From Social to Sale: The Effects of Firm-Generated Content in Social Media on Consumer Behavior

Introduction

Due to the dynamism in the use of media in the recent past, various firms have a preference for social media as a medium to engage their customers. The total spending on the social media advertising has increased to $ 17.74 billion in 2014, an incline of $ 6.38 billion from the year 2013. These are due to the synergies firm acquire when they use such medium. Therefore, given the unprecedented reach of the social media, firms have relied on it as a means in which they market their product to the customers.

Purpose of the study

The sole purpose of the study is to examine the effect of the firm generated content in social media on three main communication metrics: cross-buying, spending, and consumer profitability. Besides, it tends to investigate the synergic effects of the Firm Generated Content with the e-mail communication and television advertising.

Main theory(ies)

The main theories of this article are the Expectation and Drive theory. Expectation theory is a theory which suggests that behavior is pulled by the expectation of achieving the desired outcomes. For instance, we chose one merchandise over the other since individuals anticipate this choice to give optimistic significances for us. On the other hand, Drive theory postulates that individuals receive an anticipated amount of money that increases their disposable income. They will thus likely to spend it so as to drive up their consumption and spending in their economy. The secondary theory comprised of the Freudian theory, and cognitive learning theory.

The Hypothesis

Ho: Cross-buying, spending and consumer profitability communication metrics affects the firm generated content in Social Media

H1: Cross-buying, spending and consumer profitability communication metrics does not affect the firm generated content in Social Media

Previous Research Summary

The studies which have been conducted in the social media put a lot of emphasis on the effect of the user-generated content on the market outcomes in various contexts such as movie box office revenue, book sales, and music album sales. Others have carried an analysis on the people's motivation to post or contribute content to the social media. However, researchers have agreed that the focus on the user-generated content is understandable. However, the relevant study which can be attributed to this is that which is done with Danaher and Dagger. They did focus on the impacts of a single promotional sales campaign that was advertised in the social media for a period of 10 years. In the study, it was found that it is 7 out of 10 types of media influences the purchase outcomes of individuals. These thus forms a foundation for the study of FGC.

Methods of Data Collection

The data was collected through survey method. The collection was primarily done from the wine and spirit retailers who operate multiple stores in North Eastern parts of United States. The information was gathered from the customers who participated in the focal firm's social media site. The social media participation data set and the transactional in-store purchase dataset was merged together for analysis. The comprehensive data was thus employed for empirical analysis.

The Model used in the study

In the study, the DID model was used. For its analysis, the treatment group was selected by the use of the multistep process. The process thus did yield the 412 customers who were to participate in the study. For the DID model, the data from 85 weeks before and after the inception of the focal firm's social media page were used. Besides, the PSM method was used to match the control group which also yielded the similar number as the controlled group. Also, the TE model was utilized to address the endogeneity issues by taking into consideration the endogenous variables through its incorporation into the modeling framework.

Major Findings

The results depict that after the researchers account for the e-communication and television advertising effects, the firm generated content did tend to have a greater impact on the behavior of consumers. The firm generated content has a positive impact on the customers spending and cross buying. Besides, it did show that the firm generated content works synergistically with both television advertising and e-mail marketing. The researchers also found that the impacts of the firm generated content are far much greater for the experienced, tech savvy and social media prone customers. The study also revealed that the firm generated content have a positive association with the customers' profitability over a given period. To validate and justify their hypothesis, the researcher did propose and investigate the three main components of the firm generated content. These comprise of customer susceptibility, valence, and receptivity. After the analysis, it was found that the three firm generated content components had a positive impact and it is the receptivity component which had the largest impacts as compared to other components. It thus shows that receptivity which gives the customers move voice in the social media, a process which makes the consumer-generated content to be more effective. These thus did aid in the proper understanding of the theoretical facts which underpins the firm generated content. Besides, it aids the managers to promote their products as well as engaging in the process of nurturing profitable relationships with the customers and other clients.

Conclusion

The investigation on the impacts of the firm generated content on the main communication metrics such as cross-buying, spending, and consumer profitability have been justified. The study tends to offer insights into the firm generated content's influences and make a major contribution to both practice and theory. It thus provides vital managerial insights in regards to how firms can leverage the social media so as to attain higher returns. Despite these successes, the study did face some limitations. For instance, the study did focus on one social medium leaving other social media as they were investigating the consumers' participation in firms. Besides, it has been found that most of the problems faced in the study come as a result of lack of relevant data set. Therefore, further studies should be done to build on this research.

References

Kumar A., Bezawada R., Rishika R., Janakiraman R., & Kannan P.K (2015) From Social to Sale: The Effects of Firm-Generated Content in Social Media on Consumer Behavior. American Marketing Association; Journal of Marketing. 1547-7185.

Dahl D.W., White K & Solomon M (2017) Consumer Behavior