Running head: SOCIAL MEDIA: CHANGING THE BUSINESS LANDSCAPE

Social Media: Changing the Business Landscape

Lauren O'Leary
Central Michigan University

SOCIAL MEDIA: CHANGING THE BUSINESS LANDSCAPE

Background and Significance

The goal of my project was to investigate how social media has evolved to influence
businesses and consumer purchasing decisionsmore specifically, how effective companies
social media efforts are in marketing their brand/products to college students. Over the past
decade, social media has drastically changed the public relations, marketing, advertising, and
communication models and has become a core component of the business toolbox as a means for
information dissemination. Although social networking has transformed into one of the most
popular trends among young adults as a form of self-expression and way to connect with others,
I wanted to explore a unique dimension of it: the consumerism side.
Since social media is a relatively new concept within the business field, not much
research has been conducted on its outcomes. Although there has been a myriad of recent work
published on how to plan effective marketing strategies that incorporate the use of social media,
there has not been much discussion on the actual results and whether or not it provides a valuable
return on investment. It seems as if the trend of social media being leveraged as a marketing
tactic will only become more popular as business communication continues to evolve with new
technological advancements. My study hopes to contribute further insight into this discussion,
especially as it pertains to college students.
Literature Review
Social media is used by 80% of Americans today (Gallup, 2014). When it comes to
business communication, social media has seemingly transformed how consumers interact with
corporations, governments, traditional media, and even each other. It has become clear that
organizations and traditional broadcast media no longer control the messageconsumers do.
Through personally uploaded text, images, and audio/video content, their voices now have the

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power to create instant global reach (Jacka & Scott, 2011). In 2013, U.S. companies spent a
combined $5.1 billion on social media advertising alone (Gallup, 2014). However, the real
question to be asked is how effective are companies at actually engaging with their customers
and providing a return on investment using this method.
Authors Peter Scott and Mike Jacka, in their book Auditing Social Media, point out that
some individuals have an interesting misconception about social mediathat an organization has
the ability to somehow prohibit or opt out of social media altogether. However, what they fail to
realize is that even if the organization decides not to participate in social media itself, its
stakeholders are still out there talking about its products and services, competitors, community,
and staff. Failure to use social media as a way to listen to customers and their conversations is
simply nave. For instance, they can suggest enhancements to products, suggest new store
locations or hours of operation, provide feedback on website functionality, etc. They are telling
the organization about themselves and what they wantinsights that are extremely valuable for
future business considerations (Jacka & Scott).
In their book Social Media Marketing, authors Tracy Tuten and Michael Solomon define
social media marketing as the utilization of social media technologies, channels, and software to
create, communicate, deliver, and exchange offerings that have value for an organizations
stakeholders. Social media crosses a wide range of marketing activities that include promotion
and branding, customer service, relationship management, retailing and commerce, and
marketing research. Although there are dozens of specific objectives marketers may seek to
accomplish using social media, there are two overarching ones relevant to a brands promotional
mix: (1) to extend and leverage the brands media coverage and (2) to influence the consumer
throughout the decision-making process (Tuten & Solomon, 2013).

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Marketers target various states of the purchasing cycle to increase brand awareness,
enhance brand liking and image, build brand equity, stimulate desire, and move consumers to
action. They can influence consumer attitudes and movement through the process with
promotional messages targeted throughout various social media channels (Tuten & Solomon):
Increase Awareness: Maintain an active presence in the social spaces where target
consumers live (engaging in social communities and social entertainment, publishing
content, and encouraging word-of-mouth communication and consumer reviews).
Influence Desire: Used much like advertising, catalog marketing, and feature events to
persuade consumers to recognize a sense of desire.
Encourage Trial: Used to support sampling and loyalty programs.
Facilitate Purchase: Serves as a distribution channel and venue for many sales promotion
incentives including discounts and group offers (like or follow brands on social media
to qualify for special deals).
Cement Brand Loyalty: Offer engaging activities for consumers that ensure they spend
more time with the brand, hopefully resulting in higher levels of brand loyalty (social
games that offer rewards for the most loyal visitors).
Social media produces almost double the marketing leads when compared to trade shows,
telemarketing, and direct mail, and more than 50% of marketers believe that social media has
helped them improve sales (Bennett, 2014). In 2013, 52% of marketers reported that they found
customers via Facebook, 43% via LinkedIn, and 36% via Twitter (Bennett).
In June 2014, Gallup released a report titled State of the American Consumer that was
based on Americans' self-reported estimates of how much social media campaigns affect their
purchasing decisions. Surprisingly, the report indicated that although many companies run

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aggressive marketing campaigns on social media, 62% of Americans said they do not have any
influence on their decisions to purchase products (Swift, 2014). In addition, only 29% said they
use social media to follow trends or find product information, while a mere 20% say they visit
social networking sites to comment on what's new or write product reviews (Swift).
Unlike the study I conducted which focused solely on college students, the Gallup poll
incorporated people of all ages. Among the four major generation groups surveyed, millennials
(those born after 1980) were the most likely to say that social media has at least some influence
on their buying decisions (50%). The study also found social media's influence on purchasing
decisions decreases with age. These generational differences may reflect varying degrees of
social media use across different age groups and could have potentially skewed the data.
In the report, Gallup also reveals that consumers who engage with brands often do so
when they are already attached to a product or service. By providing exceptional service and a
pleasurable in-store experience, companies will, in turn, drive customers to interact with them on
social media. It is possible, however, for companies to use social media to boost their customer
base if they employ the proper techniques. Consumers appreciate the highly personal and
conversational nature of social media sites, and most prefer interacting in an open dialogue as
opposed to receiving a hard sell. Providing timely responses to questions and complaints can
accelerate brand loyalty and, eventually, sales. When it comes to social media efforts, businesses
benefit most when they utilize a more service-focused approach rather than one dedicated to
simply pushing and promoting their products (Swift, 2014).
In another survey conducted by BRANDfog titled 2013 CEO, Social Media, and
Leadership, nearly 84% respondents said they believe CEO social media engagement is an
effective tool to increase brand loyalty, while almost 69% said the use of social media by

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executives makes a brand seem more honest and trustworthy (Edelman, 2013). Executives who
are successful in their use of social media also create a halo effect for their corporate brand.
Todays digital consumers connect with the brands they admire and executives who are
genuinely involved in the conversation can enhance positive customer experiences across all
social media channels. CEO social media engagement is viewed as a gateway to facilitate deeper
connections with customers, employees, and shareholders.
Hypothesis
I hypothesized that social media does have some influence on the purchasing decisions
made by college students.
Method of Investigation
Participants were recruited through a listserv of randomized Central Michigan University
student email addresses I received from the Registrars Office. To ensure a sample representative
of the CMU student population, the listserv included email addresses of a mix of students who
were both male and female, a variety of grade levels, and who lived both on-campus and offcampus. The survey was entirely confidential, voluntary, offered no risks to those who chose to
respond, and was approved by the Institutional Review Board. This information was outlined in
the consent form, which appeared at the beginning of the survey.
The survey consisted of 19 questions and was created online using Google Docs. I chose
to create an online survey because I found this to be the most convenient environment for
students to respond. The questions mainly inquired responses about personal social media use,
especially regarding interaction with companies, brands, and purchasing behaviors. After
collecting 260 responses, I then analyzed the data using SPSS software to determine if there were
any relationships between variables.

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Findings and Discussion

Of the 260 responses I collected, 32% were male and 68% were female. CMU does have
a higher population of female students, so this sample was a rather accurate representation of
that, although females were still largely overrepresented in the study. There was a fairly even
spread of grade levels, with seniors being the highest represented class (28%). Almost all
respondents said they have a Facebook account (96%) and over half of them said they have
accounts on Twitter (76%), Instagram (71%), YouTube (63%), and Pinterest (56%). This
confirmed that most CMU students do have an active social media presence.
46% of respondents said they check their social media accounts 10 or more times a day,
the highest percentage of all the choices. This indicates that social media plays a large part in
CMU students' everyday lives whether just as a pastime or something more. When asked if
they follow a company/brand on social media, 81% responded yes, with the majority of
respondents saying they follow them on the three most popular social media channels: Facebook
(62%), Twitter (56%), and Instagram (39%).
Regarding why they choose to follow companies/brands on social media (for which they
could choose multiple options), 68% said to find out about new products and services, 53% said
to keep up with their general activities, 30% said to leverage sweepstakes and promotions, 25%
said to make purchases, while a lesser 8% said to join brand fan communities and 5% said to
provide feedback/engage in conversation. This spread indicates that CMU students justify a
multitude of personal reasons and interests for following brands on social media.
68% of respondents said they have never engaged in conversation with a company they
follow on social media, whether it be in the form of a comment, tweet, message, etc. However,
of the respondents that said they have, 72% said they received a reply. Not surprisingly, my

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quantitative analysis indicated that students who do actually follow companies on social media
are significantly more likely to engage in conversation with brands than those who do not.
While 67% of students said they have liked or followed a companys social media
page/account to receive special discounts or promotions, 57% said they have never actually made
a purchase based on a companys social media post. My analysis showed that female students are
significantly more inclined to like or follow a brand to receive special discounts or promotions
than male students and those who do follow companies are also significantly more likely to be
influenced to purchase from a social media post or campaign than those who do not.
When asked how much more willing they are to trust a company when it is active on
social media or frequently engages with customers, 13% said not at all, 33% said a small
amount, 37% said a moderate amount, and 16% said a significant amount. An even lesser
number indicated they would be more willing to actually purchase from a company if it has an
active social media presence. There was a fairly identical statistical spread when students were
asked how much more willing they would be to purchase from a company they follow on social
media. This indicates that activeness on social media does not necessarily play a significant role
in students' perceptions of a company and their willingness to purchase from it.
Although 68% of students said they have never researched a companys social networks
before making a purchasing decision, 79% of students said they have discovered a new product
or service from a social media post or campaign. Consequently, my quantitative analysis
indicated that students who follow brands are significantly more likely to discover new products
or services from social media than those who do not. In addition, almost half of respondents said
they have used social media to share positive or negative product/service experiences.

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Furthermore, 62% of students said they have used social media to research
brands/products and 70% said they have been influenced to purchase something from a post
(photo, video, text, advertisement) made by a company on social media. Once again, my analysis
revealed that students who follow brands are more likely to use social media to research
brands/products at a statistically significant level, with female students being even more inclined
to do so than male students. Female students were also shown to be significantly more likely to
research a companys social media networks before making a purchasing decision.
This analysis revealed my hypothesis that social media does has some influence on
college students purchasing decisions was reasonably correct. The survey revealed that a
majority of respondents have been influenced to purchase something from a companys social
media post in the past. Most students also said that they have discovered a new product or
service from a companys social media post before and have used social media to research
products. These results indicate that the social media strategies developed by businesses have
been at least somewhat successful at influencing the purchasing decisions of college students.
Limitations
Despite the valuable information contributed by this study, several limitations existed due
to the nature of the circumstances. The data from this study was derived from a one-time survey
rather than a longitudinal study, which limited the depth and scope of my analysis. All of the
survey questions were close-ended and, therefore, did not provide as much detail as an openended approach might have. Another major factor limiting the study was access to subjects.
Since the study took place over the course of one-semester, there was not as much time to recruit
as many participants as I would have liked. It fell short of the minimum sample size needed to

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provide a 95% confidence level for the population of 20,000 (the approximate number of Central
Michigan University students) I was intending to apply my study to.
Further limitations were derived from the methods of my primary research. Because I
relied on a survey to conduct my research, multiple types of response bias could have potentially
skewed the data. Biases such as intentional misrepresentation, error, and social desirability biases
may exist because participants provided information through self-report. Furthermore, members
of the population may be inadequately represented in the sample due to nonresponse bias and
voluntary response bias. The size and range of the sample is also relatively small, which adds
further bias to the data. Potential confounding variables may have also distorted the results.
Conclusions
It is no secret that social networks are playing an increasing role in how businesses are
engaging with consumers, with more marketing plans integrating the use of social media to reach
new technology-driven generations. It is a new field that many professionals are still trying to
grasp how to utilize such a powerful communication medium to best provide results. Since
research specific to the actual effects of social media on consumer purchasing decisions is
lacking in the field, I wanted to add to the discussion. My study indicated that social media does,
in fact, influence the purchasing decisions of CMU students on a moderate level. Although there
is much research yet to be done, this study gives a small glimpse into the potential power that
social media, if used in a strategic way, will offer the business landscape in the future.

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References
Bennett, S. (2014). How Social Media Influences Business. Retrieved from
http://www.mediabistro.com/alltwitter/social-media-business-influence_b55777
Edelman, D. (2013). Solving the CEO Social Media Riddle. Retrieved from
http://www.linkedin.com/today/post/article/20130226124636-1816165-solving-the-ceosocial-media-riddle
Jacka, M. J. & Scott, P. R. (2011). Auditing Social Media: A Governance and Risk Guide.
Hoboken, New Jersey: John Wiley & Sons, Inc.
Swift, A. (2014). Americans Say Social Media Have Little Sway on Purchases. Retrieved from
http://www.gallup.com/poll/171785/americans-say-social-media-little-effect-buyingdecisions.aspx
Tuten, T. L. & Solomon, M. R. (2012). Social Media Marketing. Edinburgh: Prentice Hall.

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Appendix

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