Supporting Theories and Concepts for Social Commerce Chapter 3 Supporting Theories and Concepts for Social Commerce

Learning Objectives Describe the factors that influence online consumer behavior. Understand the decision-making process of consumer online shopping. Explain how consumer behavior can be analyzed for creating personalized services. Describe online word of mouth and its benefits. Define online engagement and describe its influence on social trust, loyalty, and satisfaction. Describe social psychology theories relevant to social commerce, social network analysis, and the social graph. Describe social influence, social capital, and social support.

Opening Case: Netflix Increases Sales Using Movie Recommendations by Customers The Problem Customers often have difficulty deciding what they want to watch so they choose the most recent and popular titles The second major problem facing Netflix is the competitive nature of the movie rental business Netflix wants to rid itself of the DVD business since online streaming has no shipping costs

Opening Case: Netflix Increases Sales Using Movie Recommendations by Customers The Solution Using the “recommendation algorithm” compares an individual’s preferences with people that have similar tastes by using the collaborative filtering software “Netflix Social” connects your Netflix account with Facebook Social features include sending recommendations to Facebook friends, and sharing what you watch with them automatically

Opening Case: Netflix Increases Sales Using Movie Recommendations by Customers The Result Effective recommendations Customer satisfaction Finance Ratings Rental habits

Lessons Learned from the Case This case illustrates the use of the social Web to influence customers Netflix uses software intelligent agents in its recommendation system to gain a substantial advantage over its competitors Netflix’s recommendation algorithms are designed to increase customer satisfaction and loyalty

Learning about Online Consumer Behavior A Model of Consumer Behavior Consumers can be divided into two groups: Individual consumers Organizational buyers An individual consumer behavior model Influential factors The attitude-behavior decision process

Learning about Online Consumer Behavior The Major Influential Factors Consumer Characteristics Merchant and Intermediary-Related Factors Product/Services Factors EC and/or Social Commerce Trading Systems Motivational Factors Hygiene Factors Environmental Factors Social Variables Cultural/Community Variables Other Environment Variables

Figure 3.1 EC Consumer Behavior Model

The Consumer Purchasing-Decision Process A Generic Purchasing Decision-Making Phases—a Managerial Decision-Making Approach Need identification Information search Evaluation of alternatives Purchase and delivery Post-purchase activities

The Consumer Purchasing-Decision Process The Consumer Brand Decision-Making Process Models a Three-Phase Process Awareness Attitude Behavior

Figure 3.2 Social Commerce Brand Decision Process

The Consumer Purchasing-Decision Process The AIDA Model A—Attention (awareness) I—Interest D—Desire A—Action

The Consumer Purchasing-Decision Process Social Commerce Brand Decision Process Players in the Consumer Decision-Making Process Initiator Influencer Decider Buyer User Corporate Buyers’ Behavior and the Players in the Buyer Decision Process

The Consumer Purchasing-Decision Process Consumer Behavior in Social Media and Commerce The Shop.org Study What Prompts Users to Share on Social Media

Personalization and Behavioral Marketing Personalization in Social Commerce Personalization* User profile* Web Cookies in Social Commerce Cookies* Using Personalized Techniques to Increase Social Commerce Activities

Personalization and Behavioral Marketing Behavioral Targeting and Collaborative Filtering Behavioral targeting* Collaborative filtering* Legal and Ethical Issues in Collaborative Filtering

Word of Mouth in Social Commerce Word of Mouth (WOM)* What Makes Content Go Viral? Using Word of Mouth in Social Commerce The Process of Digital WOM Video: “How Do You Define Engagement? – Social Media Camp 2011 Ep#36” at youtube.com/watch?v=sF0U-OYuKFU The Power of WOM

Figure 3.3 The Process of Digital WOM

Word of Mouth in Social Commerce The Major Types of WOM Analog: This is person-to-person, face-to-face communication Digital: Information is digitized and possibly stored in a format that can be sent and re-sent electronically

Word of Mouth in Social Commerce Viral Marketing and Social Networking Viral Blogging* Video: “Inside The Viral Blogging System” at youtube.com/watch?v=Oj28cieWlJs Viral Videos* Consumer-Generated Videos Other Viral Marketing Methods

Consumer Engagement in Social Commerce Online customer engagement* The Benefits of Engagement Mobile Engagement The Measure of Engagement

Figure 3.4 Customer Engagement

Social Psychology Theories, Social Network Analysis, and the Social Graph Social Psychology and Social Commerce Social psychology* Social Commerce Psychology Video: “Social Psychology: Taking Shopping Carts” at youtube.com/watch?v=YWaEGkbQ2XQ Cognitive Styles and Morphing in Behavioral Marketing The Universal Heuristics of Shopping

Social Psychology Theories, Social Network Analysis, and the Social Graph Social Network Theory and Analysis Social Network Theory Social network* Social network analysis (SNA)* The Benefits of Social Network Analysis

Figure 3.5 A Simple Social Network Structure (There are only three connections between You and Me)

Social Psychology Theories, Social Network Analysis, and the Social Graph Graph Search The Power of the Social Graph

Social Influence, Social Capital, and Social Support Types of Social Influence Identification Internalization Conformity Compliance Obedience Social Media Influence Tracking and Measuring Social Media Influence

Social Influence, Social Capital, and Social Support Social Capital in Social Commerce Social capital* Effects of Social Networking on Social Capital Impact on Sales and Marketing Social Support in Online Communities Social support*