Academic Essay –

Marketing Policy and

Strategy

David McGinley 08681074

Word count -1819

Course 3BC1
I have read the University’s code of practice on
Year 2011
plagiarism. I hereby certify this material, which
I submit for assessment on the programme of
study leading to the reward of Bachelor of
Commerce Business, is entirely my own work. It
has not been taken from the work of others,
except to the extent that such work has been
cited and acknowledged within the text of my
work. Student I.D. Number: 08429804
Name: David McGinley Signature: David
McGinley Date: 08/03/2011

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 Peter Drucker was once quoted as saying Marks. O. (2009) “The Purpose of a Business is to
Create a Customer…who creates customers” (1). The quote outlines what should be at the forefront
of a social marketer, at the heart of social media lies customers sharing the word about your products.
In analysing this, the theme of sharing came up time and time again. In the brief we are instructed to
discuss how social media is changing promotion and purchasing decisions. Sharing information (in a
new way) is influencing this greatly as I will demonstrate now (through talking about Facebook and
Starbucks).

It has now become apparent that social media is taking away greatly from companies own
websites and marketing efforts as more companies feel the power of social networking to their
business. Before social media, most brand presences online would only be felt through their online
portal. Most casual consumers would simply not have time to browse through every brand’s site that
they liked. The most prominent way a brand’s online presence and message would be shared (pre
social networking) is if they were emailed. Since the creation of social networking (Facebook,
Twitter Foursquare for example) it became much easier to share the content these companies were
making (and in most cases motivated them to appeal to these communities). Many successful brands
sites just aren’t visited as much, the consumer has taken control of how they are marketed to. If we
look at Starbucks’ stats we can see that they stayed roughly the same but Neff. J (2010) ‘’Coca-Cola,
with its 10.7 million Facebook fans, has three to four times the Facebook fan base as MyTown and
Foursquare have registered users. (There are at least 11 brands whose Facebook fan pages have
quietly grown bigger than the biggest geo-location providers.) That certainly trumps U.S. unique
visitors to Coke's brand website, which fell by more than 40% to 242,000 in July compared to a year
ago, per Compete”. A clear sign that social media is taking traffic away from brand websites. The
impact of this is that brands in the future will concentrate on social media, a more powerful form of
marketing. It’s easier to share and keep up with than just websites alone.

Consumers are not only sharing information, they’re changing it, giving it more credence and
contributing to the overall message of the company. Starbucks have looked to consumers and people
on social networks to help them shape the company into the company their consumers want, taking
ideas from their consumers and in a transparent fashion and letting consumers decide which ones are
most important. In a post-social world this reinforces the message that marketers are trying to make,
in this case that Starbucks is your coffee chain, where you have a voice. As they state: “Long a staple
of consumer-friendly businesses, "suggestion boxes" brought the customer's voice — however faintly
— inside companies. Social-media advances have transformed that simple solution to a fully blown
idea-and-innovation factory. MyStarbucksIdea.com, one of the earliest and most popular, allowed
enthusiasts to share, discuss, vote on ideas, and see which ones were put into action. By late 2009, the

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site had received around 70,000 ideas" (3). At the moment we are seeing a lot of Facebook pages not
just being used solely for marketing but for input into real businesses. It mixes up the content that
consumers are seeing every day. In sharing this they are promoting the business in question further
reinforcing the importance of sharing in social media.

The shift in the way brands are marketing (from physical to social) has had a profound effect
on the distribution of offers and information. In the past brands would have to communicate their
offers through more traditional means like flyers, online adverts or physical advertisements
(billboards, Point of sale etc). This led to huge wastage and costs for brands. Brands have now moved
to social networking to market their offers, and information about the brand. Consumers now share
these offers freely with each other, and are often incentivised to do so (Groupon, Boards Deals,
Facebook Deals). Brands can post freely online opening up the market for many smaller firms to
attract an audience when they couldn’t advertise before. It made a great change to marketing efforts,
new career paths have opened for marketers, it allows any company in the world to reach a world-
wide audience and reinforces the opening quote Marks. O. (2009) “The Purpose of a Business is to
Create a Customer…who creates customers” (1).

Looking at Facebook and Starbucks we see that Starbucks is using Facebook as more than
just a direct advertising channel, they are using it to gain feedback and share some of the company’s
‘life’ with the consumer, creating a platform which makes consumers much more receptive when they
do actually advertise. Consumers become the heart of the business as they help create content and
actually shape your own business. “New media have also empowered them to promote and distribute
their own offers – consumers today serve as retailers on eBay, media producer-directors on YouTube,
authors on Wikipedia, and critical reviewers on Amazon and Tripadvisor; they do all of this and more
on Facebook and MySpace” (4). Another example is where one hotel uses facebook for more than
just direct marketing “Kimpton's Sky Hotel (Aspen, CO) This hotel, running last-minute hotel deals
for Facebook fans, racked up 200 friends within days of its initial post. During ski season, real-time
Facebook posts report snowfall amounts.” (5)

Facebook has also affected how consumers are thinking about and making purchase
decisions. Facebook deals has recently launched (alongside facebook places) bringing a whole new
avenue of advertising and offers to Facebook users. In facebook deals consumers ‘check-in’ to
certain shops and will receive discounts for doing so. It was mostly inspired by Foursquare and
Groupon. There are four types available to businesses; individual, friend (multiple friends check in),
loyalty (recurring) and charity. By checking into these places it will infulence you and your friends to
get rewards that were previously unattainable, Facebook offers a multitude of ways to customise
these deals. Friends that may for example be used to going to Costa Coffee might instead choose

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starbucks because of their launching deal with Facebook (one dollar going to charity or free cups of
coffee). This social advertising which is completely based on consumers sharing these offers is
becoming more effective all the time, as consumers trust the word of their friends more than a
company. Chacklsfield M (2011) “Facebook Deals represents the power of word of mouth marketing
and personal recommendation. (6)

The impact of this is that brands can now market on an incredibly local level, and small
chains can compete with the larger chains (for instance if a local coffee shop had a better deal than
Starbucks). Facebook deals is changing how consumers make and think about purchase decisions by
making the consumer share deals and affecting their buyer behaviour through opening up the playing
field to smaller businesses who might not have the advertising strength of Starbucks. When it comes
to deals, Facebook is revolutionising the method of purchasing . Facebook has witnessed many new
methods of purchasing evolve from its platform. Facebook has launched their own credits to help
make e-commerce thrive on their site. Facebook has strived to get into the microtransaction market as
“It is estimated that virtual goods have become a very real $5 billion industry worldwide”. (7) This is
mostly a payment for in-app goods but is also applied to their gifts system. The credits are paid for
through credit cards. Another form of how facebook is changing the way we purchase things is an
external company operating on Facebook called Trial Pay. Using trial pay users can pay for virtual
items by completing tasks for example downloading an app or taking out a free trial. This means any
user can afford to purchase items on facebook, even without a credit card. Another type of purchasing
is just plainly using a credit card, if we look at Heinz who launched a limited edition ketchup only
available to purchase over Facebook, which requires the consumer to like the page first before being
able to purchase, sharing the product with friends. It just shows the power that Facebook is gaining in
purchasing and influencing consumers. (8) The impact of this moving forward will be more brands
selling on Facebook (and consumers sharing purchase information) and Trial Pay becoming more
common as consumers ‘work’ for their products and are advertised to through doing so. Options for
consumers will increase greatly when purchasing on Facebook, these new methods will make new
decisions for consumers to make. Facebook has the potential to become a major marketplace in the
future, but this will have to unfold in a transparent and trustworthy way (looking at recent privacy
concerns

The most prominent way of influencing making purchase decisions will always be through
the recommendations of others, or trusted sources. Facebook has taken steps to ensure adverts are
now more appealing to consumers by tailoring adverts to your own personality, an arguably better
way to advertise. Advertising in a normal sidebar advert on Facebook is quite like Google Ad Words
(in the sense that it is Cost Per Click based), the ad centre gives you the same power to tailor ads, but

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Facebook learns a lot about an individual through the pages that a consumer likes, what they talk
about most and how they rate other adverts (by clicking ‘x’ beside them if they don’t find them
relevant, giving Facebook more feedback on what is relevant to the consumer in question. The extra
power in advertising that this personalisation can bring means that Facebook can greatly influence
purchase decisions, if every single advert a consumer sees is relevant to them then they are much
more likely to be receptive to the adverts message. The consequences for brands is that they must
utilise these tools in the future to ensure that the constantly changing advertising profile that Facebook
has of every user in their demographic is targeted.

In the course of this article, as a consumer I have become a lot more informed about how
Facebook is changing the way we interact with and are influenced by brands, looking at Starbucks and
the level of consumer involvement its unprecedented pre-social networking . It’s changing the way
that we gain information from brands, how we are recommending brands to friends, how we purchase
online and even how we are directly marketed to. Brands will have to leverage the relative ease of
Cost-Per-Click Facebook adverts versus running a Facebook page. The article begins with a quote
declaring saying Marks. O. (2009) “The Purpose of a Business is to Create a Customer…who creates
customers” (1) and it has become evident that through the topics mentioned in this piece, it always
comes back to consumers sharing and creating new customers.

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 References

1. Marks. O. (2009) ZDnet. Available at: http://www.zdnet.com/blog/collaboration/the-purpose-

of-a-business-is-to-create-a-customer-peter-drucker-centenary/1049 (accessed 6 March 2011)

2. Neff. J (2010) Ad Age Digital. Available at: http://adage.com/article/digital/advertising-

facebook-biggest-crm-provider/145502/ (accessed 6 March 2011)

3. Rappaport, Stephen D (2010)’Putting Listening to Work The Essentials of Listening , Journal

of Advertising Research, Business Source Premier [online]. Available at:
http://search.ebscohost.com.libgate.library.nuigalway.ie/login.aspx?
direct=true&db=bth&AN=49462758&site=ehost-live&scope=site

4. Hennig-Thurau T, Edward C, Malthouse et al (2010)’The Impact of New Media on Customer

Relationships’, Journal of Service Research, Business Source Premier [online] Availabile at:
http://jsr.sagepub.com/content/13/3/311.full.pdf+html

5. Halpern Lanz L, Wiener Fischhof B, Lee R (2010) ‘How Are Hotels Embracing New Media
in 2010’, HVS, Business Source Premier [online] Available at:
http://web.ebscohost.com.libgate.library.nuigalway.ie/ehost/pdfviewer/pdfviewer?
hid=111&sid=6409a018-b165-44fc-ac8e-64ac62136bd3%40sessionmgr114&vid=2

6. Chacklsfield M (2011) TechRadar. Available at:

http://www.techradar.com/news/internet/facebook-launches-facebook-deals-in-the-uk-
924890#ixzz1G0wOIg5S (accessed 5 March 2011)

7. Zeisser, Michael (2010)’Unlocking the elusive potential of social networks’, McKinsey

Quarterly, Business Source Premier [online]. Available at:
http://web.ebscohost.com.libgate.library.nuigalway.ie/ehost/detail?hid=104&sid=8ad16087-
24cb-4fa1-9212-
7ab046846400%40sessionmgr110&vid=2&bdata=JnNpdGU9ZWhvc3QtbGl2ZSZzY29wZT
1zaXRl#db=bth&AN=52645602

8. Heinz UK Facebook Page (2011) Available at: http://www.facebook.com/HeinzKetchupUK

(Accessed: 8th March 2011)