Abstract
This paper estimates the impact of social media conversations on consumer valuation of brand characteristics and demand for carbonated soft drinks (CSDs). We formulate a random coefficient, discrete choice model of consumer demand that includes social media conversations, and estimate it matching Nielsen sales data on carbonated soft drinks to social media conversations on Facebook, Twitter, and YouTube. Empirical results indicate that consumers’ conversations about brands and nutritional aspects of CSDs have a significant impact on their valuation of brand characteristics and ultimately on their choices of CSDs. These findings have important implications not only for firms using social media as a strategic tool for effective brand promotion and product design but also for public health policies aimed at reducing the consumption of sugary beverages and high-calorie foods.
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Notes
As used in this article, social media include social networks (e.g., Facebook), video-sharing sites (e.g., YouTube), microblogging (e.g., Twitter), etc. This is of course a simplification of the social media universe, which includes other means by which people create, share, and/or exchange information and ideas in virtual communities and networks, including consumer product reviews on Yelp, Google, Amazon, and many other sites.
Although this point is often raised by public health advocates and public officials, companies continue to lobby against policies to restrict CSD consumption, such as restricting advertising and container sizes and imposing taxes (Liu et al. 2014).
The DMAs are New York, Detroit, Atlanta, Chicago, Los Angeles, Boston, Hartford/New Haven, Syracuse, Dallas, Miami, San Francisco, and Seattle.
Shweidel, Moe and Boudreaux (2011) construct the social media sentiment score from various social media services and find that the different types of social media services developed brand sentiments in different situations. However, in our data, the great majority of all conversations come from one site—Twitter. Therefore, we only use one online sentiment score.
Calories are also an important nutritional factor for CSDs. However, since calories are highly correlated with sugar, with a correlation coefficient of 0.9995, we do not include calories in the analysis.
Since conversations on sodium were too few to be of statistical value in the empirical model, we do not include them in the analysis.
We do not report here the full results on the dummy variables due to space limitation. The full results are available upon request.
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Acknowledgments
The authors acknowledge funding from the Zwick Center for Food and Resource Policy at the University of Connecticut via USDA-NIFA Grant 2010-306-34178-20766.
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Liu, Y., Lopez, R.A. The impact of social media conversations on consumer brand choices. Mark Lett 27, 1–13 (2016). https://doi.org/10.1007/s11002-014-9321-2
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DOI: https://doi.org/10.1007/s11002-014-9321-2