How Facebook Impacts on Young Consumers’ Buying Decisions on
E-Retailers
Fangni Wang and Nadia Amin
Westminster
Business School, University of Westminster, London, U.K.
Keywords: e-Business, Facebook, UK Online Retailers, eWOM.
Abstract: The purpose of this research is to use data collected from a survey to investigate the interactions between
young consumers and products/services on social media sites, in particular on Facebook. Young consumers
are considered as computer literate and use the Internet more than any other generation. It will be beneficial
for the companies to understand their buying behaviours, product/service recommendations, as they are the
future shoppers. While the technology is developing, the companies must realize the importance of eWOM
(word-of-mouth) in the future e-business. The result will give the companies a clearer understanding on how
to change and evolve their marketing strategy so they can adapt to this fast-forward thinking generation.
1 INTRODUCTION
Word-of-Mouth (WOM) is known as a means of
exchanging opinions on various goods and service.
Many researchers believe that WOM is still one of
the most effective ways to attract and keep
customers (Duhan et al, 1997).
As the technology develops it allows people gain
access to vast information in-between simple clicks.
The technological developments also drive retailers
to innovate online as well. Online purchasing has
now become a mainstream activity in the UK.
Consumers make decisions by directly learning from
other consumers, observations, and social-normative
pressures (Van den Bulte & Stremersch, 2004).
People are bringing their online experiences into
social network as well as engaging with companies
directly. The Internet enhanced the consumers’
abilities to spread the news and recommendations
more quickly, widely and cheaply.
It is no surprise that the companies realize the
importance of consumer engagement. Companies
can catch consumers’ attention via a marketing
strategy through social media.
The aim of this research is to better understand
the relationship of eWOM and social media, in
particularly the role of Facebook in eWOM
communications. The three main questions that will
be considered are: (1) to identify the motivations of
people posting on their Facebook walls about
products they have bought; (2) to identify
consumers’ influences of their friends’ Facebook
posts that relate to products; (3) to identify the
consumers responses to the retailers’ Facebook
pages. Section 2 looks at the relevant theories, while
section 3 outlines the research method and data
collection. Section 4 discusses the results, whilst
section 5 outlines conclusions.
2 LITERATURE REVIEW
2.1 Word-Of-Mouth (WOM)
Word-of-mouth gives people a reason to talk about
the products or services they have received and it
benefits consumers and providers. Because we hear
from people we know, their opinion is considered
more reliable, credible and trustworthy compared to
hearing directly from the companies (Shciffman &
Kanuk, 1995).
When the consumers are engaged with the
product, the credibility of known person works
much better than an advertisement. Word of Mouth
cannot be faked or invented. Attempting to fake
good review is not only unethical but also creates
backlash, damages the brand and the company’s
reputation. Word of mouth is the honest, natural
process among the consumers who voluntarily share
their experiences with their friends, family and
389
Wang F. and Amin N..
How Facebook Impacts on Young Consumers’ Buying Decisions on E-Retailers.
DOI: 10.5220/0004382703890392
In Proceedings of the 9th International Conference on Web Information Systems and Technologies (WEBIST-2013), pages 389-392
ISBN: 978-989-8565-54-9
Copyright
c
2013 SCITEPRESS (Science and Technology Publications, Lda.)
colleagues and seek advice from each other. It’s the
independent and informal side of word of mouth that
makes it unique.
2.2 eWOM
As the technology developed and the Web 2.0 took
off in the 90s, the online activities of word of mouth
gained itself a new name - electronic word of mouth
(eWOM). In addition, two concepts have been
developed, ‘Marketing Buzz’ and ‘Viral Marketing’.
Viral marketing rapidly spreads formal/informal
online communications between individuals
regarding a service or a product. While buzz
marketing acts as a catalyst for a WOM conversation
to occur in person or online but it originates from a
formal corporate strategy (Goyette et al, 2010).
2.3 Role of Trust
Trust is considered central to e-shopping intentions.
A Nielsenwire (2010) study showed that consumers
trust their friends and family more than other
resources. Online reviews from other consumers are
trusted more than the ones posted directly by the
companies.
2.4 Facebook
Agresta and Bough (2010) pointed that “the key
point of social media is that it is shared with those
you identify as friends or followers – an inner circle
(which can in fact be quite large) that has opted in
to view any content or information you opt to share,
thereby making it the act of being social online.”
Facebook is now the second biggest source of traffic
online, since its launch in 2004. Once registered,
Facebook users provide their information and their
updates, they share news, views, preferences as well
as experiences that allow retailers to profile them
and thus, providing a more efficient way to reach the
right audiences. The dot.com era allows companies
to catch attentions from a much cheaper marketing
strategy through social media. The brands realize
that social media is not about extending existing
marketing into the new channels, but it’s a shift in
how we communicate with the world around us.
Facebook launched a number of tools for marketers
known as ‘social plug-ins’, which are used to
connect consumers to the retailers.
2.5 Motivations
A study carried by Sundaram et al (1998) suggested
that the four motivations for positive WOM
communications are altruism, product involvement,
self-enhancement and helping the company while
the four motives for negative WOM
communications are altruism, anxiety reduction,
vengeance and advice seeking.
On social media platform, the individuals who
participate in the social media can be divided into
three categories - influencers, consumers and
individuals in general (Powell et al, 2011). The goal
is to maximize the influencers’ power, win over the
individuals and turn them into potential consumers.
2.6 Generation Y
Young adults aging from 18-32 who grew up in the
Information Age are known as ‘Net Generations’,
also called Generation Y. The older generations
aged 33-44 is known as Generation X and the 45-54
aged is known as Younger Boomers.
Teens and Generation Y mostly use the Internet
for entertainment and communicating with friends
and family. They are more likely than the older
generations to use social networking sites, either
view other people’s information or create their own
ones.
Generation Y is indeed an important market for
many products and services. The purchase-related
behaviour that has been established in their early
lives can be crucial for the marketers to build a
foundation to predict their future consumption
patterns.
3 RESEARCH DESIGN
To investigate our research questions, primary data
was collected through survey questionnaire and
analysed. The purpose was to identify whether there
is a consensus on eWOM, test whether eWOM has
affected the purchase decisions of the Generation Y
and identify the evidences. At this stage of research
a survey questionnaire was administered to a small
sample of users. It can be applied to a larger sample
in the future to validate its findings.
A self-administered questionnaire was posted on
a Facebook wall, thus ensuring that questionnaire
respondents are predominantly Facebook users. The
survey was designed to contain multiple choices and
spaces for any suggestion or experiences people
would like to share.
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3.1 Survey
The online questionnaire combined yes/no question,
multiple choices, and if people chose to answer
‘others’ they were given a chance to give their own
answer. A five-point rating scale (5-strongly agree to
1- strongly disagree) asking respondents to indicate
the extent of their opinion of some statements was
used. The data was collected anonymously from a
distributed group of 18-30 years old. These people
would have credit cards and purchase ability. The
questionnaire was available online for two weeks. In
the end, 58 recipients responded. After collecting all
the data needed, the results were analysed and used
to understand data quickly and effectively.
4 RESULTS AND DISCUSSION
The respondents were chosen randomly, in the end,
there is a significant disproportion between male
(24%) and female (76%) respondents, and as a result
the analysis was heavily based on females’ opinions.
Online-shopping and Facebook activities depend on
individual’s characteristic, and there is no evidence
showing that sexuality has significant impact on
their behaviours (Dholakia, 2007). The target group
is between 18-30, though there were 8 people who
are over 30, the majority of respondents’ age are
within the target group. Therefore, the overall
answers should be able to cover this research.
4.1 eWOM Facebook Activity
The majority hours people spend on Facebook is
between 30 minutes -2 hours (altogether 93.1%) and
among them, socializing (67.7%) and seek
information (23.1%) are the two top activities. The
top three reasons for those who do follow the
retailers’ activities are finding inspiration (25.9%),
finding out about the products/brands (36.2%) and
seek promotion activities in-store or online (27.6%).
56.9% of the participants never check the e-retailers
Facebook pages, for those who did follow their
Facebook pages, 55.2% people never checked their
activities. Only 10.3% people would like to share
what they have bought on Facebook, 31% people
undecided. Overall, the results indicate that in
general, the respondents have little interest in
interacting with retailers on Facebook and they do
not want to engage with retailers on Facebook.
However, with regards to their friends’ activities,
people were more enthusiastic. They showed more
positive reactions to the questions. If they saw their
friends sharing information of Facebook, most them
will definitely check out the products.
4.2 Role of Trust
People value their friends’ and families’ advice the
most; 44.3% thought their friends are very
trustworthy resource while 55.2% trust their families
the most. Surprisingly the number of
recommendations that needed to convince people are
much lower than expected, with majority needed no
more than 10 recommendations.
In general, people are more interested in each
other’s Facebook postings related to products than
those that were posted by the companies directly,
which stimulates two-way interactions between
friends.
4.3 Online Shopping
All the respondents had shopped online in the past
year, from department stores, fashion, electronic and
beauty related stores.
Unlike the eWOM theory suggests, the
respondents showed little interest in engaging with
retailers on Facebook as well as eWOM activity on
Facebook. As Silverman (2011) suggested, the main
motivations behind the Facebook posts are seeking
information, communicating with friends and
family, and seeking social belonging. However,
they’re more interested once their friends posted
reviews or recommendations about products or
service on Facebook. Though searching on Google
will give people numerous suggestions, however,
people trust those they know a lot more. The way
people responded to Facebook reviews proved that
Word-of-Mouth is seen as more credible than
advertising, as it is perceived as having passed
through the evaluation of ‘people like me’ (Allsop et
al, 2007).
Trust has been proposed as a major factor in e-
business (Dennis et al, 2009) and retailers need to
pay attention to interactions with their consumers on
social media. The use of technology has become one
distinct feature of the Generation Y that would affect
their buying behaviours; their adaptability of
technology allows them to seek information faster
and at a much larger scale. Due to their familiarity
with and usage of digital media, they are the driving
force for tomorrow’s e-business.
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5 LIMITATIONS
eWOM is a rather new field that requests a more
theoretical ground to the measurement. There are
some limitations associated with this research.
Firstly, the scale of the measurement is rather
small, 58 people cannot represent the majority of
population. At the time of convenience, most of the
respondents were University students. Any future
survey should consider respondents’ education level,
occupation and income. These should be taken into
account as different backgrounds affect the way
people think, subsequently making decisions.
Secondly, social media as a whole is a fairly new
area. People initially used it as a socializing tool
rather than business tool. Retailers only recently set
up their own accounts. People are still getting used
to the business side of social media. Facebook itself
has been working on various applications to help the
retailers interact with customers.
Thirdly, though Facebook is an open platform
where people can share everything, not everyone
wants to share everything they have bought; some
people would like to keep their privacy.
At the moment, many retailers lack real
engagement with the customers rather than the
‘follow us’ and ‘like’ buttons at the bottom of their
web pages. Though this research briefly touched on
the motivations of eWOM, a more in depth
qualitative and quantitative research is needed to
help to understand what are the customers’ thoughts
and motivations.
6 CONCLUSIONS
Facebook as a social network tool is popular among
the young people. This research attempted to
investigate the consumers’ eWOM activities on
Facebook, their motivations, engagements and
online shopping behaviours. However, some eWOM
activities do not appear as popular. Facebook is seen
as a communication tool rather than business tool.
When friends start to recommend or review on their
Facebook, people are more interested. The retailers
should note this behaviour and develop more
appropriate strategies to deal with consumers’
behaviours.
There is a clear difference in the degree of trust;
people trust their family and friends the most,
strangers the least. And if there were a lot of reviews
from strangers, they would trust the advice more.
When the retailers promote new products on social
media, they should pay attention to whose opinions
people would respond. The trust scale of
recommendations can be associated with purchase
decision when recommended products or service.
ACKNOWLEDGEMENTS
The research presented in this paper formed part of
MSc thesis submitted to the University of
Westminster by Fangni Wang.
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