“Influence of Social Media on Consumer Perception

towards online Small and Medium Enterprises

(SME’s)”

Term Report

Arbina Memon

Ayesha Rehman

Madiha Narejo

Maria Sheikh

Supervised by:

Faisal Sheikh

MARKETING INTELLIGENCE

Shaheed Zulfiqar Ali Bhutto Institute of Science & Technology (SZABIST)

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 Acknowledgement

We would like to acknowledge the continuous support of our course facilitator Faisal Sheikh
for making this study interesting and knowledgeable.
His supervision and research knowledge allowed us to complete this independent study in a
professional manner. His constant support and advice led us to successfully conduct our
research and report our findings in a professional manner.

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 Abstract
This research aims to examine the influence of social media on consumer perception towards
online small and medium enterprises. Social media is one of the fastest growing networks and
is becoming a major tool of marketing for all businesses. Consumer perception is important
towards all retailers on how they see a specific enterprise and how social media affects their
perception. Our framework was developed through four attributes, convenience, trust,
information and customer relationship management and it was tested against consumer
perception of SME’s. Data was collected through survey (questionnaires) and focus groups.
The respondents of the survey and Focus group belonged to the age group of 18-40 years and
were approached by using convenience sampling. Data was collected from 384 respondents
and all the respondents belonged to Karachi, Pakistan. The study was descriptive in nature
where interpretivisim and positivism philosophy was used. Also mix-method was used to
analyze the information which was gathered from our sample size. The findings of the study
suggested that all four variables trust, information, convenience and customer relationship
management have a significant effect on consumer perception towards SME’s.

Keywords – Small and Medium Enterprises (SME’s), Social Media, Consumer Perception,
Impact, Stakeholders

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Contents
Chapter: 1 Introduction .......................................................................................................................... 4
1.1 Background ................................................................................................................................... 5
1.2 The problem .................................................................................................................................. 7
1.3 Purpose ......................................................................................................................................... 8
1.4 Research Questions ...................................................................................................................... 8
1.5 Research Objective ....................................................................................................................... 8
1.6Justification .................................................................................................................................... 8
1.7Limitations ..................................................................................................................................... 9
1.8 Scope ............................................................................................................................................. 9
1.9 Definition of Key Terms............................................................................................................... 10
Chapter 2 – Research Methodology ..................................................................................................... 11
2.1 Research Design .......................................................................................................................... 11
2.2 Procedure .................................................................................................................................... 11
2.3 Population ................................................................................................................................... 11
2.4 Sample and Sampling Method .................................................................................................... 12
2.5 Measurement / Instrument Selection ........................................................................................ 12
2.6 Variables...................................................................................................................................... 13
2.7 Hypothesis................................................................................................................................... 14
2.8 Plan of Analysis: .......................................................................................................................... 14
2.9 Software employed ..................................................................................................................... 14
2.10 Validity and reliability ............................................................................................................... 15
Appendix ............................................................................................................................................... 16

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 Chapter: 1 Introduction

1.1 Background
Internet is not only used as a source of information anymore but now as a medium for online
shopping as well. Ernst & Young conducted a study in 1998 which helped in identifying that
there are over 39 million individuals who shop online in 1998 (Ernst &Young). With the
growing use of internet,individuals are now looking at it in a more commercial way (Hennig-
Thurau et al., 2004). With time we can clearly see that it has become common in work place
and also become the only source of communication. Internet has proved to be the backbone of
any industry and now it isenabling companies to conduct business from anywhere at any time
at the most cost effective way (Chen et al, 2008). Internet has changed the way people do
business or even how they spend their leisure time. People are now very dependent on
technology and with the increasing globalization, connectivity is they to success for any
business. Internet is not only limited to the personal computers these days, as with the help of
cell phones people now are connected everywhere and at anytime.

In the current environment where technology prevails, businesses want to keep up to date and
keep on changing otherwise they might become obsolete, most business now include social
media as a way to market its products as it has become an important tool for promotion. (Abu
Bashar, Irshad Ahmed and Mohammad Wasiq, 2012). It is essential for every company to be
present on social media and reach out to its potential customers, and it can do that in the most
cost effective and reliable way, as social media is considered to be one of the ways to be do
mass communication. With time now we have observed that social media has brought about a
change in how marketers and users communicate. It is now very easy for a company or a user
to communicate with each other through the use of social media.People can now influence each
other by reviewing the product or influencing some ones decision about the product, and this
turns out to be very effective and reliable when it comes from the source directly, proving to
be word of mouth marketing for the company, and with time its organic effects can turn out to
become very profitable for any company. (Hennig-Thurau et al., 2004)

The usage of internet is growing in Pakistan, and one of the major factor which helps in this
growth is the use of smart phones, as now companies are penetrating in to the lower price bands
and introducing cheaper phones with more capabilities. Internet is now easily accessible for
everyone and has now become a main stream communication medium for small and medium

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size enterprises (SME). As small and medium size enterprises are usually new startups or are
local firms, they do not have the muscle to take the costly route of ATL communication which
can have heavy impacts on their profitability, therefore with the help of this medium, people
can reach out to a larger magnitude with very less amount of investment. People are now
opening up their own businesses and marketing themselves through social media as it’s cheaper
as compared to other forms of marketing but like any other product purchases, the success
mainly depends on user satisfaction and other such factors which would directly or indirectly
affect customers behavior online as discussed by Chen and Chou (2011). Social media has
proved to be one of the most efficient and the most effective way to market a product and reach
out to your customers, along with active interaction between the firm and the consumer.
Through researches and past trends we can clearly notice that in the last few years, there has
been a great effect of the companies on the online networks, because nowadays social media
websites are acting as a platform where the potential consumers and companies can come
together and engage with each other which helps the companies build relationships and
alongside helps the consumer gain confidence on the product that it want to buy or consume.
(Mersey, et al., 2010)

These days’ people are using several different online platforms to communicate and eradicate
the barriers with the use of podcasts, social networks, and blogs. These mediums are considered
highly reliable by any consumer who want to buy a product, as he or she is getting firsthand
information from another user / consumer. Platform like these are there for users to share their
ideas and experience about the product, service or a brand. (Kozinets, 2002)

The uniqueness & commonness of this industry has gained much popularity among both, the
customers and companies. It has also changed the ways how people think and perceive about
any product or service. Today social marketing/ digital marketing is an integral part of any
company’s marketing department, as it has revolutionized the practices like promotion and
branding (Hanna, Rohn and Crittenden, 2011). It has also made a mark on the consumers who
want to buy products online, as they have made the product available online as well as made
the information regarding it so common and easy that the consumer is now turning to social
media for a one stop solution. Post-purchase reactions such as dissatisfaction/ satisfaction is
also another area where the marketers are making the most out of, the positives here are used
to amplify the reach and create a positive buzz for its prospect consumers (Mangold and Faulds,
2009).

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Communication of brand / company and users help create a favorable or less favorable image
of other users who read information posted and consider them in the information or purchase.
Interactivity with target brand in social media is perceived differently by consumers depending
on the message they convey (Shin, 2008).

Social media includes social networks which can be defined as a website which brings together
millions of users from around the world on a website with similar interests for e.g. YouTube,
Twitter, Facebook, these social media websites are popular amongst all age groups and are
used as a form for marketing by companies and individuals (Sin, et al., 2012).Through these
social media websites, organizations are becoming more connected with their customers,
Facebook has more than 600 million daily users with over 1.5 million pages (Facebook 2013)
whereas on Twitter approximately 500 million tweets are sent in a day (Tweeter 2012).Studies
which have been conducted on the use of Facebook among SME’s found that Facebook is used
for various goals of the organization such as marketing, communication, sales, advertising,
innovation, problem resolution, customer service, human resources, information technology,
driving cultural change (Bhanot,2012), making it an important tool for SME's and through this
they can gauge a consumers perception and influence of others towards their product/service.
Due to the advantages that are attached with the whole network of social media and the service
model which helps in connecting companies directly to end-consumers, in a way which is cost
effective and timely, it has been noticed that over the period of these years since social media
has taken its place, the consumers perception and buying behavior of the consumers has
brought the industry to realize that social media is something that is here to stay and also
something which will most probably be the future of every industry. (Williams and Cothrell,
2000)(Kaplan and Haenlein, 2010).

1.2 The problem

In the current environment we are witnessing people using social media to promote their
products, with the introduction of Facebook, Twitter and Instagram, we are getting to see alot
of people opening up their own businesses and using it as a major tool to market their business.
Large organizations as well are changing their company strategies and focusing on social media
as compared to traditional marketing. They try to change a consumer’s perception about the
product or service as consumers user as a platform to voice their opinion about companies
which might be positive or negative. Once a user does that it might influence the opinion and
perception of others user’s as wellon social media due to which it has to be seen if social media

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actually influences a user’s perception regarding an SME who are using it to promote their
products and service.

1.3 Purpose
The purpose of our study was to find out if social media actually influences a consumer’s
perception regarding small and medium enterprises that use social media as way to promote
themselves and influence users to buy their product/service.

1.4 Research Questions

1. Is it convenient to purchase products from online mediums?

2. Do users actually believe the information shared on social media?

3. Do users trust social media as compared to other forms of marketing?

4. Does customer relationship management form a perception of customers when buying

online?

5. What more factors does consumers have in mind and what insights can be gauged when a
person buys through social media?

1.5 Research Objective

The main objective of this study indicates the following:-

1.To investigate if people feel that purchasing from online is convenient.

2.To determine if users actually believe the information shared online.

3.To analyzeif people actually trust it more than other forms of marketing.

4.To analyze if customers relationship management form a perception when customers buy
online.

1.6Justification
Recently most entrepreneurs and partnership businesses are using social media as a form of
marketing tool and trying to influence consumers. This study analyzed the role of social media

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and how it affected a consumer’s mindset and changed their perception regarding a company.
This study will help stake holders involved who are spending and focusing on social media, if
it has any benefits for them or should they rather focus on another medium of marketing. This
study will help identify which social media tools the company can use effectively if it
influences consumer perception.

StakeHolders (Direct and Related)

Direct stake holders are SME's who invest their time, money and resources in social media as
they want to earn revenue out of their business and tend to spend to increase their revenue. This
will help them to identify if they are actually investing in the right medium or do they need to
change their strategy and focus on something else. As no company wants to make a loss or not
be effective in the tools which they use, SME's main aim is to grow and survive the market
conditions as competition is fierce and they don't have much financial backing as they have
limited budgets their focus should be on the right medium.

The related stakeholders of this study are users of social media, as they want the best of each
product and they should realize what a company/brand has to offer.They would want to know
if social media actually changes their perception about a product but in a positive or negative
way. Through this they will be able to know that and use it to their advantage when they are
thinking of purchasing a product/service from a SME.

1.7Limitations
1. Time and Resources constraint, we only had 2 months to carry out a research and also
lacked financial resources to carry out a more thorough research.
2. The survey was carried out mainly in Karachi, Pakistan and the study will only be
applicable to Pakistani market.
3. As we only conducted the study in Karachi, we would have to be careful to generalize
it on the whole population as people think differently in different areas.

1.8 Scope
1. This study showedthe effects of social media on consumer’s perception in Pakistan.

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 2. The study mainly focused only on those people who have an internet connection and
are directly associated with SME’s through one of the social media platforms but
mainly Facebook as it’s the most widely used platform for buying purposes.

1.9 Definition of Key Terms

Small and Medium Enterprises–Organizations which employ more than 10 people but
under 250 people are known as SME’s.

Social Media–Websites which allow users to develop create and share information/data or to
use it for social networking.

Consumer Perception– It is a person’s impression about a company, it is affected by media,

reviews, marketing and social media.

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 Chapter 2 – Research Methodology

2.1 Research Design

The study made use of quantitative research methods as well as qualitative and the research
design that was used is descriptive.

The philosophy in our research proposed that based upon the positivist and interpretivism
theory, we deduced from the factors that if consumer perceptions tend to fluctuate depending
on the size of the SME, it affects their behavior online. We used a deductive approach for our
study as the underline variables had already been tested before on different theories and we
found a relationship between all the variables with respect to your consumer perception in the
online SME’s industry.

We used the survey method as our strategy and went with the multiple mixed method as well
as used quantitative and qualitative methods for our longitudinal study and gathered our data
over a due course of time.

We collected our data from respondents and got our questionnaires filled out and conducted
focus groups from our target audience.

2.2 Procedure
This study was conducted by assessing the consumer perception towards online shopping
through a questionnaire and focus group. Firstly we got online questionnaire filled out by online
purchasers and the results were analyzed. We also held focus groups to get further insights and
to gauge the relationships presented in our hypothesis.

2.3 Population
The population of our study consisted of all the social media users of Pakistan who have
purchased products through Facebook, Twitter, etc. For our research, we focused on social
media users who were in the age bracket of 16 to 45 and belonged to SEC A and B and upper
C. This is because people who fall in this category are mostly active on social media and often
make online purchases.

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2.4 Sample and Sampling Method
According to international researches conducted on Pakistan’s social media usage, 13.4 million
Pakistanis are active on social media websites. A large chunk of these users come from the
largest and the most populous city of Pakistan which is Karachi. To come up with our sample
size of 384 we referred to the sample size formulas which were addressed in an article by Gang
Xu titled “Estimating sample size for a descriptive study in quantitative research” in the July 1999
issue of Quirk journal. The article had a table which we have referred to. According to the
article in business researches the confidence interval is taken as 95% and the margin of error is
taken to be 5%. Based on this according to the table any population of 1 million or above has
a sample of 384. This is how we came up at our sample size of 384.

The sampling method that was employed in this research is convenience sampling. We used
this method because it was easy for us to get the online questionnaires filled by our
acquaintances and we were able to ascertain that they are part of the relevant population who
we had considered for our research.

2.5 Measurement / Instrument Selection

Primary data was collected through a structured questionnaire and focus groups.

The questionnaire was designed with the help of other relevant past researches and our
variables. To make sure that the questionnaire was valid and effective, we conducted pilot
testing on 30 respondents. That helped us in identifying any issues that were present in the
questionnaire and we replaced and edited the questionnaire accordingly.

The focus groups consisted of 10 social media users per group who belonged to SEC A, B and
upper C in the age bracket of 16 to 45 and made online purchases. People who met these criteria
were selected by us on the basis of convenience. The aim of the focus group was to further get
insights from consumers and check any relationship between the variables that had not been
fully analyzed in the questionnaire.

Secondary data was collected by reviewing relevant past researches on the topic as well as
articles and journals.

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2.6 Variables
Conceptual Frame work

*Papacharissi and Rubin (2000), (Chai et al., 2011).(SulaimanAinin et.al 2015)

Definition of Variable of Framework

In SMEs context, organizations post lot of information about their organization, products,
services and other promotional activities and also obtain information from Facebook and gain
knowledge from it. (SulaimanAinin, FarzanaParveen ,SedighehMoghavvemi , Noor
IsmawatiJaafar , Nor LiyanaMohdShuib), (2015)

The essentialsuccess factor for the small business is a good customer relationship that is
accommodated by social media. Expertise within the organization could share their ideas,
opinions and knowledge based on the queries of their customers via the social media
(Schaffer, 2013).

Informational trust isdefined as a users’ belief about the reliability, credibility and accuracy
of information obtained from Facebook and is an important factor that influence usage (Chai
et al., 2011).

Papacharissi and Rubin (2000) had a construct called convenience for internet uses and Koet
al.(2005) had a convenience motivation factor for interactive advertising. Korgaonkar and
Wolin (1999) also had the word convenience in some of their scale items such as “enjoy the
convenience of shopping on the web”

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2.7 Hypothesis
H1: Convenience has a significant correlation with consumer perception towards online
SMEs

H2: Trust has a significant correlation with consumer perception towards online SMEs

H3: Customer relationship management has a significant correlation with consumer

perception towards online SMEs

H4: Available information has a significant correlation with consumer perception towards
online SMEs

H5: Convenience has a significant influence on consumer perception towards online SMEs

H6: Trust has a significant influence on consumer perception towards online SMEs

H7: Customer relationship management has a significant influence on consumer perception

towards online SMEs

H8: Available information has a significant influence on consumer perception towards online
SMEs.

2.8 Plan of Analysis:

a. Frequency circulation - To find out information and analyze the demographics on
which the research was based upon.
b. Cross Tabulation- To have a vast understanding of the information which was
available to use and was divided into classifications.
c. Descriptive analysis – To analyze each stage of the study and comprehend it in a
meaningful way
d. Correlation – To check if there was a relationship between the various variables used
in the study.
e. Regression – To check any variety in the study and if it was reliant or not.

2.9 Software employed

Microsoft Excel and SPSS were used to analyze the data and the findings were presented
through a report in Microsoft Word.

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2.10 Validity and reliability
We conducted a pilot test of our questionnaires; the pilot survey was conducted on 19 people
through the concept of Face Validity, where they were asked to identify what the questions
signify and if they were able to relate to it and analyzed the results. After the results were
analyzed, we saw that our pilot testing was considerably valid and reliable to test it on our
sample size.

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 Appendix

Questionnaire
On
“Influence of Social Media on Consumer Perception towards online Small and Medium
Enterprises (SME’s)”

1. Gender:
 Male
 Female

2. Age:

16-20 21-25 26-30 30 above

3. Occupation:

Student Job Businessperson Housewife Not working

4. Have you purchased a product from an online store?(Purchase means your product has also
been delivered)
 Yes
 No

Please do not proceed further if you have not made an online purchase before.

5. When you say you bought a product online, what product did you buy?(You can tick more
than one option)

Clothes Shoes Books Food Toys Jewelry Furniture Computer Cosmetics Other
products

6. Which of the following social media sites you are using on a daily basis?

Social networking Microblogging Blogs/Forum Instagram Others

sites (Facebook) (Twitter)

7. Which Form of social media did you use for the purchase?

Social networking Microblogging Blogs/Forum Instagram Others

sites (Facebook) (Twitter)

Convenience in this context is the ease with which a customer is able to make a purchase (includes
both pre & post purchase delivery aspect)

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 Disagre Strongly
Strongly Disagree Neutral Agree
Questions e Agree

1 2 3 4 5

1 Do agree that it is easier for people to search &

order online?
Do you agree that information searching
2 (differentiating b/w products) is easier through
social media?
3 Would you agree that ordering through social
media is more convenient than the traditional
methods of purchase?
Trust in this context is the amount of credibility people have on social media if they want to purchase
anything (includes both pre & post purchase delivery aspect)
Strongly Strongly
Disagree Neutral Agree
Questions Disagree Agree
1 2 3 4 5
Do you agree that product & delivery claims made
1
on Facebook pages are reliable?
Do you agree that you have trust on the quality of
2 the product being purchased, as you can’t touch
the product unless it is purchased?
3 Do you think product information & after sales
service on social media have a higher credibility as
compared to other mediums?
Information in this context is the level of information that is present on social media in order for
customers to make a purchase (Includes only pre-purchase aspect).
Strongly Strongly
Disagree Neutral Agree
Questions Disagree Agree

1 2 3 4 5
Do you agree that with the social media sites, you are
1 able to seek out products/services information
completely?
Do you agree that the amount of information provided
2 is sufficient to make the purchase through social
media?
Customer Relationship Management is the pre and post purchase exchange between the customers
& online retailers.
Strongly Strongly
Disagree Neutral Agree
Questions Disagree Agree
1 2 3 4 5
Do you agree that communicating with the company &
1 with its customers is most suitable when it comes to
purchasing through social media?
2
Do you agree that feedbacks (reviews/comments/posts
and so on) on social media affect your purchase?
Do you agree that social media provides an effective
3 and powerful platform for consumers to communicate
with each other and with the companies?

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Consumer Perception is the receptivity of consumers of buying through social media.

Strongly Strongly
Disagree Neutral Agree
Disagree Agree

1 2 3 4 5

1 Do you agree that it is more convenient to order online?

Are you likely to trust a certain brand or product or
2 service after you have read positive
comments/reviews/online articles etc about it?
3 Do you agree that, for instance, advertisements/blog
posts/ FB pages/user reviews on social media influences
you?
4 Do you agree that information inflow about products
aid in making a purchase?

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 Focus Group Protocol

Participant Information – Male and Female

Age group – 18 years to 40 years

Occupation - Student, Housewife, Businessman/woman

Date – 25th October 2015 (Tentative)

Location – Gloria Jeans or Dunkin Donuts

No of Participants – 15 people - 3 groups (5 people per group)

Length – Approximate time – 30 minutes per group.

Name of Moderator – Fahad Zafar / Mujtaba Abbas

Purpose of Research - The purpose of the focus group is to find out if social media actually
influences a consumer’s perception regarding small and medium enterprises that use social
media as way to promote themselves and influence users to buy their product/service.

Questions-

Probing

- Is it easy and convenient to buy something online?

- Have you bought anything online recently?
- Do you agree that it is easy to search for information online?
- Do you believe the information you see online?
- Is it easy to communicate with companies online?

Prompting

- Tell us about your experience when buying something online?

- Would you rather buy something online or go out, what is more convenient for you?
- Do you agree that people now prefer to buy products online?
- What factors entice you towards purchasing products/services online, is it
convenience , customer relationship management, trust or the information provided
was relevant or is there anything else you can think of ?
Please share an experience as well.

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