Effectiveness of Social Media Marketing in the Cosmetic Industry

Abstract

Marketing has always been a vital part of a business and is important in helping to create a brand image and attract consumers to the brand and products. Previously, businesses have turned towards large marketing campaigns on T.V and other forms of media such as newspapers and magazines. However, some brands have chosen to use social media as a way of marketing their products. This dissertation focuses on the cosmetic industry and their use of social media and how they attract customers and engage with them online. This study begins with a literature review, which evaluates previously published work in relation to social media. The research methodology is provided which puts forward the philosophical stance that is adopted throughout the study and justifies the type of data that will be used for analysis. Some interesting conclusions have been made form analysing the research, which has allowed recommendations to be made for both mangers and future researchers.

Table of Contents

Chapter 1: Introduction

1.1 Background to the topic

1.2 Objectives

1.3 Chapter Summaries

Chapter 2: Literature Review

2.1 Introduction

2.1 Traditional Marketing

2. 2 Social Media and Marketing

2.3 Cosmetic industry

2.4 Blogging

2.5 Brand awareness

2.6 Consumer Buying Behaviour

2.7 Wider Audience and Followership

2.8 Advantages and Disadvantages of Social Media Marketing

Chapter 3: Methodology

3.1 Introduction

3.2 Research Philosophy

3.3 Research Approach

3.4 Primary Data

3.5 Secondary Data

Chapter 4: Data Analysis and Discussion

4.1 Introduction

4.2 4Ps marketing framework

4.3 Consumer Buying Behaviour

4.3.1 Social Media Impacts

4.4 Segmentation, Targeting and Positioning

4.5 Porters Generic Strategies

4.6 Porters Five Forces

4.7 Discussion

Chapter 5: Conclusion

5.1 Introduction

5.2 Summary of findings

5.3 Implications

5.4 Further Research

References

Chapter 1: Introduction

1.1 Background to the topic

Over the past years there has been a vast change in technology and most companies have to embrace this change and move away from traditional marketing methods (Ahlberg, 2010). This has therefore paved the way for marketers to move towards integrating social media into the marketing strategy.
Ellison (2007) defines social networks as a web based service that allows individuals to articulate a list of other user with whom they share a connection.  Users can share words, pictures and videos and in the context of a marketplace, it is the experiences of the consumers that relate to brands, products and services that are shared (Evans 2012).  With 75% of Internet using adults in the US being active on social media, traditional advertising is now on the decline with the rise of social media in the UK and USA (Bernoff et al. 2008). Therefore, social media gives companies a better platform to communicate with consumers and build brand loyalty beyond traditional methods (Jackson 2011).

Beauty brands across the world are now increasing their online presence as the tools and approaches for communicating with customers have changed greatly with the emergence of social media (Mangold and Faulds 2009). Implementing social media campaigns are paramount for branding, marketing and public relations and businesses, both small and large can attract potential customers by engaging in online social media (Smith 2009). Along with marketing their products and creating brand awareness, it is also very important for companies to understand what the consumer wants and gain their feedback on products. While social media is less controlled than traditional research, it allows businesses to understand the most passionate insight into customer perceptions and experiences (Sharma 2013).

1.2 Objectives

The aim of the research study is to explore whether social media can be used as a key marketing platform and if it has become more effective than traditional marketing methods.
Due to the growing use of social media, the topic of social media and the marketing implications have been widely published in academic literature. However, this research looks at the beauty industry as a particular example of brands using social media. Furthermore, the study looks at how social media affects the business itself but also the impacts it has on the customers and the way that they react to this type of marketing.

• Identify why brands are using social media to market their products over traditional marketing methods
• Determine the effectiveness of using social media marketing
• To examine the relationship between social media and consumer buying behaviour
• To investigate the increase of customer power that has come about through the use of social media

1.3 Chapter Summaries

In order to gather an understanding of the objective, the following chapters will be included in the study; literature review, methodology, analysis, conclusions and discussion on the topic. A brief summary of the chapters is provided below.

Chapter 2 is the literature review which examines the current discussions and views relating to social media marketing. It includes the main features of marketing that are affected by social media such as brand awareness and consumer buying behaviour and also aspects of social media marketing such as blogging and followership. Furthermore, it looks at the advantages and disadvantages of brands using social media to market their products.

Chapter 3 explains the type of methodology that is used in this study, firstly looking at the research type that is used and why it is appropriate for this research. Secondly, the chapter analyse the use of primary and secondary research and provide a justification of the choice of data that is used.

Chapter 4 analyses the models and frameworks of marketing and applies them to the findings found from the literature. It evaluates whether or not they can be applied relevantly and if they need to be adapted to relate to social media marketing.

Chapter 5 gives a conclusion of the research study and provides a summary of all the main points that were discovered and also the implications made from the findings of the study.

Chapter 2: Literature Review

2.1 Introduction

There have been vast amounts of literature surrounding the topic of social media and the ways in which it can be used to market products. This literature review will examine the idea of using social media as a key platform over traditional marketing methods. “The current marketing environment is characterized by a surge in multichannel shopping and increasing choice of advertising channels. This situation requires firms to understand how advertising online influences sales offline.” (Dinner, Heerde & Neslin 2014). Pitta & Quinones (2012) agree with this and have stated that the industry has recognized the importance of social networking and user-generated content. The internet has had a large effect on the way in which marketers interact with consumers and this is because “social media has affected more than promotion. Traditional media has become less important as communication vehicles and other areas in marketing have had to shift their focus,” (Pitta & Quinones 2012). There is a large amount of literature discussing social media and businesses however this will look specifically into how beauty brands utilise social media to reach their target market and the way their online presence can affect consumers brand awareness. Furthermore it will also investigate whether social networks run by the consumers themselves, such as blogs, have any effect on how the products are perceived by other customers.

2.1 Traditional Marketing

Kotler (2005) defines marketing as “a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.” Traditional marketing methods typically involve advertising through newspapers, magazines, radio and TV (Lavinsky 2013). Mangold & Faulds (2009) state that in traditional communications the elements of the promotional mix are coordinated to develop a strategy, and the content, frequency, timing and medium of communications are dictated by the organization in collaboration with its paid agents. In addition, the flow of information outside had generally been confined to word-of-mouth communications among individual consumers, which had minimal impact on the dynamics of the marketing A.

However, social media sites are now as influential as, and perhaps more so than conventional media (Botha & Mills, 2012). Pitta & Quinones (2012) stated that have consumers have reduced their use of traditional media like the telephone and have adopted social media instead. Smith and Zook (4: 2011) suggest that ‘old’ marketing had too much emphasis on just marketing communications and this worked before customers had fewer communication channels meaning it was easier to get a customer’s attention. Furthermore, they state that “advertising is a maturing industry” and the traditional TV advertisement is no longer the answer to everything. In the past most individuals read the local newspaper which meant that they were solid marketing channels which business owners could rely on, however, more and more people are choosing to get their news online rather than through newspapers (Lavinsky 2013).

Social media differs substantially from traditional marketing as they approach customers with interactive objectives such as conversations, sharing and engagement, whereas traditional marketing is delivered directly from the marketer and involves awareness, knowledge and recall (Weinberg & Pehlivan, 2011). There is a much higher level of efficiency on social media compared to other traditional communication channels which has prompted companies to participate in Facebook, Twitter, Myspace and others, in order to succeed in online environments (Kaplan and Haenlein, 2010).

Although much of the literature points towards social media marketing being more effective than traditional marketing, Evans (2012) explains that social media is a complementary extension of all other channels still exist and that social media is a mind-set, rather than a true channel.

2.2 Social Media and Marketing

Social media has become increasingly popular in the recent years and Kotler (2003: 34) states that ‘much of today’s business is carried over networks connecting people and companies’ showing that the use of the internet is now a more popular way of connecting Businesses to their customers. Woodall and Colby (2011) researched why consumers have chosen social media over traditional media and suggested that there were four elements which were; satisfying an impulse, the excitement of sharing, seeking advice and sharing with others with similar interests. This emphasises that there is a move away from traditional marketing. Marketers have moved towards using social media marketing to take advantage of the amount of consumers that can be reached through various social networks.

Chi (2011, 46) defines social media marketing as a “connection between brands and consumers, while offering a personal channel and currency for user centred networking and social interaction.” Social media marketing differs from traditional methods of marketing as it relates to relationships and making connections with consumers rather than trying to sell to them (Gordhammer, 2009).

Consumers spend more time online than they did a few years ago and these consumers have a wider social network because they can connect with strangers and develop their own relationships (Pitta & Quinones 2012). Jobber and Ellis-Chadwick (2013:687) suggest that although the number of users over 65 is increasing, those under 30 are more likely to use a social networking site than any other. However, Kaplan & Haenlein (2010) believe that marketers often falsely believe that social media is often only used teenagers however; members of generation X, now 35-44 years old are increasingly joining the social media trend, making social media a prime channel for marketing.

Social media does however present a challenge to organisations because until recently they have been able to control their marketing via other marketing channels and it seems now that because of social media, the consumer now defines the brand (Gillin 2009: Li & Bernoff, 2008).  Mangold & Faulds (2009) identify that in the era of social media, marketing managers have less control over the content and timing of information.

2.4 Blogging

Internet based social tools have revolutionised how consumers communicate by word of mouth (Eikelmann et al. 2008). Onishi & Manchanda (2012) explain that Consumer Generated Media, such as blogs have grown immensely in recent years. Blogs are personal online diaries which are compiled by one person or a team of people. The postings would in this case be about various beauty products and typically comments can be added to each blog to help create interactivity and feedback (Chaffey et al. 2009:11). Beauty companies are beginning to see the benefits of social media and the use of blogging is becoming increasingly popular to communicate brand awareness (Matthews, I 2011).  Furthermore, Cho and Huh (2008) go on to state that blogs are now becoming a new form of interactive advertising.

Consumers rather than the brands themselves mainly control Blogs and there are many blogs and profile pages on social networks, which contain consumer’s recommended brands. Furthermore, there are more than 248 million pages of personal content on the Internet with the sole purpose to give feedback on various beauty brands and products (Davis, J 2008).

Watkins (2013) highlights that promoting products through well-known beauty bloggers can reach a large customer base and it is also aimed at the desired target audience. Consumers who are interested in the products will be the ones who are following those particular blogs and therefore the products can be marketed directly to them. Furthermore, Watkins suggests that a sense of trust is built with the brand being advertised because it is being used by a real person rather than a photo shopped celebrity.  Matthews, I (2011) reiterate this point when she states that people trust recommendations from individuals, rather than being sold to by brands. The emergence of social economics sites allows the consumer to review the recommendations given by other consumers and then purchase the product directly from the products site (Davis, J 2008). This allows beauty brands to make use of the consumer blogs and integrate them into their marketing strategy.

2.5 Brand awareness

Brand awareness is creating the brand and ensuring that customers are aware of the brand’s existence (Peter 1996). Communicating with consumers is vital, and the Internet—notably blogs and social media outlets—is invaluable in spreading the word about a beauty brand and connecting with consumers (Chein, H 2012). Social media has affected consumers’ interaction with the brand – not just the purchasing side, but with the feedback to the brand direction in general (Hill, A 2010). The conversations that are being had between peers can provide a cost effective way for companies to increase brand awareness and increase brand loyalty (Gunelius, 2011). Mckee (2011) therefore suggests that social media helps to build up brand awareness through networking and conversation.

Social media can significantly boost the brand awareness as there is such a large reach on social networks. The well-known beauty brand E.L.F has made social media their main channel for marketing and they have no traditional media budget. Beauty brand E.L.F gets more than 200,000 visitors monthly and this interest is generated purely through social media (Neff, J 2009), showing the effectiveness of social media in creating interest for brands.

However, Weinberg (2009) highlights that consumers are now having conversations about the brand in which the brand are not involved with and this is forcing brands to listen. Brand managers must be concerned with the social media visibility of their own brand but they may also want to make comparisons with the performance of other competitive brands (Botha & Mills, 2012).

Hill, A (2010) implies that from a branding point of view, the quality of messaging due to the internet has decreased and the communications have become more cluttered than ever. This therefore means that brands are not clearly getting there message across social media sites and it needs to be improved. However, larger companies see the value in treating digital media the same as traditional media; and there is a lot more room for creativity when using digital media (Hill, A 2010).

2.6 Consumer Buying Behaviour

Consumer buying behaviour is “the process by which individuals search for, select, purchase, use and dispose of goods and services.” (Business Dictionary n.d.). Kotler (2003) believed that consumers were stimulated by marketing strategies which then led them to make decisions after processing the information.

Mangold and Faulds (2009) state that “Social media has influenced consumer behaviour from information acquisition to post-purchase behaviour such as dissatisfaction statements about a product.” Social media allows individuals to have their own voice, as well as have access to product information that facilitates their purchasing decisions (Kozinets et al., 2010). Schlosser (2005) found that a small amount of negative information from a few postings can have a large impact on the consumer attitudes. Ioanas & Stoica (2014) conducted research and found that before purchasing a product online, consumers usually inform themselves from forums, company’s websites, Facebook accounts and peer reviews. They concluded that social networks definitely have a role in influencing the behaviour of consumers. Cooke (2006) suggests that this can be useful to companies as social media can be utilised to measure and understand complex consumer decision making as consumers turn to blogs and journals to record their journey through the purchasing process.

However, Wang & Hu (2009) highlight that when consumers first approach an unfamiliar website; they have perceptions of uncertainty and risk. Therefore is important for companies to win consumers’ high initial trust or they may easily switch to other websites. Norris (2002) reiterates this point when stating that “users have nearly unlimited choices and minimal constraints about where to go and what to do. Therefore, commitment to any particular online group can often be shallow when there are other options with just a mouse click away.”

2.7 Wider Audience and Followership

Mason & Gibbs (2012) clarify that social media is an excellent way to reach brand fans that previously may have been out of reach due to distance and if properly aligned social media efforts can be global. For beauty brands, social media can be very important in reaching a wider audience as consumers can be engaged through interactions through YouTube, Facebook and Twitter (Mason & Gibbs, 2012).

The more followers a brand has on social networks, the more exposed their customers’ likings will be. Through sites like Twitter and Facebook, potential customers express their likes or tastes which rationalize an agent’s observed actions (Beshears et al. 2009). Social media increases the information about customers and therefore it is beneficial for businesses to attempt to increase their follower count (Paniagua & Sapena, 2014).

The graph below highlights how important social media is for beauty brands as it shows the number of Facebook followers many of the brands have. Their social network pages are reaching millions of people, showing the sheer volume of consumers that can be reached through social media.

(Source: statista.com)

Although the large amount of followers on social networks reaches a wider audience, Taylor et al. (2011) found in a study conducted that only 22% of consumers had a positive attitude toward social media advertising and 8% of consumers abandoned a social network due to excessive advertising. Furthermore, they state that the culture of the internet has evolved in such a way that consumers consider advertising to be intrusive and annoying that interrupt the flow of online activities.

2.8 Advantages and Disadvantages of Social Media Marketing

Social media marketing has made marketing products much easier than using traditional methods of marketing. Smith & Zook (2011) state that social media can help to create awareness and engage customers all the way through a purchase and help to convert prospects to customers and customers into lifetime customers. Furthermore, it enables consumers to give and read feedback on products brings benefits to marketers that were impossible before the Internet. “The aggregate value of hundreds of positive comments about a product gives a brand a buzz that cannot be matched by promotion via advertising alone.” (Davis, J 2008) The products can be promoted in various different ways, but what matters is the feedback and comments left by the customers (Arca, C 2012). This is because customers are more likely to accept the opinions of other consumers rather than the brand itself (Myers, N & Robinson, R 2012).

However, with the increasing usage of social media sites, businesses ‘increasingly less control over the information available about them,’ and when conducting an internet search, it is likely that the top five results do not always include the corporate page (Kaplan & Haenlein 2010) meaning that the company’s brand image may be represented in a way that is not beneficial to the business. Smith & Zook (2011) also highlight that social media requires a continued feed of fresh content as well as responses to discussions, which can be time consuming for businesses. They also bring light to the issue of hackers, scams and spammers which could jeopardize the control of messages. Furthermore, Pitta & Quinones (2012) suggest that the effects of Social media are clear but the techniques and approaches of how to use them for marketing are not so straightforward. This would suggest that there is still much research and development which need to go into using social media as a marketing method.

Chapter 3: Methodology

3.1 Introduction

Research can be defined as a scientific and systematic search for information on a specific topic (Kothari 2004). He states that the purpose of research is to “discover answers to questions through the application of procedures” and to “gain familiarity with a phenomenon or achieve new insights into certain areas.” This chapter will highlight the research philosophy and approach that have been used and then explain the different types of data that can be used and the one that has been used for this research study.

3.2 Research Philosophy

Saunders & Thornhill (2012: 127) suggest that research philosophy relates to the development of knowledge and the nature of the knowledge. There are three main research philosophies: positivism, realism and interpretivism.

Positivism is when data is collected about an observable reality, in order to find casual relationships which are then used to create law-like generalisations (Gill & Johnson 2010). Positivists believe that only phenomena and hence knowledge confirmed by the sense can genuinely be warranted as knowledge and the purpose of the theory is to generate hypotheses that can be tested (Blumberg et al 2005). Therefore, positivists follow a very structured methodology in order to facilitate replication (Gill & Johnson 2010).

Realism also relates to scientific enquiry and what we sense as reality. The philosophy of realism is that there is a reality independent of the mind (Saunders & Thornhill 2012: 136). Saunders & Thornhill (2012) go on to explain two types of realism; direct realism which is what we experience through our senses portrays the world accurately. The second type is critical realism argue that what “we experience are images of the things in the real world, not the things directly,” (Saunders & Thornhill 2012: 136).

The approach that is used in this study is interpretivism which is an approach that emphasises the meaningful nature of people’s character and participation in both social and cultural life (Walsham 1995). Interpretivists avoid rigid structural frameworks and adopt a flexible research structure (Carson et al. 2001).  Lin (1998) states that interpretivist researchers not only look for the presence or absence of casual relationships, but also specific ways it manifested, which is something that has been done in this research paper. Furthermore, Walsham (1995) explains that an interpretivist approach would be to collect the data before analysing it, which is also used throughout this study. Saunders & Thornhill (2012: 137) argue that an interpretivist perspective is highly appropriate in business and management research, particularly in the field of marketing.

3.3 Research Approach

The approach that will be used in this research study is deductive. Deductive reasoning occurs when the conclusion is made logically from a set of statements, the conclusion being true when all the statements are true (Ketokivi & Mantere 2010). Deduction begins with an expected pattern that is tested against observations, whereas induction begins with observations and seeks to find a pattern within them (Babbie 2014: 51-52). Deduction is the process used for this study as the pattern expected was put forward first and the research was then done to see if the pattern occurred in the data.

3.4 Primary Data

Primary data is data that was previously unknown and has been obtained directly by the researcher for a particular research project (Currie 2005: 89). Glass (1976) explains that primary data is the original analysis of data in a research study. It is carried out when the data that is needed is not available from published sources.

There are three main methods of collecting this type of data; surveys, interviews and observations. Surveys and interviews mainly consist of asking respondents questions whereas observations focus on collecting data about behaviour and the researcher records what is relevant to their research (Currie 2005: 90).

The main advantage of primary data collection is that it is relevant to the topic of the research and therefore the degree of accuracy is very high (Sindhu 2012). The questions the researchers ask are tailored to draw out the data that will aid them in their study (IWH n.d.). Using primary data ensures that the data collected is reliable and valid as it is carried out at the time of the study and therefore will not result in outdated information which may be the case when using secondary data.

Carrying out primary data collection can be very time consuming and a lot of effort is required for the data collection. By the time the data is collected and analysed, the research may have become outdated and therefore the purpose of the project may be defeated (Sindhu, 2012).

A disadvantage of primary data is that the results can often be bias because the observer uses their own subjective view to interpret the events that are being observed (Saunders et al. 2012). Additionally, primary data can only be used when the respondents are cooperating (Kothari 2004). Researchers may find that people are not responding to questionnaires or do not want to be interviewed for the purpose of their research. Furthermore, if respondents do reply, there is a chance that the may give ambiguous or hard to interpret responses (Kothari 2004).

Ethics is one of the main issues surrounding the collection of primary data, the researcher must ensure that the correct permission is obtained and ensure that no physical or emotional harm is inflicted upon the participants. Furthermore, it is important that participants are not taken advantage of simply because they are easy to access (Driscoll & Brizee 2012).

Primary research will not be used in this research study as it will be extremely time consuming to carry out the research and there are a large amount of ethical issues that need to be taken into consideration and breaching these could hinder the project greatly. Furthermore, there is a large amount of secondary data on the topic of research and therefore it would be unnecessary to carry out primary research.

3.5 Secondary Data

Secondary data is the re-analysis of data for the purpose of answering the original research question with better statistical techniques, or answering new questions with old data (Glass, 1976). Saunders et al. (2012) state that secondary data includes both quantitative and qualitative data and are used in both descriptive and explanatory research. They go on to explain that it may be raw data, where there has been little processing, or compiled data that have undergone some sort of selection and summarising.

Secondary data provides a large saving in resources, particularly time and money (Ghauri & Gronhaug, 2010). This point is reiterated by Stewart & Kamins (1993) who state that using secondary data puts researchers at an advantage compared to those using primary data. This is because the data can be evaluated before it is used and any unsuitable data can be rejected at an early stage (Saunders et al. 2012).  Corti and Thompson (1998) highlight that secondary research is useful in providing case material for teaching and methodological development. This in particular applies to this research study as is can be difficult to carry out empirical work. Secondary data is also very useful as it allows us to apply a new perspective to the original research (Long-Sutehall et al. 2010). Furthermore, secondary data provide a source of data which is permanent and can be regularly checked with relative ease (Denscombe 2007).

Although secondary data is easy to access and use, there is also the secondary data does not match the specific purpose of the research. This is because it would have been collected for a specific purpose that differs from the particular research topic (Denscombe 2007). This therefore means that the data found may be irrelevant to the research question which would mean finding alternative sources of data (Saunders et al. 2012). Secondary data can also be difficult to gain access to and in some cases the data may cost a large amount of money to obtain the information (Saunders et al. 2012). Kervin (1999) also states that secondary data is subject to measurement bias which may be intentional distortion to data or changes in the way the data is collected. This is because the purpose of the study may be to reach a predetermined conclusion (Smith 2006). Therefore, secondary sources should be evaluated carefully to ensure that it is reliable and valid to the research question.

This research study will consist of secondary research. This is because it allows previous research to be analysed and can offer various different perspectives on the topic. It will also be less time consuming than carrying out primary research and allow time to be spent on analysing the data rather than collecting it.

Chapter 4: Data Analysis and Discussion

4.1 Introduction

This chapter will include an analysis of the literature that was reviewed in chapter 2. The findings will be discussed in relation to various marketing theories and frameworks. These will be applied to the findings in order to analyse how social media marketing works and whether they fit into the specific aspects of the suggested models. Furthermore the findings about social media will be taken into consideration, particularly how customers behave on social media, and examine how this may change the theories and frameworks designed by marketers.

4.2 4Ps marketing framework

The marketing mix is the set of marketing tools; the product, its price, promotion and place that the firm uses to achieve its objectives in its target market (McCarthy 2001). The 4 Ps marketing mix was designed as a means of translating marketing planning into practice (Bennett, 1997). It is a conceptual framework that identifies the principles that marketing managers consider in their decision-making processes (Goi 2009). The central assumption is that if the right decisions are made and implemented about the products, its price, and how it will be promoted and distributed, the business will be successful (Doyle, 2002: 287).

When using social media marketing, the product aspect of the marketing mix is still incredibly important as consumers will always look for products that satisfy their needs and wants and the occurrence of social media has not changed this. Social media may make it harder for an organization to differentiate the products significantly compared to competitors, as there is a larger range of products available. But it does not make the product any less important.

Social media affects other aspects of the marketing mix. Organizations must understand that the price of their products is influenced incredibly by social media. If consumers spot inconsistencies in the pricing of products they are likely to take to social media to voice their views and this in turn will reflect negatively on the brand image. This may then allow for new competitors to enter, as they can identify the issue of pricing and offer a product to consumers with a more consistent pricing strategy (Cohen 2010).

Furthermore, the 4Ps do not take into account pricing in an environment where there are a large amount of alternatives and consumers have a larger knowledge base. Consumers are looking for the lowest price possible; therefore organizations must compete with these prices.

The marketing mix can only somewhat be applied to social media marketing as it is more focused on making connections with consumers rather than trying to sell to them (Gordhammer, 2009). Rothery (2008) has suggested a revised model and where there are 4E’s. The 4P’s revolve around traditional offline marketing strategies. The product has become an experience, place becomes everyplace, price becomes exchange and promotion becomes evangelism.

Everyplace focuses on the social media aspect of marketing. Rothery (2008) highlights that it is not just stores that consumers go to find products, they now use the Internet. Organizations should not spend all their time focused on one place as this means that it does not reach all the potential customers, businesses need to utilize other outlets.

The 4E’s focus more on engaging with the customers throughout the process rather than having separate focuses.

This shows the impact that social media has had on traditional models as they no longer fit into marketing strategies and they have to be adapted to fit in with new technological changes and the growing power of the consumer.

4.3 Consumer Buying Behaviour

Consumer decision-making is usually depicted as a cognitive process. Consumers become aware of a need and a possible means of satisfying which is typically found through advertisements for particular products (Foxall 2002: 120). The person is influenced by an environment, which consists of psychological variables, social influences and purchase decision. Each variable includes different factors that will influence the decision making process (Weber & Capitant de Villebonne, 2002).

Kotler (2006) suggests that consumers pass through five stages with all purchases. It is clear from the process that the purchasing decision is part of a larger process and marketers should be involved throughout the entire buyer decision process (Kotler, 2006: 152). When consumers have identified a problem they begin their information search, they may turn to external sources such as friends or family, however a great deal of information searching takes place on the Internet. The objective of this research is to build up an awareness set which is an array of brands that can potentially provide a solution to the original problem. (Jobber & Fahy 2009:61). This research is accompanied by the mental processing of the advertising messages (Foxhall 2002). Once the awareness set has been built up, consumers must then evaluate the choices, which will eventually lead to a decision being made about which product to purchase.

4.3.1 Social Media Impacts

Before social media was a large part of consumers’ daily lives, they would turn to newspapers and friends or family to complete their information search. (Jobber & Chadwick, 2013). This would usually give a limited amount of information but would be sufficient to aid their decision-making.

With the increased popularity of social media, as Norris (2002) mentioned, users now have an unlimited amount of choices and conducting a quick search will allow them to access pages from numerous businesses. Consumers will be able to find hundreds of brands and products that they may not have been aware of beforehand, giving them more options to help build up their awareness set. This can impact organizations, as they are no longer just competing with other large brands; they also have to compete with small-unknown businesses and international brands. Consumers have the ability to gain knowledge about products from all over the world and are not limited to the country they are in. This could provide some difficulty for businesses as they are competing on a global level without realising it. As a result of this, marketers must understand the importance of social media as it allows them to market their product to consumers without the expenses of big international marketing campaigns.

Beauty products in particular have a vast amount of social media attention with many YouTube accounts dedicated to reviewing products and giving the view the opportunity to witness the product being used. This means that consumers have more knowledge than ever before on the products and social media gives them the tools to make a more informed purchasing decision.  Li & Bernoff (2008) previously stated that consumers define the brand; this is evident from the way in which consumers are able to influence each other more than the brands themselves.

Social media has had the biggest impact on the evaluation of alternatives in the consumer buying process. This is because people trust recommendations from other people rather than the brand itself meaning that some marketing efforts may be insufficient when people are able to access networks where they can obtain feedback from other consumers. With the emergence of blogs and users on twitter and Instagram taking to their networks to review and give feedback about products, consumers have a variety of was to evaluate the products in their awareness set. The popularity of these supports the statement made by Woodall and Colby (2011) that consumers turn to social media to seek advice and share with others who have similar interests.

The consumer buying process explains social media marketing as it takes into consideration the influences on consumers when making their awareness set, however in order for it to be more appropriate for social media marketing, more emphasis needs to be placed on the information search, particularly from third parties.

Before social media, the business would be largely involved in the process of making a purchase however; the shift of power from the brand to the consumer suggests that marketers need to integrate social media into their marketing strategies in order to stay relevant in the consumer buying process. Marketing managers also need to understand the importance of having a strong presence throughout the whole process and ensure that the information that consumers are obtaining is beneficial for the brand image.

4.4 Segmentation, Targeting and Positioning

Market segmentation is the ‘identification of the individuals with similar characteristics that have significant implications for the determination of marketing strategy,’ (Jobber & Fahy, 2009: 109). The basic principle of market segmentation is that markets are not homogenous and that it makes commercial sense to differentiate marketing offerings for different customers (Evans, 2002: 246).

Target marketing is the process of selecting one or more market segments and developing a product that is aimed specifically at those segments, it is particularly important in global markets where major differences in culture and history can divide potential customers (Adcock et al. 2001: 126-127).

Once a company has segmented the market and decided which segments to target they must position the product. This is the decision of the company to choose the benefits that the brand has to put forward to gain a distinctive place in the market (Lambin, 2007: 209).

Segmentation is a very important aspect of social media marketing as there is such a large number of consumers online, businesses need to divide and target them effectively otherwise may implement a marketing strategy that is only effective on a small proportion of consumers. Social media allows companies to target specific consumer groups, which would be more difficult to do in traditional markets due to high costs of obtaining information about particular customers segments (Kim et al. 2004). Firms can get free marketing data from social media, which could allow marketers to significantly reduce marketing costs.

A large amount of information is provided on social networking pages about consumers and marketers can use this to their advantage by utilizing the data that is provided. Social media allows segmentation to become more in-depth as before marketers had to divide consumers into age brackets and geographical location. However, due to social media the groups in which consumers are segmented into can be a lot more relevant and useful to the marketing strategies.

For example, Facebook provides an insight which people have liked a brands page and what other pages they have liked. This means that companies can build up an understanding of their customer’s interests and firms can go beyond market segmentation to market fragmentation, dividing their markets into even smaller groups of customer – even potentially tailoring their offerings to individual customers (Robert, 1993). As consumers are more aware of alternative offerings, a more tailored approach would be a lot more effective than mass marketing methods. This would suggest that the model could be reworked and replace segmentation, which is very broad in social media marketing, to fragmentation, which is a lot more precise and breaks down the groups of consumers further than segmentation in traditional marketing.

Targeting is one of the most important aspects in social media marketing. Taylor et al. (2011) found that only 22% of consumers had a positive attitude towards social media advertising. This shows that marketing managers must ensure that they are aiming their promotional activities to the correct segment of the market as only a very low percentage of consumers were reacting positively to advertising.

The research found that ‘the quality of messaging on the Internet and communications have become more cluttered than ever’ (Hill, 2010). Managers therefore need to understand the importance of segmentation, targeting and positioning, as without it the marketing efforts over social media will become very ineffective, as they will not be reaching the right audiences.

4.5 Porters Generic Strategies

Porter made a significant contribution to strategy development by identifying three generic strategies and suggesting that the management of every organisation must accept and follow one of the strategies in order to be successful (Adcock et al. 2001: 410).

(Source: Adapted from Coulter, M, 2008: 173)

The cost leadership strategy is when the organisation aims to have the lowest costs in the industry and it produces products for a broad customer base. If the cost leader has the lowest costs in the industry it can potentially charge the lowest price and still earn profit (Coulter, 2008: 173).

Differentiation stresses the benefits in developing marketing offerings that essentially different and superior from those of competitor. This involves adding customer value through specific features or improvements but it can be achieved by very effective marketing, specifically involving brand building (Adcock, 2001: 410).

The focus strategy is used when an organization follow either a cost or differentiation advantage but in a niche customer group. The three broad ways to segment the niche markets would be: geographical, type of customer or product line (Coulter, 2008: 176).

(Source: Kumar et al. 2006)

The diagram above illustrates the different strategies applied to various large cosmetic companies. Estee Lauder uses a differentiation strategy, as the products are not the same as those that are offered by other brands in the cosmetic industry, this allow them to charge a higher price. Avon however, adopts a cost leadership strategy as they provide consumers a large range of products at a low price. It is clear from the diagram that there are a range of different strategies that are adopted by the cosmetics industry.

Over the years Porter’s generic strategies have received a good deal of support in traditional business contexts (Miller 1988). However, it is unclear whether the generic strategies can be applied to social media marketing (Smith, Bailey & Brynjolfsson, 1999). This is because online marketing varies greatly from traditional marketing.

Cost leadership is still and obvious strategic choice for many businesses marketing their brands online as Kim & Kim (2000) found, most online shoppers indicated that price was their most important consideration. Social media allows firms to quickly adjust their prices, which means that they can enjoy greater price flexibility and more efficient price competition (Bakos, 1998).

Porter (2001) argues that it is difficult for brands to differentiate themselves on social media as they lack many potential points of distinction such as showrooms, sales personnel and service departments. However, if a business manages to offer a differentiated product they will gain an advantage as consumers can easily access information that was previously impossible to obtain in order to find which brands will offer additional value through differentiated features (Kim, 2000).

Using focus strategy targets specific groups of buyers, product lines or geographic areas. Social media allows firms to customize their offerings to meet the specific wants and needs of their customers (Bakos, 1998). Social media is the ideal medium to implement focus strategies as it is viable for businesses to communicate and deliver content over the Internet to small niche markets (Yelkur & DaCosta, 2001).

The generics strategies designed by Porter are broadly relevant in social media marketing. Focus is the most relevant strategy as it is easier for marketers to access the information that they need to focus their products on consumers. Marketing managers should be aware of the difficulties associated with differentiating their products in an online environment where there are hundreds of similar products. The strategies used on social media need to take into account the ability of consumers to find out more information and find alternatives.

4.6 Porters Five Forces

Porter states that the nature and degree of competition in an industry hinge on the five forces: the threat of new entrants, the bargaining power of customers, the bargaining power of suppliers, the threat of substitute products and the rivalry between the competitors (Porter, 1979).

(Source: Porter, 1979)

The intensity of the rivalry helps to determine the level of head-to-head competition there will be in the industry and may be one of the most important aspects of the framework when determining whether a business should or should not enter an industry (Karagiannopoulos et al. 2005). The threat of entry involves how easy it is for a new company to enter the market and whether there are any obstacles that will stop them from entering the market. Porter (1980) explains that the threat of substitute products can have an effect on an industry’s profitability and depends on the relative price-to-performance ratio of the different types of products, which customers can turn to the same needs. Porter’s work also highlights the impact that buyer and supplier power have on the attractiveness of a market.

The internal rivalry in the cosmetic industry is incredibly high as there are a lot of existing cosmetic companies currently competing in the market and the environment endorses large corporations to acquire a number of brand name products (Kumar et al. 2006).

As previously discussed, social media provides consumers with easier access to information about products and suppliers, which means that the buying power of consumers is increased largely (Porter, 2001). This is because consumers now have a variety of choices when making their purchasing decision and this means that businesses are fighting for their purchase, leaving the power to the consumer.

The barriers to entry are also reduced by the occurrence of social media marketing, as it offers opportunities to new brands. The result of this is that larger brands now face competition not only from other large organizations but also small new entrants. This would suggest that managers need to be aware of the smaller companies that may come into the industry with new ideas and prices that could potentially attract new customers. In traditional marketing environments, a larger marketing budget would normally be needed in order to reach consumers but social media allows organizations to have an online presence and reach a large target audience at significantly lower costs than before as Bernoff (2008) states that social applications can almost be free and serve more sophisticated communities compared to big advertising campaigns.

However, Porter suggests that after careful examination, there are major cost centres which determine the level of the barriers to entry, which would suggest that threats of entry may vary depending on the industry.

Social media enables new approaches to meeting needs and functions, therefore creating new substitutes. Porter (2008) explains that the increase of substitutes is as a result of distorted marketing signals. If the need is fulfilled with a number of products, then there is no need to create substitutes. Social media allows marketers to assess what the product needs to fulfil by accessing consumers networking sites and evaluating their personal tastes and preferences. By this theory, social media should reduce the threat of substitutes as there is no need for consumers to turn to other products. However, due to the exposure to large amounts of information and communication with others, consumer tastes can change at an instance meaning that marketers can never truly fulfil all the needs and wants. Social media has a role to play in this as it aids the constant creation of new consumer needs.

4.7 Discussion

The theory presented in the data analysis chapter somewhat relates to the analysis of social media. The results show that there are strong links to the theory and a lot of what is suggested is still relevant to social media. For example, Porter’s five forces are still very much relevant in assessing how attractive an industry is. However some aspects of the frameworks and models need to be adapted in order for them to properly be applied to social media. This is because traditional marketing did not revolve solely around the use of the Internet.

The theories also help to explain social media to, especially the consumer buying behaviour. The process highlights that consumers look to others when building up their awareness set and this is why social media has become an integral part of people’s lives. It is a place where people can connect with others and discuss their interests and obtain views and advice on products and brands. The research shows that consumers often look to other people before making their purchasing decision and they do this by looking at social network sites.

Consumers are very heavily influenced by others on social media, especially in the cosmetic industry, social networking sites have become increasingly popular for consumers to voice their opinions and views on particular brands and products. People follow various bloggers on social networks such as YouTube, Instagram and Twitter and are heavily influenced by the products they see them use.

However, models such as the 4Ps marketing needed to be reworked in order to explain social media marketing, as some of the ‘P’s’ are not as relevant to social media as they were to traditional marketing methods. This explains why new models of the original 4Ps have occurred, because they have more relevance to social media and provide a better explanation to the process of using the Internet as a marketing tool.

From the research and analysis it is clear that managers need to be more involved in the marketing processes as consumers are looking to build up their relationships with the brand rather than being sold to by the brand. This means increasing their overall presence on social media.  Marketing managers for cosmetic industries may choose to involve bloggers in their marketing strategy. Instead of using a celebrity endorsement for a product they could choose a blogger instead. This would be effective as the research shows that consumers have more trust in real people rather than celebrities that the brand have chosen to represent the brand (Watkins, 2013).

Chapter 5: Conclusion

5.1 Introduction

This chapter will provide a summary of the findings that were presented in the previous chapters. It will examine the key findings from the literature that has been reviewed and evaluate the implications that can be made from it.

5.2 Summary of findings

Social media has become an important part of many businesses marketing strategies because consumers have reduced their use of traditional media and have adopted social media instead (Quinones 2012). As the amount of people using social media has increased largely, brands have moved towards adopting social media as their main marketing platform. This is because, as research suggested, people no longer look to newspapers and magazines for their information, they now use social media to build up their knowledge base.

From the research study, some interesting results were found about the use of social media and the effects it has on both the business and the consumers.

The research implied that by using social media, the amount of power increases significantly within the consumers. Social media allows consumers to access blogs and various other networks to see what other people are saying about the brand rather than what the brand is saying themselves. The research found that a sense of trust is built up between consumers on social networks and they would have more trust in recommendations from other individuals rather than being told what to do by the brand. Furthermore, with the emergence of social media, brands are no longer in total control of what is being said about the brand and the image that is being created about them. People write about the brand and this is what is being used to build up the brand image. This would suggest a lack of effectiveness of social media as a marketing tool as the brand are not as in control as they are when using traditional marketing methods.

From the research, it can be concluded that social media is effective in reaching a large number of people on a global level and has definitely over-taken traditional marketing methods. However, it would seem that social media gives a large amount of power to the consumer and this somewhat hinders the marketing plans of the brand. This suggests that social media should not be underestimated and seen as an easy marketing option and if a company choose to use it as a part of their marketing strategy, they should put the same amount of focus on it as they would have with traditional methods. If companies do not implement it properly and ensure that they are regularly updating and checking the content, they risk the brand image being hindered by third party comments.

5.3 Implications

The results from the research provide information that can be off use to managers in the future in regards to social media marketing.

Social media allows managers to reach a larger audience, however in order to turn social media into an effective method of marketing, managers should keep social media sites up to date and active as consumers regularly check up on social networks especially when making purchasing decisions. Additionally, companies should encourage customers to post positive feedback to social media as consumers look to other when making their decisions. This would significantly increase the effectiveness of social media as a marketing tool.

In addition, managers should aim to build up a relationship with their customers and this can be done more easily over social media, doing this will enable managers to turn consumers into lifetime customers who are dedicated to their brand. By building up these relationships, it will also help brands to gain useful feedback and make changes to their products that will be beneficial to the consumer. It will also keep the brand involved throughout the consumer purchasing process and help them to influence decisions that are being made in regards to their products.

5.4 Further Research

The study focused on the cosmetic industry, particularly on females; therefore future research could be conducted with a focus on males in the same industry or a specific age range. Furthermore, the research was mainly based on findings from USA and Europe; further research could be conducted in other countries to assess whether culture has an influence on the effectiveness on social media marketing. Also the focus could be on another industry area as it may be found that social media is not suitable for all industries.

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