The potential for marketers to exploit the emerging trend of online social networking groups

Marketing Paper

‘The potential for marketers to exploit the emerging trend of online social networking groups’


This paper aims to analyse the recent trend of online social network services and its implications from a marketing perspective. A limited amount of research has been done on the subject of social networking as a whole, but its potential for marketers apart from viral marketing has not been explored. The amount of literature available on the subject is thus also limited and restricted largely to newspaper articles and papers by blogging evangelists. This paper includes a survey conducted among cosmopolitan elite which represent the typical audience which has potential to be targeted through social networking services and analyses their trends and behaviours. Our findings are highlighted on the basis of the use of these services on counts for market research, advertising and promotion and propagation marketing. The limitations and implications of the findings are chronicled with an Indian marketer’s perspective based on the trend and internet usage patterns of the internet user base.



In the recently emerged trend of online social networks, an initial set of founders sends out messages inviting members of their own personal networks to join the site. New members repeat the process, growing the total number of members. [1] The type of network we are studying comes under the category of ‘Social networking services (SNS)’, which are oriented towards social communities and/or dating, and where users typically fill in personal information, add contacts, share information, and join communities of their interest.

Our objective is to analyse this trend of online SNS and its potential for marketers in the following activities –

a)      Segmentation, Targeting and Positioning

b)      Product Promotion by identifying and targeting influencers and trendsetters

c)      Media Planning

d)      Consumer Research

Literature Review


Social Networks - A social network is a map of the relationships between individuals, indicating ways in which they are connected through various social familiarities ranging from casual acquaintance to close familial bonds. The analysis of social networks (called network theory) has emerged as a key technique in modern sociology, anthropology and organizational studies, as well as a popular topic of speculation and study.

Internet social networks - Through the 1990s, there was a recurring piece of pop-anthropology verging on an urban myth, referred to as 'six degrees of separation'. Developed on this theme, online social networks became popular in 2003 with the popularity of such websites as Friendster, and LinkedIn. There are over 300 social networking sites (see Appendix 5) Search engine Google launched Orkut on 22 January 2004. Kibop, a Spanish- and Portuguese-language social network, also debuted in 2004.

In these communities, an initial set of founders sends out messages inviting members of their own personal networks to join the site. New members repeat the process, growing the total number of members in the network. Sites then offer features such as automatic address book updates, viewable profiles, the ability to form new links through "introduction services," and other forms of online social connections. Further evolution of this idea is the Semantic Social Network, which interconnects both people and weblogs, such as StumbleUpon and Funchain.

Christopher Allen has classified these into two primary categories in his papers, as -

BOS are already maintained with the purpose of individuals who desire to grow their business contacts as an extension of real world networking. SNS however, should be of primary interest to marketers as it provides immense scope in a number of areas.

Objectives of the Review

Our purpose is to analyse this trend of online social networking systems (SNS) and its potential for marketers in the following areas –

a)      Segmentation, Targeting and Positioning

b)      Product Promotion by identifying and targeting influencers and trendsetters

c)      Media Planning

d)      Consumer Research for Customer Relationship Management

Works under Review

Seminal Works on Segmentation and Target Marketing

The term "segmentation" appears to have been originally introduced by Smith (1956). He referred to a single-product marketer, who could either aim to secure a "share of a broad and generalized market" (product differentiation) or aim for "depth of market position in the segments that are effectively defined and penetrated" (segmentation).

The idea of segmentation caught the imagination of marketers and was soon incorporated in the orthodox canon. In 1967, Kotler described three kinds of marketing strategy: undifferentiated, differentiated, and concentrated. Briefly stated, the principles of target marketing are to identify the major market segments, target one or more of these, and tailor the marketing effort towards each particular segment.

We may thus take the efficacy of STP marketing as a given, both due to the nature and agreeability of the leading personalities on the subject of marketing and due to the established use in brand building by the marketing departments and advertising agencies of almost all established brands worth their salt worldwide.

Works on the Problems of Segmentation in the Current Information Age

Despite the well-documented benefits which segmentation offers, businesses continue to encounter implementation difficulties. Marketeers are always concerned about the cause of these problems and how they might be overcome. These concerns are addressed in the form of three questions: Is segmentation a good tool? If segmentation is such a good tool, why does it sometimes fail? What can be done to reduce the chance of failure?

Dibb S. in his paper on ‘Marketing Intelligence & Planning’ concludes by suggesting that if marketers are to overcome their segmentation implementation difficulties, they need practical guidance in all stages in the segmentation process. There is currently a gulf between the priorities of academics and practitioners carrying out segmentation.

In ‘Internet market segmentation - an exploratory study of critical success factors’ by Tom M.Y. Lin; Pin Luarn; Peter K.Y. Lo (published in Marketing Intelligence & Planning, 1 June 2004) they agree that market segmentation is a topic that has already produced significant results in conventional marketing research but appears to be still novel in the field of Internet marketing. Prior studies on segmentation on the internet have been on data mining such as ‘Mining the web for business intelligence’ (published in The Journal of Database Marketing & Customer Strategy Management) where they advocate that “Information online provides good opportunities for marketers to understand and to acquire potential customers through the internet. The essence of web mining is to convert unorganised text information into customer intelligence stored in a database.”

Works on Social Networking Services

Being a fairly recent phenomenon, there are almost no books or research articles published on social networking services, and the potential for marketers is an entirely unexplored area. Thus, when looking into this uncharted territory, one is forced to either look upon preceding works on related theories and adapt their analysis to our needs, or to rely on popular literature such as newspapers and magazines and the internet. This is, of course, subject to the limitation that the information they provide will be of very limited use. However, they are helpful as providers of information about recent trends, discoveries or changes and while care is taken to ensure relevancy and authenticity of the material, it must be understood that such resources are of a largely subjective nature.

Roger Clark in ‘Very Black Little Black Books says, “The new dimension that social networking services bring is that they entice users to disclose personal data about their friends, business contacts or acquaintances.” The author sees this as a disturbing feature, requiring careful analysis. Our purpose, however, is not to analyse the implication on privacy and social aspects of the phenomenon but to assess its potential from a marketing perspective. This wealth of personal data makes for a plethora of knowledge databases which can be exploited for the effective profiling of target audiences and consumers (current and potential) on the basis of their demographics, psychographics and behavioural trends.

Metcalf's Law which states that the value of network increases as the square of the number of users is fundamentally applicable for computer networks but may be extended to social networks as well.  Metcalf's law implicitly suggests that adoption should be extroverted, because each individual added to a network (in this case, of individuals in the social network service) creates enormous incremental power to the network as a whole. From a marketing point of view, this can be understood in terms of the use of social networks to further word-of-mouth advertising and product promotion.

Conclusions and Potential for Marketers 


The problem of effective segmentation and identifying individuals of the target segment is essentially solved as SNS users fill in detailed profiles including demographic variables such as age, location, occupation, education, gender, religion, ethnicity, marital status. Other characteristics for effective segmentation including attributes like sexual orientation, political view, fashion, tastes and preferences etc. are also part of standard profiles.

The typical user also fills in information such as their passions, activities, sports, ‘hangouts’ etc. which make for ideal psychographic segmentation.

Product Promotion by Identifying and Targeting Influencers and Trendsetters

The idea of product promotion through SNS is based on the fundamental premise of not relying on celebrities, editors or über-hipsters, but rather looks for Peer Influencers, an important yet elusive group. This is because of the high degree of vulnerability as well as the expense involved in celebrity endorsements and PR campaigns when compared with this approach. Influencers have been chronicled to typically motivate 70% of their friends to adopt a product, brand or idea.

Peer Influencers are not trendsetters necessarily, but they're the first within their circle to identify trends, products, brands and ideas and introduce them to their larger group of friends. They exist within different cultures and subcultures and typically influence more than one group since they have a broad range of interests and social circles.

According to a RoperASW/ report, 82% of those people in the US who influence the opinions and purchases of others go online multiple times each day. Plus, over 80% conduct product research online. Internet Worlds Stats estimates there will be 1.095 billion people online by the end of this year. A recent search showed that there as of December 6, 2006, Orkut has over 35.2 million subscribers, compared to 1 million in July 2004, and 2 million in September 2004.

John Lawlor - business blogging evangelist has affirmed that “SNS groupers and bloggers are, by their nature, trendsetters and influencers. Businesses that depend on a flow of timely and critical information to and from their customers and prospects need to explore how (this) can benefit their businesses.” Propagation Marketing is used to integrate something new, more quickly, more widely and less expensively. This sort of marketing is based on the criteria of behavioural segmentation and especially on the degree of acceptance of change. So, consumers identified as being very keen on new products can be activated to, in turn, stimulate other more reticent prospects.

Media Planning

Most SNS services have categories of information which include general, interests, professional and personal information and contact information. Interests cover books, magazines and newspapers read; favourite TV shows, movies, music; cuisines. Given the target segment, media planners can thus find the ideal channels to use to communicate to the consumers, in lieu of or in addition to advertising through the SNS community itself. This second possibility has looked at almost since the inception of SNS on the internet, such as in The San Fransisco Chronicle (Monday, November 29, 2004) “Potentially, (Google/Orkut) could display subject-related advertising next to the columns, as it already does with its e-mail”, a revenue-generating model which Google has refrained from till now, in spite of other noted SNS sites utilising the same post the publication of these articles.  

Consumer Research

Many of the Social Networking Services encourage the formation of communities which individuals can join based on their preferences and activities. A surprisingly large number of these communities are formed around brands themselves. For instance, Orkut has 9 communities for Coca-Cola lovers, including one for Diet Coke, and two regional communities (Brazilian Coke Lovers and Coke Drinkers in Spain). It also has a community of coca-cola haters. Such communities provide invaluable information about hardcore brand loyalists and their views and beliefs. These groups can provide a host of data and may even be moderated for research purposes through posts and if used effectively can provide research data for parameter ranking, advertising effectiveness studies and concept testing.

Survey Details

Sampling Method Used

Stratified Sampling: The population has been divided into two segments – users and non-users of social networking services. These two sub-populations are non-overlapping and may be assumed to be relatively homogenous within themselves, and taken since the type of information required and the analysis of the common questions is to be done on a separate basis.

Judgement Sampling: The units from the population are purposively selected. We have used judgement sampling in the second strata of the surveyed population, i.e. users of SNS. This is to get a more accurate representation of the strata since the number of surveyed individuals is relatively small.

Sample Size

The sample consisted of 117 non-users of SNS and 72 users of SNS who were chosen such that apart from their membership of an SNS, they belonged to a relatively homogenous group such that any significant divergence in their consumption or behavioural could be attributed to causes related to their use of SNS.

Questionnaire Design and Hypothesis of Findings

We have designed two sets of questionnaires directed each at users and non-users of social networking services. The objectives of the questions can thus be outlines as follows –

For Non-users of Social Networking Services

  1. Ascertaining internet usage and online habits of non-users
  2. Determining the reasons for non-membership, and deciphering the possibility of their conversion to users in the future to determine the rate of adoption of such services. We aim to thus establish if there are significant differences in their habits which would erode the mapping of SNS users consumption habits to the general population in similar Socio-economic class or target segments
  3. Analysing the potential of increasing membership by non-users based on their responses and determining factors that would lead to adoption of SNS by them.
  4. For the purpose of effective segmentation by marketers, we would require the members to provide information about themselves, their habits and behaviours, and social circles. Thus, the questionnaire is also designed to extract the amount and authenticity of information they would provide were they to join such groups.
  5. To find a correlation between their membership and their adoption patterns of a new product or service. This question is common to users and non-users and aims to ascertain the validity of the hypothesis that users of SNS are early adopters, trendsetters and influencers.

For Users of Social Networking Services

  1. Ascertaining SNS members’ usage and habits. This has been done on a variety of parameters including –
    1. The frequency of use of the service
    2. The amount of active time spent surfing, updating information, and building their network on SNS sites

This would enable us to roughly divide the members among active and no-active members based on their interest and activity levels. Based on this data, we hope to predict whether these services are simply a passing trend or fad (if a majority of the users simply join up but are not very active on the networks).

This would also help us divide the users on the basis of the level of activity. Significant differences in traits such as the degree of adoption of new products between active and non-active users may thus be attributed to these factors. Thus, we may arrive at a core target of active users for marketers to direct their efforts.

  1. Determining the primary factors which motivate members to use SNS.
  2. Extracting the amount and authenticity of information provided on the networks. Inadequate or inaccurate information would undermine the value of the responses on these sites and thus negate the potentiality of its use for accurate data analysis.
  3. The number of friends and communities on their network is a secondary measure of their activity levels on the SNS and moreover serves as a parameter for evaluating correlation between extroverted and gregarious individuals and their efficacy as trendsetters and influencers.
  4. To find a correlation between their membership and their adoption patterns of a new product or service to ascertain the validity of the hypothesis that users of SNS are early adopters, trendsetters and influencers.

Conclusions, Data Analysis and Findings

Segmentation, Targeting and