Chapter 11 Flashcards
if your social media marketing strategy aims to generate some buzz and get consumers spreading WOM (for example), you need to find a way to
get people talking.
consumers are more likely to talk about or share information about brands or products that are…
…inherently social, because they are consumed/used with others (or are better when they are consumed/used with others vs. alone).
When a product is inherently social, you are intrinsically motivated to…
…recruit/acquire new users/customers on behalf of the company. In other words, virality is “built in” and it helps increase the customer base without needing as much traditional marketing, because the existing customers (you!) are basically acting as informal sales agents.
a network externality exists in a good (e.g., a product, service, or brand more generally) if the utility an individual consumer derives from that good depends on…
…whether others consume it. In other words, if your enjoyment of a product has nothing to do with whether your friends are using it, the product does not have a network externality.
If you happen to enjoy a product more (or less) depending on whether some of your friends are also using it, that product does have one of two network externalities:
positive or negative
It is a positive network externality if
your utility (enjoyment, basically) is increasing with the number of other people—friends—who are using the product. For example, the more friends who use a particular chat app, the more people are available for you to talk to via this app, and the more you will enjoy using this app.
It is a negative network externality if
your utility is decreasing with the number of others/friends who are using the product. This happens more often than you might think. For example, sometimes you want to be more independent or unique, perhaps with your fashion choices. Consequently, if you find your friends wearing the same things as you, you might enjoy those items less because they are no longer unique or special to you.
The social media principle of building virality into products to make them inherently social means
you want to maximize positive network externalities and/or minimize negative network externalities.
the best way to increase the likelihood of consumers spreading WOM about your new product and helping you acquire new customers involves doing one of two things (or both):
increasing positive network externalities in the product (best), and/or decreasing any negative network externalities that might also be present (necessary but not sufficient for success).
Sometimes you just can’t come up with a “social feature” for your product or service that introduces a positive network externality. You probably can, however, develop positive externality through marketing actions such as
promotional campaigns.
you want to think of ways to make customers’ utility or value a positive function of other customers. If you can make products or services inherently social by creating features that are truly social, such that the products/services are better when consumed with others, then fantastic. But if you cannot—and oftentimes that’s the reality—
you can still introduce positive network externalities through marketing tactics, even simple promotional “refer a friend” campaigns can work.
Stimulating demand for a new product or service, prior to launch or in the early days immediately following a launch, will require a phased approach, as follows:
Before launch:
Identify a relatively small set of target customers who are most likely to appreciate the new product/service and have characteristics that make them good potential WOM transmitters (e.g., they are hubs or pumps). These customers are the “seeds” in what will, in effect, be a viral marketing campaign.
Reach out to these people and encourage them to try the new product or service. Sometimes you might be able to offer it for free. If not, a trial period or discount might be appropriate. If possible, do this before anyone else gets to try the product or service; in other words, these people are like “beta testers.”
Solicit their feedback (sincerely) and incorporate it. This attention makes them feel wanted, listened to, valued, and therefore more closely aligned with your brand.
Launch:
Develop and implement a positive network externality–based incentive (if not inherent to the product/service already) to get your seed customers working to pull in new customers.
As new customers come in, treat them like the seeds—get their feedback, encourage them to acquire new customers too, and so on.
Post-launch:
Repeat the above steps as more new customers come in.
Do some post-launch analysis that focuses on which seeds over the pre-launch and launch periods were most effective in (i) pulling more new customers in and (ii) spending more and/or using the product or service more.
the more personal, social, viral marketing approach can be more effective because
you are getting early-stage customers to help “sell” on your behalf and you are building a close (and hopefully strong) relationship with them that will ideally make them more loyal and therefore less inclined to leave later on.
when you are trying to stimulate demand, using social media principles can be very helpful. But you have to start small and build out from there. Start with
a small set of seeds, and then gradually expand that set as you grow. Start small, because managing the seed customers can (and should) be labor intensive.
