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Chapter 2: Literature Review
2.1 The capability to manage a fan page
The social media phenomenon has introduced new channels and methodologies that drive and enhance enterprise marketing and customer services. Because social networking has spread among consumers and organizations, the capability to manage and use social media is critically required by enterprises (Briones et al. 2010). When firms fail to engage their customers in a social network, they also fail to fully exploit the capacities of social media platforms (Culnan et al. 2010). Although barriers to adopting social networks are substantially lower than for most other communication and branding channels, the resources invested by enterprises to manage social networks by enterprises have a price (Solis 2010).
The resources required by enterprises to manage social networks are for establishing the platform, maintaining operations, developing content and activities, promoting the platform, interacting with customers, storing and analyzing customer knowledge, and most importantly, leveraging customer knowledge for business decisions. When more time and resources are invested in managing fan pages, interaction increases (Torsten et al. 2011). Because the objectives of the fan page are not only for retaining a relationship (Lin & Lu 2011) with current customers but also for creating selling opportunities (Shih 2009) and interacting with prospective customers (Parent et al. 2011), measurements of the effectiveness of the fan page management capability should consider the engagement and attention of customers.
Factors including the reach, referrals, activities and interactions of the fan page are key indicators for reflecting the management capability because customer-attracting content, interaction, and service design is crucial to increasing the patronage of the fan page.
2.2 Impacts of a fan page on business performance
The establishment of fan page impacts internal and external business practices.
The published information and interactive communication can prompt purchases of the firm’s products and/or services. The interactive activities can also increase brand awareness among both current and prospective customers. Additionally, the personalized service and interaction enhance customer satisfaction, and customer feedback can provide important inputs for the product development process.
Revenue from products/services
Creating a Facebook fan page is the quickest and easiest method for establishing a web presence for a new product (Guy 2011). Consumers create, modify, share, and
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discuss product content on the social network platforms (Kietzmann et al. 2011).
Product recommendations on social networks can influence people’s purchase intentions (Hsiao et al. 2010). Increasing numbers of enterprises are creating, operating, and managing their own Facebook fan pages. In 2010, Milk-Bone used a service dog named Noble; by creating activities to promote products to fans on the Milk-Bone's service-dog star fan page, they increased revenue by 16% in North America (mediapost 2010).
Word-of-mouth (WOM) also has a considerable impact on customers’ churn and purchase decisions. Users’ interest and attitudes regarding products directly predict their purchase intentions and indirectly determine the product’s persuasiveness (Prendergast et al. 2010). Thus, social networks can have a positive influence on a company's possibilities for increasing revenue through product sales (Vale and Guimaraes 2010). Therefore, we propose the following hypothesis:
H1: The better the fan page managing capability, the higher the product sold.
Customer satisfaction
Enterprises invest in product and service quality to increase customer satisfaction.
On social networks, customers evaluate and comment on products and services. This feedback can assist firms in identifying weaknesses and strengths, and generate ideas for improvements (Wirtz et al. 2010). Social networks can be used to enhance user interaction, motivate customers to discuss their experience, and enable workers and managers to receive customer feedback (Gorry et al. 2011).
The content and responses on a Facebook fan page can influence customers’
impression of product and service reliability. For example, 7-Eleven responded to product complaints on its fan page by rapidly resolving the issues, which satisfied their customers satisfied, resulting in growing loyalty (Vision 2011). Therefore, based on this perspective, we propose the following hypothesis:
H2: The better the fan page management capability, the higher the customer satisfaction.
Customer growth
An enterprise must understand consumer needs and motivations, promote member participation, and motivate members to cooperate by ensuring they feel included and empowered (Porter et al. 2011).
When users receive appealing content, they tend to share or forward it, and may even invite it. The emergence of Internet-based social media has enabled one person to communicate with hundreds or thousands of people regarding products, designers, and manufacturers. The impact of consumer-to-consumer communications in the
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marketplace has greatly increased (Mangold and Faulds 2009). Through WOM, potential members can be linked through existing members and may subsequently join the site (Trusovet et al. 2009).
Enterprises can increase their fans and engage more potential customers of varying levels by initiating activities on a social network fan page. Thus, we propose the following hypothesis:
H3: The better the fan page management capability, the greater the customer growth.
Brand awareness
The attitudes, strategies, and behaviors of market brands are affected by their relationship with the fan page site (Ho Chia-Hui 2010). Social media provides an unparalleled platform for consumers to publicize their personal evaluations of purchased products, thereby facilitating WOM communication. It has a crucial influence on brands. Profit-seeking organizations have used these platforms to launch products and strengthen existing brands (Waters et al. 2009, Mangold and Faulds 2009).
Enterprises may use numerous tools to spread ideas and increase brand awareness. Nowadays, brands resource social media by joining online communities, sharing videos, and interacting with customers, which has gradually reduced traditional brand-building routes (Fournier and Avery 2011). Social networking tools are employed to enhance consumer-to-consumer communications and create virtual and viral marketing. Viral marketing, analogous to the spread of pathological and computer viruses, use social networks to increase brand awareness by self-replicating the viral diffusion of messages (Kiss and Bichler 2008). For example, UNIQLO used the tools on fan pages to create a game and several interesting activities to attract people. Through WOM, the number of users participating in the games reached 630,000 in two weeks in Taiwan (Today Weekly 2010, Digital Times 2010). Therefore, we propose the following hypothesis:
H4: The better the fan page management capability, the higher the brand awareness.
Customer loyalty
A firm's ability to obtain profitable customer relationships relies on its capability to take advantage of information obtained through successive customer interactions (Ramani and Kumar 2008). Social networking sites provide firms with opportunities to strengthen customer relationships through the site content and services (Pagani et al.
2011) and by co-learning, co-production, and collaboration activities (Marianna 2011).
The new breed of customer requires corporate transparency, authenticity, and
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interaction (Paul 2010). To reach this intelligent and aggressive social consumer, a greater insight than that of the past is necessary. Social tools, such as Facebook insights, Google trends, and social media statistics, provide the tools for creating social media channels (Paul 2010). A fan page enables more companies to build virtual customer environments, resulting in broader and more profound implications for customers (Nambisan and Nambisan 2008). Virtual customer environments provide services ranging, enabling firms to involve their customers in innovation and value creation.
Best Buy’s employee communities increased to 2,200 members within 3 months;
they interacted with over 13,000 customers on its fan page, responding to questions, concerns, and opinions from the public (Rob Petersen 2011). Increasing employee-customer interactions can enhance the connection between firms and customers, building strong relationships with customers. Thus, we propose the following hypothesis:
H5: The better the fan page management capability, the better the customer loyalty.
Product development
Successful product development depends on satisfying the needs of diverse customers. The ability of firms to interact successfully with their customers distinguishes them from their competitors (Ramani and Kumar 2008). Firms can benefit from involving customers in developing new products (Svendsen et al. 2011, Sioukas 1995). Collecting user feedback and monitoring user interaction on fan pages (Nambisan and Baron 2010) is a method to explore customers’ needs. Analysis and inference from communication records are effective methods to transfer customer insight to the development of new products and services. Furthermore, encouraging customers to adopt a more active role in new product development (Ernst et al. 2010) is a useful strategy to obtain ideas from fan page activities. Social networking allows companies to build strong online communities for feasible customer empowerment where they can listen to and integrate thousands of customers from all over the world (Fuchs and Schreier 2011).
Customer participation is contingent on the customer contribution context (Fang et al. 2008, Nambisan & Baron 2010), whether the contributions are to the customer community (through product support) or to the company (through product ideation).
The sales of Toyota’s new Yaris model in 2008 were the highest in the market, which can be attributed to information collected from initiating activities on Facebook fan pages (NOWnews 2008). The cost-efficient and multimedia-rich interaction opportunities offered by social networks and the existence of online communities have made virtual co-creation a suitable means of creating value and improving the
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success of new products (Fuller et al. 2009). Based on literature regarding customer contribution to product development, we propose the following hypothesis:
H6: The better the fan page management capability, the more successful the product development.
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