Managing Social Media and Consumerism: The Grapevine Effect in Competitive Markets

274 Pages·2013·1.197 MB·English

by  Rajagopal (auth.)

Managing Social Media and Consumerism
Also by Rajagopal
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Managing Social Media and
Consumerism
The Grapevine Effect in Competitive
Markets
Rajagopal
Professor, EGADE Business School, ITESM, Mexico City
© Rajagopal 2013
Foreword © Jane Fae 2013
Softcover reprint of the hardcover 1st edition 2013978-1-137-28191-3
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First published 2013 by
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DOI 10.1057/9781137281920
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Contents
List of Tables and Figures vi
Foreword vii
Preface xi
Acknowledgments xvii
About the Author xviii
Part I Evolution of Business Communication
1 Shifts in Marketing Communication 3
2 Market Communication and Grapevine 24
3 Strategic Planning with Social Media 45
Part II Analysis of Social Media Effects
4 Social Marketing 69
5 Digital Communities 89
6 Social Media and Consumer Insight 109
7 Social Media Metrics 132
8 Technology and Media Effectiveness 152
Part III The Synthesis
9 The Human Factors 173
10 Communication Conflicts 195
11 Globalization and Consumer Behavior 217
Notes 230
References 232
Index 257
v
List of Tables and Figures
Tables
6.1 Some principal brand variables affecting Big Five
personality traits model 124
9.1 Social information analysis approach in marketing
strategy development process 185
Figures
1.1 Chronology of growth in business communication 7
1.2 Cognitive factors driving consumer communication 11
5.1 Harvesting e- commerce platforms 99
6.1 Corporate social business model 110
6.2 Social media intelligence cycle 128
7.1 Effectiveness of social communication 137
7.2 Social media metrics 151
9.1 S ocial information analysis and strategy development
process 191
10.1 Value orchestration in social media communication
process 213
vi
Foreword
It’s a while now since I wrote a paper on the Loyalty Ladder. That’s one of
those pieces of marketing wisdom that one learns, alongside the four P’s,
or Porter’s five forces, that seems to provide insight to what is otherwise a
highly mysterious process. Although, the insight is actually pretty simple as
people get to know you and your product better, they will become hopefully
progressively more enthusiastic about both, until they are almost literally
dancing in the streets while extolling your virtues to all their friends.
But still, it struck me, this view of the market space was incomplete.
Because there are people out there who don’t much like your brand.
They won’t buy it. They certainly won’t praise it to their friends. Indeed,
if asked for an opinion, the chances are that they will recommend
another. And beyond these, it seemed, were people who were even
more incensed by particular products. Not only would they not buy,
they would go to great lengths to dissuade others from buying as well.
In other words, it seemed to me if the Loyalty Ladder analogy was to
continue, it needed at least two further rungs—Hostile and Enemy—and
these rungs should be situated below ground level. Or to put it another
way, the Ladder is actually set up in a small hole in the ground. Evidence
for these categories comes from disparate sources. Hostiles appear to be
the equivalent of Detractors, as defined using the Net Promoter tech-
nique of evaluating customer contribution to bottom- line profit. Their
value, not surprisingly, is negative.
Enemies are harder to define, but their reach and impact has been sig-
nificantly boosted by the Internet and social media. Examples abound
of major corporations being forced to back off from controversial new
products, charges, or even attitudes, in the case of the press, following
public outcry that has not simply been given voice, but seriously ampli-
fied online. In the same week that I write this Foreword, I am aware of a
campaign group just started that is trying to put pressure on a national
newspaper by boycotting that paper’s advertisers.
Social media, it is clear, is not always your friend.
Meanwhile, also delving back into my own past, I remember how
Direct Marketing tried to differentiate itself from “traditional,” “broad-
cast” marketing methods. Direct Marketing meant that companies
could “speak directly/personally” to customers. It meant that a dialog
could take place. Of course, it was nothing of the sort.
vii
viii Foreword
The best that most direct marketing achieved was a centrally directed
conversation, in which a large corporate culture attempted to promote
its products to customers and potential customers, with the m essage ever
so slightly tailored according to one or two demographic or l ifestyle fac-
tors. Over time, and with the advent of database marketing, the number
of available factors grew but the conversations did not become that
much more intelligent, since organizations could only handle a small
number of factors at any one time.
And if they tried—perhaps by creating some sort of customer relation-
ship department—the ability of an organization to engage was always
going to be strictly limited. There simply was not the margin in most
products to hold conversations of any great length.
This is why the arrival of social media and the conversations that
have begun through channels such as Twitter and Facebook represent
such a shift change in the way that companies need to deal with their
customers. Because here, at last, is genuine direct marketing, the oppor-
tunity for t wo- way conversation every day of the week, every hour and
minute of every day with customers.
And, of course, it is unsupportable at the level that social media
themselves work. No company with any major presence has the budget
or resources to interact at the level those customers would, if given the
chance, nor is this selling or marketing in the classical sense. Rather,
social media work at every level, now circulating specific product
messages, now highlighting much more nuanced brand value issues
in ways and in forums that are at most partly under the control of the
company concerned.
Create your own brand forum, and expect it to be hijacked should
customers dissent from your corporate message. Control that forum and
look out for the backlash, with either customers resenting the degree
of control necessary to maintain a civilized conversation or just voting
with their feet and setting up alternative spaces—Facebook pages,
Twitter hash tags, and the like.
Notorious examples of big brand names that have come a cropper
through social media (and also, in the end, used social media to some
extent to claw back the damage done), include Toyota and BP, both in
2010. What marketing analysts really woke up to, after those histories,
was that social media mattered and if they ran against you, the result
could be not just reputational disaster, but major corporate damage. In
both cases, billions wiped off share values.
This is where Professor Rajagopal’s book comes into its own. Social
media has only truly begun to have an impact in the last few years, but
Foreword ix
already the potential impact is clear for all to see. Kudos to Rajagopal
for portraying social media in his book as a growing psychodynamic
and arguing the grapevine effect as an integrated constituent of modern
marketing- mix. Well on its way is a future in which conversation mat-
ters and in which conversations about a company’s products and brand
are no longer under the control, in any sense, of the marketing depart-
ments historically responsible for information flow.
These conversations can be shaped for positive purposes and can also
inflict great damage. Customers and, more importantly, non- customers
can turn on a dime like a flock of starlings swooping and diving this
way and that. They are capricious, unreasonable and, thanks to social
media, increasingly empowered.
This is what makes the appearance of this book so important. It is not,
and cannot be, the final word on social media, because social media are
still in their infancy. Still, it begins to map out a course for companies
wishing to use them and, too, for companies who find themselves on
the receiving end. It is a start, not everything it puts forward will work
for you, or forever. Because the Internet is changing rapidly and it is not
just the social media brands that will change, but their functionality
and relationship to users as well.
But for now, this book provides good valuable insight, both on what
is out there and, more importantly, how you can begin to measure
social media interactions and shape them to your benefit.
Jane Fae
Independent Academic
Managing Editor of the Journal of Database Marketing (2006–2012)
Founding Editor of the Journal of Targeting and Marketing Analysis
Lincolnshire, UK
March 27, 2013
Jane Fae spent a large part of her life working in marketing, first as direct marketer, later in
Data Analysis and Database Marketing. She established the Marketing Analysis function at
Brann Direct, then one of the UK’s leading Direct Marketing agencies, in 1988. At the time,
this was one of the first such initiatives inside an agency and it helped cement Brann’s
leading position in the provision of Database Marketing Services. She was later Database
Director for One- to- One Marketing (in Edinburgh) and later still provided analytical services
for Kitcatt Nohr, another a ward- winning direct marketing agency. In between, she set up
the database marketing function with Commercial Union Insurance—before moving back
to consultancy, working with a series of major corporate enterprises, helping them to set up
Database and Analytic Support. At the same time, She has focused on ideas and the develop-
ment of ideas. She set up and edited the Journal of Targeting and Marketing Analysis, which
ran for nearly 20 years before it was eventually merged with a sister journal by Macmillan