Do Friends on Social Networks Influence Purchases?

The link to the site of the article reference： http://www.hbs.edu/research/pdf/09-123.pdf.I found the article through the link of http://hbswk.hbs.edu/item/6187.html and the author is Sunil Gupta , and it was published on July 27,2009.

For the author’s research, he finds that some users are influenced by the purchases of their friends while others are not. The author finds three distinct groups. Firstly, Low-status members, who are not well connected to others, are generally unaffected by the purchases of other members. Secondly, Middle-status members are moderately connected and show a strong and positive effect due to friends' purchases. Thirdly, high-status group are well connected and are very active on the site, but these users show a negative effect due to friends' purchases because they want to remain distinct. So, the impact of the low-status group on revenue is negligible. Social influence increases revenue from the middle-status group by 5 percent. In contrast, social influence leads to almost a 14 percent drop in revenue from the high-status group.

However, an article on www.thecommercesolution.com argues that users of social networks do not have to be divided into three categories. All of the users will be affected by the purchases of other social network members. No matter who is the user, if the company use social network applications like MySpace, these preferences and choices can be saved, stored, shared and used to build a network of glowing endorsements for the business and products. And the products can grow exponentially as more and more people become exposed to and share the marketing message. ( http://www.theecommercesolution.com/blog/2007/05/01/how-social-network-marketing-works/)

I support the first author’s point. For me, the article let me know, though social networking has so many users, it is always not a perfect sales network. It depends on the product feed to which group and the purpose of advertising. To think about the different characters of each group, if the target consumers are middle-status group, to let friends influence purchases in social network is a good way. Using the same way to the high-status group will lead to an awful result. However, informing social networking users about a new product and getting them to buy it are quite different. In my opinion, the strength of China's social network marketing is still relatively small, because there has not been a powerful social networking site like Facebook or Myspace. But I believe in the future, social network marketing is not only a work way, but also will become a life attitude. Chinese firms should respect the users before marketing to, to avoid of be too impatient to show them for commercial purposes, such as leave the logo or the name in the picture or video to promote the goods. If Chinese firms can understand of the social network users, there will be better influence on consumers’ behavior.