1

Table of Contents

CHAPTER I ..................................................................................................................... 4
Introduction .................................................................................................................. 4
Background of the Study .............................................................................................. 4
Statement of the Problem ............................................................................................ 5
Objectives of the Study ................................................................................................ 6
Scope and Limitation of the Study ............................................................................... 6
Definition of Terms ....................................................................................................... 7

CHAPTER II .................................................................................................................... 9
Review of Literature and Theoretical Framework ......................................................... 9
Theory Base............................................................................................................... 12
Conceptual Framework .............................................................................................. 13
Research Assumptions /Research Hypotheses ......................................................... 14

CHAPTER III ................................................................................................................. 15

Methodology .............................................................................................................. 15
Method Used.............................................................................................................. 15
Study locale ............................................................................................................... 15
Sources of Data ......................................................................................................... 16
Data Gathering Instrument ......................................................................................... 16
Sampling Technique .................................................................................................. 17
Procedure of the Study .............................................................................................. 17
Statistical Treatment .................................................................................................. 18
Timeline of Activities .................................................................................................. 19
Barriers to Success .................................................................................................... 20

References ................................................................................................................... 21
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List of Figures

Figure 1. Facebook Tops the Chart ........................................................................... 11

Figure 2. Time dedicated for socializing
Figure 3. Purpose for using social media platform .................................................. 12
Figure 4. Conceptual Framework................................................................................ 13
Figure 5. Map of Davao City ........................................................................................ 16
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List of Tables

Table 1. Profile of Respondent ............................................................................... 11

Table 2. Research Timeline ......................................................................................... 19
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THE EFFECTIVENESS OF SOCIAL MEDIA MARKETING TO BUSINESS OWNERS

CHAPTER I

Introduction

Social media marketing is the use of social media platforms and websites to promote a
product or service. It is a new phenomenon that has changed how the business
environment operates and helps businesses gain access to resources that were
otherwise not available to them (Jagongo, A. et. al, 2013).

This first chapter provides the reader the background of what the research study is all
about. It will give you a closer look of the topic specifically on the effectiveness of social
media marketing as marketing strategy or tool. It will also provide a general insight of
the problem that will be addressed in this study.

Background of the Study

For the past few years, the power of internet has brought a lot of possibilities to the
world, making it easier for business owners to bring their products and services
accessible to the public. When people saw the potential of internet, new approaches
were developed and companies started to create websites to communicate with their
customers online. Now, acquiring a social media account, such as Facebook,
Instagram, Twitter, blog sites and various company websites, has been the latest trend
in the market despite of some marketing risk that may arises.

Direct marketing is the most common method of advertising products and services.
These include personal selling, TV commercials, radio announcements, and print
advertisements in magazines or newspapers as well as billboard ads. However, this
type of marketing is considered as the most expensive way of promoting a company’s
products and services. There are still business owners who conduct direct marketing, a
traditional method of selling and promoting products and services to existing and
potential customers. Some even rent an office or stall in malls where they can display
their products and so people can see and notice them.

Today, online marketing has become increasingly important to small businesses of all
types. In the past, marketing online was something that local bricks-and-mortar
businesses could justifiably ignore. It didn't make sense to waste time and money on
online marketing when all your business was local.
With online marketing and direct marketing, there can be seen great advantages for
companies. Online marketing can spread a vast range of information to customers, but
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also has disadvantages due to unsecured online transactions and presence of online
fraud. Meanwhile, direct marketing is the most expensive and time consuming method
of promoting product and services.

Statement of the Problem

With the rise of the internet, social media marketing has become one of the most
powerful tools and cost-effective ways for promoting products and services. Print media
and TV advertising has been declining for the past few years due to the rise of the
internet.

People now, are more focused on spending time connecting to social media accounts
than reading newspapers, listening to radio broadcasts and watching TV. Some people
are also engaged in online shopping because it’s hassle free. With these, direct
marketing has become less significant and internet is rapidly increasing as one of the
most important media for sharing information and as a marketplace for businesses and
customers. As a result, companies create their own blogs or company websites to get
closer to their target markets.

With this, the research study will specifically answer the following questions:

1. What is the difference between direct marketing and social media marketing;

2. What type of social media platform used by the company to reach their target
market;

3. How influential social media to customers;

4. How do they manage online fraud and other marketing risk using social media
marketing;

5. How often it is necessary to maintain and update a social media platform;

6. In what way social media help business owners in promoting their products and
services;

7. How online marketing affects the growth of a business, including its’ profit and
return of investments; and
8. Why business owners opt to use social media marketing instead of direct
marketing
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Objectives of the Study

The objective of this research study is to:

1. Identify the role of social media marketing and its’ impact to businesses;

2. Know why most companies use social media marketing as marketing strategy
instead of direct marketing;

3. Identify and evaluate how social media marketing affects the growth of a
business and increase its’ profit and brand;

4. Examine and evaluate the effectiveness of social media marketing to promote

products and services;

5. Identify the pros and cons of online marketing and direct selling; and

6. Examine why direct marketing is becoming less significant and why social media
marketing becomes the most famous marketing strategy for business owners

Scope and Limitation of the Study

The scope of this study will focus on the impact of social media marketing in increasing
a business’ sales and profit. It will also measure how often an employee spends in
social media and what type social media tools are they using to promote their products
and services. However, recipient of this study will only be limited to small business
owners in Davao City who started their business for more than one year. A total of
fifteen (15) recipients for this study will be interviewed and must not have a marketing or
public relations department. Big companies that have used direct marketing and social
media marketing successfully will not be included in the research due to time
constraints.
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Definition of Terms

Social Media – are computer-mediated technologies that allow individuals, companies,

NGOs, governments, and other organizations to view, create and share information,
ideas, career interests, and other forms of expression via virtual communities and
networks.

Social Media Marketing - the use of social media platforms and websites to promote a
product or service.

Direct Marketing – the business of selling products or services directly to the public,
e.g., by mail order or telephone selling, rather than through retailers; a form of
advertising which allows businesses and nonprofit organizations to communicate
directly to customers through a variety of media including cell phone text messaging,
email, database marketing, fliers, catalog distribution, promotional letters and targeted
television, newspaper and magazine advertisements as well as outdoor advertising.

Business – also known as an enterprise, company or a firm is an organizational entity

involved in the provision of goods and services to consumers.

Small business – a business having fewer than 500 employees (SBA,

2011).

Internet – the global system of interconnected computer networks that use the Internet
protocol suite (TCP/IP) to link billions of devices worldwide. It is a network of networks
that consists of millions of private, public, academic, business, and government
networks of local to global scope, linked by a broad array of electronic, wireless, and
optical networking technologies.

Marketing Strategy – the foundation of a marketing plan that will helps a company
identify their best customers, understand their needs and implement the most effective
marketing methods.

Profit – a financial gain, especially the difference between the amount earned and the
amount spent in buying, operating, or producing something.

Brand – is a set of marketing and communication methods that help to distinguish a

company from competitors and create a lasting impression in the minds of customers.

Products – an article or substance that is manufactured or refined for sale.

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Sale – a transaction between two parties where the buyer receives goods, (tangible or
intangible) services and/or assets in exchange for money.
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CHAPTER II

Review of Literature and Theoretical Framework

Social Media Marketing in a Small Business

According to Cox, Sarah (2012), it was essential that small businesses understand
today’s social media driven environment. They should also know the strategies behind
using social media such as Facebook and Twitter for growing their business and to stay
competitive and reach their target markets. However, many small businesses did not
have a strategy when they began using social media.

The research was conducted to acquire an initial understanding on how small

businesses were recognized for using social media to grow their business, and
increased their customers.

The respondent of this study was Bandee, an Internet-based accessory retailer and
wholesaler established in 2009. The results showed that with the help of social media,
Bandee doubled the number of their clientele who were aware about their products and
services. With that, they also considered social media important for communicating with
their customers and creating relationships. It also enabled Bandee to develop many
relationships with other businesses and clients that would not have normally developed.

The study also concluded that social media marketing increases brand exposure, sales
and business profit.

Social Media and the Impact on Marketing Communication

Social media became a communication tool that helped many companies find new
possibilities to promote their products and services for the past few years. The
purpose of the research was to study how social media influence the marketing
communication of companies (Frey B. and Rudloff S., 2010). Two manufacturing
companies, one social network platform and one marketing agency were interviewed
for the completion of the research. Data collection was also conducted and a
qualitative research approach was used combining different case studies in the
research strategy.

The overall result showed that the communication via social media was still in the
early stages of its development by that time though companies agreed that social
media was an effective tool to exceed and support marketing communication. Other
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findings showed that social media still had huge growth potentials regarding the
differentiation and specification of different platforms, because not all of them were
suitable for every company.

Study of the Effectiveness of Online Marketing on Integrated Marketing

Communication

According to Pawar, AV. (2014), Integrated Marketing Communication (IMC) is a

marketing concept that ensures all forms of communication and messages are carefully
linked together, integrating all the promotional tools, so that they work together in
harmony. It is also a concept that makes all the marketing tools work together as a
unified force rather than work in isolation. It makes the use of entire marketing efforts in
the form of advertising, public relation, personal selling, sales promotion, internet
marketing , direct marketing in order to generate maximum impact on the target
audience at the minimum cost.

The study was conducted to understand the importance of Integrated Marketing

Communication., online advertising in changing market scenario and understand the
reasons for growing popularity of online marketing. It also focused on analyzing the
effectiveness of online marketing as compared to traditional marketing tools and identify
the limitations of online marketing as IMC tool.

To attain the objectives of the study, the researcher used a descriptive research design
where data was collected from secondary as well as primary sources. Data collected
was then analyzed with the help of statistical software SPSS 17.0 and Ms-Excel Add-In
Data Analysis. Statistical tools used for the analysis were Mean, Median & mode,
Standard deviation, Skewness & Kurtosis.

The study showed that respondents relied upon more than one medium in order to
enhance their brand related knowledge. They used the combination of various sources
for making final purchase decision and heavily rely on modern marketing tool i.e. online
advertising. It was also revealed that the main reason for the growth of online marketing
was the increasing literacy of people about internet. Internet was identified as truly
advantageous and can serve various purposes mainly for social networking, online
shopping & media sharing (photo, music, and video).
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Effectiveness of Social Media as a Marketing Tool

Social Media Marketing is about understanding how technology is making it easier for
people to connect socially with their social networks and how your business can profit
from that understanding (Bashar, A, 2012). The study was based on descriptive
research design and questionnaires were provided to know the point of view of
respondents regarding the extent of social media that helps consumers in buying
decision making.

First part of the questionnaire contained information regarding demographics and usage
pattern of social media of the respondents. Second part had series of close-ended and
indirect questions which were based on impact of social media in making consumer buy
a product and expectation from such media. The survey was conducted online through
social networking sites (Facebook, Orkut, Twitter, LinkedIn, Hi5, Bebo etc.) and a total
of 150 responses were collected. Results showed that Facebook was the most popular
social networking site for the respondents. Orkut and twitter got the second and third
positions respectively. For visual representation of finding and results bar charts, pie
charts and tables etc. were used.

Table 1. Profile of Respondent Figure 1. Facebook Tops the Chart

*at 95% the two variables are
significantly different

Other findings showed that most people spend more than an hour online! Figure 1.2
clearly showed us how important for the marketers to exploit the situation by making
workable marketing strategies. Figure 1.3 showed that 58% of the respondents in the
survey used such platforms to connect with friends, 24% were exchanging their views
and experiences on various products/services and others apart from just playing games
and participating in contests (16%).
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Figure 2. Time dedicated for socializing Figure 3. Purpose for using social
media platform

Results also showed that younger people were adopting social media with a pace that
was never before in the past. It was also found out that there was almost no variability
among the social media network users on the basis of gender and that almost every
social media users who were respondents in this case used to go to brand pages to
learn more about the product/services, to learn about the exclusive offers, and to find
the reaction of their friends and peer on the selected brands.

There was also a gap between consumer expectations and actual delivery at social
networking websites. Consumers did not get the information timely and adequately.
There were questions also which were not answered by the brand pages in the
speculative time frame of consumer.

Theory Base

It is stated that a research will work well with existing theories by transforming older
theories into conditions. Integral models and theory for the topics related to social
media marketing were hardly used due to a lack of suitability. Since Internet is
developing rapidly, it is important to review studies made by previous researches and
come up with a new theory or invent or implement new theories for this particular
study.

The theory will be based on existing related literatures applicable for this study. The
theory has to deal more with the insights of how social media affects the performance
of a business based on the growth of their profit, sales, and customers and among
others. Furthermore, there have to be entirely new approaches in this study, because
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some of the existing theory is just outdated and not useful anymore, even if one
transforms it.

Conceptual Framework

Figure 4. Conceptual Framework

Figure 1.4 above shows that social media marketing is dependent with social media
platforms.

Generally social media marketing starts with the use of social media platforms such as
Facebook, Instagram, Twitter, blog sites and other websites. The number of employed
users and number of hours spent on social media to promote the company’s products
and services affect the company’s marketing strategy, profit and sales, as well as return
of their investments and increase of the number customers patronizing their products
and services.

Overall, social media marketing is a way of companies to engage with consumers in

their efforts to further expand their business and connect with existing and potential
customers. Thus, one important aspect is consumer engagement. Assuming that other
things are constant during the performance of the study, it will be possible to relate
these variables and confirm that indeed, independent variables can affect the
dependent variables.
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Research Assumptions /Research Hypotheses

The assumptions and hypotheses inherent to this study include:

1. More businesses are venturing to social media marketing because it is cost-

effective, it increases brand awareness and it reaches more customers.

2. Direct marketing has become less significant because it is expensive.

3. It is risky to do social media marketing due to online fraud but the number of
reliable and diverse customers is greater than fake ones.

4. Social media marketing helps companies grow their profit and brands.
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CHAPTER III

Methodology

This chapter will examine the design and procedures that will be taken during the
conduct of the study. It will provide the method used and present the study locale,
sources of data, data gathering instrument, sampling technique, procedure of the study,
statistical treatment, timeline of activities and barriers to success of the study.

Method Used

The study will be based on descriptive-correlational research design. Questionnaires

will be provided to know the point of view of respondents regarding the effectiveness of
social media marketing in promoting their products and services. A series of interview
and observation will also be conducted to the respondents to effectively gather
information about present existing conditions needed in the study. According to Manuel
and Medel (1998), descriptive research describes what is. It involves the description,
recording, analysis, and interpretation of the present nature, composition or processes
of phenomena. It is also used to describe characteristics of a population or
phenomenon being studied. Correlational research design is used to describe the
relationship between or among variables and provides empirical evidence suggesting
two or more variables are – or are not – related. In this study, the researcher will
compare social media marketing strategies against direct marketing based on the sales
and profits gained by the respondents.

Study locale

The study will be conducted to an area where online marketing and social media is
highly recognized and used. The location of the study will be Davao City where fifteen
(15) respondents will be chosen randomly by the researcher to represent the population
of business owners who are using social media marketing.
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Figure 5. Map of Davao City (Source: google map)

Sources of Data

In this study, the researchers will be using primary data that will be gathered based on
the researcher’s observations, interviews conducted and survey questionnaires
answered by the respondents. Respondents will be composed of fifteen (15) business
owners from Davao City.

Data Gathering Instrument

The researcher will be using different data gathering instruments to obtain information
needed about the research study. These instruments will include interviews, survey
questionnaires and observation. The questionnaire that will be provided to the
respondents will be divided into two parts namely: (1) Personal data profile of the
respondents and (2) survey questionnaires that will help the researcher attain the goal
of identifying the effectiveness of social media marketing to business owners in terms of
growth of sales and profit.

The survey questionnaire will be distributed to the respondents as means of retrieving

primary data for the study. The researcher will also measure statistical data for the
social media marketing mostly used by the respondents, as well as the number of hours
they spent per day for online marketing. Rating scales and response anchors will also
be designed in reference to the variables identified in this study. The respondents will
answer the rating scale table considering five options rated as follows:
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5 – Strongly Agree

4 – Agree

3 – Undecided

2 – Disagree

1 – Strongly Disagree

Upon answering the respondents of the research study will be asked to check the space
provided for each chosen option.

Sampling Technique

With the number of online marketers in Davao City, the researcher will use simple
random sampling technique. The research will select a group of respondents composing
of fifteen (15) members only and each of which will have equal chance of being included
in the sampling.

Procedure of the Study

The study started with extensive research and reading related to social media and
social media marketing. In order to attain the goal of the study, the researcher will be
using descriptive-correlation research design. A direct and indirect methods of
observation in data gathering will also be implemented.

For the completion of the research study, the researcher will undertake the following
activities:

a. Identification of respondents for the study;

b. Selection of appropriate research methodology;
c. Formulation of research questions for the respondents;
d. Drafting of survey questionnaires for the respondents;
e. Pre-testing and post-testing of the survey questionnaires to check validity and
reliability;
f. Gathering of primary data from respondents based on the answered
questionnaires, observations and interviews.

Once all data are gathered, it will be tabulated, processed, analyzed and interpreted.
Findings will also be summarized and possible trends will be established which will
serve as the basis for conclusions and recommendations.
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Statistical Treatment

The following statistical method and techniques will be employed for a better
interpretation of the data collected:

a. Frequency Distribution.

In this technique, the researcher will use plot graphical presentations through
charts to represent the respondents’ feedback in terms of the numbers of
hours they spent in a day using social media, the social media marketing
tools they use, the range of their income per month, the number of
transactions made online and the number of products/services sold in a
month. The frequency will also present the actual response of the
respondents to a specific question or item in the questionnaires.

b. Percentage Distribution

After the frequencies are determined, percentage distribution technique will

be used. This technique will be used to describe the demographic profile and

the distribution of the respondents as to various categories in the study. This

could be illustrated using the formula below:

F
P=
N x 100 %

Where: P = percentage

F = number of cases

N = total number

c. Likert Scale

The Likert Scale method of Summated Ratings will also be applied in this
study to indicate the extent of different items. In this technique, the researcher
will assign one scale value of each of the different responses gathered from
the respondents. Numerical value such as Strongly Agree which is equal to 5
and Strongly Disagree which is equal to 1 will be assigned to each category.
The weighted mean will be used to determine the total assigned value. The
item scoring high score consistently reflects a favorable response and a low
score consistently reflects an unfavorable response.
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The consolidated points from the respondents’ answers to each item over a
five point scale were as follows:

WEIGHTED MEAN SCALE VERBAL INTERPRETATION

4.51 – 5.0 5 Strongly Agree
3.51 – 4.5 4 Agree
1.51 – 3.5 3 Undecided
1.51 – 2.5 2 Disagree
1.00 – 1.5 1 Strongly Disagree

Timeline of Activities

Below is the expected timeline of activities for the research study:

Month Activity Duration

1 Review of related literature 2 weeks
2 Identification of respondents of the study 2 weeks
Selection of appropriate research
3 1 week
methodology
4 Schedule meeting with the respondents 1 week
Formulation and drafting of research
5 2 weeks
questions for the respondents
6 Validation of questionnaire 1 week
7 Translation of questions to local dialect 1 week
8 Primary data collection 4 weeks
9 Data entry 2 week
10 Data Analysis and Interpretation 4 weeks
Formulating Finding, Conclusion and
11 3 weeks
Recommendations
12 Report writing 4 weeks

Table 2. Research Timeline

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Barriers to Success

Davao City is one of the biggest City in the Philippines and finding respondents of the
study will be the foremost perceived barrier. Time is also a big factor to finish the study
because all respondents’ are business owners which makes it hard to get their free
schedule to conduct interviews. The conduct of the research study will also be hard
without enough resources and funding.

The proximity of the study locale and the place of residence of the respondents is
another barrier. To address this, the research will employ the help of relatives and
friends in coordinating with respondents and administering the research. In order to
maximize available time, the researcher will schedule and organize a meeting with all
the respondents to discuss about the procedure and explain purpose of the study within
the estimated timeline.

The survey questionnaire will be both written in English and Bisaya so that all
respondents and participants of the study will understand the questions provided.
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