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Grow Your Business Social Media

Social Media Are Changing the Rules for Marketing

Because of social media, consumers now expect to have a more active role in determining and marketing their purchases, which will force business managers to change their strategies, according to a new report.

Websites such as Facebook, Twitter, YouTube and Wikipedia that are based on user-generated content allow customers not only to buy and sell goods among themselves but to instantly rate and comment on those goods. As a result, according to the Journal of Service Research report, market dynamics are increasingly governed by real-time information exchange, and it is up to businesses to adjust.

“Recommendation systems enable consumers to identify new niche products which they would have overlooked otherwise. Consumers sell used products professionally. There are lots of major changes for which companies have to find adequate answers,” Thorsten Hennig-Thurau, one of the report's authors, told BusinessNewsDaily.

Contributing to the shift is the overwhelming presence of mobile technologies like smart phones and laptops, giving customers the power to send and receive this real-time information from anywhere at any time.

Hennig-Thurau, a professor of marketing at the University of Muenster in Germany, said that the matter of communicating brand images and the quality of products and service used to be a “straight line” from the seller to the buyer. Now it is more of a “zigzagging pathway” resembling a pinball game.

Marketers can still steer the ball and initiate activities, but there is interference by consumers and lots of chaos, making predictions and marketing much more demanding,” he said.

Hennig-Thurau recommends that business managers try to understand this fast-changing, unpredictable era of marketing and adapt their customer -relationship strategies accordingly.  In the report he and his colleagues say that in order to take advantage of the opportunities and avoid the dangers of the media-driven system, businesses must understand why consumers are attracted to new media and how the media affect customers’ behaviors and attitudes.

For example, purchasing decisions are now heavily influenced by electronic word-of-mouth, or EWOM, and reviews by fellow customers on sites like Amazon. The influence of  EWOM is one of the things companies should address and understand about the new media, said Katherine Lemon, the journal’s editor and a professor of marketing at Boston College.

Besides monitoring and measuring EWOM and combating negative EWOM, businesses will have to understand the power of active participation and authentic referral by firms in online communities, and of consumer search (becoming aware of how easily consumer can compare prices, and making it easier for consumers to find you).

“We… are still dealing with understanding [the system’s] functionality and rules,” Hennig-Thurau said. “Developing concrete strategies comes only as the next steps — companies will have to rely on heuristics instead of ‘optimality conditions.’”

Nicole Fallon
Nicole Fallon

Nicole Fallon received her Bachelor's degree in Media, Culture and Communication from New York University. She began freelancing for Business News Daily in 2010 and joined the team as a staff writer three years later. She currently serves as the assistant editor. Reach her by email, or follow her on Twitter.