Influence of Social Media on Brand Equity

I. Abstract:

Although human have started using the internet to interact with others since the 1970s through instant messaging applications (Greiffenstern, 2010); however, it has only really exploded in the last 15 years with the development of social network – especially Facebook. Accordingly, social network permits a user to create a personal profile, homepage and connect with each other to interact (Baruah, 2012, p.4). Moreover, the social network also increases awareness of the movements of social relationships (Baruah, 2012). Therefore, many brands have deployed social networks as Facebook, Instagram, Twitter, etc to promote their brand images. After connections are established between consumers and firms, social network will create two-way interaction; from that, the firms can consider as the effective channel for the brand to reach with their consumers that measures based on the level of engagement through positive or negative attitudes on the social networks. Thus, it is necessary for businesses to know the impact of social network on the building of brand equity.

Besides that, brand equity is also mentioned in this report. Brand management is becoming more important to marketers today (David, 2000; Goodchild and Callow, 2001). In the framework of existing competitive environment, the brand is a critical element that concerning goods purchase, sales as well as earnings generating. Moreover, brand equity is a framework which is designed to indicate the natural value that a brand name holds for the goods and services included with.

Due to the great importance of these two topics, this report set out to determine the impact of social networks on brand equity.

Keywords – Social media, Social networks, Brand equity, Brand awareness, Perceived quality, Brand association, Brand loyalty, Customer engagement.

II. Introduction:

Nowadays, customers’ purchasing decisions are increasingly affected by communication and marketing (Alam & Khan, 2015). In 2016, the percentage of online shopping increased by 13.5% over the same period last year (MCMC, 2017). This shows that there are more and more consumers using the internet and spending more time for shopping online. While the use of social networking is a trend as today, companies and governments have also used it as a tool in communications (Kim & Ko, 2012). Alam and Khan (2015) also mentioned that many companies are using social network as an effective tool to attract potential customers and make consumers become loyal to their brands. Thus, how does the social network really affect the brand?

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Furthermore, customer engagement in social networks is also considered as the key to promoting the brand (Patterson and Ruyter, 2012, p. 31-34). Therefore, the role of social network is very important that already become to be the vital thing for the process of customer engagement and the growth and development of brand equity. Hence, this research expands and develops a new incorporated conceptual framework and searching for the role of customer engagement in social networks in forming brand equity.

III. Literature review:

1. Social media:

In 2009, Safko and Brake defined social media as “activities, practices, and behaviours among communities of people who gather online to share information, knowledge, and opinions using conversational media.” (Safko & Brake, 2009). Moreover, social media is considered as a communication tool that works on web 2.0 platform – this means that activities such as participation, exchange and sharing of information will appear among people (Robinson, 2007). Therefore, the main purpose of using social media is sharing information between businesses and consumers. And, one of the noteworthy platforms related to communication cannot be ignored is social networking. Accordingly, social network is a platform that allow users share personal information for others to exchange as well as communicate (Palmer & Lewis, 2009, p.162-176). In addition, Ellison (2008) also defined social network in another way as “web-based services that allow individuals to construct a public or semi-public profile within a bounded system, articulate a list of other users with whom they share a connection, and view and traverse their list of connections and those made by others within the system”.

Nowadays, social networks have started to become a potent networking force connecting people from every area in the world. It reinforces the process of socialization by being instant, cheap, and straightforward to use that having huge reach. According to Kemp (2017), there are 2.8 billion global users use social network at least once a month, which approximately amounts to about 37% of the world’s residential. Moreover, the use of social networks also rose by 20% compared to 2016; especially, Facebook is still the most famous framework on the world with strong growth (Kemp, 2017). According to Davidson (2015), each person spends 1 hour 40 minutes on social networks every day, it accounts for 28% of internet usage. Moreover, the number of Facebook users has reached 2 billion in 2017, that turns Facebook into the largest and most influential social network in the world (Chaykowski, 2017).

Furthermore, based on the post of Barker (2017), there are 74% of shoppers have made a decision to buy based on information that they have retrieved from the social networks sites. Accordingly, it is very necessary to create intensive connections and participation between the consumer and the brand. However, several enterprises are not comfortable about how exactly to improve the customer engagement to enhance their brand equity through the use of social networks for internal or external purposes. Social networks are nevertheless immense among private persons (Wigmo & Wikström, 2012).

The appearance of social networks such as Facebook, Instagram, Twitter, etc. also re-structured the marketing landscape. It is seen as a platform to for marketer framework (Qualman, 2010, p.28). Initially, social network is only a platform that help people can communicate with others, but today it also considered as a search engine for people to find out about the company as well as the products they love. Recently, social media is a channel to distribute and transmit news that cannot be ignored (Mitchell, 2014, p. 2-8). Based on a research of Infographic, at least 50% of social networking users have knowledge of the company’s products after they follow the company through social networks (Jackson, 2011). Furthermore, social media also allows people to share their experiences of branding products or services with friends (Stileman, 2009; Mangold & Foulds, 2009). Accordingly, social network is a new paradigm in marketing that has provided ample space for business organizations to maintain a successful, long lasting and value-added relationship with their customers. It means social networks has helped to transform business organizations from transactional relationship to a social relationship. The upper level of use and interaction of social networks significantly impacts on the commercial environment which is consequently exposed to the paradigm transformation, where hierarchies break down and the communication and interaction create larger and larger networks for all the stakeholders of the organizations. Therefore, in a well – designed social networks campaign, consumers will spread viral videos, create additional brand related content, tweet about the brand and post about their experiences. Moreover, by tapping into or rather establishing their own online social networks, firms can have an impact on a brand community and potentially influence consumer behaviour and consumer perception for the organizations.

2. Customer engagement in social network:

In business, the term “engagement” was initially presented by Appelbaum in the year 2001. In the most recent two decades, the idea of “”engagement”” has been utilized in various fields including marketing, psychology, sociology, political science, and organizational behaviour (Hoffman, 2010). Shen (2014) used the term “customer engagement” and defined it as “the level of an individual customer’s motivational, brand-related and context-dependent state of mind characterized by specific levels of cognitive, emotional and behavioural activity in direct brand interactions”.  Hence, Duffyagency (2012) emphasized that companies are now recognizing that “customer engagement” is also a more strategic way of looking at customer and stakeholder relationships. In addition, customer engagement is also considered as a positive interaction of a customer with a firm, with prospects and with other customers, whether they are transactional or non-transactional in nature, from that, customer engagement considered a critical thing that involve in the process of forming brand equity, particularly effect on all dimensions of brand equity (Clark & Melancon, 2013, p.12-13). Furthermore, customer engagement concentrates on customers and their needs with the main purpose is to provide outstanding value relative to competitors by creating, disseminating messages regarding customer needs and aims to build trust and commitment in relationships with customers.

As expressed before, with the appearance of internet, IT services and social networks, customers are moving from traditional sources of communication and deciding on online product reviews posted by users on social networks as basis of their purchase decision making. Therefore, one of the factors that make the success of social networks is customer engagement, which is particularly relevant in social networks communication. It means customer engagement is viewed as a dynamic interaction of a customer with a brand, product, service, or organization which is expressed, for instance, by the creation of contents on social networks. According to (Dessart et al., 2015), customer engagement includes all consumer-to-firm interactions and consumer-to-consumer communications about the brand. Even the smallest of gestures, like putting a comment or “like” on a social networks page can also be interpreted as a form of engagement (Constantinides, 2014).

On the other hands, levels of customer engagement based on the types of consumers’ online brand-related activities (COBRA) identified by (Drury, 2008). Customer engagement with brand social networks pages could be analysed by implementing three continuous levels that corresponding to a steady involvement with a brand on social networks, particularly consuming, contributing and creating (Golder et al., 2012) as follow:

• The first level corresponds to consuming activities. It called “cognitive”. It refers to users who only watch, read, or view content but never participate or create content. It means a large number of customers are only utilizing content, but at the same time only a few are contributors and creators of content.
• The contributing type is the middle level of online brand-related activity (Hollebeek, 2011). It called “emotional”. It includes both user-to-content and user-to-user interactions about brands. Customers, who are contribute content, enjoy writing on brand’s fan pages on social networks and always eager to comment on pictures, videos and other brand – related content are permanently interested in discussing content that others have created that related with brand (Muniz & O’Guinn, 2011).
• The creators are the most active of the three levels of COBRA. These customers are a frequent producer and publisher of brand related content that others users will probably consume and will be able to contribute and discuss. It called “behavioural”.

Therefore, to provide contents that engages consumers online, one of the objectives that brands must understand consumers’ motivations for interacting with a brand through social networks.

3. Brand equity:

Each brand is each structure that creates value for both firms and consumers through different ways. It can be said that creating brand equity, or building a strong brand, is an effective strategy for discerning a brand from other of competing brands. So, brand equity has become a vital topic in the business world, and its suitable measures can deal with a number of marketing and brand managers’ concerns. Brand equity can be defined as “a set of brand assets and liabilities linked to a brand, its name and symbol that add to or subtract from the value provided by a product or service to a firm and/or to that firm’s customers” (Aaker, 1991). It is usually assumed to contribute to a company’s long-term profitability. Further, brand equity is “a set of perceptions, knowledge and behaviour on the part of customers that creates demand and/or a price premium for a branded product—in other words, what the brand is worth to a customer” (Siraj, 2012). It means brand equity is considered as the value that consumers associate with a brand. It is exactly the customers’ perception of the overall standards of product/service carrying that brand name when compared to other brands. Brand equity represents customers’ perception rather than any other objectives. Thus, brand equity can be regarded as a concept that forecasts that customers will have a trend to decide to choose a well-known branded product as an alternative of an unbranded one.

On the other hand, according to (Aaker, 1991), brand equity “is a multidimensional concept, it is composed of brand loyalty, brand awareness, perceived quality and brand associations”. These categories are measurements which represent the perception of the brand, from the view of the consumer. Moreover, (Keller, 1993) identified that brand equity focuses on brand knowledge with its two components namely brand awareness and brand image. However, the research focus more on Aaker’s concept of brand equity because this concept is widely and used by the researchers:

It can be seen that a brand will have higher brand equity when brand awareness increases to a higher level, and as consumers hold stronger, and more favourable and unique brand associations. Companies can improve brand awareness and brand image (an outcome of perceptions and association) through enhancing customer engagement on social networks sites, resulting in brand loyalty reinforcement and then forming brand equity.

4. The impact of customer engagement in social media on brand equity:

In the business, customer engagement is seen as the key to create customer loyalty and brand equity (Patterson et al., 2006; Passikoff & Schultz, 2007).  An effective marketing communication will help enhance perceived brand equity, brand loyalty, brand association and brand awareness (Yoo et al., 2000). Whereby, “watching, sharing and commenting” in social media are activities that create brand awareness as well as brand image (Zailskaite-Jakste & Kuvykaite, 2012). In addition, Schivinski and Dabrowski (2015) also shown the influences of “firm-created” and “user-generated” in social media on brand. Accordingly, the information generated by the enterprise only has an impact on the perception; meanwhile, user-generated content has a significant influence on brand awareness, brand loyalty and perceived brand quality (Schivinski & Dabrowski, 2015). Hence, customer engagement is really important to brand results.

In the society that the internet is developing quickly as today, the concept of customer engagement is very noticeable. According to Lea (2012), customer engagement is “capturing customer attention emphasizing “touch points” when marketing products or services.” Nowadays, with the diversity of media new shopping experiences, customer engagement considered as effort of company by relationship between consumer and company to able to achieve word of mouth marketing and increase sale in the future (Magneto, 2015). Moreover, Maguire (2015) emphasized that companies need to leverage media to impress consumers instead of using it as a form of branding. Presently, there is no denying the development of technology, especially the website that has provided the company with interactive platform for customers. Riquelme (2001) said that website interaction is one of the main factors, which create brand equity. Barreda (2014) found that positive interactions on the website will improve brand knowledge (brand image and brand awareness) as well as brand equity. For instance, when customer satisfy a product of brand, they will give some good comments; from that, it will generate brand knowledge among other customers. Therefore, interactions in social media will directly affect the customer’s perception of the brand equity. According to Tiwari (2010), “brand association is a specific perception, maybe real or imaged, that a customer has about a product, service or organization.” Similar to brand knowledge, customer interactions in social media also impact on brand association. Accordingly, positive interactions will help increase the value of intellectual property, patents, trademarks, branding channels; because these interactions enhance the brand image, so brand assets will also be positively affected (Siraj, 2012).

Beside positive interactions, negative word of mouth is harmful to brand equity. When customers are not satisfied with a product, service or company, they will share negative experiences in social media (Van Doorn et al., 2010). Larivière et al. (2013) also mentioned that bad values will create negative perspective for customers. This will make customers leave the company as well as share negative comments in social media that negative affect dimension of brand equity.

Barhemmati và Ahmad (2015) found that an existing relationship between customer and company will able to help the firm can achieve relationship marketing strategy. Whereby, the last purpose of this strategy is to convince customers to use the company’s products or services.

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