Importance of Social Media and Its Impact on Buying Behaviour

2659 words (11 pages) Business Assignment

24th Sep 2020 Business Assignment Reference this

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Social media or technology has increased exponentially in the past decades, which has changed many aspects of life including the way people shop. Years ago, people shopped in physical locations and would normally buy from the dealer at an agreed price. With the introduction of television and internet, the information available to consumers increased and they were able to make much better and informed decisions. The market got even better with the advent of social media platforms that provided ease to buyers and sellers to interact in the market.

From our initial research of the topic and from data collected from the Australian Post, we have found that the state of Victoria has seen the highest jump in online sales. However, since there is limited data to prove the relevance of social media, we are intrigued to put out minds into knowing how social media websites such as Facebook and Instagram have changed the way people shop now. We understand that we may not be able to research on the whole Australian population and that we may, due to time and cost constraints, have to limit ourselves to few interviews and surveys but it is a challenge we would love to take!

The research question in our minds

The above literature has been perceived that social media advertising influences consumers in the market but also the sellers who are seeking advertisements on social media websites.

In our assessment of existing literature, the first question that came to our minds is whether the advertisements on social media are a reliable means of communication?

Are consumers willing to rely on the information provided on these websites considering such advertising is not subject to any laws or regulations?

Are products advertised on social media websites reliable and as reliable as those sold in brick and mortar models?

Is it sufficient to research on social media websites before buying a product?

Finding a solution to the problem  

In reference to the issue statement, the key inquiry for the accompanying research is determining how hard or easy it is for buyers to affect the buying pattern of online consumers.

Alongside the key inquiry there are greater statements that are referenced underneath to be covered in this exploration are:

-          To gain understanding of consumer’s buying behaviour in brick and mortar and online model

-          To understand the how consumers and sellers interact in the online market and especially the social media platform

-          To understand the relative ease of advertising on social media as opposed to other means of communication such as radio commercial

-          To understand whether online shopping on social media is the future of buying in Australia

-          To keep a curious mind and find more questions along the way

Review of existing Literature

Social media and e-commerce system are integrated with each other as a result of a phenomenon called social commerce (Kwahk and Kim, 2017). Social commerce will allow users to offer products or services’ information as well as sharing their experience and feedbacks on the products and services that affect other members’ decision-making process on buying those products and services (Kim and Park, 2013)

A recent study by Fulller (2009) concluded the technological development of user-generated networking sites has created a new way of communication which make it easier to connect and interact between other people. Social media enables people to generate content as well as leave their reviews and comments on some certain products and services (Hajli, 2013). According to Chen (2011), there are many social platforms such as Wikipedia or Amazon which have facilitated its users in creating values and sharing information.

According to a consumer survey on social media in 2014, 71% of consumers’ purchase decisions are made based on social media (Invesp, 2014). This is because social media users are perceived to be more trustworthy and reliable in comparison with individuals (Chu and Kim 2011).

A number of authors have recognized the role of trust as one of the main attributes when it comes to the impacts of social media on consumers’ behaviours. According to Bashar, et al., 2012), people have a tendency of trusting reviews and comments generated from social media than being advertised by a company. Particularly, young consumers are more likely to be affected by friends and consumers and what information they provide on social media (Lu, et al., 2010).

One method employed by Hajli (2013) is to examine the role of social media on trust and intention to buy. His research suggested that trust has a significant impact on consumers’ intention to buy and social media can have an impact on trust in e-commerce.

As a result, those service companies will pay more attention to effects of social media on buyer behaviours. In terms of social media’s criteria, a research result of Kwahk and Kim (2017) demonstrated that online users who keep enhancing the relationships among members, consequently fostering trust and customer engagement behaviour will provide a great support on social commerce. Given that frequent and beneficial interaction ties among members are crucial in encouraging buyers on making their purchase decisions through marketing strategies on social media.

Another research indicated that some products online or in-store will be bought by 4 in 10 social media users after these people share them on Twitter, Facebook, or Pinterest (Invesp, 2014). By doing this way, social media have had a great impact on buying decisions. For an example of service industries such as hospitality and films industry, online comments and reviews through social media greatly effect on customers’ decision making for those services. Given a great reliance on social media, consumers in those service industries will have some ideas about evaluating the performance and quality of certain services. For an example, Hudson and Thal (2013) showed evidences on how social media has a significant impact on the customers’ decision-making process for the travel industry.

Our Survey

In our opinion, the best way to analyse existing literature is to get information straight from the horse’s mouth. In reviewing existing literature, we will be conducting an extensive survey of people across Melbourne metropolitan area to determine the whether our review of current theories is consistent with the reality.

To make our analysis as far reaching as possible, we incorporated people from different age groups. For the sake of analysis, we divided the Melbourne Metropolitan area into four major zones, namely North, South East and West. Approximately 6 people were picked from each zone to provide a representative sample of the population. We are assuming that Melbourne Metropolitan area is quintessential of the entire population of Australia since, given the limitations of our resources, we cannot cover the whole nation. The questionnaires were e-mailed to a few people and a lot of the respondents were just happy to provide their answers orally. A copy of the questionnaire has been attached to the appendix.

We noted that more than 80% of our respondents had quick access to online media platforms. They had access to a mobile equipment( or computer) with an active internet connection that provides real time reviews. So, if Apple launched the iPhone X Pro on 10 September in the US, Australians would have an in-depth review of the product at the click of button. Also, the fact that people have quick access to internet increases reliability of our research since it proves that a lot of people follow the trend.

To our surprise, a lot of buyers are aware of what they read online and what they trust. Our survey indicated that more than 90% people believe social media isn’t a spot that can be blindly trusted. From our qualitative analysis of consumer responses, we did find out a lot of apprehensions about relying on online reviews. Consumers know how to evaluate such data critically. For instance, before believing social media, they ask questions such as, who is writing the reviews? Has the person writing the review actually used the product himself? If a product has great following on social media, are the followers genuine or have those followers been fraudulently created by companies.

Adding to our surprise was the fact that despite doubting the quality of the reviews people surveyed responded that they in almost all situations searched for the product online for reviews. So regardless of whether or not they believe the reviews, they do find it a great way of preliminary assessment of product review. So, if a salesperson reaffirms that the product is reliable it adds to the level of trust the consumer has established by reading the reviews online.

Although we understand that surveys are a great way of understanding the truth behind theories, yet it is subject to a lot of bias and errors. For instance, much of the people we interviewed were those who were situated in or around Melbourne. Given that Victoria has the greatest number of online shoppers, our analysis may be skewed and may not give a complete picture of the Australia as a nation. Due to resource constraints we are unable to reach a wider consumer ways however further theoretical analysis can provide us the link. Moreover, much the existing research on around effects of social media on buying behaviour focusses on consumer trust. It does not bring the perspective from ‘businesses’ that put reviews for products on social media websites knowing that a lot of business now choose to use this ‘free’ form of advertising rather that spending millions on TV or radio commercials which reach out to relatively far a smaller number of people.

From our analysis of the existing literature and our survey of 25 people, we probably have a better understanding of how many questions we are yet to uncover. Humans are knitted with technology so much so that they don’t need human companionship. Such reliance positions mankind to a lot of advantages and disadvantage- our research is just a small effort to see how the online world affects their buying pattern, which is just an iota of the whole technological impact. Just as there is no end to the universe, our analysis has revealed that there would virtually be no end to analysing social media impacts on buying patterns.

Appendix

Questionnaire

  1. Please tell us your name?
  1. What is the name of your suburb?
  1. Please tell us your age and sex? (if comfortable)
  1. Please rate the following responses for to our questions:
  1. You would always buy a product that has great reviews on social media

Strongly Agree

 

Somewhat agree

 

Neither Agree nor disagree

 

Somewhat disagree

 

Strongly disagree

  1. Customer’s word of mouth is incredibly important, I will believe anything that is said online since they have definitely used the product and won’t lie

Strongly Agree

 

Somewhat agree

 

Neither Agree nor disagree

 

Somewhat disagree

 

Strongly disagree

  1. There are very few forms of reliable social media or those mediums don’t have much reach to people buying goods in a market

Strongly Agree

 

Somewhat agree

 

Neither Agree nor disagree

 

Somewhat disagree

 

Strongly disagree

  1. I would always search the product on social media before buying it in store

Strongly Agree

 

Somewhat agree

 

Neither Agree nor disagree

 

Somewhat disagree

 

Strongly disagree

  1. A product’s best price is revealed on social media

Strongly Agree

 

Somewhat agree

 

Neither Agree nor disagree

 

Somewhat disagree

 

Strongly disagree

  1. Buying online through social media such as Facebook and Instagram is the same as buying in store

Strongly Agree

 

Somewhat agree

 

Neither Agree nor disagree

 

Somewhat disagree

 

Strongly disagree

  1. I have ready access to social media and can gain access to any product reviews at the click of button

Strongly Agree

 

Somewhat agree

 

Neither Agree nor disagree

 

Somewhat disagree

 

Strongly disagree

 

References

  • Chu S.C. & Kim Y.(2011) Determinants of consumer engagement in electronic word-of-mouth in social networking sites: International Journal Advertisement, 30, 1, 47–75.
  • Hudson, S. & Thal, K. (2013) The impact of social media on the consumer decision process: implications for tourism marketing, Journal Tourist and Marketing, 30, 1, 156–160.
  • Invesp (2014). How social media influences purchase decisions - statistics and trends. (Retrieved from http://www.invespcro.com/blog/social-media-influences-purchase-decisions/accessed on 01 September 2019)
  • Wang, C. & Zhang, P (2012) The evolution of social commerce: an examination from the people, business, technology, and information perspective, Communications of the Association for Information Systems, 31, 5, 105–127.
  • Zhou, Z., Fang, Y., Vogel, DR., Jin, X.L., Zhang, X (2012) Attracted to or locked in? Predicting continuance intention in social virtual world services. Journal of Management Information Systems, 29, 1, 273–305.
  • Chen, J., Xu, H. & Whinston, A. B (2011) Moderated online communities and quality of user-generated content, Journal of Management Information Systems, 28(2), 237-268.
  • Fuller, J., Muhlbacher, H., Matzler, K. & Jawecki, G (2009) Consumer empowerment through internet-based co-creation, Journal of Management Information Systems, 26(3), 71-102.
  • Hajli, M.N (2013) A study of the impact of social media on consumers, International Journal of Market Research, 56, 3, 387 – 404.
  • Bashar, A., Ahmad, I. & Wasiq, M (2012) Effectiveness of Social Media as a Marketing Tool: An Empirical Study, International Journal of Marketing, Financial Services & Management Research, 1(11), p. 93.

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