How Social Networks Influence Product Adoption

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How Social Networks Influence Product Adoption

Comprehending product adoption behavior is important for companies because it helps them to understand and be able to influence consumers' decisions.
As a means of influencing buying behavior, advertising has becomes less efficient than in the past. As a result companies try new ways to affect consumer behavior.
An increasingly important way to influence consumer behavior is through social networks. The popularity of such networks has increased tremendously since the last decade.
In what ways is consumer behavior influenced by the social environment?

1. Information: Naturally, the social environment can provide others with information about specific products. Social networks offer TRUST and REDUCE UNCERTAINTY about the validity of information.
   Besides this, sociology and network theory provide two more ways that cause consumers to behave similarly. These are the following:
2. Cohesion: the first is socialization between two people in a social network. The social interaction between those people -say person A and B- often leads to a certain ALIGNMENT of their product evaluations.
3. Structural Equivalence: in this case, there is no need for person A and B to actually socially interact and communicate. Rather, the adoption decision is driven by the competing social positions of those persons in an overlapping social network. For example, if person A needs to adopt a certain product in order to obtain a certain desired social position - instead of losing it to person B in the overlapping social network - the social pressure to adopt the product is high and the probability of person A purchasing the product is high. Compare opinion leaders.

These last two ways - partially overlapping - explain the social influence on new product adoption which can be useful to understanding and influencing consumer decisions using social networks.
Source: Hinz, O., Schulze, C. and C. Takac (2014) "New Product Adoption in Social Networks: Why Direction Matters" Journal of Business Research Vol 67 pp. 2836- 2844

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		1 Jaap de Jonge Editor, Netherlands
	Social Influence on Innovation and Product Adoption Indeed when people make their decisions they often look for input from others. We have always turned to family, friends, media, opinion makers, colleagues, etc. to get their input. This is particularly true of decisions which could have a big impact on our happiness. I believe social networks have not changed this mechanism; they 'just' increased the scale of it.

		1 Sarah Daghman Lecturer, Russian Federation
	Social Proof as a Marketing Tool Advertising cues (signals, either audible or visible,) can be classified into either intrinsic, which are related to the direct and physical characterizes of the product, or extrinsic, which are related to its indirect attributes. Consumers usually apply these cues to judge the quality of products. Viewed from the advertiser's perspective, Social Cues are mostly extrinsic and meant to induce a hesitant customer into buying a particular product, by giving proof that a seller and the product are legitimate. In marketing, providing Social Proof validates the popularity and success of products/services. Individuals look to others for cues on how to feel, think, and behave. That means that consumers' beliefs, attitudes, and judgments are affected by the opinion of others'. For example, having favorable eWOM (electronic Word Of Mouth) information such as reviews, ratings, and recommendations reflects positively on sales (a 2014 market survey by Nielsen already reported that 92% of respondents worldwide trust recommendations by friends and families, and 70% of them ranked online consumer reviews as the second most trusted source of information). When is Social Proof most Influential? Conditions To be effective as a marketing tool, Social Proof benefits from the following set of conditions: UNCERTAINTY: Where customers are unsure and follow the actions of others. They keep an eye on how other people are reacting to a situation when they are uncertain about it, so that they act like them. SIMILARITY: Customers will be more influenced by others who are similar in nature to them. When they are experiencing something unfamiliar with a large group of people, they are more inclined to follow the reaction of those who are similar to them. NUMBER: When a group of customers experiences something uncertain together, the actions of the majority will be seen as correct and valid (The herd mentality). EXPERTISE: Customers with more knowledge about a certain situation can lead the reaction of the rest who look for signals of how to react. How Social Proof is used in Marketing? Types ACTION-BASED SOCIAL PROOF: This refers to the act of following others' actions (herd behavior). For example: the number of followers, views, and downloads visible to the consumer. OPINION-BASED SOCIAL PROOF: This refers to the act of following others' opinions, evaluations, and experiences about products/services. For example: Opinion Leaders, influencers. Sources: Karl D. (2017), "An investigation into how the Primark Brand use Social media to Influence the Buying Behavior of Irish Female Customers", National College of Ireland, Thesis, p. 61. Gabriela R. S. (2019), "Using Social Proof Techniques and Attributes of Social Media Influencers to Promote Fresh Fish Products", Reykjavík University, Thesis, p. 53. Nielsen (2014), "E-commerce: Evolution or Revolution in the Fast-moving Consumer Goods World?", Nielsen.