New product
launch through social media and point of sale promotion
Somil
Gupta1, Shourya Gupta2
1Asst. Manager, Robert Bosch Engineering and
Business Solution Ltd., Bangalore- 560 095
2BBA Student, St. Thomas College, Bhilai C.G. 491001
*Corresponding Author E-mail: somil.gupta17@gmail.com,
rimmi2704@gmail.com
ABSTRACT:
In this paper, the authors demonstrate that
a new product can be successfully launched into a new market using only social
media and point-of-sale promotion (POS) without the use of above-the-line
promotion tactics like advertisements and PR. This study was done considering
the changing paradigm of buying behavior with the development of social media
as means for consumers to connect and identify themselves in relation to other
human beings.
Market simulation methodology was used to
conduct the market research with 47 respondents. All the users belong to the
same social media user community where the test product was promoted using a
dummy product page, 15 days prior to the simulation and covert influencers were
asked to promote the product page during the 15 days. Before the day of
simulation, 47 respondents were randomly chosen for study. These respondents
were shown TV ads in a controlled setting followed by a retail showroom
experience conducted in a controlled environment and responses were measured
using questionnaires in 3 stages – before display of TV ads, after display of
TV ads and after POS experience.
This study concludes that if a brand is
able to generate favorable third party reviews, positive word-of-mouth and is
able to reach its target segment via social media, it has a higher chance of
being considered by the customers for purchase.
KEYWORDS: New product launch, word-of-mouth, social media marketing,
point-of-sale promotion, referral marketing.
Indeed social media platforms allow
consumers to form a sort of tribal community around a product or brand (Chatterjee, 2011). Social media channels represent a huge
opportunity for marketers in terms of word-of-mouth referrals (Kellar, 2012). People post comments or online reviews,
which will in turn significantly impact the opinion of potential customers
searching for product information via search engines. (O’Brian, 2011)
The digital era has redefined contemporary consumption,
transforming consumers from their former passive roles into an active group.
This change is a direct result of the Web
2.0 era in which internet savvy consumers have unlimited access to information
as well as the ability to interact freely with other consumers as well as
brands and businesses (O’Brien, 2011).
The
internet has redefined how consumers engage with brands. It is transforming the
marketing by making some of the traditional functions obsolete and leading to
the emergence of some new ones.
Traditionally, the buyer’s relationship
with both the dealer and the manufacturer would typically dissipate after the
purchase. But today, consumers are more engaged in their brand relationships:
They connect with myriad of brands—through new media channels beyond the
manufacturer’s and the retailer’s control or even knowledge—and evaluate a
shifting array of them, often expanding the pool before narrowing it. After a
purchase these consumers may remain aggressively engaged, publicly promoting or
assailing the products they have bought, collaborating in the brands’
development, and challenging and shaping.
What has changed is —at what touch
points—they are most open to influence, and how you can interact with them at
those points. Touch points have changed both in number and nature, requiring a
major adjustment to the marketer’s strategy (Edelman, 2010).
Earlier
Figure 1:
Traditional consumer decision journey
Consumers would start at the wide end of
the funnel with many brands in mind and narrow them down to a final choice.
Companies have traditionally used paid-media push marketing at a few
well-defined points along the funnel to build awareness, drive consideration,
and ultimately inspire purchase. But the metaphor fails to capture the shifting
nature of consumer engagement
Now
Figure 2: Modern
consumer decision journey
Rather than systematically narrowing their
choices, consumers add and subtract brands from a group under consideration
during an extended evaluation phase. After purchase, they often enter into an
open-ended relationship with the brand, sharing their experience with it online
Consider
The journey begins with the consumer’s
top-of-mind consideration set: products or brands assembled from exposure to ads
or store displays, an encounter at a friend’s house, or other stimuli. In the
funnel model, the consider stage contains the largest
number of brands; but today’s consumers, assaulted by media and awash in
choices, often reduce the number of products they consider at the
outset.
Evaluate
The initial consideration set frequently
expands as consumers seek input from peers, reviewers, retailers, and the brand
and its competitors. Typically, they will add new brands to the set and discard
some of the originals as they learn more and their selection criteria shift.
Their outreach to marketers and other sources of information is much more
likely to shape their ensuing choices than marketers’ push to persuade them.
Buy
Increasingly, consumers put off a purchase
decision until they’re actually in a store—and, as we will see; they may be
easily dissuaded at that point. Thus point of purchase—which exploits
placement, packaging, availability, pricing, and sales interactions— is an ever
more powerful touch point.
Enjoy, Advocate,
Bond
After purchase, a deeper connection begins
as the consumer interacts with the product and with new online touch points.
When consumers are pleased with a purchase, they will advocate for it by word
of mouth, creating fodder for the evaluations of others and invigorating a
brand’s potential. Of course, if a consumer is disappointed by the brand, they
may sever ties with it—or worse, spread negativity about the brand in his/her
social circle. But if the bond becomes strong enough, they will enter an
enjoy-advocate-buy loop that skips the consider and
evaluate stages entirely (Edelman, 2010).
As per the above model, we can infer that
consumers get more influenced during evaluate and enjoy-advocate-bond stages.
To do that the companies need to invest more in social media and digital
marketing where consumers spend time to research about the product through user
reviews and third party websites. Now marketers must also consider owned media
(that is, the channels a brand controls, such as websites) and earned media
(customer-created channels, such as communities of brand enthusiasts). And an
increasing portion of the budget must go to “nonworking” spend—the people and
technology required to create and manage content for a profusion of channels
and to monitor or participate in them (Edelman, 2010). .
So based on
the above, we carried out an experiment wherein we would interact with
consumers through social media and influence them during the evaluation stage
through user reviews, third party reviews, in store promotion and discount
offers
To
understand the impact of social media marketing and product promotions during
the evaluation stage on customer’s buying behavior. The study is done to
understand whether a new product launch can be done completely through social
media and point of sale promotions.
The 2
hypothesis are as follows:
H10- Social media marketing through
user reviews during the evaluation stage doesn’t significantly impact the
customers buying decision.
Due to
infancy of research in this area, we adopted a unique marketing simulation
methodology to get the consumer feedback. In order to get the correct
perspective from the study, we surveyed 47 respondents. To carry out the
exercise, the process followed is as below:
1. We chose the smart phone mobile
category with phones in a price range of INR 15000 – 25000.
2. The smart phone for our study is
BLU Quattro, a new product from a US
based company (an unknown product in Indian market). A marketing simulation was
created where this phone was pitched against 6 other smart phones.
a. Motorola DROID Razr
b. Xiaomi MI2
c. Samsung Galaxy SII
d. HTC Velocity 4G
e. Pantech Vega LTE
f. HTC One S
All the phones had almost the same specifications except that BLU
Quattro had couple of better features like better chipset and processer. We
positioned this phone for youth (to make it relevant to our target group) with
better graphics and multimedia experience.
3. We created a Facebook
page for BLU Quattro smart phone which was exposed the group of people who were
part of the exercise later. This was done to make them aware about the brand
BLU and its products.
4. Post that, the surveys were
conducted in a group of 8-10 people. Each one in group was given Rs 25000
virtual money with which they had to make a purchase as a part of this study.
The survey was divided into 4 parts:
Part 1 – This part had 18 questions
with questions ranging from understanding the customer’s online buying behavior
to their brand awareness of the above mentioned brands. At the end of part 1,
we asked them to rank the above 7 phones in order of their preference if they
have to make a purchase.
Part 2 – Before getting the part 2 of the
questionnaire filled, the group was shown TV advertisements of all the above
mentioned products except BLU Quattro. They were asked which of the products
they would consider buying and also they were asked to rank the phones in order
of their preference (same as in part 1). This ranking was again asked for to
understand the change in their preference for phones based on TV advertisements
Part 3 – Before part 3, the group was
exposed to:
·
Detailed phone specifications of BLU Quattro
·
User reviews of BLU Quattro from around the world from third party
review websites
This was
done to create a positive image in the mind of people regarding BLU Quattro.
The price of all the phones was revealed to them. Post this again they were
asked their preference and whether they would consider buying BLU Quattro or
not.
Part 4 – Before part 4, the group was
exposed to:
·
A simulated in store experience wherein they were shown the
dummies of all the phones with their price points
·
A specification comparison chart was shown to them wherein they
could compare the main features of phones
·
They were offered free gifts (stereo headset + 20 mobile games + 1
month of free online gaming) on BLU Quattro
Post this
they were asked to made final product purchase and also mention the reasons for
buying or not buying BLU Quattro.
The
analysis for the hypothesis H10 and H20 is done for the
47 participant responses. The following sections present the respondent
profiles, buying behavior analysis.
Respondent Profiles
The
respondents consisted of a leading
management school in India students from age 21 to 27, both male and female.
The respondent profiles are listed below. The average age was 23.82 years.
These respondents were part of an online social media community and frequently
interacted and shared in that community.
Channel
preference:
Respondents were asked to highlight their
online channel preference among e-retail websites, manufacturer’s website and
auction websites. More than 70% respondents preferred e-retailers websites and
auction sites as preferred channel for buying while only 28% respondents prefer
to buy directly from the manufacturer’s website.
Launching a new product with weak brand
value against strong brands required that the significant consumer utility
shall exist in parameters other than brand value. In order to measure the customer
utility, respondents were asked to rank the following parameters – Brand Value,
No of new features, Price, Ease of use and Durability in the descending order
of importance and following characteristic was observed.
The table below depicts the analysis of the
mean, median, standard deviation, variance and the range of ranks awarded by
survey respondents to various parameters.
Table 1: Statistics of various ranks
|
|
Brand Value Rank |
Features Rank |
Price Rank |
Ease of use Rank |
Durability Rank |
|
Mean |
2.53 |
2.13 |
2.34 |
3.94 |
3.81 |
|
Median |
2.00 |
2.00 |
2.00 |
4.00 |
4.00 |
|
Std. Deviation |
1.35 |
1.21 |
0.89 |
1.092 |
1.28 |
|
Variance |
1.82 |
1.46 |
0.795 |
1.19 |
1.64 |
|
Range |
4.00 |
4.00 |
3.00 |
4.00 |
4.00 |
The mean rank of features (2.13) and Price
(2.34) was found to be higher than the mean ranks of brand (2.53), durability
(3.81) and ease of use (3.94). Respondents chose features and price as higher
utility than the brand value.
The independent sample t-test suggests that
there is no significant difference between preferences for brand over
preference for features. This result is significant for the newly launched
products which offer a higher number of new features and competitive prices but
do not have the established brand value.
The respondents were also asked to
highlight their online behavior and importance of various actions in the
evaluation stage of a buying decision process. The following results show the
importance of various actions that support the concept of consumer decision
journey. More than 60% respondents highlighted online comparison of products,
friends network recommendation, online customer reviews and experiences as
important.
The analysis shows that collaborative
content has a very high significance for seeking new product information, for
creating interest and stimulating action for new products. The importance of
friend networks, Social media ads and crowd sourced content like blogs and user
reviews are very important in shaping the consumer mindset for new products.
Respondents were asked to rank the given
set of products in the descending order of buying preference. Ranks were
recorded for the first and second times before and after media exposure, after
exposure to social media, 3rd party reviews and user reviews. Ranks
were recorded a third time after product demonstration. The next section lists
the change in rank of the test product before media exposure and after the
product demonstrations.
Change in ranks
The respondents were asked to rank the
various products in terms their buying preference – 1 being the most preferable
and 5 being the least preferable. The respondents ranked all the smartphone before media exposure, after exposure to
advertisements and after point-of-sale promotion. The ranks for the test
product in the three stages were recorded and analyzed for any significant
change.
The table below depicts the 2-tail t-test
for the mean ranks of test products including the analysis of means, std.
deviations, error mean, t value and significance levels. BLU Rank2 is the rank
before media exposure, BLU Rank3 is the rank after media exposure and Final Buy
BLU is the final rank preference after point-of-sales.
Table 2: Analysis
of means for change in ranks pre and post media exposure for test product:
|
|
Paired Differences |
t |
df |
Sig. (2-tailed) |
|||||
|
Mean |
Std. Deviation |
Std. Error Mean |
95% Confidence Interval of the
Difference |
||||||
|
Lower |
Upper |
||||||||
|
Pair 1 |
BLU Rank2 - Final Buy BLU |
3.59 |
2.48 |
.362 |
2.86 |
4.32 |
9.933 |
46 |
.000 |
|
Pair 2 |
BLU Rank2 - BLU Rank3 |
2.12 |
1.84 |
.269 |
1.58 |
2.67 |
7.890 |
46 |
.000 |
|
Pair 3 |
BLU Rank3 - Final Buy BLU |
1.46 |
2.66 |
.388 |
.68 |
2.25 |
3.782 |
46 |
.000 |
The paired sample test has a significance
value p = 0.000 signifying that there is a significant difference in the
rankings before media exposure, before in-store demo and after in-store demo.
Hence we reject the null hypothesis H10 and H20 accept
the alternate hypothesis that there is a significant impact of social media and
in-store promotion on the buying behavior.
The results show that the ranks have
changed considerably due to social media exposure and in-store demonstration.
This is especially notable because the test product was chosen such that the
very few respondents were aware of the brand and the product beforehand and all
the brand and product knowledge was assimilated during the test.
The exhaustive survey of brands and the
impact of various types of media suggested that even though it is not easy to
supersede a deeply rooted brand that does both top of the line and BTL
promotion, a new brand can successfully launch itself using only social media,
collaborative content and in-store promotion. The test product was an unknown
brand and it was still able to enter the choice set of a significant number of
customers. On the other hand the other unknown brands which did not have
favorable reviews but were promoted through top of the line promotion like TV
ads were not able to enter the choice set of the significant number of
customers. This study concludes that if a brand is able to generate favorable
third party reviews, positive user reviews and is able to reach its target
segment via social media, it has a better chance of being considered by the
customers for purchase.
The study also highlights the importance of
evaluation stage in the consumer decision journey. The importance of activities
like comparing products online, taking 3rd party reviews from
neutral websites, taking friend’s advice before buying, seeking user reviews as
the consumer explores the product and makes up his mind is highlighted by this
study. The results of all this study are statistically significant. However,
another insight is that consumers do not necessarily visit the manufacturer’s
company website that often to seek the new products. This means it is
imperative for the manufacturer to reach the customers where they are. Another
important highlight of this study is the equal preference of features and price
over brand, durability and ease of use. This is important for the companies
investing on branding because the product’s functional utility is as important
as the brand’s psychological utility, if not more.
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Received on 20.01.2014 Modified on 29.01.2014
Accepted on 14.02.2014 © A&V Publication all right reserved
Asian J. Management 5(2):
April-June, 2014 page 183-187