Social Media: Is it a Valid Source for Creating New Business?

Abstract

Can social media be an effective way for merchants to create new business? We believe that more and more businesses are using Social Media Promotions (SMPs) as an inexpensive way to market their business and/or new items to new, old and existing customers. We examined the effects of SMPs on businesses by surveying 111 customers and over 30 businesses. We found that customers mainly purchased a promotion to either try out a new place or enjoy the value of the deal. On the business side, we found that businesses have had a good experience with offering SMPs. Businesses can maintain profitability while offering a promotion via a social media site. The customer experience at the business is mostly the deciding factor in determining if they will return without the coupon. This study concludes that businesses were able to be successful offering discounts via a promotion on social media sites, such as Groupon and LivingSocial, as long as they follow some key steps in their strategy and prepare themselves for the positive and negative effects that they might experience. Customers in today's economy are always looking for deals and an easy way for businesses to increase their profits and bring in new customers is to offer deals on social media sites. © 2014 Mudra Institute of Communications.