Social media use by businesses

Social media use by businesses includes a range of applications. Although social media accessed via desktop computers offer a variety of opportunities for companies in a wide range of business sectors, mobile social media, which users can access when they are "on the go" via tablet computers or smartphones, benefit companies because of the location- and time-sensitive awareness of their users. Mobile social media tools can be used for marketing research, communication, sales promotions/discounts, informal employee learning/organizational development, relationship development/loyalty programs, and e-commerce.
E-commerce businesses may refer to social media as consumer-generated media (CGM). A common thread running through all definitions of social media is a blending of technology and social interaction for the co-creation of value for the business or organization that is using it. People obtain valuable information, education, news, and other data from electronic and print media. Social media are distinct from industrial and traditional media such as newspapers, magazines, television, and film as they are comparatively inexpensive marketing tools and are highly accessible. They enable anyone, including private individuals, to publish or access information easily. Industrial media generally require significant resources to publish information, and in most cases the articles go through many revisions before being published. This process adds to the cost and the resulting market price. Originally social media was only used by individuals, but now it is used by both businesses and nonprofit organizations and also in government and politics.
One characteristic shared by both social and industrial media is the capability to reach small or large audiences; for example, either a blog post or a television show may reach no people or millions of people. Some of the properties that help describe the differences between social and industrial media are:
Community media constitute a hybrid of industrial and social media. Though community-owned, some community radio, TV, and newspapers are run by professionals and some by amateurs. They use both social and industrial media frameworks. Social media has also been recognized for the way they have changed how public relations professionals conduct their jobs. They have provided an open arena where people are free to exchange ideas on companies, brands, and products. Doc Searls and David Wagner state that the "...best of the people in PR are not PR types at all. They understand that there aren't censors, they're the company's best conversationalists." Social media provides an environment where users and PR professionals can converse, and where PR professionals can promote their brand and improve their company's image by listening and responding to what the public is saying about their product.
Impact of the Internet on Business Landscapes.
The increased use of the internet has had significant impact upon the competitive structures of the United States economy by differentially impacting small and large businesses. Studies indicate that the primary benefits of access to the internet for small businesses are the direct and indirect network effects, lower search costs and price dispersions. The primary drawbacks are limited interaction with consumers and increased expenditures.
There are multiple reasons to encourage more competition through small businesses. In particular, small businesses allow for more consumer benefits which can result in more egalitarian distributions of income, creation of more jobs and an expanded middle class.
According to the research by McKinsey Global Institute, the internet has become the driving force behind GDP growth in developed economies over the past 5 years, accounting for a 21 percent increase in GDP. The internet is considered a two sided market with indirect and direct network effects. Direct network effects are described as the utility of a service increasing as the amount of users increases. Indirect network demand for two or more users. They are defined when the value of one client group increases as another user based group joins the application.
Smaller businesses thrive with indirect network effects because they encourage more buyers and sellers. The increased numbers of participant on one side of an online business leads to an increase on the other market side. Direct network effects, on the other hand, are related to the size of the user base and thus favor large companies. For example, authors Haucap and Heimeshoff studies on internet-based dominant services demonstrate that in the case of telecommunication networks like Skype, Facebook and LinkedIn, the utility that consumers derive depend on the presence of other users.
One industry that the access to the internet has affected is the newspaper industry. The news industry is in competition with the online news media more broadly. According to the authors, Jeon and Nasr discussion, 57 percent of newspaper readers now turn to digital sources for their news information. Although this study states that the presence of the internet has negatively impacted the newspaper industry, it also demonstrates how small businesses have undermined large news monopolies. Because large businesses gather their news information from smaller news companies, it allows readers of these articles to navigate to these small companies websites. This creates more consumer interaction and ambition for high quality news for smaller businesses.
Search costs are defined as the costs of looking for information. It is easier to discover and compare information through the internet. Lower search costs allow consumers to gather a range of prices for the specific product. This reduces price dispersion. The internet supports consumer spending by providing different retailers who produce a variety of products and a variety of price dispersion. These show that lower search costs support a more competitive structure because it is easier to find unique and rare products through the increase of firms presence on the internet.
The drawbacks for small businesses include limited interaction between business and consumer and very high expenditures. The New York Times writes an article about a grocery retailer, "Holiday Market", that is labeled as a small business in Detroit. The stores revenue has increased by 20 percent because of the addition of online shopping for customers. However, although profit was booming there were still some logistical challenges for this small grocery retailer to have a presence online. One challenge was the expenses. The owner describes how expensive it was to create space inside his store to keep his online orders cold and fresh. He even had to hire more employees to shop in-store for the online orders because of the increasing demand from customers online.
Performance benefits.
There are six channels by which social media resources can transform into business performance capabilities:
There are four tools or approaches that engage experts, customers, suppliers, and employees in the development of products and services using social media. Companies and other organizations can use these tools and approaches to improve their business capacity and performance.
Monitoring, tracking and analysis of consumers.
Companies are increasingly using social media monitoring tools to monitor, track, and analyze online conversations on the Web about their brand or products or about related topics of interest. This can be useful in public relations management and advertising campaign tracking, allowing the companies to measure return on investment for their social media ad spending, competitor-auditing, and for public engagement. Tools range from free, basic applications to subscription-based, more in-depth tools.
Social media tracking also enables companies to respond quickly to online posts that criticize their product or service. By responding quickly to critical online posts, and helping the user to resolve the concerns, this helps the company to lessen the negative effects that online complaints can have about company product or service sales. In the US, for example, if a customer criticizes a major hotel chain's cleanliness or service standards on a social media website, a company representative will usually quickly be alerted to this critical post, so that the company representative can go online and express concern for the sub-par service and offer the complaining person a coupon or discount on their next purchase, plus a promise to forward their concerns to the hotel manager so that the problem will not be repeated. This rapid response helps to show that the company cares about its customers.
The "honeycomb framework" defines how social media services focus on some or all of seven functional building blocks. These building blocks help explain the engagement needs of the social media audience. For instance, LinkedIn users are thought to care mostly about identity, reputation, and relationships, whereas YouTube's primary features are sharing, conversations, groups, and reputation. Many companies build their own social "containers" that attempt to link the seven functional building blocks around their brands. These are private communities that engage people around a more narrow theme, as in around a particular brand, vocation or hobby, rather than social media containers such as Google+, Facebook, and Twitter. PR departments face significant challenges in dealing with viral negative sentiment directed at organizations or individuals on social media platforms (dubbed "sentimentitis"), which may be a reaction to an announcement or event. In a 2011 article, Jan H. Kietzmann, Kristopher Hermkens, Ian P. McCarthy and Bruno S. Silvestre describe the honeycomb relationship as "present[ing] a framework that defines social media by using "seven functional building blocks": identity, conversations, sharing, presence, relationships, reputation, and groups".
Social authority.
Social media marketing becomes effective through a process called "building social authority". One of the foundation concepts in social media has become that you cannot completely control your message through social media but rather you can simply begin to participate in the "conversation" expecting that you can achieve a significant influence in that conversation. However, this conversation participation must be cleverly executed because although people are resistant to marketing in general, they are even more resistant to direct or overt marketing through social media platforms. This may seem counterintuitive but it is the main reason building social authority with credibility is so important. A marketer can generally not expect people to be receptive to a marketing message in and of itself. In the Edelman Trust Barometer report in 2008, the majority (58%) of the respondents reported they most trusted company or product information coming from "people like me" inferred to be information from someone they trusted. In the 2010 Trust Report, the majority switched to 64% preferring their information from industry experts and academics. According to Inc. Technology's Brent Leary, "This loss of trust, and the accompanying turn towards experts and authorities, seems to be coinciding with the rise of social media and networks."
Market Research.
Social Media has had a significant impact on businesses in terms of market research. As a result of the changes in consumer communication habits, due to the rise in the use of social media platforms, traditional research methods have become less effective. Long established methods such as telephone and email conversations, used by businesses have begun to decline in terms of quality and ability to reach customers when attempting to gain opinions and insights. However, this has had many positive implications. New and innovative market research methods have been formed in replacement which better suit the preferences of the modern consumer. 
More outdated market research methods such as focus groups and surveys have the disadvantage of being very time consuming and expensive. However social media offers a new accessible method which has limited costs when attempting to communicate and gage the opinions of a target market. When making a potential purchase, customers will often turn to social media for more information and advice from brands and other customers. Therefore, this makes social media essential for many people when making decisions. Facebook and Twitter provide the opportunity for customers to interact and find out more information on products and services while simultaneously providing market research material. These interactions create lasting relationships between consumers and brands. From this communication, viewpoints and queries can be used to understand a target market better. Using social media as a tool when conducting market research helps create research strategies that can facilitate efficient and powerful results to improve business operations.