Study of Social Media and the Value to Restaurants

Rebecca J. Purdy
Conrad N. Hilton College
University of Houston

ABSTRACT

The objective of this study is to cover two questions, can social media be used to drive revenue
and if firms should spend the time and money to develop their identity in these sites. For the
purposes of this study, I am focusing on Facebook and Twitter and how restaurants use them.

In this study, a restaurant company that is actively engaging in the use of social media will be
used to measure the value of social media to the service industry. Customer uses of social media
will be measured through surveys and the activity on the sites themselves within the company
domain.

Key words: social media, restaurants, facebook, twitter.

INTRODUCTION

Many sites considered to be “social media” are sites that simply enable users to make
connections and interact with one another. With the use of word of mouth marketing, social
media is able to spread information virally to many users in a matter of seconds. Originally, sites
such as Facebook, Twitter, Youtube, and LinkedIn originated from users desire to make social
connections. On all of these networks users are able to share and transmit information with other
users. These networks are consistently developed and improved to make the sites more effective
and usable. At the same time firms are trying to determine how to use social media to drive
more revenue and if the firm should be using these sites.

Why social media?

Since social media marketing is free, it has been a widely accepted and effective way to
reach consumers at a low cost. However, these sites have also been able to maintain relationships
through communication within the domain of these sites. Some uses include marketers being
able to advertise specials in the business, creating direct personalized connections with the
company and the consumer, and maintaining interest through updates. The conversations created
through social media are important to customers because it allows users to communicate with
each other in a more trusted medium of talking to people just like them. Users are able to share
videos, products, services, and books in order to represent themselves and their beliefs.
For the service industry, many companies today are facing the struggle of whether to
jump on the social media bandwagon and start using it as a primary marketing tool. Word of
mouth marketing is free advertising for the company by its loyal customers. The fact that
anybody can use this type of marketing for free gives reason itself for consumers to start taking
advantage of social media sites, which are formed around this capability.
Study objectives

The objective of this study is to cover two questions, can social media be used to drive
revenue and if firms should spend the time and money to develop their identity in these sites. For
the purposes of this study, I am focusing on Facebook and Twitter and how restaurants use them.
As social media is a “hot topic” right now, several recent Masters theses and PhD dissertations
have been written towards understanding the value of certain aspects of social media. This paper
will look in detail at these studies as well as past studies in this discipline. However, while there
are working papers in other academic disciplines and several written in the professional context
covering social media, there are none to this date that primarily focus in the context of the
service industry. Furthermore, most of the papers are written with qualitative research and we
plan to conduct a quantitative study of the value of social media to a restaurant company.
Other questions to be answered in this study include what the purpose of social media is,
what the purchasing behavior of customers who use social media versus those who don’t, does a
social media presence make a customer more likely to visit more frequently, and if they are more
likely to tell other people about their experience. One assumption for the purposes of this study is
that social media refers to Facebook and Twitter and does not directly apply to other outlets such
as individual websites, video sites, and photo sites.

Literature support

This study will be conducted with the understanding of how social media applies to the
consumer buying process. Social media fits in to the consumer buying process in two ways:
during the search for information and as an outlet for repeat purchasers to voice their loyalty and
satisfaction with the brand. Social media helps users reach each other in order to share their
opinion of the brand by offering a place of community forum for the brand to take ownership of.
A brand community is “a specialized, non geographically bound community, based on a
structured set of social relationships among admirers of a brand” (Muniz and Hamer 2001:
Muniz and O’Guinn 2001). This definition applies to common groups in social media networks
such as Facebook and Twitter that support a specific brand. Muniz and O’ Guinn state that the
members of these groups view others as outsiders and different while having a bond to the others
in their group (p. 413). This “bond” is maintained through the networks of individuals who are
able to communicate via social media.
Online brand communities create “oppositional loyalty” (Muniz 2001, p. 412). This type
of loyalty encourages users to view competition with an opposing demeanor and will limit the
chance that users will purchase other products and keep other companies from entering the
market (Thompson and Sinha 2008). By monopolizing users’ attention, social media pages can
cut out the chance that their loyal customers will chose another brand one day.
Targeting is a method that more companies are using in social media by making the
message to consumers personal. Literature has shown that targeting in direct mail messages is an
effective marketing practice (Allenby, Leone, and Jen 1999). Targeting methods can also be
applied to direct messages in social media mediums and can make the relationship stronger by
the consumer being able to see the company’s online identity reaching out to them in a personal
way. Targeting can also improve the user interaction between the business and the consumer.
This direct interaction allows the business to respond to complaints and feedback. If an user puts
a message in a forum on Facebook about how they were treated by the company, a spokesperson
can respond to them directly and either reinforce a positive experience or apologize for a bad
one. Likewise, with Twitter a company is able to search for the company name in all tweets by
any user. The company can respond in the same way as with Facebook in order to maintain or
salvage attention by that consumer.
When a firm maintains a good customer relationship, the customer will deliver positive
word of mouth (Verhoef, Franses, and Hoekstra 2002). On the flip side, a negative incident
between the customer and the company can result in damaged customer satisfaction and effect
customer purchasing behavior in the future (Doorn and Verhoef 2007; Bitner 1990). This
incident will create emotions that will cause consumers to spread negative word of mouth. With
society changes, loyalty is going to become more difficult to maintain without keeping up with
expectations of continual communication and explanations of bad word of mouth between
consumers. Research has shown that continual exposure to cues in the environment increases
likelihood of purchase and repurchase by way of “priming” people to process the product
(Berger and Fitzsimmons 2008).
The best use of word of mouth marketing is for the business to create a product/ service
that will create “buzz.” An effective use of buzz is for marketers to inject positive buzz into daily
conversations. Twitter is a popular website for this purpose because tag phrases and topics catch
on fast and spread virally. The aspect of twitter called “trending topics” shows users what words
and phrases are being “tweeted,” or said, by a lot of users. It is a list of ten words or phrases that
are appearing the most of all users. Marketers can first use this feature to listen to what users are
talking about and what people like. The first step in understanding consumers is to listen to what
they are saying. Marketers can then use the tool by creating catchy phrases or encouraging users
to tweet a specific phrase in order to receive a specific incentive. People will catch on to the
incentive and start “retweeting” the information for users following them to see and develop
interest in.

Methodology

In this study, a restaurant company that is actively engaging in the use of social media
will be used to measure the value of social media to the service industry. Customer uses of social
media will be measured through surveys and the activity on the sites themselves within the
company domain. There will also be a portion of the study that evaluates any research already
done by the company and information they have in direct regards to their business during the
process of their initiation of social media.
A quantitative approach will be taken by placing a survey on Qualtrics for patrons of the
restaurant. A convenience and random sampling will be used to collect information from people.
The population is anyone who has visited this restaurant at least once and the sample will be
collected in four ways: intercepting patrons who visit a selected location and pay the check,
patrons who visit the company website and choose to complete the survey, from patrons who are
listed in the company email directory, and through posting a link to the survey on Facebook and
Twitter.
The hypotheses of this study is that there is value to a restaurant by using social media
and there is a positive difference in customer purchasing behavior between users and non users
of social media. The variables to be tested are the amount spent per check, frequency of visits,
number of people they tell about the restaurant, and social media presence/ involvement. These
variables will be tested by an analysis of variance. The expected outcome is that a social media
presence and involvement positively reflects on the other variables.

REFERENCES

Allenby, G, Leone, R., and Jen, L. (1999). A Dynamic Model of Purchase Timing with
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Berger, J., & Fitzsimons, G. (2008). Dogs on the street, pumas on your feet: How cues in the
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Bitner, M.J. (1990). Evaluating service encounters: The effects of physical surroundings and
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Doorn, J. and Verhoef, P. (2007). The importance of non-linear relationships between attitude
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Muñiz, A. and O'Guinn, T. (2001) Brand Community. Journal of Consumer Research, March
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Verhoef, P., Franses, H., Hoekstra, J. (2002). The Effect of Relational Constructs on Customer
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