Social Media and Kathmandu Facebook Page free essay sample

The purpose of this report is to answer the question: How do social media and consumer-generated content change the way marketers operate? To answer this question this report uses an analysis of the outdoor clothing company Kathmandu who uses retail stores and an online presence including a Facebook page for marketing their products. The report found that with the increase in media fragmentation, companies like Kathmandu that build an online community of customers engaged with their Facebook page; help ensure their customers are more attentive and favourable to their brand. The report reviews why consumers befriend (‘like’) a company on Facebook and found that the key reasons are to receive discounts and show brand support to their friends. The findings also show that consumers are more likely to trust a brand that has been recommended by their friends or networks on social media. Within the discussions around social media, the report found that there is an increase in consumer generated information from online social media sites such as Facebook, resulting in a need for companies to be customer centric in order to maintain a good reputation or risk damaging their brand. We will write a custom essay sample on Social Media and Kathmandu Facebook Page or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The findings also show that for marketers to make the most out of marketing through Facebook they need to understand why their customers use the site, for instance Facebook is not yet used widely as a place to shop but instead as a place to socialise, connect with peers, share information, photos, organise events and promote what is important to them. Companies that take advantage of this are most likely to gain the best result through marketing on Facebook. Using the findings the report offers three key guidelines for small companies looking to develop a Facebook page. They include; the need to have an interactive page for their customers to keep them engaged; realising the true value of Facebook by increasing their reach and frequency and lastly making sure their online experience is mutually supportive of their offline retails outlets to increase brand awareness and sales. Overall this report found that companies that engage their customers through Facebook and use it as a connection hub to other online and offline marketing initiatives, are likely to gain the greatest impact from using social media as a marketing tool. 2. 0 An Introduction to Kathmandu Holdings Limited Kathmandu Holdings Limited is a New Zealand-based company with operations in New Zealand, Australia and the United Kingdom. The company was founded by John Pawson and Jan Cameron in 1987 following their sale of the ALP Sports Clothing label. The company set up its first retail outlets in Australia whilst manufacturing most of its original clothing range in New Zealand. The companies head office is based in Christchurch, New Zealand and employs approximately 150 staff and includes departments from design to supply chain, marketing to finance, HR to store support, online and customer service to IT support. Kathmandu became a listed company is November 2009 on the Australian and New Zealand stock exchanges. Source (Wikipedia, n. d. ) 2. 1 Products Kathmandu sells a range of different types of clothing and equipment for travel and outdoor activities as shown in image A below. Their products are known for being good quality, middle to high price products that last a long time. On the Kathmandu website they use the following description of their products: ‘Our products are widely known for their quality, reliability, ingenuity and versatility. Lab testing ensures we consistently meet or exceed international standards, while plenty of action in the field means we know our products work the way they’re meant to’. (Kathmandu, n. d. ) Image A: Kathmandu’s product range | | | | Outdoor clothing for adults and children including fleeces, beanies, trekking shoes, gloves and even socks for wearing on a plane to prevent swelling. | Camping gear such as tents, sleeping matts, picnic rugs, head torches, coffee flasks. | Packs and bags such as backpacks, money belts| Accessories such as umbrellas, water bladders, bike seat covers and motion sickness relief wristbands. Kathmandu, n. d. )| 2. 2 Target market and key financials Kathmandu’s target market is primarily active adventurous outdoor people of all ages from the experienced adventurer to the entry-level explorer. They also have a secondary target market of anyone who likes to travel. Image B: Kathmandu’s global financial performance over the las t 3 years: Year| NPAT| Growth| Share price at end of year| Sales (NZ mill)| FY2010| $9. 4m| 0| $2. 05| $245. 8| FY2011| $39. 1m| 316%| $2. 20| $306. 1| FY2012| $34. 9m| -10. 70%| $1. 59| $347. 1| (ASX, 2013) As shown in image B above, Kathmandu has delivered impressive growth and increased sales in the last 3 years. With its innovative designs such as polypro thermal underwear and waterproof hiking boots the retailer is less exposed to competition from other fast-fashion retailers. Today as shown on 23 March, 9. 20am, Kathmandu’s share price is 1. 95, showing the business is continuing to survive well in a tough retail environment. (ASX, 2013) Kathmandu’s key financial highlights for the year ending 31 July 2012 were: * Growth in sales by 13. 4% to $347. 1 million Gross profit margin of 63. 2% 2. 3 Analysis of key financials An analysis of the key financials shown above shows that the following key strategies helped to increase Kathmandu’s revenue and sales over the last few years. In 2012 Kathmandu increased their level of on-going investment in its brand, products and retail channels to support the future growth of the company. This was during a time when retail sa les worldwide were in decline due to ‘uncertain times’ with the economy, causing consumers to spend less in retail stores (particularly seen in Australia). Plus an increase in online shopping, with consumers having more options to buy from international competitors thereby reducing the amount spent in retail stores. The focus of the company to grow their market share in the medium and long term, resulted in an increase in sales however not an improvement in profit due to the costs associated with their growth strategy and investment. The company also introduced loyalty incentives for their regular buyers (Summit club) which increased sales however reduced gross margins. Part of the growth plan for Kathmandu also included the development of a new nline channel and improved direct to customer communication and marketing opportunities through electronic and social media, allowing the company to sell and service customers globally. (Kathmandu, 2012) Kathmandus chief executive Peter Halkett said he saw the current economic conditions as the new normal. Provided there is no further deterioration in economic conditions, following the investmen t program in 2012 Kathmandu expects an improvement in performance in the business, Mr Halkett said, without providing specific guidance. He said the greatest growth opportunity was in Australia, where Kathmandus market penetration per capita is only one-third of what it is in New Zealand. † (AAP, 2012) Analysts believe Kathmandus biggest hurdles for maintaining the same levels of store sales is the potential cannibalism of their existing stores from the opening of new stores and growing market penetration share as competitors such as Anaconda, BCF and Mountain Designs open new stores. (Mitchell, 2012) Interestingly, Jan Cameron the founder of Kathmandu sold the business to a private company in 2006. In 2011, she bought a large share of Macpac another business to rival Kathmandu’s adventure gear. Macpac is a New Zealand based adventure clothing and equipment store for hard core adrenaline people. The company has since spread internationally including many states within Australia. When Jan first took on the opportunity her goal was to offer quality products at a more competitive price than Kathmandu. Analysts have shown that this will be a tough feat for Jan due to Kathmandu being a much larger brand name since she sold it in 2006. (Carruthers, 2011 ) In summary Kathmandu holds a steady place in the markets it sells to and with increased market share through new outlets in Australia, Kathmandu is one of the best known outdoor clothing specialists in New Zealand and Australia and this is unlikely to change any time soon. 3. 0 An investigation of Kathmandu’s Facebook page 3. 1 Marketing on the Kathmandu Facebook page The Kathmandu Facebook page is very inspiring, image C, shows the front page of their page containing pictures of people doing amazing sports and seeing beautiful places, it makes you want to book a holiday or just get outside and climb a mountain! They have over 50,500 likes (as shown on March 24) and growing (over the last week there has been 300 new likes), and over 800 people taking about them, it is a very popular page. Image C: Screenshot of Kathmandu Facebook page (Kathmandu, 2013) The Kathmandu Facebook page offers weekly ‘online only’ deals where customers are directed to their country webpage to take advantage of the special deal. The page is also used to advertise their new products, to provide membership information for their Summit club of regular customers, competitions for products and trips away as well as unique things to see and do with the goal of inspiring travel and adventure and therefore an increase in the need to buy outdoor clothing. The below post in Image D showing an article on the new submarine ‘Ego’ is an example. Image D: Ego Submarine (Kathmandu, 2013)| Korean based design firm Raonhaje has designed this fascinating semi submarine called the â€Å"Ego†. Passengers can observe underwater life via the submerged windows. They also get to enjoy the above water deck! http://www. egosubmarine. com/| The Kathmandu Facebook page allows their customers to ask questions or make general comments such as discussions about their customer service, stores and products. The posts are then responded to by Kathmandu staff, creating a platform for customers to find out information as well as offering Kathmandu the ability to discover more about their customers likes and dislikes. Kathmandu also uses their page to advertise other company’s products that relate to travel and adventure. Image E shows an example below of a new innovative toothbrush. Image E: New innovative toothbrush | Little pet peeve: when your mouth touches a hotel tap when rinsing after brushing your teeth. Say goodbye to that thanks to this amazing tooth brush design! Flowing tap water now becomes a mini fountain for rinsing 🙂 More here: http://www. amronexperimental. com/Amron-Oral. html| (Kathmandu, 2013) Kathmandu, in interests of being seen as a ‘good corporate citizen’ also uses their Facebook page to promote environmental issues such as World Water Day, one of their recent posts shown in image E is below. Image E: World Water Day Its World Water Day and we all know how precious water is! Theres no better day than today to share awareness of this event and encourage water saving behaviour. Do you have any great water-saving tips to share? (Kathmandu, 2013) 3. 2 Engaging their customers through Facebook The Kathmandu Facebook uses several different ways to engage their customers. Their page contains photo albums and videos of different adventure races, photos of every day regular people doing inspirational outdoor activities wearing Kathmandu clothing, such as mountain biking, trekking, camping and sailing. Their photo albums also include photos that customers have sent in of their outdoor adventures and races/events they have participated in. There is an ‘Events’ page set up to advertise upcoming events such as their upcoming Easter sale in all retail stores. Many consumers like to be able to use the online space to search information about a product before they buy. Companies must have interactive Facebook pages to allow their customers the chance to find out more information about a product. (Nesterenko, 2013) For example this new iphone product below is advertised by Kathmandu in Image F. Image F: Kathmandu Iphone product One of their customers Brenda has asked â€Å"Why would you need this when you can get a go pro. Much more robust than an iphone†. Kathmandu has responded with: â€Å"Agree Brenda. This is a cheaper and easy solution for someone perhaps not quite up to the Gopro level. † The response from Kathmandu gives customers a reason to buy if they are looking for an easy solution that is not has expensive as a Gopro and suits their basic needs. Having an interactive page with deals and competitions, photos, discussions and new and interesting products, increases the customer activity with the Kathmandu brand, with the purpose of leading to greater brand awareness and therefore greater sales. Their page is their social hub and not where they do their actual sales. There is no option for customers to buy their products through Facebook but instead is used as a channel to advertise their websites in NZ, Australia and the UK and their Kathmandu Ebay online store, where customers can click through to purchase products advertised. This is a two way channel with each countries individual website page linking to the Facebook page when customers click ‘Like’ on the Facebook icon provided. 3. 3 What Kathmandu could do to improve their use of Facebook The only thing lacking from the Kathmandu Facebook page is a bit more about the identity of their staff and the team behind the Facebook page. Whilst there is a couple of posts showing pictures of the team in certain locations, the page could do with more of this to give it a personal identification so customers visiting feel they are interacting with actual people who care and not just a Facebook page. For example, I tried asking a question regarding a product by sending a message to their Facebook email and did not receive a response for several days. Customers who are engaged with a company’s Facebook content become more attentive and often more favourable to the brand. Frost, 2012) Surprisingly Kathmandu’s key competitors Anaconda and Mountain Designs do not have a presence on Facebook. The marketing department of Kathmandu have done a good job of using their Facebook page to engage customers by enticing them to participate in their content or media, upload photos/videos, post comments, participate in competitions and express their opinions on new products, customer service and all aspects of the company. This then leads to co-creation where users of their products help marketers create products and advertising leading to an increase in customer satisfaction and sales. Frost, 2012) 4. 0 Building and maintaining customers using Facebook 4. 1 Why consumers ‘Like’ pages on Facebook Facebook started out as meeting space for users to build their own online identity and interact with others. Today, Facebook has developed into a full-scale recommendation centre. ‘Liking’ a page on Facebook serves as an opt-in for ongoing communications with the owner of that page and location-based recommendation service ‘Places’ leverages local knowledge and word of mouth. Harris amp; Dennis, 2011) A study by Chadwick Martin Bailey, found that 33 per cent of Facebook users are fans of brands, and 60 per cent of these consumers are more likely to purchase or recommend to a friend after ‘liking’ a brand. The most popular reasons consumers gave for ‘liking’ a brand were to receive discounts and show brand support to their friends. (J, 2010) Actual sales transactions are still in the early days for Facebook with only a few innovators such as Avon permitting an entire purchase to be completed without the consumer needing to leave Facebook. Harris amp; Dennis, 2011) Instead the site is a social hub for consumers to seek and share information on brands sometimes resulting in purchasing products through other means. 4. 2 Consumer trust on Facebook Trust is a very important factor to shoppers when buying online. A recent Nielsen study which showed that consumers trust their friends and family more than any other source of information about products and services, and that online product reviews by consumers are trusted more than information posted directly on a company website. Nielson, 2010) Social media sites such as Facebook enable consumers to generate and tap into the opini ons of an exponentially larger universe through social word of mouth. While word-of-mouth has always been important, its scope was previously limited to the people you knew and interacted with on a daily basis. Social media has removed that limitation and given new power to consumers. (Neilson, 2012) 4. 3 Connecting customers through social networks Consumers are bringing their online experience into their own social networks such as Facebook rather than engaging directly on company’s website. Thousands of media vehicles within each media class vie for the attention of the media consumer. Marketers are now faced with increased media fragmentation, where marketers attempt to use as many online social media platforms as possible in an effort to reach a potential audience. This can cause fragmentation of attention and resources away from what suits the company best and whatever ‘strategy’ was put into place. Nelson-Field amp; Erica, 2011) On the Investor relations page of Facebook their mission is quoted as being: To make the world more open and connected. People use Facebook to stay connected with friends and family, to discover whats going on in the world, and to share and express what matters to them. (Facebook, 2013) Companies need to be forward thinking and move away from the reliance on the centrally contr olled mass broadcast towards the development of personal and localised relationships with well-informed and demanding customers. Harris amp; Dennis, 2011) Today marketers need to consider that consumers are not yet using Facebook as a place to shop but instead as a place to socialise, connect with peers, share information, organise events and promote what is important to them. Companies that understand this and use Facebook as a connection hub to other online and offline areas of their company are likely to get the best value from using Facebook. 5. 0 Three key things for a small company to consider when building a Facebook To make the most out of marketing through Facebook, there are three key things a small company needs to consider when building a Facebook page, including: 1. Using online interactivity to engage customers 2. Measuring the impact of Facebook through greater reach and frequency of content 3. The importance of having a mutually supportive online customer experience to the offline experience In today’s current environment with economic uncertainty and the rise of competition through online global ompanies, small businesses need to be able to compete in a tough environment where consumers have the option to search online through 1000’s of different sites to find the best deal for the product they are looking to buy. Companies need to be able to find ways of offering customers more value for less money to keep them from straying to a competitor. If a company does not treat their customer’s right they risk enormous brand damage through the ability of customer complaints through social media channels reaching a large audience. Before Social Media came along a customer complaint may spread as far as that customer’s family and friends and no further, today you hear stories of customer complaints going viral to millions of people overnight! Brands that were formally shaped by managers of the company are now being shaped by consumers through online consumer generated content including conversations and insights. The online world is a customer – centric model. Consumers have a greater influence over products and brands through co-creation where they can give opinions on products and advertising. Social media sites such as Facebook create communities of people where opinion leaders and peer groups can influence the brands that consumers choose to like and buy from. For example on Facebook you can see what pages your friends like and this can then influence what brands are considered cool or trendy. 5. 1 Using interactivity to engage customers For a small company looking to build a Facebook page one of the key points they should consider is how interactive their Facebook page is. Customers engaged with a company’s content become more attentive and often more favourable towards a brand. Frost, 2012) The Facebook page should not be seen as just a page to advertise products and services. For example as shown in this report, Kathmandu uses their Facebook page to advertise travel, adventure, competitions, new products, sporting and adventure events and other company product innovations relating to travel and adventure all with the goal of increasing customer activity, brand exposure and understanding of their customers wants and needs. Research shows that twice as many brand-related searches on social networking sites relate to user generated content than to marketer-created content. For a smaller company in particular that does not have an existing well- known brand, in order to build brand awareness they must engage their customers and increase user generated content about their brand. (George amp; Jevons, 2012) 5. 2 Measuring the impact of Facebook through greater reach and frequency of content The second key thing a small company should consider when opening a Facebook page is how to gain the greatest reach and frequency of their content to determine the true value of Facebook marketing. Just measuring the amount of Likes, comments or mentions a Facebook page receives is not an accurate way to measure the impacts on customer activity. For example, the newsfeeds section of a consumers Facebook page is where most branded material is consumed. Consumers control this by hiding news they don’t want to see. Therefore a company like Kathmandu may have over 50,000 ‘Likes’ however it may be possible that only a small percentage of consumers who like their page actually choose to see their communications within their newsfeed. Simply knowing how many brand mentions exist does not provide a true understanding of the impact the content has on consumers. Research has shown that a measurement approach that focuses on reach and frequency within audience types (for example, fans and friends of fans) can lead to a dramatically better understanding of how and where brand messages are reaching consumers and the true value of a ‘Like’ or ‘Fan’. (J, 2010) Examples of ways in which a small company with limited marketing budgets can increase the reach and frequency of their content include: Page publishing: Unpaid advertising appears on a Fans page and may also appear in the newsfeed of a fan or a friend of a fan. †¢ Stories about friends: These unpaid impressions occur when a friend actively engages with a brand (e. g. Nicole indicates she â€Å"likes† Kathmandu outdoor sportswear) and become visible either on a friends wall or in the newsfeed. These stories may appear to fans and friends of fans. †¢ Sponsored stories: These paid impressions are similar to stories about friends, but they have been actively distributed more broadly and appear in the right hand column to fans and friends of fans. Advertisements with social: These branded messages come directly from the advertisers with a social context that appears to friends of fans, see example in Image G below. (Lipsman, et al. , 2012) Image G: branded message Facebook From Stephanie Stephanie amp; Dove displaced a feel-bad ad with this positive message. Send yours. Senta Vonck likes Dove. (Facebook, 2013) In conclusion a company looking to build a Facebook page to engage their customers can increase the impact their content has by using different paid and unpaid ways to distribute their content to their ‘Fans’ as well as their friends and other contacts. Just like in the offline world, the higher the reach and frequency of advertising the higher the brand exposure, leading to higher sales. 5. 3 The importance of having a mutually supportive online customer experience to the offline experience The third key thing a small company looking to set up a Facebook page should consider is how to make the online experience for their customers mutually supportive to the offline experience of visiting their retail store. This is important to ensure as many customers as possible know about new products, offers and promotional sales. In today’s environment with increasing competition and slow sales within retail, both cannot survive without the other. Below are two examples of ways to ensure mutual support of online and offline marketing: Promoting offline events through online ads, social sharing and blog posts dedicated to the events. For example Kathmandu on their Facebook page advertises their sales promotions for their retail stores. An example of this is shown in Image H from Kathmandu Facebook site and their Brookvale, Sydney retail store: Image H: Easter Sale on Kathmandu Facebook page and Easter Sale in retail outlet Warringah Mall. Kathmandu, 2013) 6. 0 Conclusion In today’s customer centric world, marketers need to have a good understanding of what their customers’ needs and wants are. Social media sites like Facebook are an excellent platform for marketers to learn more about their customers through building online communities and engaging in authentic and transparent communicatio n. Companies now have access to a much wider audience and at the same time consumers are able to research many different sources of information about a company’s products or services through website chat rooms, opinion boards and their networks on social media. By building communities using social media platforms such as Facebook, companies through consumer-generated content are able to market their products to a larger audience and build greater awareness of their brand. Companies such as Kathmandu can no longer rely only on advertising within their stores or offline advertising such as magazine ads and TV commercials, those who do not include social media as part of their marketing strategies are in danger of being left behind by competitors who do.