Analysis of Facts for Companies Going Public through Social Media

Analysis of Facts for Companies Going Public through Social Media

Dilip Kumar Mallick (Wipro Technologies, India) and Susmi Routray (IMT Ghaziabad, India)
DOI: 10.4018/978-1-4666-4209-6.ch004


Social media is altering interpersonal and social connections, empowering new forms of commitment and contribution. The emergence of social media has a dramatic impact on the current commercial environment. The power of authority has shifted from business to potential consumers. Going wrong in social media can have a huge impact on a business. However, at the same time, the huge potential of the medium cannot be overlooked. In this chapter, the authors compile a review of the cases where companies have undervalued or misused the power of social media. The research is basically a secondary market analysis wherein the failures have been identified and analyzed. Based on the analysis of the cases, the chapter suggests elucidation for companies going public through social media.
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Social media has been defined by researchers in many ways. But, in simplest terms Social media can be defined as social instrument of communication. Social media is a platform of communication between multiple participants. It is communication channel between Companies-Customer, Customer-Customer, and Customer-Companies. According to McKinsey survey 39 percent of companies surveyed already use social-media services as their primary digital tool to reach customers, and that percentage is expected to rise to 47 percent within the next four years (

According to researchers (Mangold & Faulds, 2009) social media is a hybrid element of promotion mix since in a traditional sense it enables companies to talk to their customers, while in nontraditional sense it enables direct customers to customers interaction. Social media is a great marketing tool for business of all sizes. Social media connects people to the business at a very personal level. Social media is a channel for companies to have their message in public without spending lot of money in traditional promotion mix. Example is of Ford Motor Co. that broke the tradition by launching its 2011 explorer crossover vehicle on Facebook.

According to Brook and Wollan (2011), social media creates opportunities for companies to supplement traditional sources of customer’s insight with a wealth of information gathered by listening into community sites such as Facebook, LinkedIn, and Twitter, as well as customer forums and product review and services. According to a survey by Accenture, tracking customer insight is now quicker because of the direct interaction possible with the customers through online market research. For example, Best Buy involves itself with 5,000 customer discussion every week and also interacts with 1.3 million followers regularly (Accenture survey).

Social media ad also helps in converting shoppers into buyers thus helping in sales process. Social media has led to innovation for many companies by understating the customer latent need. Social media has become a platform of recruitment process where companies have social media recruitment team who post and recruit resources form site like LinkedIn and Twitter. Social media is the source of formation of online virtual community. Firms get value when customer gets involved and thus helping in creating content and becoming loyal. Also they negate to any negative statement about the company. Having a social media platform is not only the key factor to success in business. Company has to deliberately get involve so that they are into an emotional relationship with the customers. So company has to be participative in nature. Twitter, Facebook, blogs, and company blog pages are the social media tool that is participative in nature. Unlike YouTube which is their only for video sharing.

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