Marke@ng  driven  by  companies  –  Assumes  ini@al  large  set  of  poten@al  brands  which  narrows  down  to  one  according  to  consumer’s  needs  and  preferences  

!"#$

%&&'

(

)'*+(

,-.!-

,."/

0#/(

*+-'.(

!"11

,2.!+

$*03-

4"55"6

(

$21-.$(/2.'

#37(89:9(0#

*+-(6-05*+

-';-/(.'$<("

2!*7( *+-( #-

1"$*('1,".

/-!'$'"#(

12#'!0*'#3(

+0$-(/-!'$

-$( "4( *+-(

6$=(

Stage1 -

'$(>060.-

0!*';'*'-$

.-05'$-$(

$*0*-( ?@

060.-#-

'#3(*+-(!"#

#/(A+--#0

+("4( '#4".1

"4(*+-(,2.!+

-!-$$0.B( '#

.*0#*5B(*+-('

10<'#3( ,

*+-(&.0#/(

'"#(C"2.#-B

!"#$21-.D

Figu

- Awarenes

-#-$$E(".(,

( ?F-,,0./

*+0*( *+-.-(

@-'/( 0#/( G

$$(01"#3$

#$21-.D$(,2

#7(89:9HI((

0*'"#( 0;0'50

+0$-7(,.'!-7

#;"5;-1-#*(

#4".10*'"#

,."!-$$( ?F

*"(!"#$21

B(?J02$-.(e

D$( ,2.!+0$

ure 2.4: Th

Source: C

ss=(K+-(4'.$

,."&5-1(.-!

( 0#/( G2*5-

'$(0(30,(&-

G"C0#'!7( 89

$*(!"#$21-

!"

2.!+0$-(/-!

0&5-( *"( *+-

(*+-(-L,-.'-

-L,-.'-#!

(!"#*-#*(6+

F-,,0./( 0

1-.$( '$(!.2!

et al.7(89::H

-( /-!'$'"#

he purchas

Court et al.

$*($*03-("4(

!"3#'*'"#I(K

-.7( :MMNHI(

-*6--#( *+-

9MHI( ( ( O0

-.$(0#/( '#4"

!'$'"#(C"2.#

-17( !"#$21

-#!-("4(,.-

!-/( /2.'#3(

+'!+(60$(0;

0#/( G2*5-.

!'05( '#(055($*

HI((G0$-/("

#( C"2.#-B( 1

sing funnel

(2009)

*+-(!"#$21

K+'$($*03-(*

( %*( *+'$(

-'.(!2..-#*($

0.<-*'#3D$( .

".1(*+-1(*+

#-B(?P"2.*(

1-.$( #"6( 4"

-;'"2$5B(,2

0#/( 04*-.(

;0'50&5-(*"(

.7( :MMNHI(

*03-$("4( *+

"#(4'32.-(8I8

10B( &-( /-

l

1-.(,2.!+0

*.'33-.$(055(

$*03-( *+-(

$*0*-(0#/( *

."5-( '$( *"(

+0*(0($,-!

et al.7(899M

"!2$( "#( *+

.!+0$'#3(*+

0( ,2.!+0$-

*+-1(/2.'#

( K+-.-4".

+-(!"#$21-

8(&-5"67(*+

-$!.'&-/( 0

0$-(/-!'$'"

$2&$-Q2-#

!"#$21-.

*+-'.(/-$'.-

.0'$-( &.0#

'4'!(&.0#/("

MR(

+-(

+-(

-7(

#3(

.-(

-.(

+-(

0$(

(

"#(

#*(

.$(

-/(

#/(

".(

Consumer Decision Journey

•  Revised  Purchase  Decision  Journey  –  Consider  ini@al  set  of  brands  –  Add  or  subtract  brands  as  they  evaluate  what  they  want  –  Ul@mately  select  &  buy  a  brand  –  Express  and  share  their  experience  online  

•  Dynamic,  influenced  by  others,  cyclical  •  Loyalty  loop;  contribute  opinions  and  experiences  thru  social  media  •  Based  on  Pull  or  Consumer-­‐Driven  marke@ng  strategies  

Consumer Decision Journey, cont’d

•  Consumer  driven  marke@ng  (part  of  which  is  Social  Media,  such  as  Internet  reviews  &  WOM  recommenda@ons)  now  takes  up  2/3s  of  the  touchpoints  in  the  purchase  decision  making  process  (unlike  tradi@onal  marke@ng  or  mediums  which  make  up  1/3).  

Consumer Decision Journey, cont’d McKinsey Quarterly 2009 Number 36

Two types of loyalty

Exhibit 4

Where it counts

Q3 2009Consumer decision journeyExhibit 4 of 4Glance: Two-thirds of the touch points during the active-evaluation phase involve consumer-driven activities such as Internet reviews and word-of-mouth recommendations from friends and family.

! " # $ % $ & '

Where it counts

1Based on research conducted on German, Japanese, and US consumers in following sectors: for initial consideration—autos, auto insurance, telecom handsets and carriers; for active evaluation—auto insurance, telecom handsets; for closure—autos, auto insurance, skin care, and TVs; figures may not sum to 100%, because of rounding.

5

Initial-considerationset

Active evaluation

Closure

Most-influential touch points by stage of consumer decision journey, for competitors and new customers, % of effectiveness1

Store/agent/dealer interactions

Consumer-driven marketingWord-of-mouthOnline researchOffline and/or print reviews

Past experience

Company-driven marketing

Traditional advertisingDirect marketingSponsorshipIn-store product experienceSalesperson contact

1226

37

10

26 22

31

4321

28

39

Shifts in Communication

•  Degree  of  SeparaIon  –  ShiO  from  six  degrees  of  separa@on  to  almost  half  (3.74  degrees  as  per  

study  by  Facebook)  –  Friendship  norms  redefined  &  friendship  circles  expanded  –  Average  Facebook  friends  reached  318  for  the  Millennial  genera@on  

•  Degree  of  publicity  –  Tendency  for  people  to  become  public  with  their  personal  informa@on  

and  day-­‐to-­‐day  ac@vi@es    –  Social  graphs  becoming  public  

•  Five  Degrees  of  Social  RelaIonships  –  Constructed  new  degrees  of  rela@onship  between  people  –  Rela@onships  of  different  dynamics  and  characteris@cs  

Category   DescripIon  Inner  Circle   Personal  contacts  with  frequent  personal  

interac@on  such  as  friends,  family,  neighbors,  work  peers.  

Social  Friends   Frequent  personal  contact,  mostly  online  interac@on,  video  chats,  social  networks  etc.  

Acquaintances     Infrequent  contact  via  social  networks,  mainly  focused  on  business  rela@onships,  e.g.  business  colleagues  on  LinkedIn  

Followers  -­‐  Colleagues  

Impersonal  remote  rela@onship.  Two-­‐way  ac@vity,  e.g.  reading  each  other’s  blogs,  followers  on  TwiNer,  etc.  

Followers  -­‐  Compe@@ve  

Impersonal  remote  rela@onship.  One-­‐way  ac@vity  where  one  monitors  the  ac@ons  of  another  such  as  compe@@ve  analysis  

Shifts in Communication, cont’d

Start your own business today!

Instagram  •  One  of  the  fastest  growing  social  media  outlets  with  150+  million  monthly  ac@ve  users  &  55  Million  photos  shared  every  day.  

•  The  new  gateway  for  Entrepreneurs.    

Easy Access to Entrepreneurship

I know what you ate last night!

Social  graphs  can  be  traced  online  to  determine  a  person’s  

likes  and  dislikes!.  

Brands are now empowered! New  Facebook  Graph  Search  allows  users  to  search  for  ac@vi@es,  check-­‐ins,  status  updates,  events  aNended,  likes  and  dislikes,  etc.    e.g.  People  who  like  Horror  Movies  

Thank You!