Red packets have symbolised happiness and good luck in
East Asian and Southeast Asian societies for hundreds of
years. Recently, online retailing platforms have adapted and
modernised this ancient tradition by introducing the social
red packet. This new form of red packet contains digital
coupons that can be shared through consumers' social
networks.
Inspired by this reinvention, Dr Huazhong Zhao, Assistant
Professor in the Department of Marketing and coauthors
conceptualised social promotion as a promotion
customisation framework under which consumers with
higher social network value receive better promotional
rewards.
To test the effectiveness of social promotion, Zhao and his
co-authors conducted an empirical study at a leading online
food delivery platform in China. They aimed to answer the
following research questions: (1) Does the social promotion
strategy benefit consumers? If so, which segments of
consumers can benefit most? (2) Does social promotion
motivate consumers to enhance the commercial value of
their social networks? (3) What characteristics of focal
consumers and their social networks moderate the above
effects in social promotion campaigns?
The study shows that social promotions can benefit both
consumers and the platform. The vector autoregression (VAR)
analysis reveals that under social red packet promotions,
consumers with higher social network value enjoy larger promotional rewards due to the socially shareable design.
Social promotion can benefit the platform as well: Larger
promotional rewards motivate consumers to increase the
value of their social networks by voluntarily recruiting new
consumers or cultivating frequent consumers, which in turn
helps the retailing platform reach its promotional goals.
This research provides important conceptual and practical
implications. Conceptually, social promotion is proposed as
a new framework of promotion customisation. To the best
of the authors' knowledge, this study is the first attempt
to explore customised promotion strategies based on
consumers' social network value. Like price discrimination,
in which sellers manipulate prices based on consumers'
willingness to pay, promotion customisation aims to
manipulate promotional rewards based on consumers'
value to the sellers. Social promotion aims to customise
promotional rewards based on a consumer's social network
value.
Practically, this study offers novel insights into the emerging
social commerce research by identifying a segment of price
sensitive but socially active consumers. Such consumers are
considered to have low personal value among traditional
promotion strategies targeting customer lifetime value,
but they possess high value to the firm due to their
social network connections. By identifying this promising
segment, The study offers new insights on how to improve
effectiveness of social promotion by targeting consumers
with specific characteristics.
