IS2502 Social Media and Social Networks

Week 6
Social Commerce II

Ms Rupa
Department of Information Systems
Recap: Social Commerce
‣ A subset of e-commerce that uses social media applications
− To enable online shoppers to interact and collaborate during the
shopping experience
− To allow buyers to complete the stages of the purchase decision
process
− To assist marketers in selling to customers

‣ Encompasses social shopping, social marketplaces, and hybrid

channels and tools that enable shared participation in a buying
decision

‣ Enables people to participate actively in the marketing and

selling of products and services in online marketplaces and
communities

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Recap: Forms of Social Commerce
‣ Social commerce either brings social media to e-
commerce or e-commerce to social media

− Peer-to-peer sales platform (e.g., Etsy.com)

− Social network driven sales (e.g., Facebook stores)

− Group buying (e.g., Groupon.com)

− Social recommendations (e.g., Amazon.com)

− Participatory commerce (e.g., kickstarter.com)

− Live streaming commerce (e.g., Taobao Live)

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Recap: Key Social Commerce Elements

‣ Social commerce elements

− Ratings and reviews
− Curated merchandise
− Shopping apps and venues

‣ Social media is still a minor, but it is growing

− Social referral to retail e-commerce
− In-app shopping in social network sites

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Recap: Social Commerce and Social Shopping

‣ Social shopping
− Active participation in the consumer decision-making
process, typically in the form of opinions,
recommendations, and experiences shared via social
media
− Consumers’ behavior as they use social media to make
purchase decisions

‣ Social commerce
− Commercial application of social media to drive the
acquisition and retention of customers

5
Recap: Motivation of Shopping

‣ Hedonic (pleasurable or intangible)

− Social experiences: the social venue as a community
gathering place
− Opportunities to share common interests with like-minded
others
− The sense of importance we experience when others wait
on us

‣ Utilitarian (functional or tangible)

− Access opinions, recommendation, and referrals from others
within and outside of their own social graphs
− Social aspect of shopping (consult pals and interact with
salespeople)
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Recap: Decision-Making Process

Social Media

Information Purchase Post-

Problem Alternative Purchase
Search (Where and
Recognition Evaluation Evaluation
(Information how to
(What to (Make a
about the obtain the (Satisfaction
buy?) choice)
products) product) or regret)

7
Recap: Stage 1: Problem Recognition

‣ Suppose a situation
− You get a bad cold (e.g., you have stuffy nose and
itchy throat) and you cannot see any doctor, how do
you figure out what medicines, supplements, or food
would make you feel better?

‣ How do you figure out the things you need in a

specific situation?

8
Recap: Stage 2: Information Search

‣ Rating
− Scores by users, acting in the
role of critics, that reflect
assessments of attributes

‣ Review
− Assessments with detailed
comments about a product

‣ What makes a review or

rating valuable?
− They are heuristic!

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Recap: Stage 3: Alternative Evaluation
‣ Recommendations and referrals
− Originate from the recipient’s social graph
− More influential than review and ratings
− Leveraging the social capital of the referrer
− 90% in the survey said they trust an online recommendation from
someone in their network

‣ Credibility and authenticity of the reviews and ratings

− Volume of reviews: stronger impact on sales than the presence of
negative reviews
− Source of the review: opinions from experts such as bloggers or
professional critics
− Similarity: reviewer and reviewer’s purchase context
− Reviews that focus on benefits to the consumer, not product
attributes

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Recap: Stage 4: Purchase

‣ Is there anything you are worried about when

you pay online?

‣ What makes people trust a seller?

‣ Conversational commerce
− Chatbots in social message apps

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Recap: Stage 5: Post Purchase Evaluation

‣ It’s about whether you are satisfied with the purchase

or not (the second moment of truth)

‣ Why is post-purchase satisfaction a big deal?

Repeat
purchase

Post-purchase Positive word-

satisfaction of-mouth

Recommendation
to others
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Social Commerce

Social Media Marketing, Sage

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Learning Objectives
‣ How does social commerce leverage reviews and ratings?

‣ What are the psychological factors that influence social

shopping?

‣ What are the bases of segmentation used to group social

consumers?

‣ How is social identity relevant to marketers?

‣ What are other segments of social consumers and social

media users?
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Marketing Value of Social Commerce

‣ Reputation economy
− The way in which a product’s or a person’s standing is shape
by the contributions of end users
− Where the individual social graph (the social data set about
each person) determines one’s value in society
− Based on the simplistic, but effective star ratings system
− E.g., Uber, Amazon, Klook, Yelp

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Marketing Value of Social Commerce

‣ Online review and rating

− Product opinions affect shoppers
• Willing to pay a price premium for products with higher ratings
− Generate increased sales by bringing in new customers
− People write review tend to shop more
− Enhance organic search traffic
• Reviewers tend to use the same keywords in product
descriptions
− Better site stickiness
• Stay at a site longer
− Source of research data for business

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Marketing Value of Social Commerce
‣ Why Don’t All Sellers Offer Reviews and Ratings on Their
Sites?
− Fear that dissatisfied customers will use the review feature as a
venue to flame a brand is the most commonly cited reason

https://www.amazon.com/Bose-Cancelling-Wireless-Bluetooth-
Headphones/dp/B07Q9MJKBV/ref=sr_1_4?crid=DW41QBKHJ07J&dchild=1&keywords=boss%2Bhead
%2Bphone%27s%2Bwireless&qid=1613231779&sprefix=boss%2B%2Caps%2C361&sr=8-4&th=1 17
Leverage Social Reviews and Ratings

‣ Reviews are questioned

− Deception
− Include information that is not related to product use
− Lack verified purchase information

‣ Amazon’ action
− Verified purchase
− Sued sellers for buying fake reviews
− Update review algorithm and policy
− https://www.youtube.com/watch?v=Mq_Ksga9uHY

https://www.amazon.com 18
Leverage Social Reviews and Ratings

https://www.amazon.com 19
Leverage Social Reviews and Ratings
‣ Authenticity: accept organic word of mouth, whether
positive or negative
‣ Transparency: acknowledge opinions that were invited,
incentivized, or facilitated by the brand
‣ Advocacy: enable consumers to rate the value of opinions
offered on the site
‣ Participation: encourage consumers to contribute posts
‣ Reciprocity: acknowledge the value of the opinions
customers offer
‣ Infectiousness: make it easy for users to share reviews on
blogs and social networking platforms
‣ Sustainability: online opinions are so influential because
they live on in perpetuity
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Leverage Social Reviews and Ratings

‣ What brands and marketers need to do

− Educate people about your products and services
− Identify people most likely to share their opinions
− Provide tools that make it easier to share information
− Study how, where, and when opinions are being
shared
− Listen and respond to supporters, detractors, and
neutrals

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Social Commerce Strategies

‣ Utilize, encourage, and facilitate user-generated

content with social sharing and shopping
functionalities
− Providing social sharing tools: social software plug-ins that
enable easy sharing of products sold on a retailer’s website
to social networks; e.g., Pinterest
− Recommendation indicators: simple buttons that provide an
on-site endorsement of a product; e.g., Facebook’s “like”
− Reviews and ratings: on-site reviews and ratings with tools
for writing and rating
− Testimonials: a form of recommendation that enables users
to share a more personal story about their experience,
possibly as a video endorsement
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Social Commerce Strategies

‣ Utilize, encourage, and facilitate user-generated

content with social sharing and shopping
functionalities
− User galleries: virtual galleries where users can share their
creations, shopping lists, and wish lists, user curated
shopping
− Pick lists: lists that help shoppers share what they want on-
site
− Popularity filters: filters that enable the shopper to show
products by most popular, most viewed, most favorite, or
most commented on
− User forums: groups of people who meet online to
communicate about products and help each other solve
related problems
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Psychology of Influence
‣ Factors that make it more or less likely that people will
change their attitudes or behavior based on a
persuasive message

‣ We aren’t rational unlike computers

− Cognitive biases: “shortcuts” our brains take when we
process information
− Limitations of bounded rationality

‣ Information overload in a world or search engines and

social media
− Satisfice; shortcuts to simplify decision-making process
heuristics; rules of thumb; thin-slicing

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Psychology of Influence

‣ Major factors that help to determine how we will

decide
− Social proof
− Authority
− Scarcity
− Affinity
− Consistency
− Reciprocity

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Social Proof

‣ When a lot of people select one option; popularity

− Marketer’s words: the #1 choice, market leader, etc.

‣ Herd behavior
− When people follow the behaviors of others

‣ Conformity
− Change in beliefs or actions as a reaction to real or imagined
group pressure
− Members in a society develop norms or informal rules that
govern behavior
− Unspoken rules govern many aspects of consumption

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Social Proof
‣ Common reasons of conformity
− Cultural pressures: different cultures encourage conformity to a
greater or lesser degree
− Fear of deviance: sanctions to punish non-confirming behaviors
− Commitment: the more people are dedicated to a group and value
their membership in it, the greater their motivation to conform
− Group unanimity, size, and expertise
− Susceptibility to interpersonal influence: individual’s need to have
others think highly of him or her

‣ Testimonials
− A source of social proof
− Social shopping tools; e.g., VideoGenie

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Authority

‣ Opinion or recommendation of an expert in the

field
− Expertise from specialist knowledge and/or personal
experience with the product or problem
− Save time and energy on the decision
− Marketer’s words: 9 out of 10 doctors recommend

‣ In social media
− Referral programs, reviews, branded services, and user
forums
− Professional reviewers

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Affinity and Scarcity
‣ Affinity (liking)
− People tend to follow and emulate those people whom they
find attractive or otherwise desirable
− Marketer’s strategy: casting likable celebrities
− Social shopping is tied to your social graph (your
friendships)
• “Ask your network” tools (request real-time recommendations),
pick lists, referral programs, sharing tools, etc.

‣ Scarcity
− Instinctively want things more if we think we can’t have
them
− Time-sensitive deals, limited-edition products, or products
that are limited in supply

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Reciprocity and Consistency

‣ Reciprocity
− Embedded urge to repay debts and favors
− Common norm of behaviour
− Influences daily interactions all around us
− Marketer’s strategy: an offer of some kindness, gift, or
favour to the target audience; e.g., free trial, greeting card

‣ Consistency
− With beliefs, attitudes, and past behaviors
− Cognitive dissonance: a state of psychological discomfort
caused when things we know and do contradict
− Marketer’s strategy: free trail periods, automated renewals,
and membership offers
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Benefits of Social Commerce

‣ Benefits to marketers
− Monetize the social media investment by boosting site
and store traffic, converting browsers to buyers, and
increasing average order value
− Result in more data about customer behavior as it
relates to the brand
− Enhance the customer experience; higher levels of
customer loyalty and better long-term customer
lifetime value
− Make sharing brand impressions easy and earn referral
value with these easy-to-use word-of-mouth tools
− Keep up with the competition

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Profiling the Targeted Segments

‣ Market segmentation
− Process of dividing a market into distinct groups that
have common needs and characteristics
− Trade-off between the efficiency of treating all
customers the same and the effectiveness of
addressing all customers’ unique characteristics

‣ Bases of segmentation
− Demographic, geographic, psychographic, behavior,
and benefits sought
− Digital lives vary based on lifestyle, personality,
demographics, geographic, and economic conditions
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Demographic Segmentation
‣ Grouping market units by categorical, descriptive
characteristics; answers “who” questions
− Age, gender, ethnic background, income, occupation, marital
status, family life cycle, education, socio-economic status,
etc.
− E.g., QueRicaVida.com by General Mills

‣ Demographic segmentation in B2B

− Industry vertical, size, performance, structure, ownership,
years in business, customer type, technology, etc.

‣ Social media have made it easy to target prospects

− By offering user profiles
− Each social media has a unique user profile
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Geographic Segmentation
‣ Grouping units in the market using variables tied to
location; answers “where” questions
− Region, country, geospatial data (e.g., geocode), market size,
population density, climate, environmental context (e.g., indoor or
outdoor), language, etc.

‣ Geographic segmentation in B2B

− Region, country, density, infrastructure, regulations, language, etc.

‣ Geotargeted social media

− Location-based targeting; GPS technology; e.g., Yelp
− Geofencing: virtual line around a defined geographic space
− Geotargeting: similar to geofencing but the geographic are more general
− Beaconing: very small range of geolocation; best within a store

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Psychographic Segmentation
‣ Grouping market units using psychological, sociological,
and anthropological variables; answers “why” questions
− Motives, personality traits (e.g., openness, need for variety,
impression management), values, attitudes, interests, etc.
− Sometimes combined with other segmentation bases
− Provide the richest picture; help to know the real person making
the consumption decisions

‣ Psychographic segmentation in B2B

− Buyer motives, organizational personality (i.e., organizational
culture, decision style, risk tolerance), values (e.g., deal seeker,
partner-focused), attitudes, interests, etc.

‣ E.g., Greeting card vs. social media

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Behavioral Segmentation
‣ Grouping market units based on past or predicted behavior;
answers “how” questions
− Role (e.g., buyer, user, influencer), purchase occasions, customer
value (e.g., RFM – recency, frequency, monetary value of purchases),
usage rate, readiness stage, shopping patterns (e.g., searching
online, reading reviews, purchase preferences), payment patterns,
media consumption (e.g., magazine readership), etc.

‣ Behavioral segmentation in B2B

− Purchase approach/decision procedures, occasion, user status (e.g.,
RFM), usage rate, readiness stage, research patterns, payment
patterns, industry engagement (e.g., trade show attendance), etc.

‣ Social media variables

− Time spent on social media, devices to access social media, past
engagement with Facebook pages and ads, etc.

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Benefit Segmentation

‣ Grouping market units based on the underlying

utility or need driving decisions; answers “what”
questions
− Needs/Utility, Jobs-To-Be-Done (job the customer
needs the product to perform)

‣ Benefits from interactions with brands in social

media
− Meaningful relationship with the brands they use
frequently
− Functional relationship with brands
• Social currency: ability of brands to fit into how consumers
manage their social media-centric lives 37
Social Identity

‣ The part of our self-concept that results from our

perceived membership in a group
− Influence where, when, how, and what you contribute as a
social media participant

‣ Big social data

− Data generated from technology-mediated social
interactions and actions online
− Social identity: the way marketers view you given your
social media activities
− Use social identity data at all point in the purchase funnel:
identify prospects, nurture leads, tailor recommendations,
enhance retention, or reward loyalty
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Social Touchpoints
‣ Leave impressions
‣ Make up the data that marketers use to paint your social
identity

Social Media Marketing, Sage

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Social Footprints

‣ The mark a person makes when s/he is present in

a social media space
− Subtle or obvious depending upon the quantity and
frequency
− Make up a life stream
− Source of the big social data
− Useful for making predictions about people
• Timing of log-in, like or not, life event, etc.

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Privacy Salience
‣ Concerned about privacy related to social media
activities
− Collection, unauthorized secondary use, and improper
access of personal data

‣ Privacy paradox
− People’s willingness to disclose personal information
(usually, for personalized service) in social media channels
despite expressing high levels of concern for privacy
protection
− Intuitive concern: emotional gut reaction to a possible
privacy invasion
− Considered concern: identifying possible privacy risk,
estimating the potential costs of privacy invasion, and
deciding whether any benefits offset those costs
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Privacy Salience

‣ Privacy concerns
− Social privacy: concern about disclosing personal
information to others
− Institutional privacy: privacy relating to the use of data
by the institution providing the service and third parties

‣ Right to be forgotten
− Right to have private information about a person be
removed from Internet searches and other directories
under some circumstances
− Right to privacy vs. right of free speech (right to know)
− EU and Argentina since 2006
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Social Technographics
‣ Six types of online people (Forrester Research)
− Based on how those people use and interact with social media
− Inactives, spectators, joiners, collectors, critics, conversationalists, and
creators; not exclusive

‣ New social technographics score (Forrester Research)

− How actively a segment uses social tools, how important those tools are
within the stages of the customer life cycle, and how willingly they engage
with brands in social media
− Social stars (scores of 60+) demand social interactions with your company.
These consumers constantly use social media to connect with companies,
brands, and products.
− Social savvies (scores of 30 to 59) expect social interactions with your
company. Social media are still a part of their everyday lives and they
frequently use social media to connect with companies, brands, and products.
− Social snackers (scores of 10 to 29) appreciate social interactions with your
company. They don’t shy away from branded social interactions, but neither
do they seek them out.
− Social skippers (scores of 0 to 9) spurn social interactions with your company.
They rarely use social media to connect with companies, brands, and
products. 43
Social Technographics

‣ Provide scores by customer life cycle stage

Social Media Marketing, Sage

44
Social Consumption/Creation Matrix

‣ Categorize social media user types

− According to the degree of social media consumption
and creation (Hodis et al.)

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Social Consumption/Creation Matrix
‣ Attention seekers have
− Large networks, high social capital, and the ability to create and promote
social content
− Social media influencers
− Motivated by the validation impulse and are ready to participate in
conspicuous, brand-initiated interaction

‣ Devotees
− Ideal brand ambassadors
− Talented content creators and also active content consumers

‣ Entertainment chasers
− Low level of both creation and consumption
− Passive users with short attention spans

‣ Connection seekers
− Largest segment of social media participants
− Ongoing engagement is critical to the health of social communities
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Typology of Social Utility

‣ User propensity to socialize and seek information

in social media (Ryerson University)
− Passive or active information seekers
− Passive or active participants

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Microblog User Types

‣ Seek to align by interest rather than relationships

− Polarized crowds: people who are passionately discussing an
issue
− Tight crowds: highly interconnected people such as
hobbyists, fans, or professional groups
− Brand clusters: people talking about brands, but not talking
with each other
− Community clusters: typically feature news relevant to
specific groups
− Broadcast networks: exist when many people repeat
prominent news
− Support networks: one in which customer complaints are
handled by one or more members; a hub- and-spoke
structure but the members are largely disconnected
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Summary
‣ How does social commerce leverage reviews and ratings?

‣ What are the psychological factors that influence social

shopping?

‣ What are the bases of segmentation used to group social

consumers?

‣ How is social identity relevant to marketers?

‣ What are other segments of social consumers and social

media users?
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