1.0 CHAPTER ONE: INTRODUCTION
1.1 Background of the study
Numerous studies show that the consumers, particularly the consumers that are aged between 18-30, are more likely to buy products that are promoted or rather reviewed by an influencer. This, therefore, supports the trend of consumers increasingly turning to social news feeds for gift ideas, with 49% of global surveyed shoppers agreeing that Facebook and Instagram are extremely influential when it came to shopping during the festive season. Moreover, the influence of such platforms reflects the upwards trend in global purchasing conversions made on mobile devices, surpassing those on desktop globally. Furthermore, nearly 40% of global surveyed shoppers agreed that when it came to the festive shopping season, their mobile device allowed them to make a more informed purchasing decision.
This could be due to the influence of social media news feeds that include convenient shopping ads, allowing for an easy click-through-to-purchase option (Ananda, Hernández-García, & Lamberti, 2016). Additionally, it is important to note that, in an age where consumers prefer to make their own purchasing decisions, influencers are quickly becoming the most powerful word-of-mouth marketing tool for brands. As a result, 92% of consumers are turning to the people they know for referrals, above any other source, generating twice the sales of purchasing through paid advertising. Thus, with this in mind, it’s essential for brands to understand and identify the right influencers for their target consumer that will generate the highest return on investment.
1.2 Problem statement
It is essential that brands ensure their campaigns are appealing to a variety of micro-influencers that can offer a range of messages to relay to audiences. As 2018 brings new targets and potential opportunities for businesses in the advertising space, it’s clear that Christmas 2017 lived up to its reputation as being one of the most competitive, and therefore expensive times of the year for brand advertising, in which marketers were tasked with solving the annual question of how to efficiently spend their budget over the festive period. Admittedly, influencers are now an integral part of the marketing mix for brands wanting to create high quality content and appeal to their target audience, ultimately helping to generate sales. Further, influencer marketing presents a unique opportunity for cost-effective advertising that was none more apparent than during the festive season, with half of UK young adults making purchases directly promoted by an online influencer.
1.3 General objective
This section seeks to present the general objective of the study, which is the impact of influencers on customer behavior in the luxury market and the rise of micro-influencers.
1.3.1 Specific objective
The following are the specific objectives of the study:
- To identify the relationship between influencers and customer behavior in the luxury market.
- To determine the relationship between influencers Customer satisfaction in the luxury market
- To critically evaluate the ‘Impact of influencers on customer behavior in the luxury market
- To examine how customers perceive influencers on customer behavior in the luxury market.
1.4 Research questions
The following questions guided the study:
- What is the relationship between influencers and customer behavior in the luxury market?
- What is the relationship between influencers Customer satisfaction in the luxury market
- What is the impact of influencers on customer behavior in the luxury market?
- How do customers perceive influencers on customer behavior in the luxury market?
1.5 Relation of the study
The study is important since it would give insight to business owners on how they can enhance their business through the use of influences. The study would also help in addicting the scanty scholarly sources.
2.0 LITERATURE REVIEW
2.1 Introduction
This section presents various literature on the impact of influencers on customer behavior in the luxury market and the rise of micro-influencers.
2.2 The rise of micro-influencers
Micro-influencer is considered to be an extremely rewarding tool in marketing which drives approximately 60% campaign engagement rates, and are deemed to be effective in the macro influencers in every engagement. In the today market, 82% of purchasers take recommendations from their favorite micro-influencers, according to research from Expertize (Stokinger, & Ozuem, 2014). These can have an extremely high impact on marketing campaigns, thanks to the content they create, how they are trusted among their followers, and how they are not limited to one subject area.
Also, they can be found across a range of different verticals that can impact a customer’s decision, including food, travel, beauty, and homewares. Originally developed on Instagram, micro-influencers, with a following up to 100 thousand, have been known to drive more engagement than celebrities do, due to a more intimate and trusting relationship with their followers (Brown, & Fiorella, 2013). Furthermore, they are progressively targeted to the preferred audiences. Compared to the celebrities, macro influencer works faster to get to the heart of the desired target in the current market.
Many brands interpret big numbers to mean big results, with no consideration for whether they are able of generating good, engaging content (Shukla, 2011). Brands who operate on big budgets can work with a small handful of celebrity influencers with an individual following of over 250 thousand, but a call to action is much less persuasive when it is directed at a large audience. However, the persuasion drops as the audience size increases.
2.3 A successful influencer campaign
With influencer marketing being the fastest growing and most cost-effective channel for brands wanting to promote their goods and drive sales, it is essential that brands ensure their campaigns are appealing to a variety of micro-influencers that can offer a range of messages to relay to audiences. Influencer marketing agencies can be extremely cost-effective by ensuring a brand’s campaign is integrated across paid and owned media, helping to maximize value from their spend and reinforce existing conversations that influencers have started. Brands have missed opportunities when they’ve simply tried to tick the influencer marketing box, with no consideration of how content generated by influencers can serve alongside their wider marketing strategy (Shukla, 2011). As a result, a carefully managed and executed influencer campaign can extend your reach and build a wider audience, with the best-recruited influencers, which is ever-more crucial for 2018 and a growing commerce calendar.
2.4 Targeting micro-influencers
With 2.7 billion users worldwide, social media opened up new ways for organizations to reach the consumer. This can be done through, for example, banner advertisements or creating brand pages on the different social media platforms. However, like Ananda, Hernández-García, and Lamberti (2016) state in ‘The uninvited brand,’ consumers are not always happy to see brand communications appear in their feed, as social media was created for people and not to sell products. Furthermore, the use of ad blockers is becoming more popular as the number of devices that use ad blockers has grown to 615 million in 2017, which makes it even harder to approach the consumer online and waiting for them to visit the brand page seems not to be (Wiedmann, Hennigs, & Langner, 2010). Therefore, a lot of organizations are using influencer marketing already, as 86% of marketers stated that they invested in influencer marketing in 2016. Another sign that influencer marketing is gaining in popularity is the emergence of ‘influencer agencies’ like ‘the Circle,’ that connect brands with influencers.
According to Peck, Christopher, Clark, and Payne (2013), Instagram is the social media platform with the highest engagement measured as comments and likes per post. Furthermore, with 800 million monthly active users measured in September 2017, it has doubled in two years’ time and is currently the fastest growing social media platform. Furthermore, Instagram is a social media platform where influencer marketing is thriving. However, between the numerous social media studies, there do not appear to be a lot of studies that investigated Instagram separately, let alone influencer marketing on Instagram (Solomon, Russell-Bennett & Previte, 2012). A frequently mentioned reason for the effectiveness of using social media influencers as a marketing communication strategy is that consumers perceive them to be a credible source. However, there is a lack of research that addresses the credibility of social media influencers. Furthermore, the Federal Trade Commission in the U.S. created a law that requires brand endorsers to reveal third-party influence.
Although there have been numerous studies that examined a number of source credibility, most of them focus on advertisement effectiveness in traditional media. Therefore, this study aims to clarify what the influence of disclosing a sponsor in an Instagram post is regarding the credibility of the influencer, together with how such a disclosure affects the overall effectiveness of Instagram posts. Moreover, Brown and Fiorella (2013) postulate that the arrangement of color is an essential task for advertisers. In advertising research, there have been some studies that addressed the influence that the manipulation of the dimensions of color (hue, brightness and saturation) can have on consumer attitudes and purchase intentions. However, the number of studies in this area is still limited and there is a need for more research in other contexts than print advertising. Furthermore, Instagram is especially focused on the visual, as it is about users sharing their photos and videos. For that reason, it is essential to find out more about what impact certain visual elements like color may have. Therefore, the current study objectifies to elaborate on how social media influencers can apply the manipulation of color characteristics to increase effectiveness of Instagram posts.
2.5 Social media marketing (SMM)
A frequently used definition of social media is provided by Brown and Fiorella (2013), who describe it as a group of Internet-based applications that build on the ideological and technical foundations of Web 2.0, and that allow the creation and exchange of user-generated content. Web 2.0 is the current condition of online technology compared to the early Web, typified by improved communication channels and greater user interactivity and collaboration. As the use of social media increases rapidly, not only existing social networkers, but also business and governmental organizations are starting to use them as communication tools. They appear in different kind of forms with the inclusion of weblogs, social blogs, microblogging, wikis, podcasts, pictures, video, rating and social bookmarking. Different from individual social networkers, organizations actively use social media for advertising and marketing as it provides a way to perform these activities with less cost and effort than before. Furthermore, as the amount of social media users is 2.7 billion, which is more than two third of all internet users, nowadays social media is the place where the consumer is and 10 can be reached. Therefore, brands created their own accounts on Twitter, Facebook, Youtube and other platforms.
More importantly, SMM is typically characterized by its two-way communication, which means that the interactivity between the brands and the customer has significantly increased, and replaced the old one-way communication (Peck, Christopher, Clark, & Payne, 2013). This increased interactivity means that companies now better listen to their customers and in this way brands and customers work together to create new products (Shukla, 2011). Furthermore, an important development is that social media has transformed consumers, in a sense, that they have become marketers and advertisers themselves. They are sharing and exchanging online information regarding companies, products, and services.
Importance of influencers on customer behavior in the luxury market
Influencers helps the company to target the unique and specific customers especially the professionals in the market. The organization appreciates the fact that over the year of establishment, the company has been able to realize most of the objectives and goals it had formulated. The most significant thing is that the individuals getting the services, are satisfied with both the products and employees relation. Further firms was able to identify its primary target in the market, and this knowledge has been relevant in the strategy and development of the products obtained. As stated earlier, the central target market of the company mainly includes the professional who prefers the latest fashion in the industry.
Moreover, influencers help the company targets the customers who have a great preference for an extra and specific feature within the industry. Therefore, the company has both the pre and postpaid services to facilitate the smooth operation of the company. On the other hand, the firm will belive its target market to broaden in the future as the clients are becoming more aware of the services and products via the internet and the company website. Further, the company ensures that they have an effective and sustainable relationship with their customers. As a result, communication has been a core ingredient in ensuring the success of the company. The organization has implemented websites pages and integrated the website with the communication system in the company to ensure that the company is continuously in touch with the clients. Also, the feedback that the company obtains is used in ensuring that all the concerns are addressed and that all the clients are satisfied with the products they offer. Moreover, the company has implemented the house delivery. This ensures that the clients receive their products without many efforts.
Also, influencers help the company will strive to produce the best products to ensure that the company remains relevant and achieving the sustainable competitive edge. It is more important to note that, the profitability of the companies in this industry rely on their ability to provide the high-quality products, secure a prime location to set their company as well as drive store traffic. Large companies have the benefit of the small organizations especially those that are start-up such as Spree Watches Company since having adequate sources of funds to market and finance their processes. Consequently, Spree Watches Company will have to compete effectively through offering specialized services, pursuing the native market, plus providing the memorable client’s experience. This industry over the year has been increasing in Ghana with the increase of the professionals and with the development of new fashions in the market. Thus, the leading organizations in this industry generate above 80% of the total summation of their sales in the market.
Most firms anticipate gaining profit from the industry because of the numerous factors. In the beginning, the company has witnessed continuous growth in the disposable profits as well as client confidence within the economy of the country. Presently, the consumers are ready to spend more cash in the shop to attain the best products from the company. Despite the developing demands, the company expects an intense competition is anticipated in the industry because of the developing number of the players pursuing to benefit from the growth in the size of the market available. Therefore, firms will make sure that it avails innovative services that are exceptionally priced. Besides, the organization will have the variety of services and products satisfying the requirements of the health-conscious items.
Companies, through influencers will apply an approach of the total market service that entails the provision of the unique services and products attracting the complete spectrum in the industry as well as providing the conducive environment for all the customers. Further, the firm aims to provide a memorable experience not just selling their product. Also, the firm intends to be part and parcel of the community of their clients. This strategy, therefore, presumes that every person is a potential customer and ensures that the market experience a tremendous development in future. Also, it suggests that the best method to drive sales is by selling to the soft needs of the clients.
Most thriving firms evolve with the demand of their consumers. Customers from the major centre of any business. Without customers, there is no successful business. It is for this reason recognizing and making one’s customer comfortable is the objective of most organizations. Companies appreciate its customers using various ways. One of the ways that firms uses to get to customer’s country is by identifying customers’ insight and tastes. The company has also opened up stores in several countries so that the consumer can readily get the products they want available. In addition to the products that the business sells, the stores sell other related products such as digital cameras, software titles, and camcorders. Some companies take pride in forming and building attracting and pleasing experience with its consumers with products which are stylish. Recently, the company released new products less expensive.
The company is trying to capture the most market share among its customers substantially. Spree Watches will be committed to introducing better personal computing services to its customers by producing innovative hardware and software as well as internet offerings. The company rolls programs that are service based on the comments, complaints band questions they get from customers. The structure of the industry within its external factors and attractiveness is purely based on the purpose of consumer’s satisfaction as well and familiar customer elements of the business.
Additionally, the corporation’s various related software, peripherals, networking solutions, services as well as digital applications and content. Overall, the business atmosphere has become extremely competitive and hence it is crucial for any company gaining the entry to the market to develop and implement a strategic plan on the market especially concerning customer needs. By definition, the price elasticity of demand can be described as a measure of the association between a transformation in quantity needed for certain products and an adjustment in its price. Therefore, effective company’s cooperation produces new goods and a steady supply of their products. The products are less expensive as well as customer friendly. Factors that influence productivity Growth can be said to be the appropriate internal progress of a business. Notably, active firms Company has made tremendous steps in trying various strategies to enter new. Also, the company should ensure job satisfaction to its employees.
3.0 CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction
This section consists of data collection, method, research design, and participants, sampling methods, data analysis technique, data collections instruments and ethical concerns. This section will provide the research methodology that will be adopted for the study. The chapter will begin with an introduction, nature of the survey, justification for taking systematic review approach, the collection of data.
3.3 Research design
The study mainly employed questionnaire approach and partly relied on the quantitative approach. Research design defines how the data will be collected and analyzed. The study employs descriptive survey. The descriptive survey described using variables and their relationship.
3.4 Sampling Technique
The research will employ purposive sampling, where the researcher will look for literature that is relevant to the study. The participants would include 30 online users. They would be given the questionnaire to fill on their views concerning the impact of influencers on customers’ behavior.
3.5 Instrumentation
The study mainly employed quantitative research design where both primary and secondary sources were used. The primary data was gathered through the questionnaires which were distributed to 30 online users. The questionnaire was divided into four parts to obtain information from the respondent. The first part contained the general information about the respondent; the second part gathered information about social media platforms. The data were analyzed using frequency distribution tables. Further, the secondary sources employed in the research, which include books and journals, would be obtained from online and public libraries. The research was done on electronic databases online libraries, peer-reviewed journals and other materials that relate to the topic. The selection process will begin by choosing articles distinguished scholars to ensure that the research findings are accurate. To avoid choosing irrelevant literature, formulation of main words that are essential to research.
3.6 Data collection
The data collected will be subjected to critical analysis. Different theories will be adopted in analyzing quantitative data. The selected literature will be compared information contained will keenly read to check for their relevancy. The study partly employed literature search. This was chosen because the research is readily available in libraries as well as in online databases.
3.7 Data analysis
The quantitative data were analyzed through statistical analysis. Quantitative data were analyzed through content analysis. The qualitative data were put into themes and analyzed. The results were summarized in tables and charts.
3.8 Summary of the methodology
The methodology considered the relevant ethical concerns of the collection of data. Ethical concerns are essential in researching since it guides and gives the rules that the researcher needs to follow. Also, the responses found should be confidential, and should only be for the purpose of academics. Finally, the study will use literature that was published not later than five years ago. The respondent was not allowed to reveal their names. Pseudonyms were used.
References
Ananda, A. S., Hernández-García, Á., & Lamberti, L. (2016). N-REL: A comprehensive framework of social media marketing strategic actions for marketing organizations. Journal of Innovation & Knowledge, 1(3), 170-180.
Brown, D., & Fiorella, S. (2013). Influence Marketing: How to create, manage, and measure brand influencers in social media marketing. Que Publishing.
Peck, H., Christopher, M., Clark, M., & Payne, A. (2013). Relationship marketing. Taylor & Francis.
Shukla, P. (2011). Impact of interpersonal influences, brand origin and brand image on luxury purchase intentions: Measuring interfunctional interactions and cross-national comparison. Journal of world business, 46(2), 242-252.
Solomon, M., Russell-Bennett, R., & Previte, J. (2012). Consumer behavior. Pearson Higher Education AU.
Stokinger, E., & Ozuem, W. (2014). Social media and customer retention: Implications for the luxury beauty industry. Computer-mediated marketing strategies: Social media and online brand, 200-222.
Thomson, M. (2006). Human brands: Investigating antecedents to consumers’ strong attachments to celebrities. Journal of marketing, 70(3), 104-119.
Wiedmann, K. P., Hennigs, N., & Langner, S. (2010). Spreading the word of fashion: Identifying social influencers in fashion marketing. Journal of Global Fashion Marketing, 1(3), 142-153.
