Pricing and Revenue Management Strategies

With consumer spending still not back to the levels seen before the global recession, there is strong competition for retailers to build customer loyalty while boosting their market share.

The Internet, social networking in particular, is increasingly playing a role in forming customers' opinions of brands. Retailers, however, are still struggling to engage with these new mediums and adapt their strategies accordingly.

Figures included in a case study from the National Retail Federation, authored by Jeff Zabin from the Aberdeen Group, suggested in 2009 that just 20 percent of best-in class companies employ social media monitoring, and a "fraction" of these integrate customer feedback with data from social networks.

[eventpdf]

"As control of a brand's marketing messages—and, indeed, its very image—continues to migrate from traditional media to social media, companies need to become increasingly adept at paying attention to how they're being perceived in the online world," Mr Zabin explained.

Influence of Social Media

Gartner has previously suggested the "majority" of consumers rely on social networking in some way to influence their purchasing decisions.

From its study involving nearly 4,000 consumers in ten key markets, Gartner identified six types of social network consumer, with those described as Salesmen, Connectors and Mavens making up 74 percent of the sample.

Connectors are those who join together separate groups of people who would not normally be linked and can be defined as heavy or light connectors. Heavy types have a smaller group who they keep in close contact with, while light connectors have a larger group but weaker ties.

Salesmen are defined as those with many social connections, who are able to influence their acquaintances’ behavior. The research explained these are not operating for commercial purposes, but have "a personality trait that impels salesmen to get people around them to act on information in highly directed ways."

Mavens, meanwhile, are information givers, but do not have the same persuasion abilities as salesmen, meaning they are willing to spread both positive and negative information.

Nick Ingelbrecht, research director at Gartner, explained: "Salesmen and connectors are the most effective social network influencers and the most important groups for targeted marketing based on social network analysis."

Targeting Social Media Efforts

Further research from Empathica revealed there are stark differences in the way women and men interact with retailers on social media platforms, with females more likely to search for vouchers and males more likely to seek out information.

Both sexes were shown to have increased their use of social media to comparison shop among retailers, although 47 percent of women were interested in looking for coupons, compared to 33 percent of men, Chief Marketer reported.

Gary Edwards, Empathica's executive vice president of client services, explained to the news provider: "It has become a firm representation in the consumer mindset that 'I am going to find a deal.’"

Women were more likely to share their opinions about brands on social media, although neither sex was likely to use the platform to complain or resolve an issue. Edwards also warned against retailers simply using social media as a channel for advertising discounts.

"Promotions aren't just about reducing the cost of a good or service. Keeping a customer base informed about what is new, trendy or novel is an enticement," he explained.

Some retailers have gone one step further than engaging with consumers through platforms such as Facebook and Twitter, however, creating their own online communities where shoppers can share their experiences of their brand.

Sears Holdings launched the MySears.com and MyKmart.com sites in 2009, which allow viewers to create profiles, upload photos, write blogs, exchange private messages and, importantly, review products.

The Viewpoints Technology Platform, which powers the sites, was said to optimise the content to boost conversion rates, which ranks well in organic searches.

Rob Harles, Sears' vice president of community, said: "At Sears we believe engaging our shoppers and providing the tools for them to get advice before they buy are central to our future."Sentiments which surely should apply to all retailers.