The Impact of Using Social Media on Consumer Buying Behavior

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Sultan Qaboos University College of Economics & Political Science Information System Department INFS4481: Special Topics in Information Systems Fall 2013

The Impact of Social Media on Consumer Buying Behaviour

STUDENT NAME:

COURSE NAME: DEPARTMENT: COURSE CODE: SUPERVISOR: SUBMISSION DATE:

Elham Al-Mukhaini (89789) Israa Al-Dhuhli (92975) Sara Ismael (92587) Special Topics in Information Systems Department of Information Systems INFS4481 Dr. Yousef Al-Hinai January 7, 2014 - 9.00 P.M.

THE IMPACT OF USING SOCIAL MEDIA ON CONSUMER BUYING BEHAVIOR Case study of understanding the use of Social Media on consumers' buying decisions in Oman

Elham Al mukhaini, Sultan Qaboos University (SQU), Oman [email protected] Sara Ismael, Sultan Qaboos University (SQU), Oman [email protected] Israa Al-Dhuhli, Sultan Qaboos University (SQU), Oman [email protected]

Abstract Social Media have given plenty of opportunities to consumers in adapting different aspects in life. Facebook, Twitter and Instagram have played significant roles in expanding consumers' online purchases. Though Oman and other Arabian countries are facing shortage in utilizing these sites efficiently, we still have substantial evidence of its use. This paper aims to understand which consumers are mostly influenced by online purchasing, reasons that tempt consumer to purchase online, types of products that are mostly purchased using Social Media and types of Social Media that are mostly used by consumers in Oman. To achieve these objectives, we conducted two primary research methods, questionnaire and interview to investigate the impact of Social Media sites on users’ changing behavior who aim to purchase online. The findings show that Instagram has made significant change in consumers' buying decision towards choosing particular products. This study has many implications on both theory and practice.

Keywords: Consumer Buying Behavior, Social Media, Online Shopping 1

INTRODUCTION By the few past decades, people’s way of shopping has significantly changed and improved. Consumers used to shop at physical stores like large shopping malls and many still applying the same method while purchasing (Hsiao, 2009). However, with the aid of information and modern communication technologies, consumers are able to shop via Internet using several Social Media and different websites (Toomey and Wysocki). This type of shopping mode can come in several names such as online shopping, online buying behavior and Internet shopping all refer to the process of purchasing and buying products or services via the Internet using several Social Media and different websites (Li and Zhang, 2002). Social Media (SM) are web-based services which are also known as "Social Networking Sites" refer to network of relationships and interactions among different users (groups or individuals) (Kempe et al., 2003). Social Media such as Facebook, Instagram and Twitter enable users to maintain great connections among themselves as well with others (Ellison et al., 2007) by achieving more than one task and facilitating the way of communication and sharing different information (comments, thoughts, videos and images) (Kietzmann et al., 2011). Social Media is playing significant roles in different aspects of our lives. What is interesting in SM is that it supports users in several sectors, such as, business, marketing, advertising and education (Hennig-Thurau et al., 2010). From business perspective, businesses and buyers can interact directly by SM with each other, and thereby find whatever products and services are looking for (Parson, 2013). Consumers today are progressively utilizing technology and particularly Social Media as an effective tool in their online shopping process. This process can be defined as is an electronic process that allows consumers to deal with business people and meet their purchases' needs. Social Media have played important role in spreading this phenomenon faster (Hennig-Thurau et al., 2010). Interacting with consumers on Social Media may result in increasing potential consumers and the probability of turning potential consumers into real shoppers. In addition to changing existing potential consumers into buyers, SM encourage those buyers to promote and share their purchases experience among their friends by giving their positive or negative opinions towards a purchased product (Parson, 2013). A study indicated that SM enable 25% of all consumers to post links about products and services information in their retail sites to update other users about the purchase process (Pookulangara and Koesler, 2011). Another study of Miller (2010) stated in his research that social marketing has made very important role in persuading consumers to buy online. He found that 70% 2

of consumers are visiting Social Media to get useful information, 49% of them made the decision to buy certain product and 60% of consumers prefer to share their information about the products with others online. However, the actual transactions of purchasing processes occur for only 7% of consumers (Miller and Lammas, 2010). Online shopping is growing everywhere and different categories of consumers are influenced by this phenomenon. For instance, the percentage of online buyers is increasing in India, China, Japan and Australia for about 87%, 85% (North Asia and Europe), 83% (North America), 81% (South and Latin America) and 53% (Africa and Pakistan) (Solorzano, 2011).

The overall online purchasing

process has enabled 875 million consumers to boost the percentage of other online shoppers to 40% in the recent two years due to the recommendations posted in different SM about products. For instance, 41% of users buy books, clothes, accessories and shoes (36%), videos, DVDs and games (24%), airline tickets (24% ) and electronic equipment (23% ) (Achille, 2008). Despite the fact that buying online is spreading and growing fast in short term period, some regions and countries have very limited volume of online purchasing transactions, such as, the Arab world situation. During the last 15 years, the Arab world has significantly faced a major evolution of technology which led to many changes in the norms of doing businesses, practicing governance and carrying out greater growth. With approximately more than 125 million individuals are using the internet in the Arab region and more than 53 million are considered as active users on SM (Government, 2012). A study shows that one of every 3 internet users purchase goods and services online at least once per month . These active users represent 43% of users who had several previous experiences in buying online (Galal, 2011 ). Although the high number of Middle East online users, the percentage of these users has recorded as the lowest (3.7%) compared to Western countries (Go-Gulf, 2013). This research is focusing on the purchasing perspective of consumers who use different Social Media sites to buy their preferred products. The study aims to examine why consumers purchase using Social Media, to understand which type of consumers use SM and are influenced the most, to know which products most suitable for SM and to understand the most suitable SM for specific products and particular consumers. This paper will present several important sections starting with a collection of literature and related researches, identifying the methodology, findings, analyzing and discussion, and finally a limitations, future expectations and conclusion about the impact of SM on consumer buying behavior supported with theoretical and practical contributions.

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LITIRETURE REVIEW Understand which type of consumers are influenced mostly by Social Media Nowadays, consumers are playing a significant role on the marketplace phase. Simply, they can be defined as actors on the marketplace phase or individuals who purchase or consume products and services either online or offline. One of the variables that have been reported as significant variables influencing consumers is demographic variables. For example, the number of male and female users has dramatically increased during the last years (Park and Jun, 2003). In term of online segmentation, there is a slight difference. This is because there are two main online segments we can refer to which are "Online Insiders" and "Social Clickers" (Riegner, 2007). Consumers who actually buy online (Online Insiders) Online Insiders are very active users on internet and highly influential online shoppers in using different Social Media to buy and sell (Pookulangara and Koesler, 2011). Usually, consumers’ choices are influenced heavily by online brands and consumers can influence each other. This kind of event usually affects the repurchases process as a result. Therefore, Consumers are increasingly turning to Social Media

in order to get more information on which to base their decisions

(RAMSUNDER, NOVEMBER, 2011). For instance, it can be noticed that most of the online shoppers tend to be younger, wealthier, better educated, more computer literate and more likely to spend time on internet, and shop online (Levin et al., 2005). Consumers who browse the internet without buying online (Social Clickers) Social Clickers are daily active people who tend to use the internet for different purposes, such as, getting news, doing different researchers for different subjects, sharing information and communicating with other users and from other cultures (Lee, 2013). They are heavy online communicators, but the most participatory ones tend to be younger and less affluent. These younger Social Clickers may not be influencing purchase decision today, but could become strong influencers in the future (Vinerean et al., 2013).

Understand why consumers use Social Media to purchase The important elements of visiting websites are to help consumers to communicate with other users in order to accomplish their purposes. Interaction with other users can affect buyers by many factors which play a critical role in enabling consumers to have clear ideas about unfamiliar products (Constantinides, 2004). Using SM becomes one of the necessities these days that affects consumers

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by several factors. These factors can be classified as, Design Factors, Information Factors, Product Factors, Psychological Factors, and Cultural Factors (Constantinides, 2004): 1. Information Factors: consumers will be willing to buy online if variety of products and information are provided sufficiently. Also, offers, warranties and guarantees that are provided along with products will encourage consumers to shop online (Limayem et al., 2000). 2. Design Factors: usually consumers are affected by the design characteristics of a web page. If the website is well designed and frequently updated, consumers will be more attracted to buy online. In addition, the way of designing is affected by detailed information provided about several products and the display of sites' themes (e.g., colours, icons, links, images…) 3. Psychological Factors: these factors affect consumers' attitude towards online buying. For instance, if consumers build a trust on a website, they will be willing to buy online comfortably and reduce uncertainty towards a product. Moreover, consumers may be influenced by their friends and relatives who affect their attitudes to use SM. 4. Cultural Factors: consumers can be affected by other cultures in choosing and making decisions about certain products. Also, it can affect consumers' lifestyle in interacting and communicating with new technologies (Pookulangara and Koesler, 2011).

Which products are most suitable for Social Media? Many studies have made lots of analysis to recognize and predict the relationship among the product and shopping behavior. Their analysis helped them to make a list of products which would be suitable to be sold via the internet. The list as following (Miller and Lammas, 2010): 1.

Intangible Products (Information) Category: products that provide information to consumers, such as, online videos, music, computer software, stock market, financial reports and weather information.

2.

Tangible Products (High Differentiation) Category: products that have variety classes, such as, automobiles, electronic devices, books, clothes, accessories, flowers, and jewelries.

Type of Social Media mostly used by consumers The most common SM that are mostly used by consumers for different purposes are: Facebook, Twitter and Instagram. A study of Miller (2010) has found out that over 11 million consumers use

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more than 70% of many SM to purchase different products and services, to provide rich information about certain product and to share comments with other consumers (Miller and Lammas, 2010). Facebook has more than 6 million consumers who registered to buy and share information about products (Scott, 2013). A study showed that 60% of Facebook users say that they are more able to recommend a product or service to their friends after following that brand on SM (Parson, 2013). Facebook has reached 51% of users who buy different products through it (Kunkel, 2013). Twitter has recorded 800,000 followers who showed their appreciation to the provided services about the products. The same study has indicated that written blogs has increased from 54% to 77% in two years, and watching several videos related to different products has increased from 32% in 2006 to 83% in 2008 (Miller and Lammas, 2010). Another study indicated that 79% of Twitter users say they are more able to recommend a product or service to their friends after following that brand on SM (Parson, 2013). Also, 64% of users use Twitter to buy different products (Kunkel, 2013). Instagram is spreading widely in the recent two years because of active users who share and upload different kind of photos. Based on the activities provided by users who use Instagram, the results showed more than 16 billion photos were shared among users (Krieger, 2012). Phil Gonzalez, the founder of Instagrammers (Instagram users) was interviewed to recognize the increasing of Instagram users. He stated in the interview that number of users who login into Instagram increased in less than two years to 100 million users in more than 60 countries around the world. (Gonzalez, 2013). Because of the new adoption of Instagram, there is a lack of information about the use of Instagram as a tool in online purchasing.

METHODOLOGY Despite the fact that Oman is running in the same route with other development countries, it is still not utilizing the technological resources efficiently. In general, Oman is focusing more on developing few sectors such as education but there is a limited utilization of these resources on public lifestyle, for example, online shopping. Based on Omani culture, there is a low confidential thought toward any actual online transactions. Because of these issues, our research is used to expand the understanding of consumers' buying decisions toward utilizing SM. This study is conducting two main methods, interview and questionnaire to investigate the impact of SM on changing the behavior of users who aim to purchase online.

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FINDINGS AND DISCUSSION Participant General Information Gender Occupation Female 76% Student Male 24% Employed Unemployed Age 18 - 25 84% Entrepreneur 26 - 35 13% Above 36 3% Social Status Region Single 76% Muscat Married 23% Al-Dakhileia Divorced 1% Al-Batinah Al-Sharqeia

% 62% 20% 16% 2%

35% 18% 17% 16%

The results showed a total of 341 participants answered the questionnaire, 24% of males and 76% of females. The reason behind this difference in percentage is due to online distribution of the survey, so we cannot control the genders' rate. These participants were from different governorate in Oman. They were reached by submitting an online survey using Google Drive. To be answered by lots of respondents, the questionnaire was distributed in two languages, Arabic and English. The reason for conducting a questionnaire is to know which consumers are mostly influenced by purchasing online, types of products that are mostly purchased using SM and type of SM that are mostly used by consumers, and conducting interviews is to give more justification for the questionnaire results. Therefore, a total of 34 Omani participants from different occupations (students, employees, entrepreneurs and unemployed people) were interviewed. Ten participants were interviewed face to face and 24 participants through e-mails. From the overall interviewees, 20 were students, 7 (professors), 3(employees), 3(unemployed) and one entrepreneur. Open-ended questions and matrix table were developed in the interview protocol which is based on the research questions and the literature review. Factors influence Online Insiders and Social Clickers in purchasing process From the questionnaire results, it was found that the percentage of Online Insiders (online shoppers) was 48%; half of them tend to buy at least twice per month. Similarly, Social Clickers (regular online users) shaped 52% of total respondents. Most of them are young consumers aged from 18 to 25 years-old (respond rate = 84%) and from Muscat. The reason behind this result is because they are more expose to the internet facilities than other regions due to the availability of the internet services in almost every area in it. As the participants interviewed regarding the factors that influenced them 7

to buy online, 61% of them said that they are affected mainly by information factors associated with the products. As interviewee 23 mentioned regarding this point, “I think that products are cheaper because part of their prices in the shops comes from the staff's service, taxes, shop renting and electricity provided in the shops.” In addition, 17% of the Online Insiders are affected psychologically in term of trusting Social Media sites. They judge these sites are designed to have higher security in term of protecting their accounts and personal information so that they will feel more comfortable and secured. In addition, culture factor played an essential role in influencing Online Insiders' buying decisions. Ten percent of them are influenced by this factor in term of relying on their friends and relatives (respond rate = 41% out of 10%) who provide reviews and feedbacks from their past experiences. On the other hand, the rest of participants agreed that they are not willing to purchase online. This is because they strongly believe that there is no security associated with websites and therefore they do not trust in the quality of the products, as interviewee said, “Due to security concerns, I tend to not trust putting my account information online as it may be hacked, and besides, I prefer to physically inspect the goods that I buy.” Furthermore, some mentioned that they do not own credit cards and others are not aware of the buying process itself. Types of products suitable for Social Media To match the results of both questionnaire and interviews data, it was identified specific list of products selected by consumers in the questionnaire. However, this survey does not provide deep information about these products chosen by specific consumers. Thereby, interviews were conducted in order to clarify this point. As mentioned previously, products were classified into tangible and intangible products. In most circumstances, 65% of the respondents prefer to buy fashion products (tangible) through Social Media. For example, they prefer to spend much more time on buying accessories, cosmetics and clothes. This is because most of our samples are females. Participant 24 strongly agreed on buying fashion products online in the questionnaire, within the interview he argued, “I tend to buy fashion products using Instagram because I cannot find my style in local shops.” It is recognized that fashion products are preferred to be bought online because they cannot be found easily in local market and they are less risky in term of prices. Similarly, previous studies showed same results regarding this product. These studies recommended that expensive products such as luxuries and automobiles can be not easily sold online because there can be lack or untrusted information about these products (Miller and Lammas, 2010). According to the other type of products, some of the respondents (respond rate = 27%) prefer to buy intangible goods such as online newspapers, hotels' booking, airline tickets, trainings and computers software. This is due to the low

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cost associated with these products like shipping costs and not waiting for long time to receive the product. On the other hand, few (respond rate = 8%) tend to buy both tangible and intangible products. These few participants agreed that the reason behind buying both types of products is due to the reliance on Social Media rather than the traditional purchase. Types of Social Media mostly used by consumers to shop online The results showed that there is a focus on listing more than three sites in the survey to give respondents the opportunity to choose the suitable one. However, this study focuses on three common SM sites, Instagram, Facebook and Twitter. This is because our collected data showed that they are the most common and popular sites used among Omani users. From online shopping perspective, previous studies found an increasing rate in Facebook usage but Instagram has changed this phenomenon. The questionnaire results stated that most online shoppers (respond rate = 45%) select Instagram as a prime tool to buy online comparing to previous studied which stated that Facebook had the highest rate (respond rate = 51%) among western users (Kunkel, 2013). As interviewee 15 mentioned regarding the preference of using Instagram, “From my previous experiences, I like to use Instagram because traders are well known and trustworthy. They also post comments of other consumers' opinions about different products.” It is therefore recognized that most people who are selling products in Instagram are known and trustworthy like friends and relatives. Also, images and videos are supported by comments related to different products. These results also indicated that some Omanis depend on Facebook (respond rate = 12%) to shop online and only 3% of them utilize Twitter as a tool to shop online. In contrast, 40% of users shop using other websites such as Amazon, e-bay and Google+. The reason behind this high percentage is because people tend to depend more on familiar websites that the users had past experience with. Utilizing both questionnaires and interviews in this research have integrated each other in a way that provides wealthy information. Each objective in this research is affected directly in complementing each other. Social Media has impact on both consumers' choices and products' presentation. From the above analysis, Instagram has great impact on fashion products because it has features of displaying products in fashionable images and videos which as result attract more young consumers, especially females who are affected mostly by informational, design, psychological and cultural factors. In addition, Social Media (Instagram) has built a strong relationship among products (fashion) and young consumers. The consequence of this relationship is that fashion affects directly young student consumers (respond rate = 62%) buying decisions, aged at a range between 18 and 25 years-old, in a way that the process of buying such fashion products is much flexible, unique and easier to be 9

completed effectively and efficiency. In briefly, consumers believe that Instagram is the best and suitable tool to buy fashion products online. The following matrix model illustrates the overall process of changing consumers' buying behavior which is resulted from the interaction among Social Media, products and consumers decisions.

Figure 1: Matrix model of changing Consumers' Buying Behavior towards selecting certain product by using the most suitable Social Media tool.

CONCLUSION In conclusion, the findings obtained from this research have significant implications for the academic research, derived mainly from extracting the relationship between the objectives of this study. Omani consumers are mostly affected by informational and design factors which lead them to take the best decision in choosing the most suitable Social Media site (Instagram) to buy their preferred product (Fashion) online. Although the above fact presents a positive sign toward relying on Social Media to buy certain products, there is still a gap in mistrusting among consumers toward the use of Social Media sites in term of security associated with such sites.

LIMITATIONS AND FUTURE RESEARCH Research's limitations include those generally problems related to online surveys, containing low responses' rates due to time constraints to finish this study. Although representativeness can continuously be enhanced, great energies have been made for this current study to reach a greater response rate sample. The study faces some limitations that can be improved later on to provide additional successful opportunities for a future study. Initially, definite limitations increase from selecting the sample and the way variables were measured and used. According to the way of distributing online surveys, this research showed big gap among male and female responses because online surveys are uncontrollable in term of specifying number of males and females. Therefore, 10

there is a shortage of reflecting consumer believes and behaviors associated to Social Media compared to other countries.

THEORETICAL AND PRACTICAL IMPLICATIONS Studying and analyzing consumers’ behavior towards using Social Media is an important issue because the purchasing can be a significant process for both consumers and businesses. This research supports businesses to understand their consumers’ orientation, expectation, requirements and interests toward utilizing specific Social Media. What is more, businesses will understand what kind of information should be provided for a certain product. Also, businesses will recognize which SM are mostly used by consumers. By this research, businesses and consumers understand the importance of Social Media. It would be a better idea to recommend businesses about the best Social Media to be utilized so they can benefit from them to enhance the purchasing process and products to satisfy consumers' needs. Finally, consumers are encouraged to purchase particular products online using appropriate Social Media.

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