Impact of Social networking on consumer buying behaviour

Introduction:

In recent years use of social networking sites has been rising especially by teenagers and middle
aged people. Social networking sites are a medium for meeting new people and remaining in
contact with friends. This trend is mainly due to the increasingly busy schedules of people.
Business related interactions also takes place over the web these days. Consumption related
interaction also takes place over these networking sites as people exchange viewpoints and
opinions about products. Online word of mouth is an effective tool in marketing which the
companies can monitor. As an information source for customers, word of mouth
communication is an important variable that affects closely corporate image, reputation,
relationships and promotion activities. Moreover word of mouth is strongly related with
repurchases and brand switching behaviors.

First social media site were established at 1997 with the name of sixdegrees.com. After that
web sites in different locations were established which allow users to communicate and create
individual or professional profiles like asianavenue, black planet, migente, live journal, cyworld,
lunarstorm, ryze.com, tribe.net, linkedin, friendster etc. Myspace has followed these sites in
2003 and quickly became popular. Facebook founded in 2004 with restrictions and it removed
boundaries after the year of 2005.

Background

Social media has made it possible for people to sit down and browse through the Internet,
while communicating with other people about brands, products, and services provided for
consumers. Marketers and advertisers are always looking for ways to understand the consumer
better. In order to do so, businesses need to gather more information about consumers.
Shopping and social networking Websites gather a lot of information about online users, and
has become tremendously useful for companies to track and model consumer behavior. As
compared to traditional shopping at a mall and stores, the operating costs for an online store
can be a lot lower than a storefront type of retailer. In addition, an online shopping site makes
it easier for merchants to track online activity. This enables many companies to build large
databases of online shopping activities, such as what the consumer has looked at, or what
product the user has searched for. These companies now have the data to analyze aggregate
and individual consumer behavior. social networks generally are having positive impact on
businesses, especially reputable ones who take the time to engage online with their customer
base.

Academic Justification :

For an Academician, this study of impact of social networking on consumer buying behavior
helps to understand how to lead and to learn from people within your company, marketers
outside it, and, most of all customers. This study will help to understand The rapid adoption of
technology globally is creating new market opportunities for buyers and sellers.

Business Justification:

Social media has made it possible for businesses to communicate instantaneously and
simultaneously with consumers (b to c) and consumers to communicate with other consumers
(c to c) regarding products, brands and services continuously. This reciprocal cycle is magnified
greatly in the marketplace and has impacted marketers’ and consumers’ usage of this medium.

Consumer behavior is changing at a breakneck pace as your customers embrace social media.
They are making themselves heard everywhere, sharing their opinions about products and
services, and influencing the buying decisions of their peers. To capitalize on these
opportunities, you need a solution that brings together the best of ecommerce and social
media in a single unified platform - one that goes where the consumers are, expanding touch
points, integrating with social media sites, engaging in context with shoppers, providing a
seamless cross-channel experience, empowering merchandisers, and analyzing customer
behavior to drive customer delight. Companies that embrace such a solution will be able to not
only deepen consumer engagement but also amplify sales.

Personal justification :

Nowadays social networking is playing a very important role in every individual’s life. It has
made a great impact on social life. Anybody can collect any kind of information & knowledge.
It’s just the matter of clicking computer keys & save our valuable time. We can buy and sell
various items using this online facility as well as perform our financial & banking transactions
very easily sitting at home without any stress.

It has given us as individuals control over our lives and how we express ourselves. Everyone can
express themselves to the world and carve out and create their own corner of influence.

It would benefit us in various other ways. Social networking will inform us everything and
everywhere. It is very convenient and beneficial in our day to day life. In this faster growing
world it has became a needful instrument for everyone.

It may motivate us to take control of our life and business with the new world of online
publishing and marketing via blogs and social media networks. It will benefit us in following
ways.

Purpose of the study

The increase in the trend of usage of social networking site has opened up new channels of
communication. Today it’s the world of online shopping, thus it creates an interest to study
how social networks influence buying behavior. Social Networking Sites have changed the way
individuals communicate with the world, however, everyday designers are finding new and
innovative ways in which they can use the sites to connect one person to the rest of society.
Literature review

 According to social media statistics 2012, 80 percent of social media users prefer to
connect with brands through Facebook. (source:Business2Community)
 A whopping 77 percent of B2C companies and 43 percent of B2B companies acquired
customers from Facebook. (source: Business2Community)
 A survey was conducted to know Does opinion of a product / brand
Change if it has no presence on social media sites? 55% of respondents claimed that
their opinion of a brand did not change if that brand was not actively engaged on-line
and 45% claimed that their opinion does change if the brand is engaged on-line.
 Backer (2010) have investigated the usage pattern in adoption of new technologies like
Facebook and Smart phones on students and found that such applications create a
sense of motivation and responsibility as well as it enriches their learning experiences.
(International Conference on Technology and Business Management)
 Sara Typ (2010) have analysed the impact of advances in technology and how it
transformed the traditional business procedures in communicating to their target
audience. (International Conference on Technology and Business Management)
 Dwyer (2007) express the mailing platforms, blogs and virtual brand communities as
important meeting locations which are created by customers. (European Journal of
Economics, Finance and Administrative Sciences - Issue 44 (2012))
 Hu, Liu and Zhang (2007) mention that online word of mouth, which contains
Evaluations and reviews about products, is a reliable information source for customers.
(European Journal of Economics, Finance and Administrative Sciences - Issue 44 (2012))
 Social media tools have become superb channels for marketers to reach consumers. The
article titled, “Expand your Brand Community Online” states that social media is
important for marketers because it allows them to dialogue directly with consumers,
which in turn engages consumers directly with company brands (Hanlon, Patrick,
Hawkins, & Josh, 2008)
 “When Facebook users communicate ‘what’s on their mind’ or update their status, they
are offering a representation of the ‘self,’ which is based on their social interactions with
others” (Ellis, 2010, p. 39).

Objectives of the project

 To Study how social networking sites helps companies to understand consumer
buying pattern.
 To understand why consumers/buyers consider social media sites as valuable & credible
resource for researching products & services.
 To study how online marketers are targeting a global audience through social
networking sites.

Hypothesis

 H0 = There is an impact of social networking on consumer buying behavior.

 H1 = There is no impact of social networking on consumer buying behavior.
 Questionnaire

1. Do you think that social media has a positive impact on sales of the company?
Male Female

Response Response
Yes No May be Can't Say Yes No May Be Cant say

9% 3% 4%
0%

20%
0%

88% 76%

 Interpretation –Yes, according to this study social media has positive impact on sales because it
is quick, easy access & less time consuming. With social media the businesses can connect with
their targeted customers for free, the only cost is energy and time. Through Facebook, Twitter,
LinkedIn or any other social site you can lower your marketing cost to a significant level.
 The increasing popularity of social sites like Twitter, Facebook and LinkedIn, social networks has
gained attention as the most viable communication choice for the bloggers, article writers and content
creators.
 These sites have opened the opportunity for all the writers and bloggers to connect with their tech
savvy clients to share your expertise and articles. Your audience will further share your articles, blog
or expertise in their social circle which further enhance your networks of the followers.
 Social networks have removed all the communication and interaction barriers, and now one can
communicate his/her perception and thoughts over a variety of topics. Student and experts are able to
share and communicate with like-minded people and can ask for the input and opinion on a particular
topic.
2. Which of these social networking sites do you prefer the most?
Male Female

Response Response
Google+ Orkut Facebook Twitter Google+ Orkut
Facebook Twitter
10%
3%
19%
0%
39%

58%
71%
0%

Interpretation-Most people prefer to visit face book because Facebook users like it
when businesses display their brand affiliation with friends. Social budging is an
important reason for which people choose to be fans. They like their friends to know
about the brands they like.

3. In social networking sites which pages do you like the most?

 Male Female

Response Response
Companies Companies
Product and service Products and services
Sports releted Sports related
Any other Any other

9%

19% 18%
29%
33%
0%
39% 53%

Interpretation- Most people like products and services pages on social networking sites. It
makes it important for companies to post details about their business. Relevant news stories
and blogs should be posted on the business’ facebook page . Fans like to read about the
upcoming products and deals that businesses intend to offer.

4. Which of the following websites you have frequently visited for online shopping?
Male Female
 Response Response
Flipkart Jabong Olx.com Ebay.com
Flipkart Jabong OLX E-bay

11%
18%
14%
7%
0%
8%
67%
75%

Interpretation - Cash on Delivery is a buying option that most customers probably like the most.
With multiple occurrences of payment gateway failures and wrong deliveries, it’s the best bet. Even
for people with no net banking option or cards, it’s a boon

5. How much do you spend daily on social networking sites?

Male Female

Response Response
1Hr 1-2 HRS 2-3 HRS A B C D

4% 4%

13%

24%

32% 55%
68%
6. Do you get sufficient information related to any products through chartrooms?
Male Female

Response Response
Yes No May be Not sure Yes No May be not sure

6%

20% 20%
29%

42% 16%

23% 44%

Interpretation – We got response that sometimes they get information through chatrooms and
sometimes not. For example, through friends we can get opinion related to the particular
products.

7. For awareness which media you prefer the most?

Male Female

Response Response
Television Television
Social Networking Sites Social networking site
Radios Radios
Newspaper & Visuals Newspapers and visuals

18% 10%
0%

0%
50%
21% 61% 40%
 Interprtation- Television is popular because it is easy entertainment. Unlike most other forms of
entertainment, television is brought right into homes so there is no effort to receive it.
Television brings with it a huge choice of content. It is very easy to find something on air that
will entertain.

8. What is the most important factor taken into consideration while online shopping?
Male Female

Response Response
Price Price
Quality Quality
Guarantee/Warrantee Guarranty/Warranty
After sale service After sales service
8% 15%
17%
45% 35%
18%
30%
32%

Interpretation-majority of people while online shopping take into considaration the pricing
factor generally people refer pricing factor with local market. Mostly people compare the products and
look for discount which is on flipkart like 20% or 25% off .

9. Have you ever purchased a product or service based on an advertisement on a social

network?
Male Female
 Response Response
Yes No Yes No

45% 44%

55% 56%

Interpretaion – Almost more than 50% of people would prefer to buy online. Advertisements
through Facebook can narrow down who you want to target by geography, age, sex, martial status,
education, interests and more. This data produces an estimated reach fits your goals and expectations.

10. Why do 'like' brands on Face book?

Male Female

Response Response
To show solidarity Solve Challenge To show solidarity To solve challenges
To updated Discount/Freebies updated news discounts/Freebies
E Communication lines

0% 3%

19% 19% 19%

7%
9%
28% 50%
46%

Interpretation - Followers on social networks like Facebook often translate to loyal customers for
brands. A positive brand experience online leads to more sharing and engagement and, as a result,
more business. But what is it that makes people want to follow a brand.