Social Commerce and Word of Mouth: Friend vs. Strangers

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Social Commerce and Word Of Mouth :Friends versus Strangers| The Impact of Peer Recommendations of Purchase Intent and Perceived Risk| Glenn PepitoMasters of Business Administration|

“Social Media sites like Twitter, Facebook, Linkedin and YouTube are changing the way the world does business. I think this is in response to our desire to connect with others. Relationship Marketing is all about connecting with people first as human beings and then as customers later. For a real business relationship to work, both parties must receive value. If only one or neither does, that relationship won't continue for long.” -- Terry Brock, Marketing Coach and Syndicated Columnist “Nobody cares how much you know, until they know how much you care.” -- Theodore Roosevelt, 26th President of the USA and Adventurer

1.0 Introduction
The internet users are now becoming more and more into social networks. According to Compete, Inc., the number of people, who joined social networks, increased by 109% from 2004-2006 and coupled with a 414% growth in usage. Majority of the users engage in social networks to meet new people (78%), to be entertained (47%), to learn (38%) and to influence others (23%). Transaction between social network members involves exchanges in resources, either material or information, trust, influence, etc. With this various processes going on, we focus on the intention of one member to influence another person. Networking involves making use of one’s chain of connections to make new friends, date, etc (Donath, 2004). In ecommerce, networking can be used by marketers to find potential customers. Companies have begun setting their eyes in the social media outlets to find a new way on conducting ecommerce. In this aspect, social networks are being set as a new platform for online selling and advertising, but what makes it different from the traditional online selling websites is that the consumers themselves are engaged in marketing activities and even product or service recommendations. Marketing activities may range from relaying information about products and services via recommendations to peer-to-peer selling.

Online shopping websites have been trying to make use of collaborative filtering and social network information in describing or determining preferences of users with the goal of creating more accurate and personalized recommendation systems. In social networks, they are looking into peer recommendation and its effectiveness compared to recommendations which is based on preferences. Companies are trying to make use of personal ties or social network connections as a new factor to gain trust, improve brand image, and reduce the perceived risks involved in online shopping or transactions. The focus of this paper is not what kind of recommendations nor is the way how recommendations are derived but who are involved in the recommendation and how this persons’ relationship with the recipient of the recommendation affects or influence the acceptance of such. 1.1 Motivation for Study

Social networks have grown popularity nowadays and everyday more and more people are being connected and more virtual relationships are being established on these sites. Social network is also a pool of information wherein people declare their interests and preferences and share them with others. Companies are now beginning to eye on these social network relationships and information to increase their sales generation by integrating marketing functionalities into these websites and making use of this connections and declared interest or preferences to promote their product or enhance their recommendation. With the rapid increase of social commerce, this research aims to provide a sound proof and explanation why online marketing is successfully proliferating in social networks and how relationships and connection existing between social network members are being used to promote online purchase and...
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