Social media in the age of ubiquitous computing connects people, enabling them to share personal and professional experiences. Back in the beginning of the 21st century, businesses did not pay much attention to social media, considering it as a personal space for a network of people to hang out. From 2010 on, social media platforms have elicited attention as it has become clear that shared views dramatically influence individuals’ purchasing behaviour, preferences and attitudes. In addition, technological innovation enables service providers to customise the products and services to cater to individual customers’ needs and preferences. Such individualised offerings are known as hyper-customisation.
Social media and linked technology are two major considerations that challenge businesses seeking to communicate with customers. The ceaseless growth in technology effectively compels retailers to introduce more tailored business models to retain customers and to gain a competitive advantage. A groundswell effect has prevailed, where widely available and shared online reviews have enabled buyers to gain greater knowledge, access more information and increase their purchasing power.
The retail landscape has changed and continues to change as customers, reviewers and market mavens can potentially jeopardise entire operations, thus diluting the marketing of the company and products. Some reviews may also change the future of the product completely. In particular, retailers are increasingly taking a more proactive role in satisfying customers. In doing so, they are under tremendous pressure to reconfigure their business models and to gain a competitive advantage based on the level of individual customer understanding.
Contemporary retailers’ challenges
A major issue for hypermarkets is to learn how to make use of technology and several other hyper-phobic (active) sales practices in order to survive in the increasingly competitive scenario. A few contemporary challenges are:
- To what extent are existing sales promotion practices (vouchers, coupons and in-store promotions) helpful to retailers in the age of social media?
- Will social network reviews influence buyers’ choice of store, product and brand?
- Do the existing loyalty-building frameworks still work in the technology-dominated era?
- Are fundamental changes needed in service operations such as service quality and store convenience in response to social media reviews?
- How should service operations blend with marketing efforts to utilise and maximise customer satisfaction?
The above questions formed the basis of our study, which collected retail customers’ views on weekly grocery shopping experiences with respect to various features such as loyalty schemes, convenience and price. We attempted to generalise our understanding using the perspectives of heterogeneous customers based in the South East region of the UK. We analysed key aspects of service operations (such as store service quality and store convenience), marketing (such as brand and price promotions) and social media reviews (shop reviews and product reviews) on customers’ satisfaction levels.
Research findings confirmed the importance of social media reviews, marketing and the interaction between promotions and service operations, which enable retail networks to build both loyalty-based and value-based models. Based on customer behaviour, the study suggests a need to consider operational efficiencies when promoting sales. Through careful planning, customer satisfaction and profitability levels can be increased. This sends a strong message to the retail network to defend their position within a very competitive business market.
Key findings for retailers
- In the age of social media, standalone promotional efforts will not enhance customer satisfaction.
- Social media reviews substantially influence customer choice and satisfaction.
- Retail chains need an integrated loyalty-and-value-based business model.
- Aligning service operations based on social media reviews will increase customer satisfaction.
- Integrating service operations and marketing efforts based on social media reviews will increase customer satisfaction and profitability.
- Hybrid loyalty-and-value-based business models using integrated operations and marketing efforts will enable companies to convert different segments of customers classified on level of satisfaction and profitability such as “free riders (higher satisfaction and low profitability)” and “vulnerable customers (low satisfaction and higher profitability)” into “star customers (higher satisfaction and high profitability)”.
- This blog post is based on the author’s paper, Role of social media in retail network operations and marketing to enhance customer satisfaction, International Journal of Operations & Production Management, 37 (1), pp. 105-123.
- The post gives the views of the authors, not the position of LSE Business Review or the London School of Economics.
- Featured image credit: Real wuerzburg, by Christian Horvat, own work, Public domain, via Wikimedia Commons
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Usha Ramanathan is a Reader in Supply Chain Management in Nottingham Trent University, UK. In the past, she worked as a Senior Lecturer in Universities in the UK, Oman and India. Her teaching experience spans for over 20 years. Usha is a Fellow of Higher Education Academy and Chartered member of Chartered Institute of Logistics and Transport. Usha’s research interest includes supply chain collaboration for sustainability, role of collaboration in SMEs’ performance, Collaborative Planning Forecasting and Replenishment (CPFR), value of information sharing and forecasting, e-commerce, RFID, Big Data, retail customer behaviour and loyalty in the contexts of service and operations. She has published in leading journals such as International Journal of Production Economics, International Journal of Operations and Production Management, Expert Systems with Applications and Omega: The International Journal of Management Science. She is a reviewer for many leading journals.
Nachiappan (Nachi) Subramanian is a Reader in Operations and Logistics Management at University of Sussex, UK. Nachi is a Senior Fellow of Higher Education Academy, UK and chartered member of Chartered Institute of Logistics and Transport. Previously, he worked at University of Nottingham Ningbo, China and Thiagarajar College of Engineering, Madurai, India. He has 17 years of academic experience and 2 years of industrial experience. He has published over 70 articles in refereed journals. He has guest edited several special issues in leading operations management journals. His research interests are sustainable logistics and supply chain; performance measurement and optimisation; supply chain resilience and ambi-supply networks.
Guy Parrott is a Senior Lecturer in Marketing at the University of Bedfordshire, UK. His teaching experience spans over 23 years; prior to this experience Guy spent 9 years working for several blue-chip clients as an advertising agency account handler. Guy is a Senior Fellow of the Higher Education Academy, a member of the CIM, a member of the Academy of Marketing and a member of the Emerald Literati Network. Guy’s research interests include: Pedagogy, Brand Management and SME Branding. He has published in the Journal of Small Business & Enterprise Development, The International Journal of Management Education, the Journal of Entrepreneurship and the Journal of Fashion Marketing and Management. Guy is a reviewer for: Sport, Business, Management: an International Journal, The Academy of Marketing-S.I.G. Small Business and Entrepreneurial Marketing, International Journal of Bank Marketing, Journal of Marketing Management and the Journal of Fashion Marketing and Management.