Social Networking Market Research: Opportunities and Challenges

The fundamental questions that are prominent in marketing research today have not changed in the last few decades.  Marketing researchers have continued to seek answers about what motivates customers to buy a product and how the intricacy of advertising works. The culmination of a marketing researcher’s work has also stayed the same; to have a clear understanding of the consumers’ perception of different products and brands.  The grasp of the consumer’s insight is subsequently used for deriving strategic recommendations for companies in competitive industries.   Fundamentally, the process has not changed, but has the age of the internet changed the spectrum on which marketing research is based?

What are the Business Opportunities?

The opportunities that the internet affords for companies and especially for market research companies has radically changed how companies communicate with their consumer.  With ease of internet access that 3G and Wi-Fi have given us, the internet has continued to become more important as a platform for market research in all industries.  Marketing Researchers have adapted by implementing their marketing process online.

In the age of instant access to the internet, communications happen in a virtual universe with millions of variables deciding what ad will pop up on your screen next.  Each internet user can reach millions of people through the portal of social networking.  A television ad for a product or brand can find its way quickly around the globe and become a sensation.  The cost of this international marketing, nothing!  Viral videos are not made through outstanding production value or its celebrity cast; these videos are made popular because of social networking, which is the newest and most effective method of word-of-mouth marketing. These types of marketing campaigns give companies a new way to put their foot in the customer’s door.  Companies can use this type of marketing in concert with their brand message by creating a video that is quirky, catchy, cool, or just downright interesting.

Branding experts, business strategists and marketing researchers will deal with the positioning and development of new strategies through the portal of social networking.  Facebook, Twitter, Myspace, Friendster and Orkut are among the most popular social networking sites.  They have all become platforms for companies to communicate on a more personalized level with their customer.  Being a part of one of these social networking sites gives valuable information to companies that want to better understand their consumer database.

Analyzing Consumer Reviews

Another important element of marketing through the internet is the subject of customer reviews.  They exert a great influence on the consumer’s perception of a product, which the consumer will eventually use to decide what product to buy.  Relevant reviews of products and services can be found on the internet; for example, Yelp provides ratings and reviews of restaurants, providing relevant links to their websites, or providing menus and phone numbers for the restaurant.  Online-merchants, such as Amazon and eBay, have been praised for their comment and evaluation functions integrated in their online-shops.  Reviews and comments create a bond of trust between the buyer and the seller, which in turn leads to repeat purchasing.

Social Media Market Research

One of the most exciting topics is the question of how information can be used from social networking sites for use in marketing research.  There are gigabytes of anonymous information available, of which market researchers can only dream of – age distribution, geographic location, gender, language, and most importantly, their interests. The members of social networks are actively involved in the digital world and are willingly to share their opinions and feelings towards products and brands.  The task of market researchers is to prepare the available data and deeply analyze it.  This process is more than just data collection. First of all, expertise is necessary in selecting the correct portals, blogs, and networks. Also the consolidation of the comments and identification of opinion leaders can not only be delivered by software-based solutions. Here you need market researchers with industry and internet expertise.

Market researchers can prove their added value by deducing knowledge out of the information which is practicable and indispensable for corporate decisions.  But in the current market there are technical providers without market research expertise.  The result is that companies that have conducted pilot projects with these providers don’t have their expectations fulfilled.

The exploration of social networks is still in its infancy but offers promising developmental opportunities.  With the help of the so-called Web Content Mining (“Netnography”), for example, systematic information of users of social media can be analyzed.  Typical ambitions of companies entering social media are the improvement of products, redevelopment of products, the comparison with competitors, the optimization of campaigns and an early warning system in term of product trends.  It is an advantage to companies that the opinions expressed by consumers are authentic and there is no outside influence.

Challenges

Disadvantages in social media include the lack of representation, incomplete socio-demographic data, and the fact that researchers can not demand certain information be made available to them.  Therefore, each decision made by a company through social media outlets needs to understand which approach would be more advantageous: direct-to-consumer online marketing or more traditional methods that reach a larger audience. Social media is not meant to be a replacement of traditional methods, but more as a supplement.  Either through new media outlets in social networking, or by in-depth interviews, focus groups, and other consumer focused marketing – finding new ways to understand the consumer will remain the central instrument of market research.