retailers and social media

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Student Number: 2224030 RMKU9R4 1 Critically evaluate whether or not retailers can use social media and mobile technologies to alter customer behaviour to their own benefit? Illustrate your answer with reference to one retail sector. WORD COUNT: 3538 STUDENT NUMBER: 2224030

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Page 1: Retailers and Social Media

Student Number: 2224030 RMKU9R4

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Critically evaluate whether or not retailers can use social media and mobile technologies to altercustomer behaviour to their own benefit? Illustrate your answer with reference to one retail sector.

WORD COUNT: 3538STUDENT NUMBER: 2224030

Page 2: Retailers and Social Media

Student Number: 2224030 RMKU9R4

Contents Page• Introduction and Summary of methodology 3

• Social Media and Mobile Technologies 4

• Retailers and the Digital Era 5

• Organisations Analysis 7- Missguided 7- H&M 10- Chanel 11

• Comparison 12

• Conclusions and Recommendations 14

• References 15

• Appendix 17

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IntroductionThe aim of this report is to critically evaluate whether or not retailers can use social media and mobile technologies to alter customer behaviour to their own benefit.First of all, the definition of what is meant by social media and mobile technologies will be provided along with a number of data concerning the use of this kind of instruments by consumers. Afterwards, some examples will be given of how retailing functions can be performed through social media and mobile technologies and how retailing theories can be adapted to these devices. Moreover, three firms within the retail sector of ladies apparel will be analysed in depth to better understand the impact of social media and mobile technologies when used in retail marketing. The organisations presented will be compared and contrasted to examine whether the use of such tools represents a real competitive advantage and, if so, the magnitude of this advantage. In the end, some conclusions will be drawn in order to provide an answer to the question asked at the beginning and some recommendations will be made.

Summary of methodologyThe methodology adopted to analyse the industries’ approach to social media includes the employment of:

• Primary sources: personal knowledge of the stores (online and physical), personal experience as a consumer, interviews to managers and personnel, experts journal articles.

• Secondary sources: analysis of the promotion material, advertisements, web pages, financial statements, forums, newspapers.

• Research methods: observation, study of analytics and review of existing literature.

• Auxiliary means: pictures, screenshots from websites and social media pages, tables.

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Social Media and Mobile Technologies

Social media are websites where people can create their personal account and share contents with other users, while mobile technologies are both used for more basic means of communication such as calls and texts, and as a support to access social media and the internet. The aim of both tools is to connect people, shrink the world and delete distances in order to make everyone able to develop relationships with whoever in the world and capable of expressing their idea on a platform where someone will eventually listen to it.

Social media and mobile technologies have become an increasingly important part of people’s lives in the last years. In fact, for example, Facebook accounts for 15.5% of total time spent on the Internet, Instagram has 150 million monthly active users and 78% of Facebook users are mobile-only (MomentFeed, 2015) (Reed, 2013). Moreover, social media and mobile technologies seem to account even more popularity than TV among US adults who spend 29% more time on digital than on TV and usually use at least one other device while watching TV (MomentFeed, 2015).

These data are extremely significant to retailers, who undoubtably need to adjust their marketing strategies and make sure they provide information and promotion through the right channels.Evidence easily suggests that ads on TV are no longer the key influence on buyers. Nowadays, 47% of americans say Facebook is their #1 influencer of purchases (MomentFeed, 2015) and online r e v i e w s h a v e b e c o m e fundamental in the purchasing decision.

Can retailers use this new trend to gain competitive advantage? If so, how?

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Retailers and the Digital EraIn the Age of social media and mobile technologies, retailers need to adapt the theories and concepts of retail to the new tools available and find a way to perform retailing functions through these new instruments. Evidence shows that the majority of retailers at the moment are using social media in the traditional one-way linear model of mass communication (Johansson, 2013), in which there is no interaction between retailer and customer, consumers are assumed to be passive and retailers simply transmit their promotional message to them.However, this model was developed in 1955 and it is no longer appropriate as modern customers are interested in having a personal relationship with retailers and prefer those who interact with them. Some companies have understood this desire and are already using social media and mobile technologies to improve their relationship with buyers. The two retailing functions on which retailers are focusing more when involving social media and mobile technologies are customer service and brand building, here are some examples of how these digital tools are used by firms to improve the business performance:

CUSTOMER SERVICE

Social media allow retailers to:• Improve the quality and increase the amount of customer analytics: the more

retailers know about their customers, the better customer service they can provide. Social media represent a great source of analytics: customers have the chance to express what they like more about a certain retailer and what, instead, is not satisfying their needs and wants. Consequently, retailers can adjust their performance. Moreover, if a retailer has misunderstood the target audience, it is possible to get to know it better by looking at the social media pages of the brand and studying the people who liked it (or followed it) through the insights provided by social media.

Mobile technologies can help retailers by:• Allowing people to use social media everywhere: the amount of time spent on

social media has grown a lot since social media apps were developed and so did the amount of data available to retailers, with the result of an overall improvement in customer service in the last years.

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• Providing in-store wifi and mobile apps: every retailer that provides in store wifi can analyse the data collected through the buyers use of wifi, and afterwards, through the retailer mobile app it is easy to offer coupons to shoppers based on their preferences, give them the chance to share a purchase with a friend or learn more about the products before buying (Accenture, 2013). All of these features make the customers feel better about the company and help develop loyalty towards the brand, i.e. shoppers like the customer service they get and the attention the retailer pays to them and are willing to go back to the store.

BRAND BUILDING

Social media provide:• Opinion leaders: customers want a personal relationship with the brand, they

want to be listened and understood and want to be advised on what to buy by people they can trust, people just like them. Opinion leaders are individuals that are more predisposed to receiving information and then reprocessing it to influence others, they belong to the same peer group of consumers and, because of that, they are more persuasive than the information received from mass media (Baines and Fill, 2014). Bloggers are opinion leaders and operate through social media. Usually firms send free products to them so that they wear or use the goods and then review them — hopefully providing a positive feedback; once bloggers have become famous, firms hire them and make sure they advertise positively the brand. The influence that bloggers have on people (especially young individuals) is huge and the wideness of the audience they can reach is incredible, so companies get an effective highly-involving marketing campaign by hiring only one person (or a few more).

• Feedback and reviews: social media give customers the opportunity to write what they think of the product after purchasing it, i.e. the audience reactions to the product or service are now public. The feedback and reviews process is similar to the opinion leaders mechanisms, consumers trust what other shoppers think of the products because they can identify themselves in the people who wrote the review or feedback. A series of bad feedbacks can be fatal to a company, but if the reviews are positive they become a great competitive advantage and source of profit.

• Likes and followers: The number of likes on the retailer’s Facebook page or the amount of followers on Twitter and Instagram are influencing the people’s attitude towards the company. Creating the firm’s Facebook, Twitter and Instagram accounts is the first step towards building the brand and making it grow.

Mobile technologies:• allow customers to get all the information listed above whenever they want. So, if

the retailer is doing a good job in brand building on social media it is very difficult not to notice as people can check what is happening on their mobile (and usually do so quite often).

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Three organisations within the sector of Ladies Apparel will be now analysed in order to provide some practical examples of how retailers use social media and mobile technologies to alter costumer behaviour to their own benefit.

a. MISSGUIDEDMissguided is an online fashion retailer born in 2009, from the initiative of the British 32 year-old entrepreneur Nitin Passi. The company started delivering products to the UK and now, after only six years, it is expanding across the EU, the US and Australia (at the moment it is active in 160 countries), it includes over 600 employees and has reached £51m revenue in 2014 (Loizou, 2015). Missguided owes its success and quick growth to social media and mobile technologies, and, of course, to a staff able to make the most of these resources.

Since social media and mobile technologies arose, the mass communication costs has become incredibly low. However, the scene for brand building has become more crowded and organisations such as Missguided need to differentiate from thousands of others to succeed. Missguided’s competitive advantage is the consistency between their brand identity, image and profile. The brand owner, Mr. Passi, wanted the brand to have a core customer base of women between 16 and 35 years old (Sillitoe, 2014) and to reflect in the products exactly what target customers feel and want. Missguided made of the interaction between the brand and the customers the biggest strenght of the organisation, as they say:

“We are Missguided. We are an empowering, bold and forward thinking online fashion brand, inspired by real life. We design and create product informed by you, our customers, our friends and global influences: Catwalk, celebrity, social media, bloggers and street style, creating an online fashion destination that encompasses and celebrates everything it means to be a girl in a digitally immersed world today.” (Missguided, 2015) In fact, this is exactly what they deliver designing clothes in line with the latest trends, at affordable prices and having the former Pussycat Doll and X-Factor judge Nicole Scherzinger as a brand ambassador.Moreover, the customers —mostly composed by young women— have the feeling to be understood and to have a personal relationship with the brand, thanks to the

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marketing strategy adopted by Missguided through social media and mobile technologies.

Some examples of the company’s knowledge and expertise on how to use conveniently digital tools are listed below:• When customers ask for help on social media, Missguided answers informally so

that the shopper has the feeling to be talking to a modern young woman. This shows the deep knowledge that the company has of its customers. In fact, most Missguided customers are young ladies, that would answer in the exact same way as Missguided staff do. In this way, the communication is quick and easy, customers feel at ease and the relationship between retailer and buyers is informal and relaxed, resulting in a generally positive attitude towards the brand.

• Missguided always retweets customers’ tweets (Twitter, 2015). This makes customers feel important and part of the community, involvement is a key factor to achieve customers loyalty. Moreover, seeing positive tweets wrote by normal people on the company, those who are visiting Missguided twitter account for the first time have a better impression of the brand.

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Example of conversation between retailer and customers on Instagram

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• Missguided’s campaigns involve customers. They frequently ask customers to post pictures or thoughts about the theme of their campaign, then they nominate a winner that usually gets a voucher to spend on Missguided clothes. This is another mechanism to engage customers and bond them emotionally to the company, so that they do not stop buying and spreading the positive feeling about it.

• Missguided is advertised by many famous fashion bloggers (Instagram, 2015), who have a lot of power over customers as explained before. Moreover, the fashion bloggers involved in Missguided’s campaigns advertise important brands such as Victoria’s Secret, Prada and Versace, which is a kind of guarantee of quality and style in the view of customers.

• Missguided also has its own mobile app, where customers can buy, review or simply gain information a b o u t p r o d u c t s a n d activities.

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b. H&MH&M was born in 1947 and it is known all over the world. This retailer has already built its brand and created awareness. Its biggest challenge, however, is to keep on satisfying customers’ needs, which is not easy considering the business environment becoming more and more competitive, especially in the ladies apparel sector.

H&M has 5.13million of followers on Twitter, 21m on Facebook and 5.7m on Instagram. These are huge numbers, however it can easily be noticed that the relationship with customers is very formal and most of the answers H&M gives on social media are copied and pasted from previous ones.In some cases, H&M manages to reassure customers and to maintain their loyalty even with short, neutral answers.

However, in some other cases this seems not to be enough:

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Social media allow new participants, other than the company, to tell stories and express opinion about it. This situation can lead to positive and reassuring views of the brand, but social media are also a channel for negative sentiment which is risky and sometimes discourage firms to create accounts on them (PwC, 2013). However, most of the times taking risks is fundamental to succeed.

The contents that H&M posts on social media are mainly generic advertising photography being repurposed. This does not give a great sense of community and special treatment to those who follow the brand or like its page.

c. CHANELChanel is a worldwide known brand which was born in 1909. This brand is iconic and certainly does not need brand building or awareness. Chanel does not even need to keep customers engaged or involve them in activities or promotion to maintain their loyalty. In fact, everybody loves Chanel. The legend and the stories around the logo make women of all ages desire Chanel products, there is no urgency to persuade them.

Chanel activity on social media is limited to repurposing advertisement and to maintain through short and effective sentences the image of untouchable and unreachable brand, which is not even a brand, but a whole lifestyle.

This retailer does not even use fashion bloggers or reviews.The logo says everything that needs to be said and celebritieswear Chanel clothes because they want to, and not because the company gives them free products or pays them.

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ComparisonH&M is the retailer who has the biggest number of followers, but the lowest number of new followers every week (see Tables in the Appendix). Also, it is the one using social media and mobile technologies in the worst way, as it is not an iconic brand that can afford to avoid having a relationship with customers, neither is a friendly brand connected with young people. In fact, H&M target customers are almost the same as Missguided and they clearly desire a different approach from an affordable ladies apparel brand. They want the brand to be near to them, ready to answer when they have a problem and present on social media with new vouchers and competition every day. Young women have demonstrated to appreciate special contents to be posted on social media, such as authentic, in-the-moment pictures which have demonstrated to perform best than the regular advertising posted by H&M (Reed, 2013).Nevertheless, H&M keeps its position as #31 in the list of the 100 most valued brands in the world (Forbes, 2015). However, it has to be said that H&M comprises more than ladies apparel and that this particular sector could probably fail if they keep on managing badly social networks and mobile technologies, as the company will lose their competitive advantage. At the moment their competitive advantage is given by the brand awareness and the affordable prices, but, as soon as companies like Missguided will develop and spread more, this won’t be an advantage anymore. Thus, H&M needs to provide added value to customers or they will switch to c o m p a n i e s t h a t g i v e m o r e interesting services along with the products.

Missguided is the company with the smallest amount of followers and likes on social media. However, it is also the youngest retailer— only six years old— and the only one that works online only.

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Missguided was born right after the 2008 financial crisis, when nothing such as starting a business seemed possible and has managed to grow at an increasingly fast rate. Right from the beginning, this company has managed to master retail marketing techniques through social media and mobile technologies and has conquered a huge number of loyal customers. Numbers suggest Missguided is the weakest retailer between the three presented, but it is still growing and it is not easy for a business to grow during these years, so this company is probably stronger than it seems and extremely prepared to face the future of retail.

Chanel is undoubtably the strongest brand and retailer between the ones analysed. Regardless of the fact that it is the less active on social media and it does not offer an app, it is by far the most followed on social media. Chanel is the proof that the brand is the vital core of the company and that when the core value of the brand is consistent with the representation of it and the associations people make when thinking of it, the firm has reached the main objective (Johansson, 2013). In fact, Chanel does not need to persuade people anymore, it has created the perfect brand and transmitted to customers an incredibly effective message, at the point that the desire to own a Chanel product has become a kind of underlying, natural feeling of attraction that is part of our culture and that every woman is brought to experience.

To sum up, it can be said that in certain cases, such as Chanel, the competitive advantage is already in the brand or in other parts of the company. However, in most cases, such as H&M and Missguided, especially if the concerned sector is overcrowded and extremely competitive, the relationship with customers is fundamental as they are the only ones capable of convincing other potential buyers that a firm is satisfying and able to deliver valuable products. The newest, fastest and cheapest way to establish, develop and maintain a relationship with customers are social media and mobile technologies. However, they do not always make firms gain competitive advantage as they are a double-edged sword. In fact, social media are channels of communication, which could be used as means to develop positive exchanges between retailers and customers, as well as platforms where buyers express and share negative thoughts, experiences and sentiments about retailers.

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Conclusions and RecommendationsIn conclusion, it can be said that retail communications have changed consistently since social media and mobile technologies were introduced. In fact, businesses have gone from simply transmitting a message to customers to interacting and developing personal relationships with them. To solve the dilemma purposed at the beginning, it can be stated that social media and mobile technologies can actually be used by retailers to alter customer behaviour in their own benefit. In fact, the examples provided demonstrate that, in the vibrant, highly competitive environment of the ladies apparel retail sector, a company which wishes to enter the market needs to be able to use social media and engage with modern customers to differentiate from the others and gain customer loyalty. In fact, conquering the people support and appreciation is the most effective marketing strategy for organisations in the ladies apparel sector, as well as in almost every other sector. However, old companies which have already created a solid and effective brand and are strongly differentiated from competitors, do not need to engage people through social media and mobile technologies, as long as their strategy is successful.

Some recommendations on how to use social media and mobile technologies to provide added value that retailers should follow in the future can be:

• retailers should create original brand content and curate customer content on social media and brands’ apps (Reed, 2013).

• It is very important to show originality, but the consistency of contents posted with the core value of the brand is essential.

• Improve mobile apps creating store-aware mobile apps which can scan products found in the shop and provide all useful information about it to customers, as well as giving retailers the opportunity to collect data on what buyers scan to understand shoppers’ tastes and preferences more in depth (EKN, 2013).

• Insert in the store mobile app the possibility to write a shopping list so that, once customers have typed the products they need, the app tells them where to find the goods in the shop (EKN, 2013).

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References:• Accenture, (2013). Inspiring Shoppers in a Connected Store Environment. 1st ed.

Accenture.

• Baines, P. and Fill, C. (2014). Marketing. 3rd ed. Oxford: Oxford University Press.

• EKN, (2013). State of the Industry Research series: The Future of the Store. 1st ed.

• Facebook, (2015). CHANEL. [online] Available at: https://www.facebook.com/chanel?fref=ts [Accessed 22 Mar. 2015].

• Facebook, (2015). H&M. [online] Available at: https://www.facebook.com/hmunitedkingdom?fref=ts [Accessed 19 Mar. 2015].

• Facebook, (2015). Missguided. [online] Available at: https://www.facebook.com/Missguidedcouk?fref=ts [Accessed 26 Mar. 2015].

• Forbes, (2015). The World's Most Valuable Brands List - Forbes. [online] Available at: http://www.forbes.com/powerful-brands/list/#page:1_sort:0_direction:asc_search: [Accessed 11 Mar. 2015].

• Instagram.com, (2015). CHANEL (@chanelofficial) • Instagram photos and videos. [online] Available at: https://instagram.com/chanelofficial/ [Accessed 24 Mar. 2015].

• Instagram.com, (2015). H&M (@hm) • Instagram photos and videos. [online] Available at: https://instagram.com/hm/ [Accessed 30 Mar. 2015].

• Instagram.com, (2015). MISSGUIDED (@missguided) • Instagram photos and videos. [online] Available at: https://instagram.com/missguided [Accessed 24 Mar. 2015].

• Johansson, U. (2013). Social media and brand building in food retailing - an explorative study. Lund: Lund University.

• Loizou, K. (2015). How I Made It: Nitin Passi, founder of Missguided | TheSunday Times. [online] Thesundaytimes.co.uk. Available at: http:www.thesundaytimes.co.uk/sto/business/small_business/article1513460.ece [Accessed 13 Mar. 2015].

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• Missguided.co.uk, (2015). About Us. [online] Available at: http://www.missguided.co.uk/about [Accessed 29 Mar. 2015].

• MomentFeed, (2015). MomentFeed - Localized Marketing at Scale. [online] Available at: https://momentfeed.com/localizedmarketing/trends [Accessed 25 Mar. 2015]

• PwC, (2013). Demystifying the online shopper: 10 myths of multichannel retailing. 1st ed. PwC.

• Sillitoe, B. (2014). Big interview: Missguided managing director Nitin Passi - Essential Retail. [online] Essential Retail. Available at: http://www.essentialretail.com/news/article/53aa8962ee6e1-big-interview-missguided-managing-director-nitin-passi [Accessed 8 Mar. 2015].

• Twitter.com, (2015). CHANEL (@CHANEL) | Twitter. [online] Available at: https://twitter.com/CHANEL [Accessed 16 Mar. 2015].

• Twitter.com, (2015). H&M (@hm) | Twitter. [online] Available at: https://twitter.com/hm [Accessed 24 Mar. 2015].

• Twitter.com, (2015). Missguided (@Missguided) | Twitter. [online] Available at: https: twitter.com/Missguided [Accessed 17 Mar. 2015].

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Appendix

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followers TWITTER FACEBOOK INSTAGRAM

CHANEL 6.95M 14M 3.5M

MISSGUIDED 280K 758K 875K

H&M 5.13M 21M 5.7M

new page likers (per week)

CHANEL 53,382

MISSGUIDED 2,893

H&M 2,735

people talking about them

CHANEL 223,799

MISSGUIDED 3,856

H&M 297,116

Table 1. Companies’ number of followers on three types of social

Table 2. Companies’ number of new page likers per week on Facebook

Table 3. Number of people talking about the companies on Facebook