Sample Marketing Essay: Propensity for consumer engagement through social media: The case of Apple Inc. in China

The digital era has introduced a new way of measuring business success. Return on investments no longer appear to be sufficient enough to determine if the business, particularly for consumer items, is performing well in its industry. Since the internet has brought along many opportunities especially for reaching customers worldwide, marketers have used social media as a tool to develop meaningful relationships with customers. Social media is today’s most up-to-date marketing concept. Every business desires to understand how social media can create business value. Realizing the function and purpose of social media, businesses have used social networking sites to share and discuss product or service information. As users are encouraged to contribute and to create content, consumer engagement is now a growing standard by which companies determine their market success. Thus, it is important to measure if consumer engagement efforts translate to financial goals and marketing objectives.

Among the developing countries, China offers the highest business potential expressly because of the size of its emerging middle class. Every business seems to be interested in entering the Chinese market having the largest population in the world pegged at 1.38 billion as of 2016 (World Population Review, 2016, par. 1). Its middle class is the world’s second largest with 157 million consumers (Kharas, 2011, p. 13). Entering the Chinese market for Western business has become important considering the trying economic markets in the United States and Europe. Home market sales for western businesses have declined. In contrast, in the past few years, the Chinese economy has grown significantly and predicted to sweep over the United States by 2020 (Hedley, 2016, par. 1). The country’s progressively open business environment has attracted many Western businesses. Hence, understanding how to business in a large and complex market like China has turned crucial.

In China’s social media space, Facebook, Twitter, and YouTube are non-existent (Chiu, Ip & Silverman, 2012, p. 1). Despite this, China is the world’s largest most active social media population (Chiu, Lin & Silverman, 2013, par. 1). There are 500 million Internet users recorded in 2014, which come mostly from Tier 1 and 2 cities – an attractive opportunity for more expensive products (Cicero, 2014, p. 3). Moreover, internet penetration growth at that time was estimated at 45.8% of the population (Cicero, 2014, p. 3). Thus, for western businesses to understand how China’s social media space is imperative. A number of companies have already taken this challenge, and the conventions for engagement have not been unusual. Among these companies which have penetrated the Chinese market is Apple Inc. Since 2003, Apple Inc. has sourced around half of its revenues in China (Booton, 2016, par. 3). However, in Apple’s fiscal second quarter revenues of 2016, sales have dipped by 26%. The company attributed the decline to China’s macroeconomic concerns. But, local manufacturers like Huawei Technology Co. and Xiaomi are increasing its competitive powers. Also, smaller smartphone manufacturers like OPPO and Vivo are also now receiving more market attention, more so that iPhones are priced at $399 (Booton, 2016, par. 8). Apple Inc. should be able to explore means of regaining its stronghold in the Chinese market. The company should intensify its marketing efforts through social media as a prevailing tool for marketing and considering also the propensity of the Chinese market for social media use. Determining Apple Inc.’s social media impact in China through customer engagement should help the company identify what it needs to do to help bring back Apple’s revenue position.

This paper aims to measure the Chinese’ predisposition for customer engagement with Apple Inc. The outcome should help identify Apple Inc.’s social media strategies that work in terms of the scope and depth of customer engagement. As such, this paper should be able to answer the research questions – What are the tendencies of the Chinese in customer engagement with Apple Inc.? What is the level of customer engagement of the Chinese customers with Apple Inc.?

This research shall aim to test the following hypothesis for the quantitative aspect of the study. First, buzz volume through the duration of activity time has no effect on sales volume. Second, buzz volume through the frequency of visit has no effect on sales volume. Qualitatively, particular themes and the effect on buzz volumes shall be identified.

Review of Literature

            The Chinese population leads in the explosion of social media as visits to the social networking sites are highest compared to other countries (Chiu, Lin & Silverman, 2012, p. 1). In a McKinsey survey cited in Chiu, Lin and Silverman (2012), a significant finding indicates that social media has more impact on the Chinese’ purchasing decisions unlike in other countries. Because of social media, the likelihood of buying a product in this country is higher, which propensity is culturally defined. According to this study, recommendations from peers are highly valued by the Chinese since formal institutions are perceived quite deceitful. Advertising and news sources are regarded with skepticism; thus, instead word-of-mouth is relied upon.

Chiu, Lin, and Silverman (2012) provided significant interpretations of the McKinsey survey. First, social media usage patterns are observed to be different since there are definite reasons for connecting with social media. Companies must be able to obtain information about the Chinese’ usage patterns to ensure more effective customer engagement. Second, the Chinese spend more time on social media compared to other countries. Third, more popular social media sites in China are Qzone, Sina Weibo and Renren, Tencent Weibo and Kaixin, with Qzone as most popular (Chiu, Lin & Silverman, 2012, p. 3). Fourth, these social media sites attract varying kinds of users. For instance, those with accounts in Sina Weibo tend to belong to higher income groups and probably live in Tier 1 cities. Fifth, social media activities involve product reviews, blog posts on the hottest technology and services and a frank group of people who assertively criticize products.

Consumer engagement in China confronts three challenges (Chiu, Lin & Silverman, 2012, p. 6). First, there is little understanding of the dynamics of social media in China and the lack of ability to extract consumer insights from these data. Second, current knowledge and evaluation of social media are often not actionable. Third, the fit between insights gained from social media and brand planning processes, who should be responsible for social media and the measurement of its impact is uncertain. Loss of control is a highly critical aspect of branding that consumer reactions should be made consistent with the goals (Sashi, 2012; Thurau, Hofacker & Bloching, 2013). Moreover, they cited that the co-creation of brand stories should be observed. Chiu, Lin and Silverman (2012) suggested that the social media objective and context must be very well established in comparison to competition in terms of tracking buzz volume and brand sentiment. New ways of collecting information must be made to guide the companies’ handling of social media. Capturing the customers’ interconnectedness and their active role must be evaluated (Thurau, Hofacker, and Bloching, 2013, p. 239).

Taking note of the Chinese culture, there is increased the significance of Word-of-Mouth (WOM) in social media. The exchange of information among customers is key in establishing the trustworthiness of the site among the Chinese. Consumers rely on WOM, or eWOM as this is online, as a basis for purchasing decisions (Chu & Kim, 2011). These eWOMs come in the form of blogs, emails, consumer reviews and forums. eWOMs establish attitudes toward the brand and the website, aside from decision making processes. This process of spreading and exchanging information with others is measured against social tie strength. Chu and Kim (2011) identified tie strength as the potency of the bond between members of a network, which can either be strong or weak. Strong ties are normally established with stronger and closer relationships which are found in the personal network of the user. Referral behaviors are most likely within this quality of ties. These relationships also pose increased impact on the individual and small groups levels mostly. On the other hand, weak ties include acquaintances and colleagues in which there are less personal relationships; however, they are regarded as an important bridging function according to Chu and Kim (2011). Information exchanged in these weak ties are on diverse topics.

Meanwhile, customer satisfaction, retention or loyalty do not inevitably imply customer engagement, but the probability of the latter is increased (Sashi, 2012, p. 253). However, engaged customers are to be expected to endorse products to others and add value to social media content. For the company to translate these social media objectives into profitability, market share or revenue, consumer needs must be satisfied.

In the study by Thurau, Hofacker and Bloching (2013), the following facets are suggested to be measured: consumer engagement motive, consumer-generated content, consumers’ network structure and consumers’ social roles and interaction. Beyond these metrics, there are customer lifetime value and word-of-mouth elements cited in other studies. What is important is that companies must be able to select their metrics according to their objectives.

Methodology

Both qualitative and quantitative approaches shall be used for this study. The qualitative study will involve communication approaches of Apple Inc. Company objectives must be identified into themes such that responses of customers can be matched with the company’s themes; thus, providing a link to the attainment of company objectives. A thematic analysis will be used to determine if the company’s message is consistent. Textual descriptions shall be obtained from the social media account of the company particularly observing brand sentiment. It is expected that a translation of Apple’s main themes in the social media during the period may be requested. Since the customers’ responses are likely written in Chinese, there would be a difficulty of translating customer’s responses. Aside from the descriptive statistics to create a profile of the customers engaged in the social media account, quantitative research shall be used to track buzz volume. Buzz volume data shall be two-fold: the activity time or duration and visit frequency. These then will be both correlated with the sales volume for the period.

Participants in the study are the social media users engaged in the Apple’s social media account. However, the number of participants shall be based on the actual number of active users. These are those who have participated in forums, blogs or posts. The number shall be determined by the duration in which the study shall be conducted.

The social media account shall be observed for one quarter, starting from January to March 2017. The social media accounts which shall be tracked include Qzone, Sina, Weibo, and Renren. Daily posts by Apple shall be monitored as well as the number of customers’ responses.

Data analysis would be made on the consistency of themes of Apple’s social media campaigns and the use of correlational analysis for the buzz volume and sales revenues.

Conclusion

            This research proposal aims to determine the propensity of customer engagement of Apple in the Chinese market. It intends to test the relationship of buzz volume with sales revenue for Apple’s iPhones in China in particular. To answer the research problem, a qualitative and quantitative approach shall be used. The thematic analysis shall be conducted to identify the advertising or promotional message of Apple. This will be linked in terms of the buzz volume for the message. The quantitative approach shall determine the correlation of the buzz volume with iPhone sales for three months.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Booton, J. (2016). This is why Apple iPhone sales are tanking in China. Market Watch. Available at: http://www.marketwatch.com/story/apple-is-performing-terribly-in-china-but-its-not-because-of-the-economy-2016-04-27. (accessed 24 November 2016).

Chiu, C, Ip, C and Silverman, A. (2012). Understanding social media in China. McKinsey Quarterly. Available at: http://asia.udp.cl/Informes/2012/chinamedia.pdf. (accessed 25 November 2016).

Chiu, C, Lin, D, and Silverman, A. (2012). China’s social media boom. McKinsey & Company. Available at: Simon-Young-McKinsey-Chinas-Social-Media-Boom.pdf. (accessed 26 November 2016).

Cicero. (2014). Social media in China. http://www.cicero-group.com/wp-content/uploads/2014/05/Social-Media-in-China-V3.AH-edit.pdf. (accessed 24 November 2016).

Hedley, M. (2016). Entering Chinese Business-to-Business Markets: The Challenges & Opportunities. B2B International. Available at: https://www.b2binternational.com/publications/china-market-entry/. (Accessed 24 November 2016).

Kharas, H. (2011). The emerging middle class in developing countries. Brookings, Institution. Available at: http://siteresources.worldbank.org/EXTABCDE/Resources/7455676-1292528456380/7626791-1303141641402/7878676-1306699356046/Parallel-Sesssion-6-Homi-Kharas.pdf. (accessed 25 November 2016).

Sashi, C. (2012). Customer engagement, buyer-seller relationships, and social media. Management Decision. Vol. 50. No. 2. 253 – 272. Available at: https://www.researchgate.net/profile/Cm_Sashi/publication/235292856_Customer_engagement_buyer-seller_relationships_and_social_media/links/5553b13108aeaaff3bf19c25.pdf. (accessed 24 November 2016).

Thurau, T, Hofacker, C and Bloching, B. (2013). Marketing the Pinball Way: Understanding How Social Media Change the Generation of Value for Consumers and Companies. Journal of Interactive Marketing. Vol. 27. 237 -241. Available at: https://www.researchgate.net/profile/Thorsten_Hennig-Thurau/publication/259143423_Marketing_the_Pinball_Way_Understanding_How_Social_Media_Change_the_Generation_of_Value_for_Consumers_and_Companies/links/00b4952a7208267b40000000.pdf. (accessed 25 November 2016).

World Population Review. (2016). China population 2016. Available at: worldpopulationreview.com/countries/china-population. (accessed 25 November 2016)

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