Impacts of social media on business performance of vietnamese SMEs

Impacts of Social Media on Business Performance of
Vietnamese SMEs
– Master Thesis –

to be awarded
Master of Science in Economics

submitted by

Bui, Thi Phuong Hong

15th October 2018

Email:
Address: WG. 604, Karl-Marx-Allee 1, 07747 Jena
Student ID: 163398
Supervisor:
1st: Prof. Dr. Uwe Cantner
2nd: Dr. Maximilian Göthner

Friedrich-Schiller-Universität Jena
Fakultät für Wirtschaftwissenschaften
Lehrstuhl für Mikroökonomik
Carl-Zeiß-Str. 3
07743 Jena


ABSTRACT
Social media is widely accepted as one of the most effective marketing channels for
enterprises. Although it brings many benefits to companies, there are still some potential
risks. Furthermore, there is no comprehensive study on the impact of social media on

business performance, especially for developing countries such as Vietnam. Based on related
theories and studies, we propose an ordinal three-step model explaining the way social media
influences business performance. Accordingly, in the first step, enterprises use social media
to carry out five activities, including business branding, call for purchases, public
relations/customer service, re- posting of customer reviews, and product introduction. In the
second step, these activities affect three crucial customer perceptions, namely customer
engagement, brand awareness, and information diffusion. In the last step, these three issues
directly affect business performance, especially sales and customer growth. We used direct
questions, multivariate regression and structural equation modelling (SEM). While there is
still some mixed evidence for particular issues within our proposed model, we have
confirmed that social media strongly improves business performance for small and medium
enterprises in Vietnam by increasing customer engagement, enhancing brand awareness and
promoting information dissemination. We also find that the format of social media messages
has a significant impact on customer’s perception and the effectiveness of communication.
Last but not least, we discover that the respondent’s perception varies according to the
type of company they have worked for and personal characteristics.
Keywords:

Social

media, business performance,

customer engagement,

brand

awareness, information diffusion

1

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION .......................................................................................... 4
1.2. Significance of the study.................................................................................................. 8
1.3. Research questions and objectives of the study ................................................................9
CHAPTER 2: LITERATURE REVIEW............................................................................. .10
2.1. Overview of social media ............................................................................................. .10
2.1.1. Definition of social media .................................................................................................. 10
2.1.2. The role of social media ..................................................................................................... 10

2.2. Business performance and its measurement ...................................................................11
2.2.1. Definition of business performance .................................................................................... 11
2.2.2. Measurement of business performance ............................................................................... 11

2.3. Theoretical perspective on the relationship between social media and business
performance ........................................................................................................................ .12
2.3.1. General theory of marketing ............................................................................................... 12
2.3.2. Marketing mix theory ......................................................................................................... 14
2.3.3. Theory of buyer behaviour ................................................................................................. 14
2.3.4. Theory of decision-making ................................................................................................. 16

2.4. Empirical evidence on the impact of social media on business performance...................19
2.5. Conceptual framework and hypotheses on the relationship between social media and
business performance .......................................................................................................... .22
2.5.1. The proposed research model ............................................................................................. 22
2.5.2. Hypotheses......................................................................................................................... 23

CHAPTER 3. RESEARCH METHODOLOGY ...................................................................25
3.1. Research design ............................................................................................................ .25

3.2. Time and place of study................................................................................................ .25
3.3. Population, sample size and sampling technique ............................................................25
3.4. Research instrument ..................................................................................................... .25
3.5. Data gathering procedure .............................................................................................. .26
3.6. Methods of data analysis............................................................................................... .27
CHAPTER 4: FINDINGS AND DISCUSSIONS .................................................................29
4.1. Description of respondents............................................................................................ .29
4.1.1. Age .................................................................................................................................... 29
4.1.2. Gender ............................................................................................................................... 29
4.1.3. Marital status...................................................................................................................... 30
4.1.4. Educational attainment ....................................................................................................... 31
4.1.5. Work department................................................................................................................ 31
4.1.6. Employment position ......................................................................................................... 32

2


4.1.7. Years of experience ............................................................................................................ 33
4.1.8. Type of the company .......................................................................................................... 33
4.1.9. Type of business activities.................................................................................................. 34

4.2. Current status of social media use of SMEs in Vietnam .................................................35
4.2.1. Social media participation .................................................................................................. 35
4.2.2. An assessment of using social media by SMEs in Vietnam ................................................. 41

4.3. Impacts of social media on business performance of SMEs in Vietnam .........................47
4.3.1. Quality analysis of the impact of social media on business performance ............................. 48
4.3.2. Empirical analysis of the impact of social media on business performance .......................... 62
4.3.2.1. Evidence from multivariate regression ............................................................................. 62
4.3.2.2. Evidence from SEM ........................................................................................................ 70

Chapter 5: CONCLUSION, IMPLICATION AND FUTHER STUDY .................................74
5.1. Conclusions .................................................................................................................. .74
5.2. Implications.................................................................................................................. .76
5.2.1. Policy implications............................................................................................................. 76
5.2.2. Improve participation and performance of social media ...................................................... 78
5.2.3. Enhancing customer engagement........................................................................................ 80
5.2.4. Increasing business awareness ............................................................................................ 82
5.2.5. Improve information diffusion............................................................................................ 83

5.3. Limitations and further studies...................................................................................... .84
REFERENCES.................................................................................................................... .86

3


LIST OF TABLES

Table 1: The Likert five-point scale .................................................................................... .26
Table 2: The business lines of the surveyed enterprises.........................................................34
Table 3: Types of advertising and media.............................................................................. .35
Table 4: Social networking sites .......................................................................................... .36
Table 5: Information posted on the social networking sites ...................................................38
Table 6: Purposes in using social networking sites................................................................39
Table 7: The use of social media.......................................................................................... .42
Table 8: Social media and customer engagement ..................................................................48
Table 9: Social media and brand awareness ......................................................................... .52
Table 10: Social media and information diffusion.................................................................56
Table 11: Customer engagement, brand awareness, information diffusion and growth of sales
and customers .............................................................................................................. .59

Table 12: Social media and business performance ................................................................60
Table 13: Message format and social media performance .....................................................62
Table 14: The model of perceptive growth of sale (Q53) ......................................................64
Table 15: The model of perceptive growth of sale (Q53) (continued)....................................65
Table 16: The model of actual growth of sale (Q12) .............................................................67
Table 17: The model of perceptive growth of customer (Q54) ..............................................68
Table 18: The model of perceptive growth of customer (Q54) (continued) ...........................69
Table 19: The model of actual growth of customer (Q13) .....................................................70
Table 20: Estimated results of structural equation modeling (SEM) ......................................72

4


LIST OF FIGURES

Figure 1: The model of buyer behaviour ............................................................................. .15
Figure 2: The buying decision process ................................................................................ .17
Figure 3: The proposed research model ............................................................................... .22
Figure 4: Structural equation modelling for impacts of social media on business performance
.................................................................................................................................... .28
Figure 5: The age of the respondents ................................................................................... .29
Figure 6: The gender of the respondents .............................................................................. .30
Figure 7: The marital status of the respondents .....................................................................30
Figure 8: The educational attainment of the respondents.......................................................31
Figure 9: The work department of the respondents ...............................................................32
Figure 10: Employment positions of the respondents ............................................................32
Figure 11: The years of working experience of the respondents ............................................33
Figure 12: The type of surveyed enterprise .......................................................................... .34
Figure 14: Experiences in using social networking sites........................................................36
Figure 15: Frequency of using social media......................................................................... .37

Figure 16: The growth of frequency in using social media ....................................................37
Figure 17: Numbers of followers on the social networking sites ...........................................38
Figure 18: Integration of direct sale system ......................................................................... .40
Figure 19: Revenue from direct sales systems of online social networking sites....................40

5


LIST OF ABBREVIATION

SEM

Structural equation modeling

NAND

Neither Agree or Disagree

MLMV

Maximum likelihood with missing values

6


CHAPTER 1: INTRODUCTION
1.1. Background of the study
Social media is the communication channel in which users have the ability to share
information and update/respond to other peoples’ information. All these media platforms
converge in such a way that they are together considered social media. With this view, not

only social networks like Facebook and Twitter, but also forums, YouTube, Instagram, Zalo,
and even news sites are all considered to be part of social media.
Social networking is a tool that enterprises use to inform their customers about their
product offerings. Hence, social media can enable businesses to become more prominent in
the eyes of customers. Equally, using social media can help firms connect with other
companies within their sector, research and study each other, analyse competitors and
develop more effective media strategies. Furthermore, social media is a way of
communicating between customers and companies and is a tool for firms to answer customer
queries and to satisfy them.
Social media includes tools that combine technology and language skills to promote a
brand image of a business on the Internet at a low cost with superior performance. Social
media gives marketers a voice and new ways of communicating with customers and
prospects. Branding is a means for companies to deliver messages to customers through
content that is distributed in the most effective way. Marketers view social media as a vital
element of their business and take into account all the activities that take place on social
media networks.
In Vietnam, with the development of Yahoo 360, the first social media platform, some
brands quickly used it to promote their image. Social media marketing in Vietnam actually
began in the 2008-2009 period, following the success of the Close-Up branding campaign,
which opened the way for social media campaigns by other big brands. It can be said that the
main milestone in the development of social media after the decline of Yahoo 360 from 20082009 was the arrival of Facebook in 2011. With the rapid development of the number of users
in Vietnam, Facebook emerged as a “fertile land” that brands wanted to exploit.
The biggest advantage to businesses in Vietnam is that there are not many popular
social media platforms. Vietnamese users still focus on major social networks such as
Facebook and YouTube and major forums (some teenagers use Zalo, which is the second
largest social network). Therefore, in Vietnam, the investment in social marketing is more
concentrated, more resource-efficient and easier to measure.
Social media marketing has the potential to be a great way for small and mediumsized businesses in Vietnam to increase brand awareness with customers. Companies can also
7

create a playground for the participation of customers, as well as trying to improve customer
loyalty

8


with their products and services. Alongside the positive elements mentioned, social media is
also a huge “trap”, because it can consume a lot of money for connecting the community with
the marketing campaign and advertisers can be denigrated by competitors. Therefore, this
study considers the impact of social media on the business performance of small and
medium-sized enterprises in Vietnam and considers whether or not investment in developing
social media activities is the right strategy. Further, the question as to which policies the
government should use to promote the efficiency of social media for small and medium-sized
enterprises in Vietnam will be addressed.
1.2. Significance of the study
This study is expected to contribute knowledge to the effective and efficient
management of labour exports; hence, it will benefit the following sectors:
• International employers. Based on the analysis of this paper, Vietnam’s
government will build special action plans to improve the competitiveness of
Vietnamese labour. Hence, international employers will gain access to better and
more competitive labour in the future.
• Vietnamese workers. This study will help workers understand their strengths and
weaknesses. In addition, workers will be made aware of the requirements of
international employers in term of academic performance, technical skills,
communication skills, performance ratings of previous employers, working
seniority (in previous companies) and personal characteristics. Thus, Vietnamese
workers can prepare and study to improve their abilities and increase their
potential for success; this will provide them with assessments and direction in
applying for work abroad in the future.

• Managers of labour export. This research will help these managers understand the
requirements of international employers. The research will provide them with
important suggestions on how to build action plans for improving the
competitiveness of Vietnamese labour. The paper could help build the reputation
and competitive advantage of Vietnamese labour through superior innovation and
meet the expectations of international employers.
• Vietnamese government. This paper will study the current status of Vietnamese
labour in term of strengths and weaknesses; it will also provide useful information
about the requirements of foreign labour importers. It will be a good basis for the
Vietnamese government in planning labour development, especially export
activities.

9


Other researchers. This study will help other researchers to collect necessary
information in relation to their research fields. Other researches will also consider the
limitations of this research as they conduct future research related to this field of study.
1.3. Research questions and objectives of the study
There are two important questions that need to be studied:
(1) What is the status of using social media by small and medium-sized enterprises
(SMEs) in Vietnam?
(2) How does social media influence business performance?
To answer these two questions, this thesis focuses on assessing the current status of
social media use by Vietnamese SMEs by analysing the results of an enterprise survey,
drawing out good and bad points about the application of social media for marketing by these
enterprises. In particular, the thesis evaluates the impact of social media on the business
performance of Vietnamese SMEs. Based on the results of the analysis, the thesis provides
suggestions for businesses to improve the effectiveness of using social media in marketing.
The thesis is organised into five chapters. Chapter 1 explains the importance of social

media to businesses, as well as the current issues in the social media debate, research
objectives, and the scope of research.
Chapter 2 focuses on the basics of social media and business performance and
business performance indicators, as well as research on the relationship between social media
and business performance both theoretically and practically. From this literature review, the
author presents the proposed research model.
Chapter 3 introduces the research methodology, sample selection and sampling
procedures, as well as the analytical methods used to answer the research questions.
Chapter 4, based on the results of the survey, analyses the current use of social media
in marketing by SMEs in Vietnam. In addition, it uses multivariate regression to assess the
impact of social media on the business performance of Vietnamese SMEs.
Chapter 5 summarises the results of the research and provides solutions to improve the
effectiveness of using social media for SMEs in Vietnam.

10


CHAPTER 2: LITERATURE REVIEW

2.1. Overview of social media
2.1.1. Definition of social media
What is social media? Social media is a subject of concern to many enterprises,
executives and policymakers, but the concept of social media and the way corporations can
take advantage of social media are very limited (Kaplan & Haenlein, 2010). Social media is
generally described in relation to Web 2.0 and ‘user-generated content’. In their study, Kaplan
and Haenlein (2010) attempted to divide social media into groups, namely: collaborative
projects, social networking sites, virtual games worlds, social worlds, blogs, and content
communities. Social networking sites are the largest and most important part of social media.
The term social media has tended to be used interchangeably with the term “Web 2.0”, and
can be identified by the following principal categories (Constantinides & Fountain, 2008):

• Blogs: Encompassing individuals’ or enterprises’ online journals and often
combined with audio or video podcasts.
• Social network: Applications allowing users to build personal websites accessible
to other users for exchanging content.
•

Content communities: Websites organising and sharing particular types of content.

•

Forums: Sites for exchanging ideas usually around special interests.

• Content aggregators: Applications allowing users to customise fully the web
content they wish to access.
2.1.2. The role of social media
The importance of social media lies in the interaction between people and in the
facilitation of asynchronous, immediate, interactive, and low-cost communications. So, what
is the role of social media in business? There are three reasons why it becomes necessary.
Firstly, social media helps a business raise awareness of its brand. Branding is always
one of the top goals in many marketing campaigns. When focusing on this goal, the problem
for many brands, especially e-commerce brands, is that it is not possible to create links that
connect with customers by emotion. Fortunately, social media can solve this problem. With
creative approaches and consistent content, a brand can be brought to life.
Secondly, social media helps to increase traffic. Social media platforms are
increasingly playing a role in bringing users to business websites. There is a view that
Facebook has overtaken Google in terms of influence on the Internet. Increased traffic is
generally proportionate to improving sales effectiveness.

11

Thirdly, social media is the place to go to for information and knowledge. With social
networks, users can update a lot of information and knowledge without having to go to the
newspaper networks. This information is what businesses collect in order to understand users
or new trends that are of interest in the community. To do this, businesses can use social
listening tools, to listen and watch what is happening in social networks. From the
information and knowledge gathered, firms can improve their campaigns and processes.
2.2. Business performance and its measurement
2.2.1.
Definition
performance

of

business

Business performance, or organisational performance as the broader term, is widely
accepted as the actual outcome or results of a company as measured against its inputs.
According to Richard et al. (2009) business performance can be grouped into the
following three areas: (i) financial performance (profits, return on assets, return on
investment, etc.); (ii) product and market performance (sales, market share, etc.); and (iii)
shareholder return (total shareholder return, economic value added, etc.).
2.2.2.
Measurement
performance

of

business

Business performance is a very broad topic and measuring it is not easy. In terms of
enterprise resources, a firm's business performance is determined by the efficiency of using
resources and transforming them into increased competitiveness advantage (Barney, 1991;
Day,
1994). Notable factors that reflect business performance are financial capacity, operational
optimisation and social performance (Carroll, 1979; Venkatraman & Ramanujam, 1986).
Financial performance focuses on the growth of sales and customers, or profitability.
Operational performance reflects operating efficiency, market share or customer satisfaction.
Social performance relates to reputation, brand awareness or the public image of the
company.
Needly (2002) and Taticchi (2010) synthetize some business performance indicators
and their formulas as follows:
* Financial performance:
- Profit:
Profit = Revenue −
Cost
- Return on Investment (ROI):

12


Revenue − Expenses
Return on Investment
Expenses
× 100%
=

Net Profit

- Return on Assets (ROA):

Return on Asset = Total Assets × 100%
- Return on Equity (ROE):

13


Net
Profit
- Rate of Return:

Return on Equity = Total Equity × 100%
Net
Return on Equity =

Profit
× 100%
Net Revenue

* Market performance and Business Growth:
- Sales, growth of sale
- Customers, growth of customer
- Market share
* Shareholder return:
- Total shareholder return
- Economic value added
Due to time and budget constraints, this study focuses on aspects of financial
performance, particularly the growth of sales and customers, which are the two most
important issues that determine the survival of an enterprise.
2.3. Theoretical perspective on the relationship between social media and business
performance

In general, the use of social media is a widely recognised part of marketing. To be
precise, social media, in this context, is a tool in marketing that is used to deliver messages
and connect with customers. Marketing is broad as “a discipline uniting activities aimed at
enhancing the potential for sales of goods and services”. Social media, although part of
marketing, is not fully researched in relation to business performance. This section analyses a
number of related theories to establish how social media affects business performance.
2.3.1. General theory of marketing
The theory of marketing was first developed and introduced by an American
Marketing Association (AMA) conference in Pittsburgh in 1946. It aimed to describe the
essence of marketing as well as create a framework for modern economics. Alderson and Cox
(1948) put forward the need for a common marketing theory and provided a comprehensive
approach on the basis that marketing theory should be general and appropriate for all areas.
Bartels (1968) shares the same view as Alderson and Cox (1948) on the importance of
developing marketing theory. He used a “cumulative approach” to suggest that general
marketing theory should be synthesized from seven theories:
•

The theory of social initiative; economic separations

•

The theory of market roles, expectations, interactions


•

Flows and systems


•

Behaviour constraints

•

Social change

•

Marketing evolution

•

The theory of social control

Two years later, Bartels (1970) restated his view of marketing in terms of five
theories, which all remain relevant:
•

Theory of marketing functions

•

Historical institutional evolution

•

Small versus large-scale activity

•

Integration

•

Theory of specialisation

Hunt (1983, p. 24) continued to develop the theory of marketing with a combination of
four important theories:
•

Theory of buyers’ behaviours

•

Theory of sellers’ behaviours

•

Institutional framework

•

Behaviours of buyers, sellers and institutional frameworks

Marketing is described as “a behavioural system of exchange” (Bagozzi, 1979) or
“exchange process” of the company to the market and what is exchanged here can be
products, services, ideas, messages and even emotions.
However, there are many other approaches to marketing. Kuhn (1996) defines
marketing as a “set of sales and distribution practices.” Levitt (1960) and Keith (1960)

describe marketing as “customer-centred rather than product-centred”. In addition, there are
many other paradigms of marketing (Fournier 1998; Palmer & Ponsonby 2002).
The American Marketing Association first officially defined marketing in the 1960s as
“performance of business activities that direct the flow of goods and services from the
producer to the consumer or user” (AMA 1960, in Keefe 2004). In 1985, the concept was
refined into “Marketing is the process of planning and executing the conception, pricing,
promotion, and distribution of ideas, goods, and services to create exchanges that satisfy
individual and organizational objectives” (AMA 1995, in Keefe 2004). The recent marketing
concept was introduced in 2004, in which marketing is defined as “an organizational function
and a set of processes for creating, communicating, and delivering value to customers and for
the benefit of the organization and its stakeholders” (AMA 2004, in Keefe 2004). In the field
of business, Belz (2005), Tomczak and Brexendorf (2005) emphasise that the tasks of
marketing include


public relations, branding, marketing communications, customer relationship and sales
channel development.
As a part of marketing, social media may be used to deliver company messages with
various contents for numerous purposes, i.e. call for purchases, public relations, business
branding or product introduction. These messages may influence customers’ perceptions and
interactions, and they also potentially increase information diffusion about the company and
its products and services.
2.3.2. Marketing mix theory
Marketing mix is often considered as a tool to help businesses determine which
products or brands to offer. Kotler (2000) defines it as “the set of marketing tools that the
company uses to pursue its marketing objectives in the target.” Initially, McCarthy (1964)
introduced marketing mix with 4 Ps: Product (product needs to meet demands and
expectations of customers); Place (customers must have easy access to the product); Price
(price must be reasonable); Promotion (companies need to use advertising, public relation,
sales promotion, social media to reach potential customers).

Booms and Bitner (1981), Kotler (2012) expanded the marketing mix model and added
4 Ps: People (the company needs to ensure the quality of human resources and build positive
relationships with customers); Processes (delivery of goods, services to customers need to be
done well, and customers are ready to return to use the products and services of the
company); Physical Evidence (what the customer receives must have a “physical” attribute,
whether that is a service or a product, i.e. with the insurance service, the customer still needs
to get back the insurance contract, manual, document…); Performance (this P represents the
goal that the business should aim for in order to bring its core values and real benefits to
customers).
2.3.3. Theory of buyer behaviour
The theory of buyer behaviour was first introduced by Howard in 1963 as a consumer
decision model. The model was developed by Howard and Sheth (1969) and aims to provide
“a sophisticated integration of various social, psychological and marketing influences on
consumer choice into a coherent sequence of information processing” (Foxall 1990, p. 10). To
fully reflect the factors influencing buyers’ behaviours, Loudon and Della Bitta (1993)
present the theory and model of buyer behaviour in detail as shown in the diagram below:


Figure 1: The model of buyer behaviour (Loudon and Della Bitta (1993)

The factors that influence the behaviour of buyers can be grouped into two categories:
perception constructs and learning constructs. Perception of components consist of three
issues: (i)

Sensitivity to information, which reflects the ability to capture stimulus
information.

(ii)

Perception of bias, which reflects changes and disturbances of prior perception.

(iii)

Search for information, which reflects the proactive search for information
on
selected products or services.

Perception of constructs defines the process by which buyers approach information
and filter and process the information received. Learning constructs reflect the impact of
individual factors on purchasing decisions, including:
(i)

Motive, which reflects the motivation or purpose of the purchase.

(ii)

Evoked set, which is the buyer’s assessment of the ability to meet the
expectations, objectives when using the product or service.


(iii)

Decision mediators, which reflect buying psychology and alternatives.


(iv)

Predispositions, which reflect the perception and preference of brands.

(v)

Inhibitors, which reflects the limitation of resources to meet procurement

needs. (vi)

Satisfaction, which is a reflection of satisfaction from previous

purchase
decisions or from other buyers.
Loudon and Della Bitta (1993) emphasise the importance of customer perception in
the purchase decision, and this depends a lot on customer knowledge. In particular, the
dissemination of information and interaction with customers will be a very important input to
the purchase process, while other customer reviews are an important channel for reference.
In addition, Loudon and Della Bitta (1993) deal with a number of other factors that
influence the behaviour of buyers, including the importance of the purchase, personality
variables, social class, culture, organisation, time pressure and financial status. They said
that the output variable buyers respond to follows five steps:
(i)

Attention – access to information about goods and services.

(ii)

Comprehension – the process of selection and processing of information.

(iii)

Attitudes – customer perceptions and evaluations of specific brands.

(iv)

Intention – the perception and forecast about the to-be-purchased products.

(v)

Purchase behaviour – making an actual purchase.

2.3.4. Theory of decision-making
Decision-making theory was firstly introduced by Edwards (1954), and it reflects
“how people make choices among desirable alternatives.” This theory was later developed by
Nicosia (1966) and other scholars. In essence, the purchase decision involves a number of
sub-decisions that require a great deal of time and effort. A sales outlet, for instance, might be
the department store and other places. The purchase decision involves risks that vary in
degree according to the product and purchase conditions. Consumers seek to reduce the
possibility of risk in the decision they take (to the best of their knowledge).
The buying decision is a series of choices made by a consumer prior to making a
purchase that begins once the consumer has established a willingness to buy. The consumer
must then decide where to make the purchase, what brand, model, or size to purchase, when
to make the purchase, how much to spend, and what method of payment will be used. The
marketer attempts to influence each of these decisions.
According to Engel et al. (1968) and Kotler (2012), the buying decision process can be
explained as below five steps:


Figure 2: The buying decision process (Kotler, 2012)

* Need recognition and problem awareness:
The buying process starts when the buyer feels that they have a problem or need. The
need can be triggered by internal or external stimuli, e.g. a person may feel hungry internally
or the sight of a sumptuous meal or smell of delicious food might act as an external stimulus
to arouse the want of food. The marketer tries to stimulate need and help people identify

these needs by intelligent use of market offerings such as product, packaging, pricing or
promotions.
* Information search:
A customer who realises their need for the product will try to gather information
regarding the product. Information search helps the customer understand the product better
and also creates awareness about competing brands. Past purchase experiences will reduce the
time required for the information search. The information can be gathered from several
sources, including:
•

Personal sources – family, friends, neighbours, acquaintances.

•

Commercial sources – advertising, salespersons, dealers, packaging, displays.

•

Public sources – mass media, research organisations.

•

Experiential factors – past experiences, free trials.

Generally, the customer receives most information from commercial sources.
However, the most effective information comes from personal sources. As the customer
gathers more and more information, the awareness level about the product and competing
brands and their features will increase. The marketer must identify the relative importance of
different information sources, and this will help in designing effective marketing
communication.

* Evaluation of alternatives:


In this stage, the customer analyses the information available to select the right
product or brand. The criteria to evaluate a product may differ depending on the buying
situation, level of involvement etc. The evaluation is based on rational and conscious thinking
as well as mental processes such as perceptions, attitudes or predispositions.
During this stage, the customer assigns relative importance to different attributes of
the brand or product on the basis of accumulated information and draws conclusions about its
relative potential to satisfy desired needs. By developing an understanding of how a customer
evaluates the product, the marketer can improve or develop the product and segment the
market on the basis of product attributes. The communication mix can be designed to
prominently highlight those benefits which are most sought after by the target markets.
Evaluation leads to the formation of buying intention that can either be to purchase or
reject the product or brand.
* Purchase decision:
Purchase intention may lead to a purchase decision. There are three factors which
intervene between buying intentions and a buying decision:
(i)

Attitudes of others such as spouse, friends and relatives. The intensity of a
negative attitude and buyer’s tendency to comply with this attitude are the
most significant contributors.

(ii)

An anticipated situational factor such as family income, cost of buying and
expected benefits of the product.

(iii)

Unanticipated situational factors like accidents, sickness etc.

* Post-purchase behaviour:
After purchasing and consumption, the customer will experience some level of
satisfaction. If the performance of the product meets expectations, the consumer will be
satisfied. If the performance of the product exceeds expectations, the consumer will be
delighted, and if it falls below expectations, the consumer will be dissatisfied. Post-purchase
behaviour refers to the behaviour of the consumer after the purchase and depends on the
customer’s experiences of using the products and degree of satisfaction. A satisfied customer
may be involved in repeat purchases, and a delighted customer becomes a brand advocate
spreading the positive image of the brand. A dissatisfied customer not only abstains from
repeat purchasing but may also be a critic of the product or brand. Post-purchase behaviour
also includes learning about the ways the product is used and disposed of, and this may reveal
new usage of the product or threats caused to the environment by wrong disposals. It may also
help the company to design a marketing mix, e.g. the company may develop eco-friendly
packages


or buy back schemes to improve the sales of a new product. The company may also launch
refillable packs.
2.4. Empirical evidence on the impact of social media on business performance
Dutta (2010) found that social media has changed the way we do business, not just for
small companies but also for large enterprises, from employees to CEOs. There are many
reasons why companies now focus on social media. First, social media has remarkable
advantages, such as low cost, easy access, and the ability to cover a wide area with no
limitation. These advantages make it easy for companies to reach potential customers, as well
as build brand recognition. Secondly, participation in social media is extremely easy and

diverse, and includes corporate employees, clients, colleagues and the public; this helps
companies build relationships and promote public relations. Third, the online platform
enables two-way feedback between the company and its customers or partners in a fast,
convenient way; this will be helpful for both parties.
It is not only a place to post information on products and company events; social
media is also a great place for companies to recruit staff. Hunt (2010) states that social media
is where companies can post recruitment information, and also where job seekers can find
employment opportunities. LinkedIn is an example; this is a social networking site dedicated
to human resources. Its widespread influence and the possibility of two-way communication
are important reasons for using it for recruitment. Hunt (2010) argues that if a company does
not participate in these sites, it may miss out on a lot of talented people who fit in with the
company but are unaware of the recruitment information.
Corconran and Feugere (2009) has provided information that in the US, brands and
retailers are currently using social networks to promote sales and enhance brand awareness. In
particular, high-end brands focus on building loyalty with customers through Facebook. User
ratings and successful online transaction rates are important tools for enhancing customer
engagement.
Social media, in fact, has had a tremendous impact on business activities, particularly
Facebook and Twitter (Granovetter, 1973; Jansen et al. 2009). The Small Business Saturday
program is an example. In 2010, when the program was first introduced by American Express,
it reached more than one million Facebook “likes” and around 30,000 tweets. Markowitz
(2013) estimates that this program has brought growth to 28% of small businesses. By 2013,
this program had generated $5.5 billion USD in sales.
In addition, social media influences market orientation, which has a direct and positive
impact on business performance (Ellis, 2006; Kirca et al., 2005), especially for SMEs around
the world (e.g. UK (Appiah-Adu & Singh, 1998), US (Baker & Sinkula, 2009)). It is not only