How Can Social Media Be Used as a Powerful Marketing Tool in a Small Business - Research Paper Example

How Can Social Media Be Used as a Powerful Marketing Tool in a Small Business? This study explores the research question, “What is the potential of Facebook as an effective marketing tool for a small business?”. The case study is about Twinklestars Children Clothes (TCC), a small business run from the home of its owner who designs and makes children’s clothes. Facebook was its first attempt at marketing its products to people outside her own small social network of family and friends who have been her constant customers. This study provides the information on how the business’ sales increased through the use of Facebook through interview with the owner of the business as well as looking into the financial figures derived from their sales and comparing them from the time she used traditional word-of-mouth marketing to the time she already used Facebook as a marketing medium. The findings prove that since posting pictures of her children’s clothes in her Facebook page and setting up one for TCC, the business’ sales has grown by 150% in just nine months. The profit increase is evidence that Facebook is an effective marketing medium for a small business. Key words: Facebook; small business marketing. Table of Contents Introduction……………………………………………………………………….…………3 Literature Review……………………………………………………………….…………..4 Method………………………………………….……………………………….………..…11 Results………………………………………………………………………….…………...12 Discussion………………………………………………………………………………….14 Conclusion………………………………………………………………………………….17 References………………………………………………………………………………….20 Introduction The internet has evolved to be a powerful tool that can be used for a variety of purposes. Being known as the information highway without leaving one’s home, it provides users with a vast range of sources of information that allow them to find answers to any question in one click. Even businesses have boomed with the utilization of online advertisements. Currently, social media has likewise hopped on the marketing bandwagon, offering their sites as platforms for selling products and services in a myriad of ways. Social Media Today (2014) reported the latest statistics of internet user behaviour as follows: 72% of all Internet users are now active on social media 89% of those between 18 and 29 years old are social media users 72% of individuals aged 30 to 49 are engaged in social media 60% of people between 50 to 60 years old are active on social media 43% of those 65 years old and above are engaged in social media 71% of users access social media from a mobile device These statistics show how effective social media can be to boost the popularity and sales of businesses using it for marketing purposes. Research Question: “What is the potential of Facebook as an effective marketing tool for a small business?”” Research Objective: This paper will show how small businesses can maximize social media to make their business grow. It will focus on a small dress shop in London started by a young woman who worked from home and decided to sell the dresses she made for children online using her Facebook account. The shop’s name is Twinklestars1. Literature Review Marketing goods and services online has been ongoing for many years now. Berthon et al. (1996) explain that potential customers begin with their search for a preferred product when they surf the internet. Businesses which have established their website presence are more likely to attract customers as long as they keep their sites dynamic, with their advertising designs and texts consistently updated so they sustain the interest of their customers (Durkin & Lawlor, 2001). Apart from the use of computers, mobile devices have stepped up to include features that access the internet, widening the reach of online marketing to people who are not always on their computers, but also those who are mobile with their cellular phones, computer tablets, etc. Powers et al. (2012) noted that consumers use their mobile phones to check on social media while shopping and finding information about their desired product or service. However, when they need more in-depth information from the company’s website or reviews about the product/service, they are more likely to use their personal computers. Social media is defined as the “production of content by users that is accessible and searchable by all” (Reid, 2009, p.39). Kalamas, Mitchell & Lester (2009) define it as “a communication medium that is devoted to or characterized by interaction between participants or consumers of the medium” (p.3). Social media platforms include Facebook, YouTube, Twitter or blogs offering opportunities for engagement marketing. As of yet, Henry & Harte (2012) argue that Facebook offers the greatest opportunity to be engaged in with a variety of content types. Facebook has become a standard add-on of businesses in their brand page and is an effective avenue to increase traffic towards their business’ website. It can offer rich content about the business as well as attention-getting photos and videos to attract prospective customers (Social Media Today, 2014). The following are basic facts about Facebook: Facebook now has over 1.15 billion users One million webpages can be accessed with the “Login with Facebook” feature 23% of Facebook users login at least 5 times daily 47% of Americans say Facebook is the top influencer of their buying decisions On average, Americans spend 16% of each online hour on Facebook. 70% of marketers acquire new customers through Facebook (Social Media Today, 2014) Smith (2013) reports that positive experiences with certain brands’ content on Facebook pages may lead people to be more engaged with the brand’s page. Such people are 3.2 times more likely to post a positive comment and 4.3 times more to share the content if they experienced strong positive emotions while engaging with the brand’s content. To take advantage of what Facebook as a marketing tool, Smith (2013) recommends three things to business owners. First is having a clear strategy of what they want to achieve using Facebook such as the particular experiences their Facebook page’s visitors will encounter. Are there pictures of the products that can be viewed? Are there articles about the products or testimonials from satisfied customers? Content should be engaging enough to capture the attention and interest of potential customers. Second, Smith emphasizes the importance of piquing the curiosity of viewers. Do they go to the business’ Facebook page to satisfy their curiosity which was tapped elsewhere such as an ad in the newspaper, a television commercial or any other place online? Alternatively, from the Facebook page alone, curiosity should be triggered or even intensified enough for the viewer to seek deeper information, such as the business’ website or actual store. Finally, the business owner should attempt to create an emotional impact with the content of their Facebook page in order to increase the likelihood of viewers forming attachments with their brand prompting them to keep revisiting the page, telling their network about it, recommending them to see it for themselves and eventually, moving on to close a deal with the business owner (Smith, 2013). Users of the social media site express their affinity for a particular brand by “liking” its page. Automatically, they become “fans” of the brand, and they become regular recipients of the updates about the brand such as deals and promotions or upcoming events for the brand (Lipsman et al., 2012). The friends or contacts of the “fan” becomes exposed to the brand even if they are not explicitly fans of the brand yet because they keep seeing the fan’s activity and engagement with the brand on their newsfeed (Lipsman et al, 2012). (Ex. “Nicole likes Nike”). There is a great chance that such friends of fans will check out the brand themselves and hopefully become fans as well. Caren Baginski (2014) shares strategies in growing a wider fan base of a brand through a Facebook “Like” Campaign which has proven to be effective in boosting sales for her business through the tremendous increase in her brand page’s “likes”. She claims that she gained more than 9,300 new page likes at the cost of 56 cents per like. Her ads appear in other people’s newsfeeds as well as positioned on the right column of Facebook pages. Her guidelines in running the campaign are as follows: Click “Create an Ad” in the Facebook Ads Manager. (facebook.com/advertising) Choose “page likes” and then the business’ Facebook page. Follow the instructions indicated. Six pictures of the brand need to be uploaded to test different imagery for the ad. The photos should have only 20% of text on the image. The Facebook grid tool may be used to pretest the images if they fit the required size and quality (facebook.com/ads/tools/text_overlay). Add the headline for the image, which is usually the name of the business, and the text of the content. A brief teaser explaining what the people who will “like” the page should be provided. This can be a reward of coupons, tips, discounts, etc. The target audience should be defined in the content so it attracts exactly the desired demographics of potential customers. The interests field can be filled with several applicable key words that would attract the ideal audience. For example, if the brand is for children’s garments, the ideal audience should be mothers of young children and children themselves. Choosing more categories can filter the audience for the campaign but it also significantly limits potential reach. Since this is not a free campaign, budget and schedule for the campaign run should be considered. The campaign should be identified with a name such as “Twinklestars Children’s Clothes Ongoing Page Likes Campaign. Finally, click “place order” and allow Facebook to review and approve the ad. (Baginsky, 2014) Social media brand impressions are what makes a Facebook page or business web page active that brings much exposure to the business’ content. Lipsman et al. (2012) enumerate social media brand impressions as follows: Page Publishing: The business owner can post his or her own content which appears on its fan page wall and also in the Newsfeed of a fan or a friend of a fan. Social media brand content is not usually consumed within the page of the brand or business but primarily within the newsfeed of its fans and their friends. The increase in the likelihood of content reaching the fan base is based on the frequency and quality of posting the content. More frequent publishing increases the rate at which fans see it. In one Facebook analysis, it was found that each incremental day of publishing branded content from the business’ Facebook page increases the reach among fans by approximately 2.5 percent. Content should be engaging and is not annoying to view (Lipsman et al, 2012). Stories about Friends: When a Facebook friend actively engages with a brand such as “liking” the brand or commenting on a post, it becomes visible on a friend’s wall or in the Newsfeed. Such “stories” may appear to fans and friends of fans (Lipsman et al., 2012). Sponsored Stories: These are paid impressions or posts that have been actively distributed on a wider scale and appears on the right hand column of fans’ pages or their friends’ pages (Lipsman et al., 2012). Advertisements with Social: Branded messages created by the business owners or advertisers with a social context that its fans can engage with and such engagement gets reported in their friends’ newsfeed. The content has the potential to generate “brand awareness, favourability, purchase intent, conversion or even long-term loyalty and lifetime value” (Lipsman et al., 2012, p. 46). Boosting Sales via Facebook Handly (2014) advises business owners to give priority to their Facebook page due to its great potential to pool in potential customers. She even contends that Facebook may be more effective in creating a stronger online presence than the business’ website. The following are her professional tips: “Tap into existing communities of potential buyers.” (p. 34) These may be from established “group pages” or social circles of loyal fans. “Target by niche, not by numbers” (p. 34). Facebook can provide demographic and behavioural information of its users so businesses can target the customers they want. In this case, the number of “likes” takes a backseat to the customized customer profile brands want to target because they are more likely to purchase. Friends of those targeted customers can also be pursued. “Remember that it still costs money.” (p. 34). The use of Facebook as a marketing tool entails expenses for the ads it will disseminate. It is much less compared to expenses for traditional marketing strategies such as placing ads on television or the newspaper on a regular basis. “Content is key”. (p.34). Content should be kept interesting and informative that viewers will keep coming back or better yet, share it to their own network. A business need to present itself as a credible source of knowledge of its specialization. It breeds trust and respect from customers. “Pick the right vendor partner” (p. 34). Businesses can partner with a vendor to take care of its sales. That way, transactions may be done on Facebook itself and customers do not need to leave the site to purchase a product. Once customers develop a kinship with the brand from Facebook and become loyal fans, they can be expected to follow the brand to its website or better yet to its business outlets offline. This study contributes to the literature by showing how Facebook can be a viable marketing tool for a small business run from home and to show its possibility for aspiring entrepreneurs. Method To determine how effective using the social media, Facebook, is in increasing the sales of Twinklestars Children’s Clothes, its sales from the time it began using Facebook as a marketing tool and the current sales shall be compared. Its Facebook activity shall also be analyzed to observe customer engagement with the business page. For the purpose of this study, only figures pertaining to sales gained through Facebook marketing shall be analyzed and not those derived from other sources such as orders from customers who did not get to know about TCC through Facebook. Case Study: Twinklestars Children’s Clothes (TCC) just opened for business in January of 2014. It is owned by a lady who will be identified in this paper as Ms. R, who is studying fashion design in a university in London. She intends to specialize in children’s fashion. The owner/designer of TCC, Ms. R began creating children’s clothes for her daughter when she was 3 years old. Since then, she has learned how to make dresses, skirts, blouses, pants, shorts, etc. for casual wear. The year after, she also learned how to make clothes for little boys. Her friends took notice of the quality and designs of her creations and began ordering clothes for their own children. In January of 2014, she started accepting orders from customers other than her family and friends. Most of her customers were recommended by her existing customers who were mostly her friends. She also began posting photos of her creations on her personal Facebook page and set the privacy setting to public. Her friends “liked” her photos and started “tagging” their friends, who were mostly mothers of young children. The “tags” gave these people access to the pictures that the owner posted. By March, 2014, TCC’s clientele grew, keeping the Ms. R busy creating children’s clothes to deliver to her growing number of customers. Seeing the marketability of her creations, the owner’s husband created TCC’s own Facebook page and posted his wife’s photos of her children’s clothes as modelled by their daughter and a nephew. They invited all the people they know to “like” their page as well as recommend it to their own social networks. In a span of a week, TCC’s Facebook page “likes” multiplied to a total of 7,583 likes. Several customers made inquiries and even ordered some clothes. To keep up with the demand, Ms. R had to hire 2 seamstresses to help her sew her designs. They all worked from Ms. R’s workshop in her home. As Ms. R and her husband learned about the business features of Facebook, they began paying fee to “boost” their posts, meaning it will reach the Facebook newsfeeds not only of TCC’s fan base but to the public as well. This strategy was proven to be highly effective as more customers were attracted to the photos and more orders for the clothes came in. The items were relatively low in cost, ranging from £25.00 to £250.00 depending on the item and its material/ design. The monthly sales derived from Facebook transactions only shall be investigated for this study. Isolating sales from Facebook marketing will determine if that platform is effective in boosting sales for small businesses like TCC. Results Beginning Sales Figures (no Facebook marketing yet) As of January 15, 2014: £855.00 Source of orders: Ms. R’s friends’ orders for their children’s clothes. Began posting photos of TCC items on Ms. R’s personal Facebook account on January 17, 2014 Sales from Facebook orders alone as of January 31, 2014: £540.00 Set up a Facebook page for Twinklestars Children’s Clothes on February 10, 2014 Sales from Facebook orders alone from February 1-28, 2014: £1,167.00 Monthly Sales from Facebook only, starting the month of March, 2014. Table 1. Monthly Sales Figures from Facebook Marketing only. It is clear from the sales figures, as expressed in the line graph below that Facebook marketing has positively affected the sales of TCC. The figures only reflect sales from Facebook marketing and not TCC’s other customers who knew of the business outside of Facebook. The figures show that monthly sales from Facebook alone increased by 150% in just 9 months. Figure 1. Graph showing progress of sales from Facebook marketing. Discussion The findings have shown how effective Facebook is as a marketing tool for a small business like Twinklestars Children’s Clothes which is run from the home of the business owner, employing a staff of only two sewers. When the business started, it earned £855.00 from orders from customers who knew Ms. R in person, outside of Facebook. However, when she posted photos of TCC items on her own Facebook account, exposed only to her small circle of Facebook friends, she already earned £540.00 in just 15 days and that figure is only from Facebook orders. Upon the creation of the business’s own Facebook page which was visible publicly, reaching a much wider audience due to boosts by Facebook itself, sales jumped by 115% in just one month. Growth of sales from Facebook was steady over the months with a few dips on the months of June and September. However, such dips were not significant enough to affect the overall progress of the business in terms of overall rise in sales for 9 months. The month with the highest sales from Facebook was October due to the business’ promotion of Halloween costumes and other novelty items. It is now gearing towards a full blast sales increase by December due to the holiday season. Ms. R is contemplating on hiring more people to help her out with production of orders. The significant increase in sales due to Facebook marketing may be attributed to the fact that most people are tuned in to social media, especially Facebook (Social Media Today, 2014). Hence, it is much faster to communicate with others because with one posting of a status message or photos of goods being sold, there are already multiple viewers. Because Facebook offers a variety of features for engagement of its users (Smith, 2013), business owners may come up with different strategies to attract customers, and Facebook is ready to help them boost their marketing ploys to the public. One strategy is boosting “likes”, as suggested by Lipsman et al. (2012). It was commendable how TCC gained 7,583 likes in just one week, thanks to the help of their Facebook network who not only liked their business page but also invited more people to like it as well. It is very helpful that Ms. R belongs to different social networks of women, who are mostly mothers with young children, and are therefore, part of her potential customer base. TCC has yet to follow Baginsky’s (2014) tips in further boosting the business’s fan base by paying a small amount to Facebook to embed its ads on the newsfeeds of Facebook users, be they part of TCC’s network or not. Visibility and name recall is one tried and tested marketing strategy that Facebook implements. Ms. R did not merely rely on the “likes” that people give to her business page but was more aggressive in pushing her products online. Having found a good market, she was motivated to update her customers of new designs that she posted regularly along with some promotional activities such as provision of discounts to the first 10 orders. This may not be such a big deal to some business people, but such a move already creates large strides for a small business like TCC. Another way of widening TCC’s visibility is by engaging its friends or contacts to like and comment on posts. Every action of a user is reflected on the ticker feed located on the right corner of the newsfeed of the friends of the user. Thus, when TCC posts pictures of its latest designs and “tags” some people by writing their names on the status message, the post becomes visible on their respective pages if they allow it in their security settings. When TCC’s post is displayed on the tagged user’s timeline, his or her friends are bound to see it too on their newsfeeds, giving a wider exposure to TCC. Since TCC is a public page, anyone can comment on its posts. The administrator of the TCC page, or Ms. R should be responsive to any comments or questions and provide a reply on the comment thread to keep the user engaged. Ms. R and her husband were overwhelmed with the rapid growth of their business in a short span of time and it was only the use of Facebook as a marketing tool at that! If they are serious in pursuing greater success in profits, they can also venture into the use of a myriad of marketing tools online such as the creation of TCC’s own website, which is still under consideration, having a blog dedicated to TCC and its products, or blogs written by other bloggers about TCC (ex. Positive reviews, photo essays, etc.), SEO marketing or “search engine optimization” or the process of attracting online traffic to their website from potential customers typing words on their search button that are related to their business such as “children’s clothes”; “girls’ dresses”; “boys’ overalls”, “toddler clothes”, etc. Then when search results come up, TCC’s entry will be included as one of the top search results (Vroom Digital, 2013). The tendency of most internet users is to click on one of the top results of their searches, and if TCC is on it, it is most likely their website gets more visitors to view their page and check out the goods on display there. These are just a few of the options Ms. R can take to bring TCC further in its success. She just needs to be ready for more challenges and work harder and hire more people to help TCC grow. Facebook was just TCC’s first step towards being a label worth buying. Conclusion The brisk pace of progress in technology makes it so much easier to market goods and services nowadays. Not only are people spending more time on their computers surfing the internet, but gadgets such as mobile phones, computer tablets, and other mobile devices keep them connected to their social media networks when they are on the go. Facebook has become a standard social media network most people have access to. Thus, marketers have exploited this medium to spread information about the products and services they advertise, and it has proven to be an effective tool! This case study on a small business, Twinklestars Children’s Clothes (TCC), has proven it. In a span of just 9 months, Facebook has done so much to help the business reach more customers, bringing more business. Simple as this study may be, the researcher has witnessed the power of Facebook not only in connecting people, rekindling friendships but also in boosting businesses. This provides much hope to striving entrepreneurs like Ms. R who may not be able to compete with bigger businesses that have much more resources for marketing their goods and services. Facebook has affordable features that can be customised to its users, addressing their specific needs. Research Contribution The contribution of this study to the literature is its finding that even housewives or unemployed individuals who want to earn from their own hobbies, interests or special talents may now be empowered to market it online. With this perspective, there is no excuse anymore for people to stay idle, as there are several options they can take to gain attention for their wares and opportunities to make their small businesses grow. Facebook has been a valuable resource to boost not only friendships and self-esteem but also businesses like Twinklestars Children’s Clothes. Implications for Future Research This study may inspire future research of doing comparisons of Facebook’s effectivity as a marketing medium for small, medium and large businesses. Enterprises much larger than TCC have the resources to use more sophisticated and more expensive marketing formats, and it is interesting to see how much different it would fare if it would still use Facebook to advertise its goods or services. It would also be interesting to do more specific research on the differences in profits gained by different products and services. For example, would Facebook marketing yield more profits for food businesses or for fashion businesses? How can Facebook marketing be customized to target specific markets like only mothers of young children or only male business executives? All these topics, among others, would be interesting to examine in future researches on Facebook marketing. References Baginsky, C. (2014) Attract Facebook followers with a ‘likes’campaign, Retrieved from newhope360.com, Penton Media Inc. Berlhon. P.. P Leyland and R.T. Walsoii. 1996. Marketing Communication and the Internet, Business Horizons, Sept/Oct. pp. 26-32 Durkin, M. & Lawlor, M. (2001) The Implications of the Internet on the Advertising Agency-Client Relationship, The Service Industries Journal. 21(2), 175-190 Handly, A. (2014) Buy me on Facebook, Entrepreneur, 42 (3), 34. Henry, M. & Harte, B. (2012) Practitioners articles: A new model for assessing the value of social media activity, Journal Of Brand Strategy 1 (3), 234-239. 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