Social Commerce Plan (3000 word)
Eirwan
Week3-TheoriesandConceptsforSCrev9.pptxWeek 3 Turban Chapter 3 Tuten Chapter 1
Supporting Theories and Concepts for Social Commerce
Learning Objectives
Describe the factors that influence online consumer behavior.
Understand the decision-making process of consumer online shopping & other related theories.
Explain how consumer behavior can be analyzed for creating personalized services.
Describe online word of mouth and its benefits.
Define online engagement and describe its influence on social trust.
Describe social psychology theories relevant to social commerce, social network analysis, the social graph & social capital.
Opening Case: Netflix Increases Sales Using Movie Recommendations by Customers
The Problem
Customers often have difficulty deciding what they want to watch so they choose the most recent and popular titles
The Solution
Using the “recommendation algorithm” compares an individual’s preferences with people that have similar tastes by using the collaborative filtering software
Opening Case: Netflix Increases Sales Using Movie Recommendations by Customers
The Result
Effective recommendations – 60% follow
75% watch based on recommendation
Customer satisfaction – 90%
Finance – growth in membership
Ratings – 3.5 billions ratings
Lessons Learned from the Case
This case illustrates the use of collaborative filtering to influence customers
Netflix’s recommendation algorithms (AI) are designed to increase customer satisfaction and loyalty
Netflix gained a substantial advantage over its competitors
Learning Objectives
Describe the factors that influence online consumer behavior.
Cultural
culture
sub-culture
social class
Social
groups
social network
family and household
roles and status
Personal
age
life-cycle
occupation
economic situation
life-style
personality
self-concept
Psychological
motivation
perception
learning
beliefs and attitude
Need recognition
Info search
Evaluation of alternative
Post-purchase Behaviour
Purchase
Figure 3.1 EC Consumer Behavior Model
Learning Objectives
Describe the factors that influence online consumer behavior.
Understand the decision-making process of consumer online shopping & other related theories.
The Consumer Purchasing-Decision Process
The AIDAS Model
A—Attention (awareness)
I—Interest
D—Desire
A—Action
S - Satisfaction
Five steps of Purchase Decision Making Process:
Need identification: notification.
Information Search: Product brokering (e.g. electronic catalog) or merchant brokering (google).
Evaluation of alternatives: comparison, samples, etc.
Purchase and delivery: ordering, payment, delivery.
After-purchase evaluation: customer support, installation, returns, etc.
<More on week 7 Social Shopping>
Consumer Purchasing-Decision Process
Impact of Internet Media on Purchase Decision Process
Inform. search
Inform. search
Social Media
Social Media
Social Media e.g SCRM, Ratings, Chatbot
Social Media e.g. Blogs, Influencers, Artificial Intelligence
AI
Marketing objectives and social media
Increase
awareness
Influence
desire
Encourage
trial
Facilitate
purchase
Cement
brand loyalty
Recover
from service failures
Roles people play in decision-making (It is a participatory process – social commerce)
Initiator—suggests/thinks of buying a particular product or service
Influencer—advice/views carry weight in making a final buying decision
Decider--makes a buying decision or any part of it
Buyer—makes the actual purchase
User—consumes or uses a product or service
Who do you think has the strongest influence on purchase?
Learning Objectives
Describe the factors that influence online consumer behavior.
Understand the decision-making process of consumer online shopping & other related theories.
Explain how consumer behavior can be analyzed for creating personalized services.
Behavioural Targeting and Personalization
Behavioural targeting using personalization to influence consumer to conduct social commerce
Personalization: Process of matching content, services, or products to individuals’ preferences
Alternative methods
Solicit information from users profile
Use clickstream data
Collaborative filtering
Collaborative filtering (big social data analytics)
A personalization method that uses customer data to predict, based on formulas derived from behavioral sciences, what other products or services a customer may enjoy; predictions can be extended to other customers with similar profiles or in the same social group
Micro marketing – targeting individuals based on his/her needs. Make use of personalization technology.
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Example of Collaborative Filtering
This is why the Facebook login
Learning Objectives
Describe the factors that influence online consumer behavior.
Understand the decision-making process of consumer online shopping & other related theories.
Explain how consumer behavior can be analyzed for creating personalized services.
Describe online word of mouth and its benefits.
Word of Mouth in Social Commerce
Word of Mouth marketing(WOMM): person-to-person communication. Viral marketing
Targets WOMM to influencer with many connections.
The Benefits of WOM
Metcalfe’s Law Value of Network proportionate to N square
90% trusts WOMM
67% spend more money because of WOMM
44% of purchase are influenced by WOMM
Awareness, brand health, engagement, action, innovations
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Figure 3.3 The Process of Digital WOM
Word of Mouth in Social Commerce
Viral Videos
How to make your video content go viral https://www.youtube.com/watch?v=lEn_YCY4tKM
Life of an entrepreneur in 60 seconds
https:// www.youtube.com/watch?v=h-KHWUq3B7I
What Makes Content Go Viral?
http://mashable.com/2011/12/03/viral-infographic/#P4eVztHwpEqo
What makes a content viral?
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Learning Objectives
Describe the factors that influence online consumer behavior.
Understand the decision-making process of consumer online shopping & other related theories.
Explain how consumer behavior can be analyzed for creating personalized services.
Describe online word of mouth and its benefits.
Define online engagement and describe its influence on social trust.
Online Consumer Engagement & Trust
Online customer engagement - “Engagement of customers with one another, company or a brand. Consumer or company led”
The Benefits of Engagement
Increase customer trust
Customer interaction and awareness
Quick response to consumer changing needs
Leverage on customer contribution – crowdsourcing
Increase satisfaction & loyalty to existing customers.
Reduce operating cost (gain market insight).
Trust: Psychological status to pursue further interactions to achieve a planned goal
Ratings, comments, liking, social shopping, online public relations – cause marketing, authoritative articles, conversational marketing, crowdsourcing, etc.
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Social Media don’t drive sales but engagement
Video: “How Do You Define Online Engagement? – Social Media Camp 2011 Ep#36” at youtube.com/ watch?v =sF0U-OYuKFU
Read https:// conversionxl.com/how-to-use-social-media-to-drive-sales & http:// marketingland.com/report-fewer-than-1-of-sales-can-be-tracked-back-to-social-media-22708
SM in SN drives engagement (attention, interests & desire) leading trust (in going to your website for further action).
MOTIVATIONS OF PARTICIPATION IN SM
Less than 5% of sales derived directly from SM
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Affinity
1
Contact, comfort & immediacy
3
Altruism
4
Curiosity
5
Personal utility
2
Validation
6
The SMM functions
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Q. How companies increase consumer trust in using social commerce?
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Value Creation and the Marketing Process
Step 1
Step 2
Step 3
Step 4
Step 5
Marketing Definition: The process by which companies engage customers, build strong relationships, and create value in order to capture value from customers in return.
‹#›
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Learning Objectives
Describe the factors that influence online consumer behavior.
Understand the decision-making process of consumer online shopping & other related theories.
Explain how consumer behavior can be analyzed for creating personalized services.
Describe online word of mouth and its benefits.
Define online engagement and describe its influence on social trust.
Describe social psychology theories relevant to social commerce, social network analysis, the social graph & social capital.
Social Psychology Theory
Social psychology - “the study of the manner in which the personality, attitudes, motivations and behavior of the individual influence and are influenced by social groups.” (Merriam-Webster dictionary)
Social Commerce Psychology – “harnesses the human capacity for social learning , i.e. learning from the knowledge and experience of others we know and/or trust &… profit from social situation” (Marsden 2009 ).
Video: “Social Psychology: Milgram study on obedience to authority
https :// www.youtube.com/watch?v=yr5cjyokVUs
Social Psychology Theory Applied
The Universal Heuristics of Shopping (Robert Cialdini , 2008), Shoppers use thin sliced information:
social proof (follow the crowd)
authority (follow the authority)
scarcity (scarce products must be good)
liking (follow those you like)
Consistency & commitment after agreeing e.g. StickK
reciprocity (repay favors e.g. get RM10 coupon).
https:// www.youtube.com/watch?v=0qelyk_mWBs
Social Network Theory (1950s)
Social network – a structure that describe social relationships & flows of info & activities among participants in a community.
Social network analysis (SNA) - measuring of both relationships and information flows among groups, organizations, and other connected.
Social Network Theory and Analysis
Figure 3.5 A Simple Social Network Structure
(There are only three connections between You and Me)
Social Graphs (using SN Analysis software)
The mapping of relationships and information flows among people, groups, organizations, computers, and other information- or knowledge-processing entities in SN. The nodes in the network are the people and groups, whereas the links show relationships or flows between the nodes. Social graphs provide both visual and mathematical analyses of relationships.
What is the use?
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Social Capital
Help to find friends.
Finding influential bloggers. Knowing the size of an interest. Determine the importance of a person and a topic.
This is use to find associate bloggers for their product or services and to get support to advertise their products by clicking the like button or to comment about their products and services.
Find the best person for WOM advertisement
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Twitter social graph. Colors represent different communities.
Which are the most influential persons? Who can help to link to other community?
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The Benefits of Social Network Analysis
Identify the individuals, teams, and subgroups who play the influencers roles in social networks.
Leverage peer support e.g. crowdsourcing
Market insight on an individual or group (Big Social Data)
Help to refine SC strategy e.g. targeted segment
Find information flow problems and identify those who are not getting information properly as a result of the problems (collaborative problem solving)
social capital
social networks have value; just as physical capital or human capital can increase productivity (both individual and collective), so do social contacts affect the productivity of individuals and groups. Why?
Metcalfe Law -Value of Network proportionate to N square
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Digital democracy – add value by recommendations, rating, creating content, products, crowdsourcing, collective intelligent, network effect – more users, more value an application. E.g. Dota2, Skype.
All of these are useful for Social Media Marketing e.g WOM, getting premium users to encourage free users to convert. E.g. Skype – group conference.
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An architecture of participation and digital democracy encourages users to add value to the application as they use it.
The ability to tap into the collective intelligence of users. Example?
Data is made available in new or never-intended ways. Why?
Relies on user-generated and user-controlled content and data. How are they useful to companies?
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SOCIAL CAPITAL - CHARACTERISTICS OF SM
Crowdsourcing – Wikipedia, DellIdeaStorm, Living Social,
Users are excited to share their personal data.
Data useful for profiling, targeted advertisement, developing new products, better service to customers, etc.
Provide reviews and ratings. Add application e.g. google map (marshup). Create products/services (virtual goods in social games); Provide Intelligence; Bring Crowd (WOM advertisement); More users more value (e.g. Skype, Dota 2); Pinterest – add value by adding pins related to an interest; marketer can profile consumer better.
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