Social Media Effects on Market Share Improvement in the Service Industry
INTRODUCTION
BACKGROUND TO THE STUDY
“Marketing and marketing communications mix is changing. New insights, new tools, new opportunities and new challenges are emerging as the 21st century progresses. The world’s 61/4 billion consumers and almost 400 million business customers are becoming increasingly accessible” (Smith and Taylor, 2004, p 4) which makes them ready targets for new global competitors.
“Marketing has moved from ‘customer acquisition’ (winning new customers) through ‘customer retention’ (keeping customers for life) through customer selection (dumping unprofitable customers while selectively seeking and keeping the more profitable ones)” (Smith and Taylor 2004, pg 4) towards ‘customer relationship’ (interacting with customers, gathering and analysing data on them and forecasting customer trends and/or behaviours to enhance customer experience). This fact is further buttressed by Arens, Weigold and Arens, (2008, p. 307), in this statement “the key to building brand equity in the twenty-first century is the development of interdependent, mutually satisfying relationships with customers and other stakeholders.” Today’s marketers must therefore embrace continual change and the opportunities and challenges that come with marketing.
One of the areas of marketing in which this continual change is currently being experienced is in the area of the marketing communications mix and brand managers need to have “a basic understanding of the communication tools available to them and how they can best be used in the overall communication mix” (Arens, Weigold and Arens, 2008, p 307). One of the new communication tools available to brands now is social media marketing which is a subset of digital marketing.
Social media, although a relatively recent phenomenon, is becoming an increasingly important part of any business’ marketing and client base development platform. Social media provides a unique opportunity for brands to foster their relationships with customers but “the dynamic, ubiquitous, and often real-time interaction enabled by social media significantly changes the landscape for brand management” (Gensler, Völckner, Liu-Thompkins and Wiertz, p. 1). Brands on the other hand are highly valuable assets for businesses and brand managers aim to “create strong brands with a rich and clear knowledge structure in consumer memory by authoring compelling brand stories” (Keller 1993; Srivastava, Shervani, and Fahey 1998). However, today, “a brand is no longer what we tell the consumer it is – it is what consumers tell each other it is” (Cook, 2012).
“Consumer-generated brand stories told through social media are much more impactful than stories spread through traditional channels because they utilize social networks, are digital, visible, ubiquitous, available in real-time, and dynamic” (Hennig-Thurau et al. 2010 p. 12). This has led to the blend of social media and customer relationship management (CRM) with the end result being “Social CRM” a means of enabling brands listen, engage and successfully coordinate or integrate consumer-generated and firm-generated brand stories on social media into their communication mix to create compelling brand stories that strengthen customer relationship and move them further into the sales funnel.
Of all the marketing promotional tools, digital marketing has experienced the most changes within a short period of time with more and more marketers embracing the many opportunities it presents. Digital marketing is simply marketing online: “identifying, anticipating and satisfying customers’ needs online” (Smith and Taylor 2004, p. 620). This is split into several areas such as Search Engine Marketing, Search Engine Optimization, social media marketing, mobile media marketing, interactive out of home (OOH) as well as digital TV and radio with social media marketing being one of the most important and ubiquitous types.
Social media marketing can be said to be a hybrid element of the marketing promotional mix. This is so because in a traditional sense it enables brands to talk to their customers, while in a non-traditional sense it enables customers to talk directly to one another and to the brand in real time. For instance, it is now possible for one customer to communicate with hundreds or even thousands of other people about products/services and the companies that provide them. This stands in contrast to the traditional marketing communications paradigm where communication is usually one-sided.
When companies join the social channels, consumers can interact with them and they in turn can communicate with customers and potential customers directly. This interaction feels more personal to users than traditional methods of marketing and can instil a feeling of loyalty. Social media also isn’t just valuable in and of itself; it is also valuable as a source of analytics and data which can hint at what types of content will work as paid media. Brands therefore use social media on the whole to connect with customers, stimulate and promote positive brand-related stories as well as listen to and influence consumer-generated brand stories while customers use social media to discover, research, and share information about brands and products or services.
Also, the fact that social media platforms such as Facebook, Twitter, Google+, Instagram, etc. enable brands to reach a much wider audience than some traditional media alone like TV, radio, print etc. at a fraction of the cost, (as most social networking sites can be used at no cost) has made it easier for brands to accept it. Thus, now, instead of shelling out millions of Naira for a 30 second ad slot on TV or radio, brands can now generate buzz simply by creating viral content and encouraging engagement.
Market share according to the Merriam Webster Dictionary 2013 is defined as “the percentage of the market for a product or service that a company supplies”. It can therefore be implied that market share helps determine how well a business is performing. “Past data analyses have consistently demonstrated that most businesses with high market share enjoy above-average profit margins and rates of return on investment while most businesses with smaller market share have below-average margins and returns on investment.” (Nielsen 2013). One of the first research suggesting the relationship between market share and profitability came from Profit Impact of Marketing Strategist (PIMS) program sponsored by the Strategic Planning Institute in Cambridge Massachusetts and was first published in the mid-1970s.
According to (Werner and Kumar, 2003, p. 82), the financial advantage of a strong market position thus makes it a common strategic marketing goal in most organizations. Usually, only market leaders are satisfied to just hold on to their existing marketing shares while the number 2, 3 and below competitors are aggressively trying to catch up with the leaders.
STATEMENT OF THE PROBLEM
With the advent of social media and more than half of the world’s population registered with different social media platforms “brand managers have lost their pivotal role as authors of their brands’ stories” (Gensler et al, 2013, p 2). Instead, consumers who are now empowered to share their brand stories easily and widely through social networks have gained a more important voice that brand managers can no longer afford to ignore – even for firms that decide not to actively participate in social media themselves. As a result of this, the concept of Social Media is now top of the agenda for many marketing executives as they try to identify ways in which they can leverage their brands on social media platforms. Social media has become an essential part of online marketing strategy due to its cost effectiveness, ability to reach targeted audiences quickly and generate more leads and sales. A research by Forbes (2014) also reveals that 94% of corporate are using social media and 85% said it has given their business more exposure.
This has culminated in a rapid adoption and creation of social media pages on the major social media platforms by a growing number of brands both global and local and Nigeria has not been left behind. This desire to become involved in social media is understandable and the growth in social networks has been phenomenal. But in order to make the best use of this medium it is imperative that marketers not only understand what social media is, they also need to know what role it can play in their marketing communication mix, how the use of social media marketing can affect their brand’s awareness, relationship with customers, product purchase and consequently market share.
RESEARCH OBJECTIVES
It is hoped that this research work will achieve the objectives below:
· To evaluate the factors that influences emerging popularity of social media in the Nigerian service (insurance) industry.
· To identify the social media platforms commonly used by brands in the service industry in Nigeria and its effects on market share improvement.
· To examine the role of social media marketing in a company’s marketing communications mix.
- To discuss the impact of social media marketing on brand awareness of insurance companies.
· To evaluate the role of social media on consumers’ effective demand in the insurance industry.
- To identify the ways in which social media marketing can have an impact on the market share of an insurance company.
Major terms that will be examined in this study are marketing, traditional marketing or media, digital marketing, social media, social media marketing, social media platforms like Facebook, Twitter, Google+, Instagram and Blog, customer relationship management, brand loyalty, service industry, insurance and market share.
RESEARCH QUESTIONS
This research will be hinged on these questions:
· What are the factors responsible for the adoption of social media marketing by insurance companies in Nigeria?
- What role does social media marketing play in the marketing communications mix of an insurance company?
- How has the use of social media impacted the awareness of these selected insurance firms?
- Has the adoption of social media marketing by these firms resulted in effective demand for their products?
- Can the use of social media help improve the market share of the select insurance companies?
HYPOTHESIS
This research work will be based on the following hypotheses:
H01 – Social media has no effect on the awareness of a company in the service industry.
H02 – Social media marketing does not lead to effective demand for a product.
H03 – The use of social media cannot improve the market share of a company in the service industry.