Chapter 8 Social Computing © Logorilla/iStockphoto

Chapter Outline 8.1 Web 2.0 8.2 Fundamentals of Social Computing in Business 8.3 Social Computing in Business: Shopping 8.4 Social Computing in Business: Marketing 8.5 Social Computing in Business: Customer Relationship Management 8.6 Social Computing in Business: Human Resource Management 8.7 Crowdsourcing

Learning Objectives Describe six Web 2.0 tools and the two major types of Web 2.0 sites. Describe the benefits and risks of social commerce to companies. Identify the methods used for shopping socially. Discuss innovative ways to use social networking sites for advertising and market research. Describe how social computing improves customer service. Discuss different ways in which human resource managers make use of social computing. Discuss the advantages and disadvantages of crowdsourcing to organizations.

Introduction Opening Case: Tiger Tans and Gifts Human behaviors and decisions are influenced by their social context. Social computing combines social behavior and information systems to create value. Users, rather than organizations, produce, control, use, and manage content via interactive communications and collaboration.

8.1 Web 2.0 Web 1.0: First generation of the Web Focuses on creation and commercialization of the Web Web 2.0 A loose collection of information technologies, applications, and the Web sites that use them A new digital ecosystem that promotes creativity, connectivity, collaboration, convergence, and community

Web 2.0 Applications AJAX A Web development technique that enables portions of Web pages to reload with fresh data instead of requiring the entire Web page to reload Tagging Using a tag (a keyword) to describes a piece of information in multiple, overlapping associations rather than in rigid categories Geo-tagging: Tagging information on maps Really Simple Syndication (RSS) Subscribers receive customized information when they want it, without having to surf thousands of Web sites Subscribers receive a notification of the changes and information about the new content

Web 2.0 Applications Blogs (or weblogs) Personal Web sites, open to the public The site creator (blogger) expresses his/her feelings or opinions via a series of chronological entries Blogosphere: Millions of blogs on the Web Service providers: www.blogger.com, www.xanga.com Microblogging A form of blogging using short messages, image, or video Example: www.twitter.com Wiki A Web site made up entirely of content posted by users Promotes collaboration Example: www.wikipedia.org © esolla/iStockphoto

Web 2.0 Applications Social networking Web sites A Web site that supports activities for maintaining social networks Allow users to create a profile page, post blogs, and link and media share Enterprise social networks Business-oriented social network www.linkedin.com Corporate social networks Mashup A Web site that takes different content from other Web sites and mixes them together to create a new kind of content Example: www.housingmaps.com

8.2 Fundamentals of Social Computing in Business Social commerce The delivery of electronic commerce activities and transactions through social computing Supports social interactions and user contributions See Table 8.2 for benefits of social commerce What are the risks of social commerce? Risks of social commerce • Negative, unedited, and possibly invalid and unethical reviews • Potential bias content (20–80 rule of thumb: 20% of individuals contribute 80% of the content • Information security concerns • Invasion of privacy • Violation of intellectual property and copyright • Employees’ reluctance to participate • Data leakage of personal information or corporate strategic information • Poor or biased quality of users’ generated content • Cyberbullying/cyberstalking and employee harassment

Benefits of Social Commerce

8.3 Social Computing in Business: Shopping Social shopping A type of e-commerce using social networking tools to enhance the shopping experience Ratings, reviews, and recommendations Guide consumers in purchase decisions Examples: www.epinions.com, www.shopsocially.com Group shopping Major discounts offered for a short time Examples: www.groupon.com, www.livingsocial.com

Social Shopping Shopping communities and clubs Offer discounts for members for limited time without diminishing a brand’s image Examples: www.ruelala.com, www.kaboodle.com Social marketplaces and direct sales Social marketplaces: Online intermediaries using social networks for buying and selling products and services Examples: www.craigslist.com, www.flipsy.com Peer-to-peer shopping models Support bazaar-style and bartering systems Encourage collaborative consumption: Peer-to-peer sharing or renting www.relayrides.com

8.4 Social Computing in Business: Marketing A process of building profitable customer relationships by creating value for customers and capturing value in return Two main processes: Advertising Market research

Social Advertising Social advertising Leverages user dynamics to influence consumers Peer pressure, friend recommendations, likes, etc. Social apps Branded online applications that support social interactions and user contributions Nike+ app Viral marketing (word of mouth)

Market Research Market research The open nature of social networking allows merchants to understand, identify, and target potential customers at zero or low cost Conversational marketing Using blogs, wikis, online forums, and social networking sites to collect feedback from customers Social intelligence A process of monitoring, collecting, and analyzing socially generated data to support strategic decisions How do companies use social media tools such as Facebook and Twitter for market research? Using Facebook for Market Research • Get feedback from Facebook fans and their friends on advertising campaigns, market research, etc. • Test market your messages. Provide two or three options and ask fans which one they prefer and why. • Use Facebook for survey invitations (i.e., to recruit participants). Using Twitter for Market Research • Follow tweets about the company • Monitor industry-specific keywords. www.twellow.com • Follow the most frequently used words www.tweetstats.com

8.5 Social Computing in Business: Customer Relationship Management Social computing helps improves customer service Companies are aware of the effects of negative comments posted by social network members Opportunity to involve customers proactively to reduce problems through improved customer service

8.6 Social Computing in Business: Human Resource Management Recruiting Recruiters scan online social networks, blogs, etc. to find information about potential employees Job seekers are more visible to recruiters if they are online and active Training Several companies use virtual worlds for training purposes www.secondlife.com Cisco uses its virtual campus in Second Life for product training and executive briefings IBM runs management and customer interaction training sessions in Second Life

8.7 Crowdsourcing Taking a job traditionally performed by an employee or a consultant and outsourcing it to an undefined group of people in the form of an open call Assumption: A large number of enthusiasts can outperform a small group of experienced professionals Let freelancers, volunteers, customers, and low-paid amateurs solve problems, innovate, and get work done Examples: www.innocentive.com; www.istockphoto.com What are the benefits and risks of crowdsourcing? Benefits of crowdsourcing • Problems can be explored at relatively low cost, and often very quickly • Many times crowds solve problems for free • The organization can tap a wider range of talent than might be present in its own organization • By listening to the crowd, organizations gain firsthand insight on their customers’ desires • Crowdsourcing taps into the global world of ideas, helping companies work through a rapid design process Risks of crowdsourcing • How accurate is the content created by nonexperts in the crowd? How is accuracy maintained? • How is crowd-created content being updated? How can companies be sure the content is relevant? • Should the crowd be limited to only experts? How would a company go about doing that? • The crowd may submit too many ideas, with most being worthless. If this happens, it can cost too much money to evaluate all of the ideas. • Content contributors may violate copyrights, intentionally or unintentionally. • The quality of decisions depends on the composition of the crowd. The best decisions may come if the crowd is made up of diverse opinions and ideas. But, in many cases, companies do not know the makeup of the crowd in advance.

What’s in IT for ME? Accounting Audit teams use social networking technologies to support communications Finance Finance-oriented groups on social networking sites provide access to expertise and potential clients Marketing Marketing professionals use social computing tools to become closer to their customers Production/Operations Management Production personnel use social computing tools to “enlist” business partners and customers Human Resources Management HR professionals use social network for recruiting activities MIS MIS department develops and monitors employee usage of social computing applications while at work

Closing Case 1: Facebook Commerce Questions What are the advantages for a business conducting commerce on Facebook? The disadvantages? What are the advantages for customers conducting commerce on Facebook? The disadvantages?

Closing Case 2: Social Computing at Starbucks Questions Compare and contrast Starbucks’ marketing strategies across the various social networking sites. Describe possible disadvantages of Starbucks’ use of social computing in its marketing efforts. Provide specific examples to support your answer.