Creative way of product diffusion Chapter: 1 Introduction: Social networking sites provides personal link to the world outside

with your friends, contacts or even with the whole internet population. It is the internet community where people indulge in various activities like exchange of message, publicising of upcoming events and activities and the uploading and accessing of photos, music and videos. Social networking sites (SNSs) become popular not because of common location but because of common interest. Many of the users of SNSs integrate these sites into their daily practice (Webb, Burqoyne, 2009). Online social networks over the last decade have attracted an increase proportion of internet users. A study was conducted in US by eMarketer Williamson,(2009) and he found that in 80 million internet users 41% of users visited a social network website at least once a month in 2008, this is an increase of 11% from 2007 (Garg...[et al.]. 2009). Since after the introduction of SNSs such as MySpace, Face book, Cyworld and Bebo, many other SNSs started with various technological affordances and supporting wide range of interest and practices. Even though their technical aspect is same the culture of the site is different in one another. SNSs not only allow the users to meet strangers but also communicating with the people who are already a part of their extended social network (Boyd, Ellison, 2007). Social networking sites are defined as Internet based service which allows users to construct public or semi- public profile within the bounded system, communicate with other users in the network and can interchange the list of contacts within the system. Each site varies in their nature and nomenclature (Boyd, Ellison, 2007). SixDegrees.com is the first recognizable social network site launched in 1997. From 1997 to 2001, a number of SNSs launched with various changes in their nature and operations. Sites like Asian Avenue, BlackPlanet and MiGente allowed users to create their own profile and add friends without their approval (O. Wasow, personal communication, 2007). In 1999 Korean virtual world site Cyworls started and in 20001 SNS features added to this site. By 2001, Ryze.com became popular because it helps people to leverage their business networks. Friendster was launched in 2002 and MySpace was begun in 2003 to compete with Friendster. Later in July 2005 BBC bought MySpace for $ 580 million (BBC, 2005). SNSs like Orkut, LunarStorm, Grono, Hi5, and Bebo were started after the popularity of MySpace. These sites became popular in different countries. Chinese QQ instant messaging service became the worldwide largest SNS when it added profile and made friends visible (McLeod, 2006). Shortly blogging service in SNS became popular. SNSs like Xanga, LiveJournel and Vox are having the blogging features and they attracted border audience. In early 2004, Facebook began its operation as SNS for college students. It was started as Havard-only SNS (Classidy, 2006). Later they expanded to other colleges and those who are having university e-mail id can start a Facebook account. By September 2005 Facebook expanded their user by

opening the SNS to high school students, professionals inside corporate organisation and later on to everyone. Facebook provide amenities for outside developer to build application and it is one of the main features that attract more users into it. By this feature users can personlised their profile and can compare other features like movie preference and chart travel histories. There are lots of target specific SNS which is targeting only certain demographic and its users are tend to be smaller in size. SNSs like aSmallWorld, beautifulPeople, MyChruch comes under this category. Ning provide platform for users to host their own SNS. Popularity of SNSs increasing day by day and in UK 78% of online users belongs to countrys networking community (CamScore, 2007). This growth of users in social networking sites prompted many of corporate firm to invest money and time in creating advertisements in this platform. Most of the networking sites encourage people to provide validate information in their profile and the aspect of self presentation is articulate in friendship. Datas collected for profile in SNS is gathered either through an automated collecting technique or through datasets provided directly from the company. SNS researchers analyses the structure of friendship and the role played by each member in the network structure. According Kumar, Novas and Tomkins (2006) there are passive members, inviters, and linkers who generally participate in these networks. According to Liu, Maes, and Davenport (2006) other than friends network structure, there are performance of taste network structure usually call taste fabric is more common in which the network is build up by the commonality in users favourite music, books, film etc. Social networking sites like Bebo.com, Facebook.com, MySpace.com, Flicker.com and Hi5.com are the most popular SNSs in U.K (guardian, 2008). Number of visitors in social networking sties in UK reached 24.9 million in August 2007 which is 78% of U.K online population (CamScore, 2007). According to eMarketer, advertisers forecast that the growth in ad spend on social networking sites in UK will reach 175m by 2009 (guardian, 2008). In nut shell Social networking site represent: (TNS, TRU & Marketing evolution, 2007)
y y y y

A vogue, especially among the youngsters and techies. A unique tool for contacting friends and others. A new opportunity for brands to establish the relationship with its customers. A new expressive and unscripted format.

Research Questions: More than just fun social networking sites developed a new way of people interacting with each other. This Word of mouth communication provide a vast and powerful network for a marketer to market a product or service and even plays an important role in shaping consumers attitudes and behaviours. How do social network influence diffusion and what impact can it makes on its consumers? According to Social Shopping Study 2007conducted by E-tailing group and commissioned by PowerReviews, 65% of respondents were social researchers. 78% of the respondent spent more than 10 min of time in reading reviews about

the products; 86% of social researchers believe that customer reviews are extremely or very important. Social researchers are consumers who always or most of the time actively seek out and read customer reviews before making a purchase decision (Multichannel Merchant, 2207). This has made the researcher investigate on the subject Creative product diffusion Broad research aim: Investigate the product diffusion through the social networking sites Objective
-

To identify the general characteristics of the users in social network To find the involvement of users in social networking activities What opportunities exist for a brand within the social network to communicate with its consumer? To study how a product does diffuse through social networks? Further development (recommendation) effective product diffusion in context to social networking sites

In summery this research concluded that how the opinion leader can contribute for the product diffusion in social networks. How meaningful relationship a brand build up with the consumer during this product diffusion. This paper is organised as follows, (1) the literature reviews related to the topic. (2) Research methodology (3) Data analysis (4) Discussion and Implication (5) Conclusion. Chapter: 2 Literature review: Various researches on online social networking sites elucidate the influence of SNSs on consumers purchase decision across variety of context. This literature review illustrate on two broad research stream (1) the literature on new product diffusion (2) literature on social network analysis Product diffusion The diffusion of innovation is the process of adopting an innovation by few people within a social system and then over time more members in that social system adopt the innovation till all or most of them adopt the new idea (Ryan and Gross, 1943; Rogers, 1983; Valente, 1993). A social network is a group where people share their friendship, advice, communication or support among the members of a social system (Knoke and Kuklinski, 1982; Burt and Minor, 1983; Wellman, 1988; Scott, 1991; valente, 1996). Opinion leaders are those individuals who are active media user and have immense of influence on the other lower -end media users to interpret the media messages (Wiki, 2009). Word of mouth has been considered to be the extensive method for promoting a product (Godes & Mayzlin, 2004; Zhang... [et al.]. 2008). According to assumption based on Bass (1969) diffusion model, the potential adopters adopt the product by the influence of their friends and other direct contacts who have already accepted the product (adopters) more than the influence of the marketers (Zhang... [et al.]. 2008). In online network structure the informations are made so overt and observable that to

identify an influential members (adopters) is an excellent opportunity for a firm to promote their product is (Keller & Berry, 2003; Kumar & Benbasat, 2006; Rogers, 2003; Zhang... [et al.]. 2008). Wordof Mouth and electronic WordofMouth WOM is considered to be a powerful mechanism for stealth marketing or undercover marketing and it is considered to be an informal communication among the consumers regarding a brand, a product, a service or organisation (Anderson, 1998; Buttle, 1998; Zhang... [et al.]. 2008). It plays an important role in the introduction and diffusion of new products and services (Brown & Reingen, 1987; Chevalier & Mayzlin, 2006; Price & Fedick, 1984, Zhang... [et al.]. 2008). Different types of WOM marketing includes community marketing, where people of same interest shares there experience, viral marketing where information is passed via electronic media and there are referral programs where customers refers their friends (Zhang... [et al.]. 2008). Information reaches to the consumers through active or passive word of mouth. In passive WOM the information is passed to the individual when he or she is listening to the WOM on the other hand in active WOM individual search for the information and WOM (Rogers, 2003; Zhang... [et al.]. 2008). WOM is considered to be the low cost method for communicating information with potential adopter (Coleman, 1988). WOM also hep the potential adopter for the decision making process because of the trustworthiness of information in WOM (Silverman, 2001). The effect of WOM on potential adopters depends on two factors the volume and valence of WOM (Mahajan, Muller, and Kerin, 1984; Mizerski 1982, Neelamegham and Chintagunta 1999). The total amount of WOM interaction used to create customer awareness is measured as volume (Godes & Mayzlin, 2004) and the nature of information communicated is called valence whether it is positive or negative. It has been found that the consumers (adopters) who are more confused or dissatisfied about the product information indulge more in WOM interaction than the satisfied adopters (Anderson, 1998). A negative WOM can create more impact than a positive WOM according to a recent study conducted by Chevalier and Mayzlin (2006). WOM can influence various emotions of consumers like awareness, expectations, perceptions, attitudes, behavioural intentions and behaviour (BUTTLE, 1998). Due to source reliability and the flexibility of interpersonal communication (Day, 1971), WOM was more important in creating awareness and influencing the consumer for trying a product (Sheth, 1971). According to Day (1971), compared to advertising WOM was nine times effective in converting unfavourable or neutral predisposition into favourable or positive attitude. There are input WOM and output WOM; those opinion consumers received prior to the purchase may not be the same after purchasing the product. The pre- purchase information is called input WOM and the experience after purchase or consumption is called out put WOM (BUTTLE, 1998).

Opinion leader are individual who can influence the opinion followers in taking a decision about the purchase. Generally opinion followers ask opinion leaders about their opinion and the information which the opinion leaders passed to them have the ability to exert certain disproportionate degree of influence on peoples behaviour in purchase (Rogers & Cartano, 1962; Zhang... [et al.]. 2008). Recent Study conducted by Yale and Gilly (1995) suggested that it is not necessary that information seekers select information from any opinion leaders as it is, instead they seeks information from the person whom they believe to be high in product knowledge (BUTTLE, 1998). By the popularity of internet, new way of communication has emerged and it is called electronic word- of- mouth (eWOM) (Hennig-Thurau et al., 2004). According to researchers, similar to WOM eWOM have got higher credibility, empathy and relevance to customers than the source of information on the web created by the marketers (Bickart and Schindler, 2001).One of the important aspects of internet based communication is its bi-directionality (Dellarocas 2003). According to Montgomery (2001) viral marketing is a word-ofmouth marketing in which the advertising messages act as a virus which passes from one consumer to the next like a rampant flu virus (Vilpponen... [et al.]. 2006]. The most distinctive difference between eWOM and WOM is the relationship between communicators and receiver (Chatterjee 2001; Lee & Youn, 2009).

Product diffusion in Social Networks Social networks are online communities where people share their common interest or activities. In social networks there are many ways for users to interact each other like blogs, e-mail, instant messaging, and newsfeeds. In general users create their own profile while joining the social networking sites and this profile describe their interest and activities. Once they created the profile they will start searching for friends or people of their own interest (Redbridge marketing, 2008).

Social networks behavioural theories: Theories which explain the product adoption in social networks: (1) threshold model, (2) personal network exposure model, (3) degree of adopter friends model, (4) network closure model and (5) epidemic diffusion frame work (Zhang... [et al.]. 2008). Threshold Model The threshold model assumes that if higher the number or proportion of individuals participates in a social system activity then more individual in that social network also willing join in that same activity (Granovetter, 1978; Zhang... [et al.]. 2008). A threshold for an individual to engage in an activity is the proportion of individual who have already engaged in the activity. Early adopters are individual with low threshold who engage in the activity before the majority of other individual do. In contrast later adopters are individual with high threshold (Rogers 2003 Zhang... [et al.]. 2008).The major disadvantage in the application of

the threshold model is some product adoption may not be directly observable. Secondly even if it is observable, it might not be observable to other individuals in the social system. Hence, those people with whom potential adopters has direct communication (first-order contacts) can only consider for the measurement of threshold (Zhang... [et al.]. 2008). Personal Network Exposure Model In an ego-centric social network those people who have direct contact with the potential adopters are considered as potential network exposure (PNE) (Zhang... [et al.]. 2008). PNE is mainly dependent on the idea of connectedness, women were likely to adopt product or service only if they perceived that other individual in their personal network were already using it (Valente [et al.]. 1997; Zhang... [et al.]. 2008). When large numbers of adopters are connected to the individual exposure is high (Zhang... [et al.]. 2008). Network Influence = Total number of direct contacts Number of direct contacts who are adopters

Source (Zhang... [et al.]. 2008) Through WOM the direct contacts of potential adopters adopt the product. Depending on the network size of the potential adopters, direct contacts will have higher network exposure and the volume of WOM also will be higher. Therefore PNE is considered as a measure of network influence (Zhang... [et al.]. 2008).

Susceptible-Infectious- Recovery (SIR) Framework Epidemic diffusion theories consider the life cycle of a disease with an individual susceptible-infectious-recovery (SIR) framework and it is considered as a classical diseasepropagation framework in epidemiology (Bailey, 1975; Zhang... [et al.]. 2008). According to this frame work virus of the disease spread only when the individual is first vulnerable to that virus and when that person gets the disease, he or she becomes communicable. Finally that person will recover from the disease or dies. This frame work explains some factors about the conversation of susceptibility to an infectious. Firstly infectious depends not so much on the number of friends that a virus carrier have but on the degree that one gets into touch with carriers. Secondly it depends on the ability of the organism to cause disease and thirdly depends on the persons defending capacity to deal with the incoming organisms (Zhang... [et al.]. 2008). Applying this concept in product adoption, product can be considered as the disease. The infectious contact is the potential adopters contact with an adopter and the decision to adopt will based on the personal considerations that are considered as resistance factor (Zhang... [et al.]. 2008).

Frequency model In an ego-centric network if the potential adopters are frequently comes in contact with adopters, there is more likely chance of the adopter to adopt the product. This is because of the relationship maintained between the potential adopters and his adopter friends. Frequency model refers to the total number of times the potential adopter comes in contact with the adopter friends per unit of time. In the case of online reviews the infectious contacts are those who once visit the product review websites. Frequency model is also consistent with effect of WOM on potential adopters ( Mahajan, Muller, and Kerin, 1984; Mizerski 1982, Neelamegham and Chintagunta 1999; Zhang... [et al.]. 2008). the frequency of contact is related to the volume of WOM than the relative proportion of adopter friends. Frequency-rating model Positive WOM helps a product to diffuse easily in the network where as negative WOM can discourage it. Both positive WOM and negative WOM can easily pass around in online social network. If product rating determines or influences the consumer in his or her purchase decision then that model is called frequency-rating model. Chevalier and Mayzlin (2006) found that in Amazon.com, when books were rated high the sales of that books increased rapidly even though such effects are not always present (Liu, 2006; Zhang... [et al.]. 2008). More than interaction among the members in the network, the PNE model and threshold model both rely more on the static network. In contract frequency model and frequency rating model are closer to the behaviour of members in social network and could predict better in product adoption behaviour (Zhang... [et al.]. 2008).

Social network impact on purchase decision In social networks, actors (consumers) are connected each other with set of ties (Wasserman & Faust, 1994) and the connection between them is directed or undirected. The focal actor called ego, have ties to set of alters such type of social network is called ego-centric social network (Wasserman & Faust, 1994; Zhang... [et al.]. 2008). Studies about past ego-centric social network found that, on ones adoption of new product; ego-centric exert a significant influence. Survey method was used to collect information on respondents social contact and relationship in the past ego-centric network studies (Valente 1996). Respondents were likely to recall more of strong ties than weak ties. Distance between individual called social proximity is developed by the sharing the attitudes. Number of nodes that need to be traversed from one individual to another can be used to measure the distance between the individual. When ego faces an uncertain situation that has no direct answer, she will approach people who she knows and discuss the issue with them. After coming to a common understanding they start sharing the same perspective of the situation with each other (Burt, 1987; Zhang... [et al.]. 2008).

There are two types of social networks offline and online. Online social networks represent set of actors and their ties digitally. Recently there has been an increase in number of online social networking sites and its users. Unlike offline social networks the social proximity is no longer a constraint in online social networks (Hampton & Wellman, 2000; Wellman et al. 1996) and there User profile and an explicit representation of relation are more important (OMurchu, Breslin, & Decker, 2004). In the online social networks, members are bound together with the expression of their feelings and interest rather than physical closeness. Although they seldom or never met, online world members are even considered each other as their closest friends (Hiltz & Turoff, 1993; Zhang... [et al.]. 2008). This research paper will explain the product diffusion through social networking sites by taking movie as product. This can be achieved by reviewing various literatures about the aspects of movie marketing and about the blog influence among the adopters in watching a movie. Impact of film review on Box office performance: When quality of the product is difficult to determine before purchase, the consumer may relay on secondary cues which help them in their selection process. Product reviews written by experts is one important secondary cue that transmits information about the product (Reinstein & Snyder, 2005; Gemser... [et al.]. 2006). Experts can be defined as actors who can influence the selection process of consumers by virtue of specific knowledge or abilities attributed to them (Wijnberg & Gemser, 2000; Gemser... [et al.]. 2006). There are so many studies examining the impact of expert reviews of experience product like theatre and the performance arts. The lifecycle curve of film is typically quite short normally extent only for a week period. The word-of-mouth effects are likely to be more pronounced in the case of film lifecycle because of the social context and high involvement of the movie- going experience (Zufryden, 1996). There are two ways a film review can influence its audience. First, film review can influence the consumer in their selection process this is called the influence effect of film review. Second, movies success or failure can be predicted by the film reviews and this is called prediction effect of film reviews. There is a strong belief that film critics can play an important role in the success rate of movie because of their influence among the movie audience. Negative reviews can badly affect the movie performance, whereas positive reviews enhance the box office revenues. Due to this belief the movie distributers incorporate film review quotes in their advertisements (Gemser... [et al.]. 2006). If critics are influencers, they can create greater impact on the early box office revenue after that their role should weaken as other word- of mouth became available to the consumer (Eliashberg & Shugan, 1997; Gemser... [et al.]. 2006). In the case of critics predicting a films ultimate fate, their reviews should correlate with late box office revenue that early week revenue (Basuroy et al., 2003; Gemser... [et al.]. 2006).Therefore if the box office revenue is strongest in the first week then diminish it means the reviews have an influence

effect and if it is late and cumulative box office revenue then a prediction effect is present (Gemser... [et al.]. 2006). According to Basuroy et al. (2003), critics may act both as influencers and predictors and the first eight weeks reviews whether it is positive or negative are significantly related to box office receipts (Gemser... [et al.]. 2006). According to Ravid (1999) movie reviews are the source of projecting higher revenue, the more reviews a film receive, whether it is positive or negative the higher the revenue it will obtain(Neil... [et al.]. 2008). Blogs Blogs are personal journals on internet that facilitate interactive computer mediated communication through images, text and audio/video objects. The word blog is derived from the word Web Log and it refers to an online dairy of post that is sorted in reverse chronological order (May, 2003, p. 4; Trammell & Keshelashvili, 2005, p. 968; Kent, 2008). The earliest blog started at late 1990s (Dearstyne, 2005; Xiang Lin... [et al.]. 2007) and it became so popular communication medium during the past few years. Between mid-2003 and mid-2006 number of blogs increased 100 tiimes this is due the emergence of free easy-touse blogging services in the market (Sifry, 2006; Xiang Lin... [et al.]. 2007). Bloggers are heavy users of the internet and they are also engaged with tech-based social interaction (Lenhart and Fox, 2006) and most bloggers actually use blogs for individual expression and communication (Pew Internet & American Life Project survey; Xiang Lin... [et al.]. 2007). Collective of blogs is called blogosphere, it has its own terminology like those who post information to blogs are called bloggers and the act of creating or posting to a blog is called blogging. Blog readers are those people who read blogs but do not usually post any information to them (Emerging Industry Overview: Blogging, 2006) Blogs are the fastest- growing media, over 75,000 new blogs are created each day. Community sites and blogs can be utilise to measure and understand complex consumer decision making where actual decision might be made for less than rational reason (Cooke, 2006). According to Figueredo, (2005) blog may function as a personal diary, a daily pulpit, a collaborative space, a political soapbox, a collection of links or a set of memos of the world. So in general heterogeneous motivations are likely to reflect in blogs (Xiang Lin... [et al.]. 2007). Studies conducted by NArdi, Schiano, Gumbercht and Swart (2004) suggest that for a blogger to blog there are five major motivations, they are self-expression, life documenting, forum participating and information searching (Xiang Lin... [et al.]. 2007). Mobile internet is evolved from occasional activity to being a daily part of peoples life. In this mobile internet usage social networking and blogging have emerged as very popular and it is growing at a torrid pace (Mark Donovan, senior vice president, mobile, comScore, 2009) Figure x

Fundamental difference about Blogging and other Mainstream Media: (Corry & Mundell, 2006).
y y

Communication is generated by consumers itself Credibility of the information in the blog

Communication by the consumer to the consumer People who are writing blogs are mostly consumers and they put their own opinion about a product or brand in their blogs. This is type of communication is different from traditional media (Corry & Mundell, 2006). Credibility of the information In blogs readers always expected an objective conversation and this conversation can be an opinion or information that are not influenced by any external factors i.e. for promoting any specific product or point of view. According to a study conducted by Ipsos North America many of the blog readers trust the information in Blogs as media source (Corry & Mundell, 2006). For example cosmetic product consumers seek information about the product in various review blogs. They trust the information in the blog and it influences them in taking purchase decision. If the consumers have any problem about the product (negative review) they can post that in their blog, or they can post it on someone else blog (Zhang... [et al.]. 2008). Blogging can be considered as a form of viral marketing, several good qualities of viral marketing campaign including fun and intriguing, well targeted and credibility of the source are there in blogging (Dobele and colleagues, 2005; Singh... [et al.]. 2008). Blogging is more effective than viral marketing because of its bidirectional nature with long life span and it is considered to be more interactive and dynamic. Due to these effective natures of blogs, it has quickly become a major force in new generation of marketing. Blogs are going to be more explosive outbreak in the information world since the internet itself (Baker & Green, 2005, p. 56; Singh... [et al.]. 2008). Movie Blogs Film critics play a major role on the success or failure of a film (Weiman, 1991). According to Eliashberg and Shugan (1997) critics can play a role of an influencer or a predictor. Based on the review written by the critic, he or she can influence the box office results and they do have the ability to manipulate the box office revenues. A critic can predict the success of a movie on the basis of his or her review but these reviews necessarily dont have any impact on the performance of the movie at box office. Compared to influencer, predictor does not have much impact on the box office success even though they can generate an initial curiosity among the consumer (King, 2007; Neil... [et al.]. 2008). Now a days film reviews are

available in newspapers, magazines and through online (blogs and other websites). The availability of these critical reviews in advance of a movie release can create a positive or negative response in the opening week itself. Film critics are considered as advisors to their readers because they are more explicit in their recommendation. Cinema audience are younger than the general population so they are more interested in online reviews than print reviews (King, 2007; Neil... [et al.]. 2008). The result of a study conducted by Reinstein and Snyder, (2000) shows that the entire critic population does not necessarily influence the consumer demand instead only a few critic reviews can create an impact on the decision process of the consumer. The reports concluded that the impact created with the positive review is surprisingly larger and it can affect a positive response on box office revenue. Recent studies revealed that more than a positive review, a review containing high information content about a movie can create more interest in a film (Wyatt and Badger, 1990; Neil... [et al.]. 2008). Chapter 3: Research Methodology This research aims to investigate the product diffusion happening in social networking website. From the WOM and product diffusion literature review it has clearly discussed the role of influential individuals or opinion leaders, in spreading information ((Bass 1969, Katz and Lazarsfeld 2005; Dewan & Ramaprasad, 2007). Second part of the literature review discussed about the importance of WOM created by blogs particularly in understanding the valence associated in the review.