Social Media and Business Practices

Introduction

In today’s competitive environment, businesses are continuously exploring ways by which customers can be better engaged to sustain long-term growth (Aral, Dellarocas, & Godes, 2013). Because of the unpredictable and wide dispersion of social media (SM) platforms, businesses today face many challenges that did not exist a few years ago (Dong & Wu, 2015). SM platforms are economical and user-friendly and facilitate the consumption, generation, and sharing of user-generated content by the consumers (Sigala & Marinidis, 2009). As most of their targeted customers are present on various SM platforms, businesses are aligning their strategies and tactics to incorporate these platforms at all levels. This shift toward SM platforms can be determined by several factors including declining response rates vis-a-vis traditional customer engagement methods, technology development through customer participation, open communication of customer preferences, low cost of information dissemination, and the demographic shifts toward use of new technologies (Gillin, 2007).

SM platforms offer an easier and more cost-effective way for businesses to reach customers, and consequently strengthen brand awareness through numerous applications and tools (Rodriguez-Donaire, 2012). Using SM platforms, businesses can define or re-define relationships with both new and old users, respectively, and develop communities that interactively collaborate to identify issues and solutions for both themselves and businesses (Meredith & O’Donnell, 2011). Businesses appear to believe that such SM initiatives are justified because of their potential to generate profits, for instance, through advertising (Aral et al., 2013). Businesses can improve branding and direct more traffic to its web site utilizing SM advertising.

Furthermore, customers can add value by generating their own content to influence the purchase decisions of others through peer-to-peer communications. SM platforms enhance the communication power of individuals by providing different avenues without demanding much effort of the users (Curran & Lennon, 2011). Apart from creating and sharing knowledge, users can create or join various communities with other like-minded individuals based on their similarities of interest and purpose. Also referred to as virtual communities, they help users create personal relationships in an enabling environment through emotion-laden discussions (Rheingold, 2000). These communities have resulted in new opportunities for businesses (Brodie, Hollebeek, Juri, & Ili, 2011). Some of the activities undertaken by businesses include sharing of content, interaction with customers, gathering customer feedback, provision of customer services, and effective collaboration with employees or business partners, and so on. (Bowden, 2009). Furthermore, SM has not only strengthened the existing relationship between businesses and users but also resulted in innovative changes in traditional communication methods, thereby enhancing the capability of businesses to better interact and dialog with users.

In light of above, this chapter attempts to explain SM in greater detail and as delineated by various business practices. This understanding of the use of SM by businesses is preceded by a discussion on the definition of SM platforms, their different types, and the associated business models.