Consequences of Viral Marketing on Purchase Decision

Mehwish Aqeel 8403

mehwishaqeel@ymail.com
Muhammad Mazher Uddin Akhter 7164
mazher.moiz@gmail.com
Ayaz Ahmed Farooqi 6097
mr_ayaz@hotmail.com

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Management brief
The purpose of this paper is to predict the impact of the social networking site on purchase
decision. For the purpose of this study, primary data is gathered via online questionnaire of
both genders of sample size 80 within Karachi. The result shows insignificant impact of
online shopping in our culture. It is suggested that for further study other variables like
rebates, discounts and marketing communication should be analyzed for policy making.

Keywords: Viral marketing, Click to mortar, Homophile, Social media, Cost

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1. http://en.wikipedia.org/wiki/History_of_the_Internet
2. http://en.wikipedia.org/wiki/Viral_marketing
3. http://en.wikipedia.org/wiki/Social_networking_service
4. http://en.wikipedia.org/wiki/Online_community
1. Prologue
In the era of globalization and advance technology our methodology living has been changed.
We prefer to be fast and updated in every moment of our lives. Therefore when we say
something about fast or updated first thing which click our mind is Internet. This global
system of interconnected computer networks emerges in 1950
1
and change our lives.
Different organizations or more precisely different people who want an edge over others
make most of it in many areas especially in education and business.
Like other areas modern trade is also positively affected by this system, and this flourishing
evolved as with the concept of viral marketing. Viral marketing, as an approach to
advertisement, has been tied to the popularization of the notion that ideas spread like viruses.
The field that developed around this notion peaked in popularity in the 1990s.
2
When we talk
about viral marketing the platform clicks in our mind is Social networks. A social networking
service is a platform to build social networks or social relations among people who, for
example, share interests, activities, backgrounds or real-life connections.
3
This platform
works in a similar way as traditional get to gather works. People can share their views openly,
criticize or dramatize the scenarios. This online community allows them to interact with each
other and taking parts in each others rituals. An online community can take the form of an
information system where anyone can post content, such as a Bulletin board system or one
where only a restricted number of people can initiate posts, such as Weblogs.
4





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This online community is very attractive forum for marketers as well. Here they initiate about
the existence of their product, advertise it and directly analyze the response the customers
about their offering. Marketers receive instant cash without concerning about the distance
same for the customer they screen out maximum possible alternatives in just a click.
Therefore in developed countries this platform is highly utilized in marketing activities.
Social sites provide convenience for both customers and marketers and saves different costs
associated with selling and purchases. Different researches take place to predict the effectives
of online marketing and customers positive response and concluded by providing significant
outcome of social media marketing in creating and maintain brand awareness and image, but
can this practice is as much fruitful in our Pakistani culture is also as much fruitful as
different countries? The aim of doing this project is to analyze the impact of social media in
of our purchase.
Therefore we are picking same genuine facts from past researches and applied in our
purchase process and then evaluate the results by checking its significances or insignificance
in our society any draft the related factors associated with it.
2. Literature Review
2.1. Theoretical background:
At first, generally individuals go and simply shop and settle on the buying choice in the shop.
They are off and on again bound to settle on choices of obtaining choice inside the business
sector or at some point they want or look for mindfulness from recently presented item from
their surroundings or media.
In any case, the pattern is change now. Client settles on buy choice prior as well as gets
enough data of item through online CRM. This is extremely useful for exhortation looking
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for clients in light of the fact that at first they don't have this administration to get item data of
give immediate criticism to the organization. Likewise, from business perspective, brand
elevated because of vigorously speculation through the conventional print media (daily
papers, magazine and so forth) and electronic media (particularly TV). Preceding viral
promoting, it is excessive to advertise the advertising offerings.
We have a place with that pop culture where the effect of expressions of mouth
correspondence is high. From business perspective just those item's deal level are on its top
whose mindfulness level is high around clients. No questions items, administrations or
offering's focusing on and situating likewise matters a ton however in the event that we talk
Facebook ads so its focused to that potential clients who makes some move as far as
obtaining perspective or alluding their companions. With the assistance of this examination, I
can reason that how a viral promoting message creates the brand mindfulness. A while later
how companions impart their plans to their companions, then how they respond and take the
choice of acquiring those new items, which are new in our business sector.
In late 90s, we simply take after Indian society then we curved to western society however
now we likewise take enthusiasm toward some different societies also in term of style,
apparel and so on because of globalization. Web is the best wellspring of globalized business
and because of social networking website or society changed. Because of social networking
locales, we can without much of stretch mindful of nearby and in addition worldwide brands.
2.2. Empirical evidence:
According to literature review, the researchers found:
Chuhay (2010) identify the impact of social networking and friends circle on online
purchases by using word of mouth, friendship preference and social networks as variables
and linear function has been applied. Result shows that increased homophile is beneficial for
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both consumers and marketer for sales especially. Therefore; it is suggested that the
prediction derived from the model compare with the observation from real market.
Iyengar, Han and Gupta (2009) identify the power of advertising in social media (Myspace
and Facebook) in purchase. Their research is based on secondary data of sample of 206, taken
from Cyworld a Korean social networking site and research model is based on two major
component of choice (buy-no buy) and quantity (how much money to spend) via Bayesian
approach and MCMC method. Result shows that there are three distinct groups of users with
very different behavior. Therefore it is suggested that for further investigation product
diffusion and customer segmentation must be taken into consideration.
Janssen and Noll (2005) identify the Internet Retailing as a Marketing Strategy by analyzing
bricks-and-mortar firms and click-to-mortar firm by using two-stage model liner function of
order condition. E-Commerce, Internet, multichannel competition, online uncertainty, online
shopping convenience as variables. Results show that online markets are less interactive but
online retail channel cannibalizes conventional market sales. Therefore it is suggested that for
better relationship in online transactions firms need to be more interactive with customers and
for brick to mortar firm they need to open their inline sites to maintain their position in the
market.
Kumar, Lang and Peng (2005) identify the search behavior of online shopper by using search
cost and convenience as dependent variable whereas product differentiation, price level, price
elasticity, and price dispersion as independent variable. They use cluster analysis and
Vivisimo to compute the research. Result shows that online market reduces different type of
cost associated with purchase. Therefore, it is suggested that he technology by itself does not
significantly reduce search cost, but that technology in combination with behavioral factors
does.
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Chen and Xie (2004) identify the elemental issue concerning online consumer review as a
new component of marketing mix by using probability function with respect to Lemma as a
coefficient and time. Availability of Consumer Reviews used as dependent variable whereas
as Time and Product category is used as independent variables. Result shows that with the
help of technology online seller not only make sales but also supplying information to
consumers by allowing them to post their product evaluations on the sellers website or
licensing consumer review information. Therefore it is suggested that for further investigation
is required in this area for those product which are new in the market.
2.3. Research questions (via literature review):
1. When an online seller should provide consumer reviews to its customers?
2. How a sellers decision to supply consumer reviews interacts with its product
assortment strategy?
3. How the sellers strategy regarding the supply of consumer reviews interacts with its
traditional marketing communication strategy?
4. What timing is best for the seller to offer consumer review information for a product?
5. Do friends influence purchases (frequency and/or amount) of a user in a social
network?
6. Which users are more influenced by this social pressure?
2.4.Variables:
1. Homophile
2. Social media marketing (Click to mortar convenience)
3. Search cost
2.5. Definition of variables:
1. Homophile: Same choice and like hood just like your peers/friends
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2. Social media marketing (Click to mortar convenience): Virtual markets; you can do
shopping any time you want.
3. Search cost: Travelling expense, time cost, information seeking cost.
3. Methodology
For conducting this research in our context (i.e. in Pakistan) we have prepared questionnaire
on likert scale and fill these questionnaire on social networking site i.e. facebook.
For analysis purpose we have run box plot for outlier removal then we check the reliability of
the data then we have run factor analysis then compute variables according to factors and
finally run regression analysis to develop model.
Social media =Cost +Homophile
4. Data evaluation
The outlier exist in forth question of our dependent variable which is further removed.





The factor analysis shows that the model is significant to run factor and the fitness of factors
are 61.4%

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KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .614
Bartlett's Test of
Sphericity
Approx. Chi-Square 217.416
df 105
Sig. .000
The reliability analysis shows that the overall data is reliable because the Cronbach alphas
value seems significant.
Reliability Statistics
Cronbach's Alpha N of Items
.668 15

5. Outcome of evaluation
After removal of outlier, checking reliability and making factor we have run linear regression
in which Social media is taken as dependent variable whereas homophile and cost is taking as
independent variable.
Coefficients
a

Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig. Collinearity
Statistics
B Std. Error Beta Tolerance VIF
1 (Constant) 3.089 .407 7.585 .000
Homophile .118 .122 .112 .964 .338 .991 1.009
Cost .162 .093 .200 1.728 .088 .991 1.009
a. Dependent Variable: Socialmedia


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The model is free from multi but all the variables are insignificant which means cannot be the
part of the model.
Social media = (Where = 3.089)
Social media = 3.089
6. Epilogue and policy implication
Social networking showcasing has turned into a vital some piece of up to date culture. It is
the most advantageous course to arrive at. Customers are controlled by interpersonal group
that it will do something uncommon for them which will change their life. The principle
explanations behind preferring social networking was the data it gave in regards to the rebate,
exceptional endowments appended, brands and nature of the item.
The outcomes of the study uncovered that the online purchase trends is not applicable in our
culture. The research shows that although we are using social media but not prefer click to
mortar firm. It is suggested that for further study other variables like rebates, discounts and
marketing communication should be analyzed for policy making.
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7. References
Stojanova, D., Ceci, M., Appice, A., & Deroski, S. (2012). Network regression with
predictive clustering trees. Data Mining and Knowledge Discovery, 25(2), 378-413.
Iyengar, R., Han, S., & Gupta, S. (2009). Do friends influence purchases in a social network.
Harvard Business School.
Chen, M. C. (2006). The competition and integration between virtual channel and brick-and-
mortar channel.
Kumar, N., Lang, K. R., & Peng, Q. (2005, January). Consumer search behavior in online
shopping environments. In System Sciences, 2005. HICSS'05. Proceedings of the 38th
Annual Hawaii International Conference on (pp. 175b-175b). IEEE.
Chen, Y., & Xie, J. (2008). Online consumer review: Word-of-mouth as a new element of
marketing communication mix. Management Science, 54(3), 477-491.

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8. Appendixes
8.1. Test results
8.1.1. Box plot: Dependent: social media
Explore
Case Processing Summary

Cases
Valid Missing Total
N Percent N Percent N Percent
Social_media_marketing_1 80 100.0% 0 .0% 80 100.0%
Social_media_marketing_2 80 100.0% 0 .0% 80 100.0%
Social_media_marketing_3 80 100.0% 0 .0% 80 100.0%
Social_media_marketing_4 80 100.0% 0 .0% 80 100.0%
Social_media_marketing_5 80 100.0% 0 .0% 80 100.0%




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8.1.2. Factor analysis (without removal of outliers)

KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling
Adequacy.
.625
Bartlett's Test of
Sphericity
Approx. Chi-Square 249.58
1
df 105
Sig. .000
Conclusion:
Outlier found in variable 4.
Reporting:
KMO represent 62.5% fitness of factors
whereas sig. shows significant result.
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Rotated Component Matrixa

Component
1 2 3
Homophile_1 .582
Homophile_2 .740
Homophile_3 .731
Homophile_4 .669
Homophile_5 .494
Social_media_marketing_1 .680
Social_media_marketing_2 .378 .637
Social_media_marketing_3 .558
Social_media_marketing_4 .522
Social_media_marketing_5 .657
Search_cost_1
Search_cost_2 .760
Search_cost_3 .388
Search_cost_4 .667
Search_cost_5 .645
Reporting:
Table show where to transform variable
into factors.
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8.1.3. Factor analysis (after removal of outliers)

KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .614
Bartlett's Test of Sphericity Approx. Chi-Square 217.416
df 105
Sig. .000


Rotated Component Matrixa

Component
1 2 3
Homophile_1 .622
Homophile_2 .690
Homophile_3 .716
Homophile_4 .655
Homophile_5 .542
Social_media_marketing_1 .672
Social_media_marketing_2 .717
Social_media_marketing_3 .530
Social_media_marketing_4 -
.475

Social_media_marketing_5 .699
Search_cost_1
Search_cost_2 .725
Search_cost_3
Search_cost_4 .678
Search_cost_5 .634
Reporting:
KMO represent 61.4% fitness of factors
whereas sig. shows significant result.
Reporting:
Table show where to transform variable
into factors.
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8.1.4. Regression analysis
Variables Entered/Removed
b

Model
Variables
Entered
Variables
Removed Method
1 Cost,
Homophile
. Enter
a. All requested variables entered.
b. Dependent Variable: Socialmedia




Model Summary
b

Model R R Square
Adjusted R
Square
Std. Error of the
Estimate
1 .238
a
.057 .030 .64670
a. Predictors: (Constant), Cost, Homophile
b. Dependent Variable: Socialmedia



ANOVA
b

Model Sum of Squares df Mean Square F Sig.
1 Regression 1.783 2 .892 2.132 .126
a

Residual 29.694 71 .418
Total 31.477 73
a. Predictors: (Constant), Cost, Homophile
b. Dependent Variable: Socialmedia

Reporting:
Table show Cost and Homophile as independent variable whereas Social media as dependent variable.
Reporting:
Table show Cost and Homophile as independent variable whereas Social media as dependent variable.
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Coefficients
a

Model
Unstandardized Coefficients
Standardized
Coefficients
t Sig.
Collinearity Statistics
B Std. Error Beta Tolerance VIF
1 (Constant) 3.089 .407 7.585 .000
Homophile .118 .122 .112 .964 .338 .991 1.009
Cost .162 .093 .200 1.728 .088 .991 1.009
a. Dependent Variable: Socialmedia




8.1.5. Reliability analysis
Case Processing Summary
N %
Cases Valid 76 100.0
Excluded
a
0 .0
Total 76 100.0
a. Listwise deletion based on all variables in the procedure.
Reliability Statistics
Cronbach's
Alpha N of Items
.668 15

Reporting:
The sig value shows that the overall model is insignificant.
Reporting:
The Homophile and Cost both are insignificant element in social media marketing, also the model is free from
multicolinearity (VIF < 10)
Reporting:
Chronbachs alpha value is > 0.5 therefore it is concluded
that the data is reliable.
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Item-Total Statistics
Scale Mean if
Item Deleted
Scale Variance
if Item Deleted
Corrected Item-
Total
Correlation
Cronbach's
Alpha if Item
Deleted
Homophile_1 51.2632 40.996 .167 .668
Homophile_2 50.9079 39.151 .364 .642
Homophile_3 50.0526 40.077 .295 .651
Homophile_4 50.4737 39.239 .406 .639
Homophile_5 50.6579 39.001 .285 .652
Social_media_marketing_1 51.0395 36.625 .365 .639
Social_media_marketing_2 50.4474 38.704 .387 .639
Social_media_marketing_3 51.0395 38.385 .311 .648
Social_media_marketing_4 51.0658 41.129 .195 .663
Social_media_marketing_5 51.2237 37.803 .430 .632
Search_cost_1 50.1711 43.237 .032 .682
Search_cost_2 51.0132 39.320 .284 .652
Search_cost_3 51.0526 41.277 .109 .680
Search_cost_4 50.1579 40.321 .334 .648
Search_cost_5 50.2237 40.256 .298 .651

8.1.6. Reliability (prior to the removal of outlier)
Case Processing Summary
N %
Cases Valid 80 100.0
Excluded
a
0 .0
Total 80 100.0
a. Listwise deletion based on all variables in the
procedure.

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Reliability Statistics
Cronbach's
Alpha N of Items
.696 15















Item-Total Statistics
Scale Mean if
Item Deleted
Scale Variance
if Item Deleted
Corrected Item-
Total
Correlation
Cronbach's
Alpha if Item
Deleted
Homophile_1 50.9750 44.582 .177 .697
Homophile_2 50.6000 43.585 .307 .681
Homophile_3 49.7750 44.050 .279 .684
Homophile_4 50.2125 42.752 .425 .669
Homophile_5 50.3750 42.845 .282 .684
Social_media_marketing_1 50.8000 39.630 .399 .667
Social_media_marketing_2 50.2125 41.030 .459 .662
Social_media_marketing_3 50.7500 41.861 .323 .679
Social_media_marketing_4 50.8625 43.513 .271 .685
Social_media_marketing_5 51.0250 40.835 .452 .662
Search_cost_1 49.9125 46.258 .092 .704
Search_cost_2 50.7875 41.967 .347 .675
Search_cost_3 50.7750 44.556 .144 .703
Search_cost_4 49.8750 44.339 .311 .682
Search_cost_5 49.9375 43.857 .307 .681
Reporting:
Chronbachs alpha value is > 0.5 therefore it is concluded
that the data is reliable.
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8.2. Questionnaire:
Tick) each statement according to a scale given below:


Homophile
1. People in particular gathering hold similar character.

2. Our social aura is the plate form through which we decide what to purchase.
3. Society affects persons sense of fashion and buying behavior

4. Social community influence consumer buying behavior

5. Some time you change your purchase decision if your friend buys something unique.

Social media marketing
1. You like to buy online if your favorite brand is available.

2. Social media (such as Facebook) play important role in creating brand awareness
1 2 3 4 5
Strongly
Disagree
Disagree Undecided Agree Strongly
Agree
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
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3. You mostly liked (in facebook) or follow (in twitter) the official pages of
different brands.

4. Online offers encourage you to buy.

5. Rate the interaction level in online shopping.
Search cost
1. Information is essential prior to purchase.

2. Rate convenience of online shopping as compared to other means of shopping.

3. We spend lot of time in shopping.

4. Buying behavior is easy if you know the source of different varieties.

5. You feel satisfied in purchasing if you compare all possible alternatives.

1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5