The Effects of Social Networks on E-Commerce Particularly in On-Line Advertising - Research Proposal Example

Objectives of the Research The purpose of this study is to determine the influences of social networks on e-commerce particularly in on-line advertising industry, with a special indication to consumer buying behavior and demand patterns. Social networks are significantly transforming e-commerce and assisting it towards new and better directions (Chen and Tan 77). With its help, e-commerce has been able to overcome various problems faced by e-business enterprises. Websites such as Facebook and MySpace attract millions of users every year and persons ranging from elders to teens are signing up to make use of these sites all over the world (DeLone and McLean 45). All these social networks have a common theme- they combine persons from every part of the world who share similar friends and interests. According to Nielsen, the whole world spends more than 110 billion minutes every day on social network sites. This has led the on-line advertising industry to maximize their use of social networks in order to boost consumer-buying behavior and increase demand for products and services (Huang et al. 1292). Currently, social networks play a signifcant role in advertising products. In the era of digital economy, it is no longer adequate to set up an online or physical shop and wait for customers to arrive (Chatterjee 715). Instead, online advertising companies are becoming very proactive through finding methods of engaging consumers, building relationships as well as creating communities through involving social elements in social network sites (Khalifa and Liu 36). Social commerce websites have incorporated features such as customer reviews and ratings, social shopping tools, user referrals and recommendations as well as online communities (Stratmann). Such features have created a trust environment whereby family, friends, and workmates can enthusiastically add information to the referral as well as sale of products and services via reviews, constructive or unconstructive response, testimonials, and ratings about their present and past experiences (Sambamurthy et al. 239). As a result, the research and buying cycle has been minimized through establishment of one destination, which is driven by numerous people (Rubel). Generally, social networks have become a trusted environment whereby prospective customers are able to make decision to purchase various products or services depending on a network of family and friends, and not persons they do not know or trust. This research will particularly focus on consumer buying behavior and demand patterns, which arise from online advertising over the social networks. According to Zetlin and Pfleging, most consumers’ needs are arranged through the social networks in consumer driven online markets such as social networks. This assembling of consumer needs in a single place enables the advertisers to target many people and this leads to higher sales (Dekimpe et al. 26; Wyner 38). The social networks have affected almost all the companies that produce consumer goods and those that offer services. It has changed online advertising and the way which business is done (Blanchard and Markus 70). Chambers (620) points out that most of the social network sites can be taken as exceptional democratic participation networks whereby individuals create what others desire and require on an equivalent basis. For instance, a social network site, such as Facebook uses a number of social media tools such as blogs whereby users can express their preferences and passions while simultaneously providing a central contact center for a group of colleagues. McKinsey notes that both existing and start-up companies are building online fan communities in order to endorse their goods and services, brands such as Coca-Cola, BMW, Adidas, New York Times use circles of friends which serve as brand-building centers. Social network sites have becoming so appealing for online advertising companies because of their power to build a “friends” network of persons who are passionate about a certain brand, and customers can include the trademark as a “friend” and make use of the trademark sounds, logos, images, as well as extra widgets to individualize their profile (Zhu et al. 264). It is for this reason that this study seeks to determine the effect that social networks have on e-commerce, especially in on-line advertising industry. Literature Review The intention of this research is to determine the influence of social networks on e-commerce particularly in on-line advertising industry, with a special indication to consumer buying behavior and demand pattern. There will thus be a focus on the relationship between e-commerce success and online advertising over social networks using demand patterns and consumer buying behavior as the indicators. Hypothesis Hypothesis 1- H0- There is a positive association amid online advertising over social networks and consumer buying behavior and demand patterns. Hypothesis 2-H1- Online advertising over social networks has led to e-commerce success. Hypothesis 3-H3- User acceptance has moderated the online advertising strategy and e-commerce success connection over social networks. Research Questions Is there a positive relationship between online advertising over social networks and consumer buying behavior and demand patterns? Has online advertising over social networks led to e-commerce success? Has user acceptance moderated the online advertising strategy and e-commerce success connection over social networks? These research questions and hypotheses are related to the larger issue of the research as they will be important in determining the effects of social networks on e-commerce using consumer buying behavior and demand patterns. Most people are increasingly signing up for accounts in social networks, e.g., Facebook and MySpace and are using the sites to communicate with each other online and to view and build their own profiles (Boyd and Ellison 212; Jelassi and Enders 9). This has made online social networking sites particularly appealing to online advertisers as they offer big potential for business to advertise their products in a cheap and efficient manner and reach many people. Social networks are one of the fastest means of advertising particularly through word of mouth as it allows millions of people in different countries and continents to communicate (Bharadwaj 170) The second research question will be important in determining whether online advertising over social networks led to e-commerce success. The emergence of e-commerce has led to a dramatic increase as most companies try to make the most of e-commerce to reach a wider market and manage non-stop growing firms (Boyd and Ellison 212). E-commerce entirely focuses on the use of the web or the internet to quicken and simplify commercial business deals (Huang et al. 64). Currently, companies usually fight in order to succeed in the face of increased competition, executive usually employ information technology as an important component to note and react to market changes (Luftman). Voss and colleague (69) also agreed that nowadays managers are aware of the internet possibilities and potential as a strategic component. Most companies are currently using social networks to build their brand, share important information, track and facilitate consumer communities, broadcast messages, offer customer service, create promotional campaign and remain competitive in the market (Chen and Dubinsky 325; Kaveri et al. 422). All these efforts are leading to an increased customer base and increased demand for products and services and hence the online advertising over social networks is bearing fruits and hence leading to e-commerce success. Sambamurthy et al. show that using the internet can bring about accomplishment through IT capabilities because it provides alternatives for responding to change (239). The strategy laying emphasis on using social networks is an e-marketing strategy; this is a great method of attracting a wider customer base (Kaplan and Haenlein 61; Voss and Voss 69; Young and Jaideep 295) Online advertising through the social networks offers a great chance for generating competitive advantage as the sites acts as an important channel for marketing products and services. Wyner (37) argues that it is easier to change various business perspectives with the growing digitalization and watch the way consumers reach. Hence, a company’s ability to use social networks such as Facebook, MySpace, and Twitter into core organizational strategy leads to improved performance in terms of customer base, sales, and demand of products or services (Brodie et. al. 346). Social networking has boosted the role of e-commerce in terms of advertising products and services and deploying a marketing strategy. It also enables companies to create good relationship with their customers and positive publicity over the sites (Borgatti and Pacey 991). It is aimed and catches the consumers’ attention and this can lead to repeat customers. Currently, the most frequently used social networks are Facebook, LinkedIn, MySpace, and Twitter (Strauss and Frost 2; Strauss et al. 70). Most online advertising companies have one or more accounts in all these social network sites for an effective-e-marketing strategy. Good marketers usually engage in an endless search for ways of obtaining better understanding when it comes to their customers (Clemons et al. 1; Mislove et al. 10). To acquire more information about the customers, firms are using the social networking sites because the sites gather a lot of information on the users. This has turned out to be very beneficial for companies to keep track and shape customer behaviors (Ussahawanitchakit 3). Huang et al.note that most information presented on social sites indicates greater challenges to customers looking for things they are interested in. Using social network sites to advertise the company profile and to reach marketing can be regarded as an e-marketing strategy as it entails using the internet and other related technology to operate marketing strategies (Eisenhardt and Martin 1106). Methods, Design & Analysis  Sample and Data Collection Procedure In this study, the sample will be e-commerce businesses that use social networking sites to advertise their products and services. The sampling list will be acquired from the Business Development Department database. A mail survey will be used to collect data as it enables a large number of respondents to be reached (Patton 78; Punch 56). The questionnaires will be distributed to about 900 e-businesses. The mail-survey response rate is usually less than 20% without a proper follow-up procedure (Aaker et al. 27; Silverman 101). The response rate will be used to determine whether the study is acceptable. To test non-response and potential bias, a t-test will be used to compare between the late and early respondents (Monsen and Horn 110; Neuman 77) The data collection instrument in this study will be a questionnaire, which will consist of seven parts. Part 1 will ask for demographic information or information regarding the business, i.e. business type, product type, business type, employees and investment capital. Part 2 will evaluate each aspect of the three research questions. The parts will be designed by a 5-poing Likert scale which will range from 1 (strongly agree) to 5 (strongly disagree) (Ruane 134; Thomas 45). In addition, the operational of every question will consist of numerous sub-items obtained from literature as well as new items development; Part 3 will consist of questions about consumer buying behavior and demand patterns and social network sites advertising. Part four will focus on the e-business strategy with specific focus on social network online advertising. Part 5 will focus on the conditions, which affect the strategy and success of the e-commerce businesses. Part 6 will focus on the consequences of online advertising over social networks on the success of e-commerce. Finally, there will be open-ended question for opinions and suggestions. Data will be gathered to measures variables specified within the research question (Leech and Onwuegbuzie 270). The 5-point Likert scale will be used to measure every variable- Strongly agree will score five points whereas strongly disagree will score one point on the Likert scale (Miller and Neil 96). The success of e-commerce will be a dependent variable. It will refer to the outcome of online advertising activities, operations, and practices over the social networks. This will be measured using a six-item scale. These items on the questionnaire will indicate sales growth, profitability, new market, market share, and sales revenue. Customer behavior and demand pattern will be the independent variables and they will be measured in reference to e-commerce activities over social networks. A 4-scale item scale will be used to as the respondents about the company use of online advertising over social networks. The respondents will also be asked about the company vision towards social networking sites use. To test the validity and reliability of the questionnaires, forty e-commerce business managers will be chosen randomly from the population data, which will not be part of the sampling data. The aim of this pre-test is to verify the questionnaire the questionnaire understanding in order to get rid of variable measurement errors (Gray 72; May 88). Hence, a pre-test is required prior to using actual data collection to reduce errors. Factor analysis will be employed to test the questionnaire validity (Hesse-Biber and Leavy 105). Cronbach Alpha will be used to measure reliability in this study. The test factors, which affect the success of e-commerce, will be tested using the Ordinary Least Squares (OLS) regression analysis. According to Hair et al. (14), OLS is a good method of checking the hypothesized. Timetable WORK PLAN Year Activities Year 1 Selecting the e-business Population and Sampling activities Year 2 Issuing questionnaires Collecting filled questionnaires Year 3 Data analysis Compiling research Significance & Conclusion The intent of this study is to offer an obvious understanding of the effects of social networks on e-commerce particularly in on-line advertising industry, with a special indication to consumer buying behavior and demand patterns. In addition, this study will be able to focus on the antecedent variables of online advertising over the internet. This study will also focus on the moderating impacts of user acceptance of the products advertised over the social media using their buying behavior and demand patterns. The research results will offer beneficial implication and contributions to the businesses marketing managers and the CEOs. In case the study indicate that social networks have a positive impact on on-line advertising industry, e-commerce firms will be able to concentrate more on capability and resources creation which can boost e-marketing strategies to attain success in a highly competitive environment and to attain operation performance. The study will reveal aspects that e-businesses should focus more on, in order to increase customer base and demand. E-commerce is important in assisting companies to widen the new channels to grow and increase customer numbers hence enhancing organizational performance (Chang 673; Eberl and Schwaiger 853). During the study, an outline of the ontology and epistemology of the social networks as a social commerce networks, together with a systematic scrutiny of the existing trends as well as transformations will be provided. The study will describe the prospective direction of social networking sites and e-commerce hence providing businesses directives for ensuring that they achieve maximum gain from these sites. In future, the best e-commerce firms might be the ones, which will come up with groundbreaking methods of facilitating relationship between the numerous users in the social networking spots. The big winners will be the ones, which will encourage and allow the clients to play a part, take control, direct, and shape the designs of the products and services that they will consume (Lenhart and Madden 16). Works Cited Aaker, David, Anarudha Kumar, and George Day. Marketing Research. New York: John Wiley and Sons, 2001. Print Bharadwaj, Anandhi. 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