SOCIAL MEDIA: EFFECTS ON MARKET SHARE IMPROVEMENT IN THE SERVICE INDUSTRY
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SOCIAL MEDIA: EFFECTS ON MARKET SHARE IMPROVEMENT IN THE SERVICE INDUSTRY
Chapter one
BACKGROUND FOR THE STUDY
1.0 Introduction
“The marketing and communications mix is shifting. New ideas, technologies, possibilities, and difficulties emerge as the twenty-first century progresses. The world’s 61/4 billion consumers and over 400 million business customers are becoming increasingly accessible” (Smith and Taylor, 2004, p. 4), making them prime targets for new global competitors.
“Marketing has moved from ‘customer acquisition’ (winning new customers) to ‘customer retention’ (keeping customers for life) to ‘customer selection’ (dumping unprofitable customers while selectively seeking and keeping the more profitable ones)”
(Smith and Taylor 2004, p. 4) to ‘customer relationship’ (interacting with customers, gathering and analysing data on them, and forecasting customer trends and/or behaviours to improve customer experience).
This fact is supported by Arens, Weigold, and Arens (2008, p. 307), who state that “the key to building brand equity in the twenty-first century is the development of interdependent,
mutually satisfying relationships with customers and other stakeholders.” As a result, today’s marketers must embrace continuous change as well as the opportunities and challenges that come with marketing.
One of the areas of marketing experiencing constant change is the marketing communications mix, and brand managers must have “a basic understanding of the communication tools available to them and how they can best be used in the overall communication mix” (Arens, Weigold, and Arens, 2008, p. 307). One of the new communication methods available to organisations today is social media marketing, a type of digital marketing.
Social media, while still a relatively new phenomena, is becoming an increasingly crucial aspect of any company’s marketing and customer base development strategy.
Social media offers brands a unique opportunity to strengthen customer relationships, but “the dynamic, ubiquitous, and often real-time interaction enabled by social media significantly changes the landscape for brand management” (Gensler, Völckner, Liu-Thompkins, & Wiertz, p. 1).
Brands, on the other hand, are extremely significant assets to organisations, and brand managers strive to “create strong brands with a rich and clear knowledge structure in consumer memory by authoring compelling brand stories” (Keller 1993; Srivastava, Shervani, and Fahey 1998). “A brand is no longer what we tell the consumer it is – it is what consumers tell each other it is” (Cook, 2012).
“Consumer-generated brand stories told through social media are much more impactful than stories spread through traditional channels because they utilise social networks, are digital, visible, ubiquitous, available in real-time, and dynamic” (Hennig-Thurau et al., 2010, pp. 12-13).
This has resulted in the fusion of social media and customer relationship management (CRM), with the end result being “Social CRM,” a means of allowing brands to listen, engage,
and successfully coordinate or integrate consumer-generated and firm-generated brand stories on social media into their communication mix to create compelling brand stories that strengthen customer relationships and move them further down the sales funnel.
Of all the marketing promotional tools, digital marketing has seen the most change in a short period of time, with more and more marketers embracing the numerous options it provides. Simply said, digital marketing is the process of “identifying, anticipating, and satisfying customers’ needs online” (Smith and Taylor 2004, p. 620).
This is divided into various categories, including Search Engine Marketing, Search Engine Optimisation, social media marketing, mobile media marketing, interactive out of home (OOH), and digital TV and radio, with social media marketing being one of the most essential and widely used.
Social media marketing can be described as a hybrid component of the marketing promotional mix. This is because, in a traditional sense, it allows brands to communicate with their customers, and in a nontraditional sense, it allows customers to communicate directly with one another and with the company in real time.
For example, one client can now converse with hundreds or even thousands of other people about products/services and the companies that offer them. This is in contrast to the traditional marketing communications paradigm, in which communication is typically one-way.
When businesses join social media platforms, consumers may interact with them, and they can then communicate directly with customers and future clients. This engagement feels more intimate to users than traditional marketing tactics and can foster a sense of loyalty.
Social media is valuable not only in and of itself, but also as a source of analytics and data that can indicate what types of content will do well as paid media. Brands use social media to connect with customers,
stimulate and promote positive brand-related stories, and listen to and influence consumer-generated brand stories, whereas customers use social media to discover, research, and share information about brands, products, and services.
Furthermore, the fact that social media platforms such as Facebook, Twitter, Google+, Instagram, and others allow brands to reach a much larger audience than some traditional media alone, such as TV, radio, and print, at a fraction of the cost (because most social networking sites are free to use) has made it easier for brands to accept.
Thus, rather than spending millions of Naira on a 30-second commercial time on TV or radio, marketers can now drive buzz simply by creating viral content and promoting participation.
According to Merriam Webster Dictionary 2013, market share is “the percentage of the market for a product or service that a company supplies”. As a result, market share contributes to a company’s performance. ”
Past data analyses have consistently demonstrated that most businesses with high market share enjoy above-average profit margins and rates of return on investment while most businesses with smaller market share have below-average margins and returns on investment.” (Nielsen 2013, p. 1).
The Profit Impact of Marketing Strategist (PIMS) programme, sponsored by the Strategic Planning Institute in Cambridge, Massachusetts, conducted one of the first studies to show a link between market share and profitability, which was published in the mid-1970s.
According to (Werner and Kumar, 2003, p. 82), the financial benefits of having a strong market position make it a popular strategic marketing goal in most organisations.
Typically, only market leaders are content to maintain their current marketing shares, while competitors ranked second, third, and lower are aggressively attempting to catch up to the leaders.
1.1 Statement of the Problem
With the introduction of social media and more than half of the world’s population using various social media platforms, “brand managers have lost their pivotal role as authors of their brands’ stories” (Gensler et al, 2013, p 2).
Instead, consumers who are now able to simply and publicly share their brand stories via social networks have earned a more powerful voice that brand managers cannot afford to ignore – even if their companies choose not to actively participate in social media themselves.
As a result, many marketing executives are now focused on identifying strategies to utilise their businesses on social media platforms. Social media has become an important component of internet marketing strategy due to its low cost,
capacity to reach targeted audiences fast, and ability to produce more leads and sales. According to Forbes (2014), 94% of corporations use social media, with 85% reporting that it has increased their business exposure.
This has resulted in the quick adoption and construction of social media profiles on key social media platforms by an increasing number of global and local firms, with Nigeria not far behind. This desire to participate in social media is natural, especially given the spectacular expansion of social networks.
However, in order to make the best use of this medium, marketers must not only understand what social media is, but also what role it can play in their marketing communication mix, and how the use of social media marketing can affect their brand’s awareness, customer relationship, product purchase, and, as a result, market share.
1.2 Research Objectives
It is envisaged that this research endeavour will achieve the following aims.
· Assessing the elements influencing social media’s appeal in Nigeria’s insurance industry.
· Identify social media channels used by service industry brands in Nigeria and their impact on market share improvement.
· Examine the impact of social media marketing on a company’s marketing communications mix.
To examine how social media marketing affects insurance company brand recognition.
· Evaluate the impact of social media on consumer demand in the insurance business.
To identify how social media marketing can affect an insurance company’s market share.
This study will look at marketing, traditional marketing or media, digital marketing, social media, social media marketing, social media platforms such as Facebook, Twitter, Google+, Instagram, and blogs, customer relationship management, brand loyalty, the service industry, insurance, and market share.
1.3 RESEARCH QUESTIONS.
This research will be predicated on the following questions:
What factors drive the adoption of social media marketing by Nigerian insurance companies?
How does social media marketing fit into an insurance company’s marketing communications mix?
How has the usage of social media affected the awareness of these specific insurance firms?
Has the use of social media marketing by these companies resulted in effective demand for their products?
Can the usage of social media boost the market share of certain insurance companies?
1.4 Hypothesis.
This research will be based on the following hypotheses:
H01 – Social media has little effect on a service company’s brand awareness.
H02 – Social media marketing does not generate effective demand for products.
H03 – Using social media will not increase a company’s market share in the service business.
1.5 Research methodology
Social media marketing is still a relatively new idea globally, and the usage of social media by brands in Nigeria is still in its infancy. In the Nigerian insurance sector, Mansard Insurance and Leadway Assurance are blazing trails in social media marketing, while others, such as AIICO Insurance and Goldlink Insurance, are catching on but at a slow pace,
with the remaining insurance companies completely absent from social media at the moment. Thus, this research will focus on these four insurance companies that have a presence on at least one social media platform at the time of the study.
The research topics that underpin this study will be addressed using a quantitative research methodology. Given the subject matter of this research, the survey research method will be used,
with the above-mentioned research questions expanded into questionnaire form and administered to a randomly selected sample size of 250 respondents from potential insurance customers who use social media platforms.
This sample size of 250 respondents will be chosen using simple random selection and will include people aged 18 to 60 who are members of a brand community on any social media site, including Facebook, Twitter, Google+, Instagram, or blogs. A link to the questionnaire will be posted online and shared on prominent social media sites.
1.6 SCOPE OF THE STUDY
The primary factor to consider when selecting respondents for the study is that they must have an account on at least one of five social media platforms – Facebook, Twitter, Google+, LinkedIn, and Blog – and be a member of a brand’s community on these platforms. These respondents should be between the ages of 18 and 60,
with 18 being the minimum age required to sign up for an insurance policy in Nigeria and 60 being the maximum age required to sign up for the majority of insurance policies in Nigeria. These chosen respondents can be from anywhere in Nigeria because the questionnaire will be given online and hence not limited by geography.
No special educational qualifications are required for the respondents because insurance is now available to almost everyone, regardless of socioeconomic status, with insurance companies now offering products specifically designed for low-income earners such as artisans, drivers, and traders in addition to their standard policies.
One such insurance policy is MTN Y’ello Life, which was designed by Mansard Insurance in collaboration with MTN and has a daily premium of only N15.
Finally, as previously indicated, this research will focus on four insurance businesses in Nigeria that have a present presence on social media platforms: Mansard Insurance, Leadway Assurance, AIICO Insurance, and Goldlink Insurance, with the first two having the most engagement on social media.
1.7 Significance of Study
A rising number of businesses, regardless of industry (service, consumer, or industrial), are already embracing social media sites such as Facebook and Twitter to improve brand communication and promote and communicate product information to customers.
The significance of this research work stems from the fact that, once completed, it will provide insurance marketers with relevant information on how their use of social media can impact their relationship with customers,
which may in turn affect the customer’s purchase of their insurance policies and, as a result, the market share of their brand when compared to their competitors.
This is critical in light of recent developments, which show that more marketers are now willing to spend more on social media marketing, as depicted in a survey by Nielsen and Vizu in April 2013, which found that “70% of brand marketers were planning to spend more on their social media marketing.”
It is expected that when this research is completed, the findings will add meaningfully to the existing information on social media marketing, serve as a guide for brand managers in the insurance sector on how to use social media marketing, and provide a foundation for future studies in social media marketing.
1.8 Operational/Conceptual Definition of Terms
Blog – is an abbreviated version of ‘weblog’, which is a term used to describe websites that keep an ongoing chronicle of information by an individual with connections to articles on other websites.
Brand loyalty is the extent to which consumers are loyal to a specific brand, as evidenced by their recurrent purchases in the face of marketing pressure from competitors.
Customer relationship management (CRM) is a method for managing all interactions between a firm and its present and future customers in order to increase efficiency, improve customer happiness, and retention.
Digital marketing is the promotion of products or brands through electronic channels. It can take many forms, including SEO, SEM, social media, mobile phones, electronic billboards, and digital television and radio channels.
Effective demand reflects the amount to which purchasers’ income, perceptions, loyalty/preference, and needs combine to result in a purchase rather than just a desire to buy. It is therefore the distinction between nominal and latent demand.
Facebook is a famous free social networking site where registered users may build profiles, upload photos and videos, send messages, and stay in touch with friends, family, and colleagues.
The site, which is available in 37 languages, contains public elements such as a marketplace, events, pages, and presence technologies. It is currently the largest social networking platform in the globe.
Google+ is Google’s social network. Google+ now provides functionality and features similar to Facebook.
Instagram is a free online programme and social network that allows users to shoot, edit, and share images with others via the Instagram platform, email, and other networking sites.
Insurance is a risk-transfer mechanism that provides whole or partial financial compensation for losses or damages caused by events beyond the insured party’s control.
LinkedIn is a social networking platform created primarily for the business community. The site’s purpose is to enable registered members to create and document networks of people they know and trust professionally.
Marketing is an organisational role that includes a set of processes for developing, conveying, and delivering value to customers, as well as managing customer relationships in ways that benefit both the organisation and its stakeholders.
Market share is the percentage of total revenues in an industry or market that a specific company earns over a given time period. This indicator is used to provide an overview of a company’s size and profitability in comparison to its competitors.
The service business is made up of enterprises that primarily generate money by delivering intangible products and services.
Social media refers to electronic communication formats such as social networking websites and microblogging, in which users create online communities to share content such as information, ideas, personal messages, and so on, or to participate in social networking.
Social media marketing is a type of digital marketing that uses social media platforms to gain brand awareness, broaden customer reach, and is primarily driven by word-of-mouth, resulting in earned media.
Traditional marketing uses print, broadcast, direct mail, and telephone media to reach and convey information to a specific audience.
Twitter is an online social networking and microblogging service that allows users to post and read brief 140-character text messages known as tweets.
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