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

2. 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.

3. 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

4. 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

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

6. 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

7. 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

8. 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

9. Figure 3.1 EC Consumer Behavior Model

10. 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

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

12. Figure 3.2 Social Commerce Brand Decision Process

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

14. 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

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

16. 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

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

18. 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

19. Figure 3.3 The Process of Digital WOM

20. 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

21. 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

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

23. Figure 3.4 Customer Engagement

24. 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

25. 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

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

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

28. 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

29. 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*