When it comes to branding, social media is giving small businesses the chance to compete with the big guys, new research finds.
The rise in social media's popularity has changed the way consumers learn about businesses and products, by giving them the opportunity to discover more from one another, according to a study published recently in the journal Business Horizons.
In the past, large businesses were able to flex their branding muscle by pouring money into advertising designed to increase customer awareness and build a positive reputation. Today, however, social media has increased consumers' power, allowing them to interact with one another and skip the established marketing channels, thus diminishing large businesses' stronghold on the market.
"Social media has the potential to upend traditional branding," the study's authors wrote.
The researchers said that reviews on e-commerce sites like Amazon are now a major tool for discovering new products, and conversations on social media sites like Twitter and Facebook allow businesses, regardless of size, to reach a much larger audience. [Social Media for Business: 2015 Marketer’s Guide ]
"Consumers now rely more on information from their peers; this limits the power of advertising, making it difficult for companies to justify large upfront investments in it," the study's authors wrote. "Social media also makes buyers more demanding and discriminating; power has clearly shifted in their favor."
The study's authors believe that, with more power in customers' hands, bigger corporations risk losing control of their branding efforts and face increased competition from smaller businesses that are capitalizing on online word-of-mouth and low-cost social media campaigns to build awareness.
In order for marketers, both big and small, to compete in this new landscape, it's critical they adopt a mobile strategy, the study's authors said.
"In a world where there are more mobile phones than toothbrushes, consumers are likely to leverage their power in social media to be more demanding of marketers," the study's authors wrote. "Social media can strengthen or kill a brand; the key to success lies in how quickly companies can change their mind-set and adopt new strategies in response to consumer preferences."
The study was authored by Rajneesh Suri, a professor at Drexel University; Chiranjeev Kohli, a professor at California State University, Fullerton; and Anuj Kapoor, a graduate assistant at the University of Utah.