Social networking has evolved rapidly, providing huge potential for businesses to market online in a cost-effective and efficient manner. The word-of-mouth advertising that takes place in these networks is one of the fastest modes of advertising for the companies. Another positive aspect is that companies can directly communicate to the customers and understand their needs. This article examines how social networking can be used by the companies to increase sales and business performance.

Social networking has become a cultural phenomenon for all the mass media. It helps the people to make their profile, share their thoughts and feelings in the blogs and thus develop a network. People can thus connect very easily through social marketing. Exhibit 1 displays the networking between the people. Online communities where people can share their ideas are known as social networking sites. The approach of the marketers towards these members depends on their nature of business. Social networking is considered to be a stable revenue generating model in marketing. In 2006, marketers spent $280 mn on social networking in US. In the other markets $70 mn was spent by the marketers in order to create a profile. Number of users has also increased in different countries over a period of time.

Traditional marketing tools are becoming ineffective as the profile of the audiences has changed. Their media habits have also changed and they now prefer the personal computer and the Internet over the television. Social networking is a kind of informal conversation between the customer and the marketer. They are entertained as well as informed about the new ideas by the marketers. Through social networking, marketers reach their particular target segment as has been displayed in Exhibit 3. After reaching the customers, marketers can have round the clock communication with the customers. While communicating with them they can get the feedback about the product. With this feedback they can also make certain modifications in the product. This helps in developing trust and long-term relationship with the customers. This kind of relationship motivates the customers for repeat purchase. It helps the marketers to expand their business.

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