Chapter II

REVIEW OF RELATED LITERATURE

The purpose of this chapter is to provide a review of existing local and foreign literature

on the topic of influence of social media on the consumer preference.

Foreign Literature

According to Xia et al., (2007), the use of the Internet as an additional sales channel offers

traditional retailers opportunities to reach expanded markets while improving the efficiency of

their operations. Although the potential benefits of the online channel are clear, there are

significant variations in the scope and depth of online channel use among retailers.

According to Kotler (2009), the consumers interact continuously and informally with their

primary groups such as family, friends and co-workers and also belong to secondary groups such

as professional and religious groups that require less interaction. He also states that both types of

reference groups have a direct or indirect influence on consumers’ attitudes or behavior.

Schiffman and Kanuk (2004) states that the reference group influence on consumers’

decisions and their buying intentions may be strong and the consumers may highly be influenced

by opinion leaders who offer informal advice and information about a specific product or brand.

The consumers also perceive market mavens as a credible source, when they need knowledgeable

advice about a specialized product or product category expertise according to Feick and Price

(1987). Mangold and Faulds (2009) suggests that social media has important influences on every

stage of consumer decision making processes including information acquisition, brand awareness,

purchase behavior and post-purchase communication and evaluation.

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 According to Chung and Austria (2010), nowadays consumers trust more user reviews and

online consumer recommendations on social media websites rather than traditional media before

making a purchase decision. The consumers’ comments about a product on a social media platform

produce negative and positive virtual messages and these messages affect their purchasing

decision. So, social networks have become an important source for consumers who are seeking to

obtain product information and created a platform for them to share their opinions about products

and brands.

As per the research paper by Angella Jiyoung Kim, Eunju Ko in the Journal of Global

Fashion Marketing (2010) titled ‘Impacts of Luxury Fashion Brand’s Social Media Marketing on

Customer Relationship and Purchase Intention’, luxury fashion brands’. Social media marketing

is a significantly effective marketing medium. Specific results and corresponding implications are

as follows: Luxury brands’ social media comprise five properties: 1. Entertainment; 2.

Customization; 3. Interaction; 4. Word of mouth; 5. Trend

Local Literature

The results from TNS’s annual Marketing Monitor study across Asia Pacific highlighted

the centrality of social media for marketers — it ranked as the top element guiding the planning

process, as well as the top metric used to measure the performance of campaigns. According to the

study, which surveyed a total of 2,250 marketers in Asia Pacific, including 200 from the

Philippines, businesses are using a variety of sources to inform their marketing strategy. Insights

gathered through social media monitoring have finally overtaken more traditional metrics such as

market share data and brand tracking to become the most popular component used by marketers.

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The Top 5 metrics used by marketers in Asia Pacific, including the Philippines are: Social media

monitoring; Market share data; Brand tracking; What the competition is doing; Information from

media agencies.

The findings echo the changes happening in consumer behavior across the region. As

people become more connected via digital channels, brands are focusing on how they can

communicate with their customers in the online spaces where they are already spending time –

social. What’s more, for many mobile-first internet users across the country, social is the primary

reason for going online, and so it is a valuable environment for marketers to both connect with

their audiences and build a better understanding of them. Zoë Lawrence, digital director for Asia

Pacific for TNS, said: “It’s no secret that social has become an intrinsic part of our daily lives –

97% of connected consumers in the Philippines use social networks, switching between Facebook

and Google+ and Instagram as the top three channels. “This mass adoption of social provides

marketers with an array of sources when it comes to developing strategies and evaluating the

effectiveness of their marketing activity. As the digital ecosystem evolves, we will continue to

identify new ways to build insights. However, whatever the metric used, it’s important to ensure

marketers are monitoring the indicators that contribute to sales.”

The proliferation of the social activities in the social media platform in the Philippines

created an avenue for business entrepreneurs to take advantage of the opportunity to expand their

markets and to attract online consumers, thus social commerce has emerged as the new era of e-

commerce. The importance of social commerce has been widely explored in recent literature in

understanding the several factors influencing the intention of the consumer to purchase online.

However, there is a lack of studies here in the Philippines on how social interactions affect the

intention of the individuals to engage in social commerce specifically in a Facebook platform. The

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study aims to examine the social interaction of Filipino consumers as for how this would affect

their online purchasing behavior by conceptualizing the constructs of WOM communication and

observing other consumer’s purchases and examining their impacts on the intention to purchase,

actual purchase and post-purchase behavior. The study collected 125 responses from the surveyed

online consumers. The study resulted that the positive valence WOM and observing other

consumer’s purchases significantly affect consumers’ intention to purchase a product, leading to

the opportunity of actual purchase and sharing of product information with peers on social

commerce platform.

Social networks gave a big help to everyone, especially among the students, business man

and other members of the society. Businessmen have noticed also the value of social networks in

our life that’s why they used it to promote their products. Social marketing was often used at the

present time due to people used social networks frequently.

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