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1.0 Executive Summary With an average of 1.09 billion active users every day, Facebook is the biggest social media platform in the world now as of March 2016. It is an important channel for marketers to take note of due to its massive reach and the proliferation of electronic word of mouth. Word of mouth is seen as the most credible source of information to a consumer due to its unbiased nature. It is especially more relevant in the context of services because of its intangible attribute. With proper steps taken and proper monitoring, businesses and brands can take advantage of electronic word of mouth to reach out to massive audience with little to no cost.
2.0 Introduction This report aims to document how Facebook check-in feature holds as one of the most crucial roles in the success of the business amongst certain service providers and retailers in Singapore. It will be focusing on identifying popular service providers or retailers in Singapore where consumers check-in on Facebook, explaining how the words-of-mouth being important to the business. Subsequently, the report will also be explaining on how service providers manage and influence the positive and negative word-of-mouth communication that is spread via social networking sites, the factors that consumers take into account when evaluating firm-generated against peer-generated communications. The report will then describe the pros and cons for marketers of highly connected, smartphone-equipped consumers, how marketers are paying interest to the consumer reference groups, providing examples on how an online consumer reference group may influence the decision-making process of a Facebook user.
3.0 WOM in Service marketing versus Goods marketing The reason why word of mouth is particularly more relevant to service marketers compared marketers of goods is because of the intangible nature of services. As such, consumers rely on other cues such as physical evidence and word of mouth for assessment. These cues are vital to overcome the various risks associated with purchasing the service such as psychological and outcome risks. A positive word of mouth from someone of close tie will increase the consumer’s confidence level in the service and hence reduces the psychological risk. On the other hand, unlike services, goods can be seen and touched, consumers can experience the product for themselves and determine if it satisfies their needs before purchasing. While word of mouth is still important in goods marketing, it is even more relevant to service marketers. 3.1 Teo Heng KTV at Causeway Point https://www.facebook.com/pages/Teo-Heng-KTV-at-Causeway-Point/1010707622325601?fref=ts Popular and affordable local karaoke joint. Word of mouth through photos uploaded by customers having fun. Most of the comments for these posts are friends asking why they are not invited. Friends of customers see that they are having fun and may want to patronize Teo Heng in the future. 3.2 Singapore Sports Hub https://www.facebook.com/sporesportshub/ Common venue for big scale events such as concerts and sports events. Visitors check-in when they are there to share the moment. May attract potential visitors to visit the sports hub. Allows tourist to find out more about the sports hub from an unbiased source. 3.3 Art Science Museum https://www.facebook.com/ArtScienceMuseum/ Iconic landmark in Singapore Museum cater to tourists and locals. Word of mouth allows potential visitors to find out more about the museum before visiting to avoid disappointment. Gives tourist more assurance as they can find out more about the museum from an unbiased source when planning their trip to Singapore.
3.4 LaserOPS Indoor Laser Tag https://www.facebook.com/LaserOPS/?fref=ts Indoor laser tag game facility Corporate and group bookings available Customers check in to share their experience there. Electronic word of mouth allows customers to find out more about the place before making a group booking because the risk associated with disappointing a large group is high. 3.5 Lighthouse Studio https://www.facebook.com/lighthousestudio.sg/?fref=ts A local video production house that specializes in wedding videography. Videography package costs around $3,000. Positive word of mouth on their Facebook page gives greater confidence to their potential customers to sign up for their services because a wedding is an important occasion so the appointed vendor needs to be competent in delivering them.
4.0 Word of Mouth (WOM) Word-of-mouth (WOM) is the most efficient way of receiving feedbacks from the consumers. The feedbacks are not just exposed to the company but to the public since social networking sites provide a global communication platform. Thus, the outcome of word-of-mouth has a huge impact on the company’s value, as they will influence buying decision of the consumers. Since WOM is an unbiased opinion from the personal experiences of consumers, the viewers of the feedback rely on it. Hence it can be concluded that positive or negative WOM influences the consumer brand perception positively or negatively. Therefore, WOM gives businesses the opportunity to reach their customers and attract business of prospective customers. The service providers can manage WOM communication by increasing interaction with their consumers via social networks. 4.1 Managing WOM Communication When consumers visit stores, they are encouraged to like the Facebook page of the company. Many of the business cards from vendors involve a “like us on Facebook at” on them. The companies then manage their Facebook pages to be more appealing and engaging towards the audiences. They include posting products or service updates or other news such as promotions by the company. These efforts would attract more interaction from the consumer's - likes, comments and check-ins. This provides a chance for the companies to reflect and follow up on any useful feedbacks to improve their services. These interactions from consumers would appear on the newsfeed of their friends who will be exposed to the company’s engaging page setup. They will also be compelled to view and like the page hence increasing the ‘fan base’. Eventually, these interactions would turn into a viral marketing and the major advantage would be the costfree advertising.
4.2 Importance of managing WOM communication The reason why service providers constantly manage the pages is to promote post likes, comments and check-ins, which are the mechanisms that constantly broaden company’s fan-base, since these activities appear on the newsfeed of consumer’s friends, there will be ‘repetition’. If the page were to be left unattended, the only way to increase the “fan-base” would be by promoting the Facebook page to consumers in the shop. This limits the likes of page to the consumers that has previously interacted directly with the company or those that stumbled on the page occasionally. Since liking a page could only be done once by each consumer, it would appear in a small scale compared to liking, commenting on a ‘post’ or checking-in as these actions could be done multiple times. This method is known as the ‘repetition’, which uses the peripheral route. It is especially effective for ‘low involved’ consumers. Eventually, the brand has unconsciously registered in their mind causing interest due to repetition.
5.0 Firm-generated versus Peer-generated (WOM) Firm-generated messages are defined as messages communicated from an organization to the consumers. For example, when Apple launches a new iPhone, they claim that it is the best smartphone in the market ("Iphone 6S" 2016). Peer-generated messages, also known as WOM are communications and reviews among consumers and societies. Consumers may spread WOM to their social circle after evaluating their purchase. Firm-generated WOM are more likely to be evaluated objectively by consumers. Evaluation will be based more on facts and track records of the organization. For example, Apple is a successful organization that consumers are confident of, making them a more trustworthy company compared to a new one when it comes to WOM. On the other hand, peer-generated WOM are more relationship oriented. Evaluation of the WOM is based on the personal trust with the other party. A recommendation or negative feedback from a close friend is seen as more credible compared to a firm generated one.
6.0 Pros and Cons of highly connected consumers With the rapid advancements in mobile technology, people now have easy access to the internet onthe-go now instead of being tethered to a computer a few years ago. While these advancements benefits consumers generally, it is not without cons for marketers. 6.1 Pros Marketers have an advantage when targeting highly connected smartphone users. Forums and social media such as Facebook provide consumers with comprehensive product information, hence increasing consumer certainty. The check-in feature on Facebook serves as a form of ‘recommendation’ for other consumers as well. Mobile marketing on applications help create ‘buzzes’ about products and services. This allow marketers to reach consumers while they are actively shopping, socializing, and making buying decisions. Furthermore, mobile phones can receive input anyplace-anywhere-anytime, enabling behavioral targeting for local businesses.
6.2 Cons Dissatisfied consumers are now able to spread negative WOM faster and to a wider audience than before through social media, presenting a bad image to the company. Furthermore, obtaining information is made easier with search engines where consumers are able to compare products or services with other brands resulting in an increase in competition. As WOM are perceived to be more credible by consumers, marketers need manage them appropriately and carefully.
7.0 Reference Groups A reference group is any person or a group that an individual compares themselves to or associate with which can influence and form values, attitudes or behaviour (Joseph Sirgy, Rahtz and Portolese Dias 2016). There is no limitations on the group size or membership and they are also not required to identify with a tangible group. Reference groups are important as they influence how consumer interpret information and makes purchasing decisions. These groups can be further divided into two groups; normative and comparative. Normative reference group influences the general values or behaviour of an individual through direct interaction. Whereas, comparative reference group is a group of individuals that one compare themselves against and may strive to be like (O. Bearden and J. Etzel 1982). 7.1 Types of reference group Reference group consists of both direct and indirect individual and group influences. It can be further categorized into the 4 different types of reference group; contactual, aspirational, disclaimant and avoidance. Contactual - It is a group whereby a person holds membership or has regular direct contact and of whose values, attitudes and standards he or she approves of (David Mudondo 2014). Therefore, a contactual group exerts a positive influence on an individual’s attitudes or behaviour. Aspirational - The members of the group does not hold membership, whereby the consumer idealize, idolize or admire a person which they do not have any direct contact with. However, would like to be associated with. Thus, it serves as a positive influence on the consumer’s behavior or attitude (Pittard 2013). Disclaimant - Disclaimant group is a membership group whose ideology an individual rejects. Thus, the individual tends to adopt attitudes and behaviour that are in opposition of the norm (Mahajan and Mahajan). Avoidance - Avoidance group is a non-membership group whose values an individual rejects and wishes to avoid association with (Brown and Turley 1997). 7.2 Consumer reference group With the advancement of technology, the Internet enables consumers to gather and form virtual groups or communities centered on particular brands or interests. Facebook, being one of the largest social media site (Chaffey 2016), many gather online to discuss and share their e-WOM of various experiences. Therefore, these consumer reference groups’ serves as an establishment of online brand communities for consumer-to-consumer interactions. These opinions generate discussion and highlights the wants of the consumers, also, providing feedback of a certain product or experience. Through these engagements, marketers are provided with an opportunity to learn of the consumer’s attitude, needs and desires. Hence, marketers are better equipped with knowledge to enhance the consumption experience.
8.0 Reference group influential factors 5
The degree of influence of a reference group is subjective in nature; it varies across an individual, product or specific social factors. 8.1 Information and experience An individual whom has a direct experience of a product or service, or is able to easily obtain detailed information of a product will less likely be influenced by the opinions of others. On the contrary, an individual with little to no experience of a product or whom is unable to have access to the complete information will easily tend to accept and be influenced by the opinion of others. 8.2 Credibility, attractiveness and power of the reference group A reference group, which is considered to be credible, would exert a higher influence on the consumer whom is looking for accurate information of a product performance, quality and service. Whereby consumers are concerned with their social acceptance and approval, the individual will tend to use the product, brand or behave the same as the group. However, when a consumer is fearful of the power of a group, one would adopt the norms to avoid ridicule or punishments. Hence, the probability of being influenced by such groups is high. 8.3 Conspicuousness of the product When a product is visible and conspicuous, such that it relates to the self-esteem and social status of an individual, the consumer tends to be more conscious while purchasing it due to the reaction of others. 8.4 Consumer conformity When a consumer is socially directed and looks towards a group for approval, the individual will conform to the advice given by the members of the group, as he/she wants to be identified and associated with the group. Therefore, he/she would conform to the products or brands suggested by the group. 8.5 Online consumer reference group influence of the decision-making process In the Facebook context, an online consumer reference group is able to provide information and experience from the various to a potential consumer. Also, it allows the consumer to compare his/her thinking with the group, which may however encourage the user to adopt similar beliefs through connectivity. Hence, influencing the consumer on its decision making process.
9.0 Conclusion It can be therefore concluded that electronic word-of-mouth communication is a dominant force in the marketplace for services. It is inexpensive and the most valuable form of marketing in which the consumers trust the most above all others. It is pivotal for the success of businesses.
10.0 References Brown, Stephen and Darach Turley. 1997. Consumer Research. London: Routledge. Chaffey, Dave. 2016. "Global Social Media Statistics Summary 2016". Smart Insights. http://www.smartinsights.com/social-media-marketing/social-media-strategy/new-global-social-mediaresearch/. David Mudondo, Chenjerai. 2014. "The Social Context Of Consumption: Analysing Social Reference Group Factors That Influence Millennial Mobile Phone Purchasing Behaviour". http://www.rassweb.com/wpcontent/uploads/PDF/IJMS/Vol-3/Issue-3/Paper%203.pdf.
Joseph Sirgy, M., Don R. Rahtz, and Laura Portolese Dias. 2016. "Consumer Behavior Today 1.0 | Flat World Education". Flat World Knowledge. http://catalog.flatworldknowledge.com/bookhub/reader/8111? e=sirgy_1_0-ch11_s01. Mahajan, J.P. and Anupama Mahajan. Principles Of Marketing (For B.Com, BBA, BBM And BMS). Vikas Publishing House. O. Bearden, William and Michael J. Etzel. 1982. "Reference Group Influence On Product And Brand Purchase Decisions". https://www2.bc.edu/~woodsiar/nov%202%20reference%20grp.pdf. Pittard, Vickie. 2013. "Using Reference Groups In Marketing". Business 2 Community. http://www.business2community.com/marketing/using-reference-groups-in-marketing0427866#wfYfF1DL0xdMswxp.97. Whitler, Kimberly. 2016. "Forbes Welcome". Forbes.Com. http://www.forbes.com/sites/kimberlywhitler/2014/07/17/why-word-of-mouth-marketing-is-the-mostimportant-social-media/#780ec6b67a77. "Facebook Newsroom". 2016. Newsroom.Fb.Com. http://newsroom.fb.com/company-info/.