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Business Benefits of Using Social Media

Paper Type: Free Assignment Study Level: University / Undergraduate
Wordcount: 2723 words Published: 23rd Oct 2020

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1. Introduction

According to the oxford dictionary social media are websites and software programs used for social networking. Social media are an interactive computer medium for users to interact with one another online, users can create, and view content created by others. Social media can be considered a lifestyle or a career by some people. Facebook, YouTube and WhatsApp are the most popular applications among them. The emergence of social media forces business to join social media. Businesses have been adopting social media to connect with the mass. This literature review will explore the benefits generated from using social media for companies. The review will first ask what are the ten business values? Then the top three business benefits will then be selected. To identify the top three business values, a framework by Trkman and Trkman(2018) will be used to decide.  The body will first list the ten business values from companies using social media, then a selection of the top three business benefits will be conducted. 

2. Business Benefits

Several studies have indicated there are indeed business benefits from adopting social media. What are the benefits? Is a question to be asked. To indicate what is beneficial for businesses for using social media, there must be a gain of some kind.  

2.1 Promotion

It is common now for organizations to use social media for promoting their product, brand or service. For example, Alawan, Rana, Dwivedi and Algharabat (2017) found that ‘…social media are largely considered by modern business as promising platforms to conduct the promotional activities as to effectively communicate with the targeted customers.’  The article shows that businesses are adopting social media to promote themselves. However, the research by these authors are only conducting research in the marketing context while ignoring other factors such as education, politics and culture. Charoensukmongkol and Sasatanun (2017) can back up their findings by showing that social media are being used by ‘…companies to promote their products and services…’ The research is however, only conducted in Bangkok, therefore; the sample size is rather small. Despite the limitations from the two articles, the two articles confirm that social media is important for promotional activities and there are no disagreements among the authors. It can be concluded that the popular reason for businesses to use social media is for promotional purposes. Any promotion is good. Promotion is without doubt a business benefit from using social media. 

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2.2 Cost effectiveness

Advertising and brand building have a cost, most social media is free to sign up and use. Odoom, Dorson and Acheampong (2017) found that ‘while interactivity was a higher motivation among SMEs offering services, cost effectiveness on the other hand was a higher motivation among SMEs who are into physical goods.’ The study by these Ghanaians evaluates the cost effectiveness for small and medium sized enterprises using social media. They concluded that there is benefit, cost effectiveness wise for small and medium sized enterprises to use social media. Marketing is expensive through traditional media; it is useful to save costs by using social media platforms. While the research does enforce the fact that it is cost effective to use social media, it is important to note that the research only explored the sub-Saharan Africa setting and SMEs, meaning large enterprises and other countries are thoroughly researched for cost effectiveness; another gap within the research is that the research only make use of Facebook and Twitter. Although, while the limitations from the Ghanaians’ study are there, this does not mean that large enterprises and businesses from other countries do not also benefit from the cost effectiveness from using social media; in addition; while twitter and Facebook are the only two social media platforms researched, they both have a large active userbase with Facebook having a billion users and twitter with 320 million users. It is safe to assume that using social media is cost effective for most, if not all, businesses. The cost effectiveness benefits should be a good motivator for businesses to use social media.

2.3 Increase Sales

Customer engagement is important for customer loyalty. He and Zha’s(2015) findings reported that ‘Small businesses should engage social media users and keep them coming back. User engagement is crucial not only to getting more Facebook ‘‘likes’’ but also to converting those ‘‘likes’’ into sales and revenues.’ He finds that small businesses have been using social media as a mean to increase sales and that there is a positive effect on sales revenue growth after continuous use of Facebook. He and Zha researched 27 small businesses in a mid-sized US city and only Facebook which is only one of the many social media platforms on the internet. It can be argued that the sample size is rather small and geographically limited. However, the research from Charoensukmongkol and Sasatanun (2017) can support He and Zha’s findings since their research was based in Thailand, although their research was also limited to small sized businesses; furthermore, findings from Tajvidi and Karami(2017) also support He and Zha’s claims, but their research is limited to hotels in the UK only. However, despite the gaps within the three articles, these articles proved that businesses do benefit from an increase in sales when it comes to using social media. Increase sales is a good reason to start using social media.

2.4 Customer Engagement

Customer engagement through social media is an effective method. Remier, Leyer and Anisimova (2018) found that companies have been fostering customer engagement to build brand loyalty. Companies engages their customers through social media by interacting with their customers and try to create customer involvement. While this is the case, Remier, Leyer and Anisimova’s research is restricted to 20 companies and shown that customer involvement can be low depending on the product or service provided by the company. The link between customer engagement and social media use by the companies is also noticeable in Kleinaltenkamp, Karpen, Plewa, Jaakkola and Conduit (2018) study. This proves that customer engagement can be built through using social media. Hence, customer engagement should be a main benefit considered when adopting social media.

2.5 Brand Loyalty

Using social media is a great method for businesses to build brand loyalty. Customer engagement can be converted into brand loyalty according to Remier, Leyer and Anisimova, it is important to note that the research also showed that is limited to 20 companies. However, Tajvidi and Karami also found that customer engagement through social media increases brand loyalty. The study also shows that brand-hosted social media contributes to engagement with consumers helps create brand loyalty. The research is restricted to hotels and the UK, but this does not mean there is no connection between brand loyalty and social media. Almost all articles demonstrated that there is a connection between creating brand loyalty and social media is evident among other type of businesses and other regions. As a result, creating brand loyalty is indeed a factor for using social by businesses. 

2.6 Gaining Customer Trust

Online social media marketing has been earning customer trust for organizations. For instance, Dutta and Bhat (2018) found ‘interpersonal trust on individuals influences interpersonal trust on organizations, which in turn leads to formation of attitude. Towards that organization on the other hand, intention to pass-along e-WOM (electronic word of mouth) is formed directly as a result of trust in the individuals on online social media or trust in the organizations undertaking social media marketing. People who perceive high risk involved in online purchase form low interpersonal organizational trust with them.’ The investigation shows that customers trust organizations more as the word of mouth spread through social media about them. It is important to know, there is a gap in Dutta and Bhat’s research, their research only investigated the top four social media applications and is geographically limited to India. Dutta and Bhat stated that their research is empirically verified but by whom is omitted or not stated. Although the trust is built more based on the individuals themselves rather than the organizations, the organizations still play a role in building customer trust through social media; it has been shown that organizations can still use social media marketing for earning customer trust.

2.7 Brand Image

Organization can build and shape their brand image by using social media. Nguyen, Lu, Tran, Conduit and Nayak (2018) found that social media engagement helps shape the perceived brand image. The study found the link between brand image built from e-WOM influences the intent to enrol in higher education institutions. The perception of brand image is important for future enrolments for the Vietnamese Higher Education Institutions. While this study shows a strong link between social media and brand image, the study’s sample of study is questionable since it only restricted to Vietnamese higher education students only and make no mentions of negative brand image. Nonetheless, the study’s findings can be supported by Mechant and Praet’s findings. In summary, businesses can use social media to create a positive brand image.

2.8 Recruiting

Companies have been using social media platforms for recruiting employees. Preat and Mechant found that there is a social media provide communicational reach for businesses to find recruits. Interviewees also stated that they expect social media activities from companies which also helps corporate image. Preat and Mechant’s findings can be questionable as one of their main research methods is through an online survey and it is not randomly selected. Howbeit, the authors based on there research on previous findings from other articles from other countries. Historically, employees have been using newspaper, websites and other methods to recruit employees, considering this historical context, it is not farfetched to assume business can recruit employees through social media. Thus, social media can be used for recruitment. 

2.9 Innovation 

Social media has been used for innovating. Companies innovate by gathering customer input through replies and messages from social media and develop new ideas to help them or create products wanted by the consumers. Tajvidi and Karami found that hotels in the UK use social media for innovating. This was also evident in He and Zha’s research. The relationship between innovation and social media is unmistakable. Kane (2018) found that social media will continue to grow technologically, with technological evolution within social media; businesses can innovate. There is an influence on innovation from social media and businesses should continue to use social media to innovate.

2.10 Decision-making

The data collected from social media can be used for decision making. The data from social media gathered from social media was deemed important enough that even the government uses data from social media to influence their decision-making as stated by Callaghan, Mehment and Simmons(2018). The data collected from the authors showed that the government find citizens’ opinions and reactions through twitter and Facebook influence their decision-making. The research is exclusive to fishing policies and Australians, however. In spite of the limitations within the study there is a trend that organizations have been using social media for decision making through polls and interactions to see how their followers will react. It can be concluded that if the government based their decisions from data collected through social media, other organizations should too. Social media can be a great tool for organizations to use for decision making.

3. The top three business benefits

The top three business benefits are chosen by exploring which of the ten business benefits generates the most business value. The framework created by Trkman and Trkman helps identify the top three business benefits. The framework values purpose and user involvement. The framework ask does the use of social media serve it purpose? And measures user involvement. Therefore, the three top benefits should have selected through achieving the intended purpose and whichever of the benefits have the most user involvement.  

Figure 1: Social Media Business Value framework

SOURCE: Trkman and Trkman 2018

Customer engagement is a targeted benefit for most businesses and social media can be used for engaging customers. Customer engagement receives has the most user involvement, hence; customer engagement will be one of the top three benefits as it generate an abundance of business value according to Trkman and Trkman’s framework.

Decision-making through social media’s purpose to make decisions based on the user data from social media, reactions and comments is a form of user involvement, therefore; the decision-making is another of the top three.

The final best benefit is brand image, building a positive brand image should be a goal for all organizations and the brand image can be shaped through word of mouth from individuals, this means that there will be considerable amount of user involvement and using social media to do so serves companies’ targeted benefits.

Selecting the top three is a difficult process, it is arguable that other benefits can be in the top three. However, the top three business benefits chosen do, indeed, in fact generate business value by using social media.  

4. Conclusion

Most of the benefits found to increase firm performance according to Preat and Mechant. Which is indicative that social media is beneficial for organizations to be involved with.

The top business benefits identified are:

  • Promotional activities
  • Cost effectiveness
  • Increase sales
  • Customer engagement
  • Brand loyalty
  • Gaining customer trust
  • Brand imaging
  • Recruitment
  • Innovation
  • Decision making

And the top three business benefits that creates business value are:

  • Decision-making
  • Brand image
  • Customer engagement

Social media can give business value for businesses as indicated by Trkman and Trkman.

There is little to no reason for businesses not to use social media as the benefits gained from using social media is too beneficial. Social media is a trend and emerging market, it is not something to ignored. Businesses should continue to use social media as there is no reason not to. In summary, it is obvious that there is a clear advantage for business to use social media as there are strong motivators to do so.

5. References

  • Alalwan, A, Rana, N, Dwivedi, Y & Algharabat, R 2017, ‘Social media in marketing: A review and analysis of the existing Literature’, Telematics and Informatics.
  • Charoensukmongkol, P & Sasatanun, P, 2017, ‘Social media use for CRM and business performance satisfaction: The moderating roles of social skills and social media sales intensity’, Asia Pacific Management Review.
  • Tajvidi, R & Karami, A, 2017, The effect of social media on firm performance’, Computers in Human Behavior.
  • He, Wu & Zha, S, 2015, ‘An exploratory investigation of social media adoption by small businesses’, Inf Technol Manag.
  • ANZMAC, 2018, 2018 ANZMAC Conference Proceedings’, ANZMAC.
  • Kane, G, 2017, ‘The evolutionary implications of social media for organizational knowledge management’, Information and Organization.


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