Marketing through Social Media

Written by Master Student at Lund University



New marketing through social media – Only for the big fish or for the small businesses well?



The emerge of online marketing has revolutionized the marketing arena, since its rise in the middle of the 1990s it has become one of the most common marketing channels in today’s society; which is due to the exponential development of the internet and social media (Seraj 2012; Meerman, 2011;Winer, 2009;Varadarajan 2009). The rapid growth of the internet have caused scholars to debate the relevance of the 4Ps model, a model that has served as the foundation for marketing. Moller (2006) and Yudelson (1999) argue that the model is still coherent and applicable if it’s adapted, while Constantinides (2006; 2002) argues for a new model. The opinion that these scholars share, is that the emerge of internet and social media will continue to change the marketing arena, and marketers will have to adapt in order so successfully implement marketing strategies. Simultaneously the consumer awareness concerning environmental consciousness and CSR is changing the companies’ relationship with society (Wind, 2008). The recession has also been a contributing factor to the change of the marketing arena, and thus recovery is occurring, the marketing arena will not be the same (Piercy, 2010). In combination these three major changes creates an incredible challenge companies must learn how to master in order to maintain and increase their customer base (Romaniuk, 2012).

The more widespread use of internet have provided a new platform for the phenomena of word of mouth (WOM). The most powerful marketing tool but the least understood according to Milner (1999) in Trusov et al (2009). Previous to the emerge of social media and the internet it was hard to trace and measure WOM activity, but due to the development of social media WOM activity will become more accessible for companies (Coutler & Roggeveen, 2012;Trusov et al, 2009). The emerge of social media has opened up a new field of marketing and comes with many associated benefits, however it has significantly increased the challenge for companies to market themselves (Kietzmann et al, 2011). According to Wind (2008, p. 21) “the discipline of marketing hasn’t kept up with the rapid changes facing 21st century businesses”, which causes a dilemma. There are multiple opportunities (Kietzmann et al, 2011) but the greater opportunities the greater the risk, especially since the marketers have not kept up with the paste of change (Wind, 2008). Larger corporations with the financial power have the potential to utilize the benefits associated with social media to generate WOM, but smaller businesses who does not possess the same economic strength needs to pursue the social media developments with caution (Geho et al, 2012). These factors raises the question if the approach differs between large corporations and smaller businesses in order to utilize the benefits associated with social media and to generate WOM.


In 1995 an estimate of 0.4% of the world population had internet access (Geho et al, 2012), today the percentage of internet access have reached 34.3%, which accounts for roughly 2.4 billion people (Internet World Stats, 2012). The growth of social media has significantly changed the approach towards marketing, however it has not caused the old marketing methods to become insignificant (Winer, 2009). Traditional Marketing methods still play an important role, but the balance of the advertising is shifting more towards newer marketing methods (The CMO Survey, 2012). The projection for traditional marketing spending indicates a significant decrease while internet marketing will continue to increase (The CMO Survey, 2012). However, thus the increase of internet marketing spending there has also been a shift in focus in this medium towards social media (Winer, 2009; Trusov et al, 2009).

Winer (2009) states that the new media, in comparison to traditional media, is that it is digital and interactive. This provides companies with great opportunities to generate awareness, facilitate and track WOM, and to generate buzz more efficiently compared to traditional media. WOM marketing has a significantly stronger impact on new customer acquisition in comparison to traditional media, its elasticity is 20 times higher than marketing events and 30 times higher than media appearances (Trusov et al, 2009) which verifies the potential of efficient facilitation of WOM and buzz (Dye, 2000). However, buzz marketing is industry dependent (Dye, 2000). Certain industries tend to thrive on higher levels of buzz creation than other industries (Dye, 2000). The fashion industry is heavily driven by buzz whilst industries including gas, oil, and insurance are to a large extent immune to buzz (Dye, 2000).  There is a grey zone between the two extremes contains 54% of the major industries (Dye, 2000), and therefore this segment has a potential opportunity to increase the buzz percentage due to the developments of social media (Dye, 2000).

The rapid growth of Internet and social media has transitioned the power from companies to the consumer, and has changed the ways of communication between societies, corporations, and individuals (Kietzmann et al, 2011; Deighton & Kornfeld, 2009). This change has caused the consumers’ beliefs and expectations to change (Varadarajan & Yadav, 2009; Wind, 2008). They now expect customization, being part of a community, multiple channels, competitive value, and plenty of choices; which proves the strengthened empowerment level of today’s consumers (Piercy 2010; Wind, 2008). Social media has made it easier for corporations to gain insight on consumers wants and needs, however the corporations have not been properly prepared for this change (Kietzmann et al, 2011; Wind, 2008). The increased importance of social media has caused marketers to over do their marketing efforts in social media, in an attempt to not fall behind (Romaniuk, 2012). Corporations need to carefully examine their position in order to properly adapt to the changes caused by social media in order to utilize their marketing efforts (Romaniuk 2012; Kietzmann et al, 2011) while avoiding the risk of saturation if the corporations marketing efforts are not measured (Armelini & Villaneuva, 2011). 

In order for corporations to properly adapt to the different types of social media Kietzmann et al (2011) suggests a framework consisting of 7 functional blocks. The blocks cover specific areas in which different social media platforms are associated with (Kietzmann et al, 2011). The blocks are labeled as followed: presence, sharing, relationships, identity, conversation, groups, and reputation (Kietzmann et al, 2011). Depending on the corporations’ goals in their marketing strategies, certain social media platforms will fit better with certain goals, and therefore it is of great importance that corporations carefully select the right type of social media. For example, if a company is attempting to acquire qualified personnel, a social media platform as LinkedIn will be a better fit than Facebook, since LinkedIn is a professional career network focused on identity, while Facebook emphasizes more on relationships (Kietzmann et al, 2011). If a corporation uses the power of the social media platforms properly, it will stimulate the WOM process. However, a majority of the WOM activities occur offline today according to Keller & Berry (2006) in Predergast (2010), but is projected to increase (Seraj, 2012), and therefore proper social media usage is of great importance.


According to Armelini and Villanueva (2010) WOM serves as a critical driver of consumer behavior. Therefore it is of great importance for less strong brands to carefully make marketing decisions concerning social media approaches, since stronger brands does not get as affected by negative WOM as smaller corporations do (Armelini & Villanueva, 2010). In the early stages of the development of social media, it was a true challenge for smaller business to manage to keep up with the developments. There were so many different platforms and smaller business did not have the time to learn and properly utilize all the platforms (Geho et al, 2012). Therefore engaging in social media was a higher risk for smaller business in the early stages of the social media growth cycle. Now, the social media management tools have become more efficient and easy to learn, and therefore allows smaller business owners and entrepreneurs to properly take advantage of it (Geho et al, 2012). However, the fact that an entrepreneur or small business owner knows how to handle the different types of social media does not necessarily mean that the business itself fits in this arena, or that the information broadcasted in social media is relevant to the customer base (Geho et al, 2012). The difference between a smaller business and a large corporation in this arena is that the larger companies can afford professional help and learn through trial and error (Armelini & Villanueva, 2010). In the case of smaller business a small blunder can have devastating effects due to the speed of information in social media; which can be compared to a business handled poorly in a small town, it does not take long until the whole town knows about it. Another obstacle is failing to realize the consumer expectations on content in the social media the company is present within (Heller & Gautam, 2011). Heller & Gautam (2011) addresses a problem in information sharing between the companies and their customers. According Heller & Gautam (2011) and Spenner & Freeman (2012), there is a misconception between companies and the consumers concerning the information presented through social media and the internet. The results indicated that companies believe that consumer interact with the company through social media due to informational needs and product information, while the consumer prioritized discounts and wanted to interact when making a purchase (Spenner & Freeman, 2012; Heller & Gautam, 2011). This perception gap causes a problem, and proves that especially small business will have to take many precautions when entering the world of social media.


Social media sites facilitate communication not matter if it is positive or negative (Coutler & Roggeveen, 2012). It therefore comes with incredible opportunities for a small business to generate more business and WOM by properly adapting its marketing strategies to social media. Today, approximately 90% of WOM occurs offline according to Keller & Berry (2006) in Predergast et al (2010). Consumers are primarily starting to use internet as an information source before making purchase decisions (Predergast et al, 2010) which increases the importance of social media and internet presence for small business’. However, the hype surrounding social media (Romaniuk, 2012) has the potential to cause saturation of company efforts to reach current and potential customers (Armelini & Villanueva, 2011), and further contributes to the information overload that exists in today’s society (Spenner & Freeman, 2012). The current trends concerning the purchase behavior of the upcoming generations points to buying more local products and have a lower emphasis on brands (Jensen, 2007). Generation’s Y and Z is more educated and used to the online world (Jensen, 2007), and therefore will be able to attain the information they need themselves without companies reaching out to them. The power is now with the consumer (Deighton & Kronfeld, 2009). This is supported by research committed by Spenner and Freeman (2012), Kietzmann et al (2011) and Wind (2008) that argue for a change from CRM to Customer Managed Relationships (CMR).

In combination with the information overload existent on the internet it can potentially provide smaller business with a competitive advantage compared to larger companies that have contributed more to the saturation of social media and the overall information overload online. The factors also points towards a decrease of importance when it comes to social media, although these potential effects need further research. Piercy (2010) expresses that thus we are working our way through the recession, the post recession era will significantly differ from the past period. We can therefore conclude that the structure of marketing will continue to change, and therefore it is essential, for small business especially, to take careful precautions when committing to the new and changing methods of marketing due to the increased spread ratio of positive and negative WOM. 


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