Is Social Media the Future of Marketing for the Automobile Industry in Australia?

This research report explores the advantages and disadvantages of social media marketing and its impact on the automobile industry in Australia. It evaluates whether adoption of social media marketing can enhance the profitability of the automobile companies in comparison to conventional marketing techniques.

Running head: RESEARCH REPORT
‘Is Social Media is Future of Marketing for Automobile Industry in Australia?’
Name of the Student:
Name of the University:
Author note:

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1. Introduction
Social media is a big revolution for modern world. In the era of technological
advancement and revolution, the easy availability of internet and devices with smart technology,
such as, smartphones, tablets, laptops etc. has made not only life easy, but has also made the
world a smaller place. After globalization, as the industrial world is growing, it is expanding the
market also. Hence, to address the larger audience, locally as well as globally, the companies are
taking the help of internet. Social media has become a very powerful medium in the last decade
and the corporate world and the industries are taking advantages of social media for reaching out
to a much larger market in a time and cost efficient way (Paliwal, 2015). As per the report by
Statista (2019), there are 2.77 billion users worldwide in the year 2018, which increased from
2.46 billion in 2017. Thus, it is a large and powerful number for social media users, which, if
tapped effectively, can lead to a massive impact on the business performance of the companies.
Majority companies now-a-days use social media for marketing activities. There are
various advantages of social media as a part of digital marketing strategy. It improves brand
awareness, it is time and cost efficient, it enables more direct connection with the customers and
thereby leads to improved brand loyalty (Paliwal, 2015). Thus, social media is now being used
widely in digital marketing. The automobile industry of industry of Australia mostly depends on
imported cars as the car manufacturing by the pioneer companies, such as, Ford, Toyota and
Holden, has been closed down due to high cost of production (Maxcy & Silberston, 2017).
Although, the existing companies are still using the traditional marketing techniques, they are
also adopting the social media marketing to capture a larger market share as well as retain them.
This research report will document the importance of social media marketing and its impact on
the automobile industry of Australia.

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1.1 Research aim and objectives
The aim of the research report is to explore the advantages and disadvantages of social
media marketing and its impact on the automobile industry of Australia. The report will also
evaluate whether adoption of social media marketing can enhance the profitability of the
automobile companies in comparison to the conventional marketing techniques.
The research objectives are:
 To explore the advantages and disadvantages of social media as part of digital marketing
 To evaluate the impact of social media marketing on the Australian automobile industry
 To assess if social media marketing is beneficial for increasing the profitability of the
Australian automobile industry in the future
1.2 Research hypothesis
H0: Social media marketing do not have any impact on the profitability of the Australian
automobile industry
H1: Social media marketing has significant impact on the profitability of the Australian
automobile industry
2. Literature review
2.1 Social media and its different aspects
Social media is a huge revolution in the era of advanced technology. Within a decade,
social media has been successful in bringing revolutions not only in the lives of millions of
people but also in the course of business performances (Ngai, Tao & Moon, 2015). The social
media platforms have penetrated quite deeply in the systems of daily life, and affected formal

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and informal interactions of people. These platforms have also changed the organizational
structures and the professional routines. The rules of social interactions have changed drastically
after the innovation of social media. Van Dijck & Poell (2013) have explored the complicated
dynamics between the social media platforms, the users, mass media and the social institutions
by addressing the norms, mechanisms, economies and strategies of the social media. The authors
have addressed the mass media logic, which helped the social media to expand beyond its
institutional boundaries and by reviewing the theories, the authors found four grounding
principals, namely, programmability, popularity, connectivity, and datafication, and they argued
that these were entangled with the mass media logic. It was also highlighted that these grounding
strategies and principals have been invading all the areas of public life as well as organizational
work systems. Other than the traditional news channels consisting of print news and digital
broadcasting, social media is also affecting the law and order, social stability, social activism,
political scenario of the country and many more. Thus, it can be inferred that social media has a
very powerful and widespread effect on every aspect of personal and professional lives of people
and the work systems in a major way. The mass media logic of social media should be mapped
with the driving technologies for getting a better outcome in terms of social media performance.
Fuchs (2017) defined social media as a complex term with multi-layered meanings. It
contains several aspects, such as, communication, information, collaboration and communities.
For example, Facebook is a social media which contains a huge amount of information, and
along with that it is also a tool for communication and creating and maintaining communities.
Hence, according to the author, understanding of social media involves the engagement with
different types or forms of sociality on the virtual world that is on the internet.

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On the other hand, Van Dijck (2013) stated that social media is an engineering system
that works as a culture of connectivity in the modern world. The invention of internet has made
world a small place and the connectivity among cultures have increased in an extensive manner.
The whole world can be connected in a time and cost efficient manner through social media.
Thus, the reach of social media in terms of establishing personal and professional connections is
magnificent. Social media platforms, such as, Facebook, Twitter, Youtube, LinkedIn, Instagram,
Pinterest, blogs etc. are now being used by billions of users across the world and these sites have
been helping people in getting to know each other and form communities on the basis of similar
tastes and interest. Hence, people from different parts of the world can communicate with each
other in a much easier fashion than it was a decade earlier, which has been helping in nurturing
the talents of the individuals and showcasing their talents to the world. Thus, it is found that
many local talents are getting platforms and success, which was difficult earlier. These talents
can come in any form, such as, music, photography, cooking, travelling, painting, dancing, and
many more. The difference between local and global has diminished in a major way after the
invasion of social media in the lives of people.
Similarly, social media has impact on professional world also. Talent and experience can
be sourced from anywhere through social media, like LinkedIn, and the businesses can also
communicate with the clients all over the world in an easy manner. One of the primary purposes
of social media is to establish direct interaction among people, which is being utilized by the
organizations in a massive and extensive manner. As millions of organizations are operating as
multinational corporations, social media is a major system for easy connectivity across different
centers located across the world. Almost all the organizations now have social media accounts
and they often posts update regarding any change, any event or any promotional activity for all

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the employees and shareholders, which reaches to the target audience across the world in a
quicker manner (Leonardi, Huysman & Steinfield, 2013). Hence, the change in the global media
landscape and the evolution of social media has been quite beneficial for establishing cultural
connectivity.
However, as there are many advantages of social media, there are disadvantages also.
Data hacking, fraud and scams, addiction, cyber bullying, health issues, fakeness and lack of
trust, reduction in face-to-face interactions and decreasing empathy, are some of the drawbacks
of social media. The social media platforms often creates opportunity for fake profiles and
personas, and those combined with lack of emotional connections result in social problems. Data
hacking, cyber bullying, data fraud and scams are technological disadvantages which are serious
threats to the businesses as well as for the individuals. Thus, data security is a big question for
the businesses (Castells, 2015). Social media is also criticized for affecting the physical and
mental health of the users. Too much addition of social media is leading to health issues like
obesity, mental disorder, lack of interpersonal skills, lack of patience, lack of fitness etc.
(Heldman, Schindelar & Weaver, 2013). Therefore, it can be said that wide usage of social
media has quite a few challenges for both the individuals and businesses, and thus, the social
must be used efficiently and responsibly.

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Figure 1: Ranking of social media platforms worldwide as per number of users as of
January 2019
(Source: Statista, 2019)
It can be seen from the chart that Facebook is the giant in the social media world with 2.2
billion of active users worldwide. User-friendliness and continuous addition of new features are

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two of the best features of Facebook, which has made it the most popular among the users. It is
followed by Youtube with 1.9 billion users and WhatsApp with 1.5 billion users. Facebook has
acquired WhatsApp and Instagram to gain their already established market share and hence, it
added to the business growth of Facebook in a significant manner.
2.2 Social media marketing
Social media marketing is a form of digital marketing, which involves the creation and
sharing of the marketing contents on the social media networks, for achieving the marketing
goals of an organization. As stated by Davies (2019), social media marketing is a very powerful,
versatile and cost effective strategy, which is why, it is adopted by the 97% of marketers,
irrespective of their sizes and nature of business to reach the target market and boost the sales
over time. These platforms provide the marketers the opportunities to interact with the customers
directly, and thus, great marketing techniques can bring remarkable success to the brands. Social
media is also providing marketplaces, for example, Facebook and Instagram, where the
marketers can sell their products directly. Sajid (2016) pointed out that social media can help the
companies to meet their marketing goals by many ways, such as, increasing the website traffic,
increasing the brand awareness, building conversations among the customers, creating a brand
identity, creating positive brand association and improving the communication with the
customers. Thus, the more the companies are engaged with the audience on the social media, the
easier it becomes for them to achieve the marketing goals.
Ashley & Tuten (2015) conducted their study on the creative strategies adopted by some
top brands in their social media marketing. They performed content analysis and the findings
revealed that the top brands should understand the importance of frequent updates and incentives
for participating, and should take creative measures accordingly. Apart from that, various

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creative strategies are important for customer engagement, such as, images, excusive
personalized messages, etc. These contents are helpful in establishing a connection with the
customers directly. Thus, maintaining a social presence across the social media platforms with
fresh and frequent contents is very much essential for the marketers to create brand awareness
among the target audience.
Tuten & Solomon (2017) argued that people are now living a social (media) life, as more
than the real life interactions, people are now more engrossed in the virtual life through social
media. The social media platforms are not only providing options for individuals to connect with
each other and form communities based on shared interests, but it is providing opportunities for
the companies also to promote their brands and communicate with the target audience, which is
the essence of social media marketing.
Figure 2: Zones of social media

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(Source: Tuten & Solomon, 2017)
It is seen from the chart that social commerce is a significant zone of social media, which
addresses points like CRM/service, Retailing/sales and human resources. Social commerce
represents the usage of social media for the purpose of online shopping, that is, buying and
selling of the products and services in the social marketplace. Thus, social commerce makes
people, both the networks of buyers and sellers, participate actively in the marketing activities
and buying and selling of products and services. These social platforms are quite useful in
generating leads and then converting the leads into purchasers due to the large number of active
users. The marketers also can collect feedback about their products and services, effectiveness of
marketing or promotional activities from the social media in a faster and cost effective way.
Social media platforms like Facebook, Groupon, TripAdvisor, LivingSocial, Instagram, Snipi
etc. are some of the most popular sites that are used by the marketers for the purpose of social
commerce (Chaffey & Ellis-Chadwick, 2019).
In this context, Cleary et al. (2013) mentioned that social media has led to new e-
professionalism, as not only the marketing activities, but also professional communications take
place through social media. LinkedIn is one such platform where people connect for professional
purpose. The growth of the job markets, technologies on demand, requirement of professionals
with specific skills are the contents that are addressed in LinkedIn and that has been helping the
organizations in a major way.
On the contrary, Nadaraja & Yazdanifard (2013) highlighted some of the disadvantages
of the social media marketing. Although social media connects millions of people in a faster
manner, there are also security issues, and for that purpose, there must be monitoring of the

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networks in a strict manner, which is time consuming. Any forum conversation usually takes
time, and companies need dedicated department to handle the social media account and
networks, without which it becomes difficult to be competitive in the market. Hence, the
organizations must understand the necessary time required for effective communication, which is
not about only promoting the products or services, but also about time consuming interaction
with the customers regarding the feedback about the products and marketing activities.
There are also trademark and copyright issues, privacy, trust and security issues, user-
generated content (UGC) and negative feedbacks. There is a high chance of violating the
copyright and trademarks of the companies by third parties and hence, there is chance of abusing
intellectual property. Business impersonation can damage a company’s brand as well as the
reputation if proper preventive measures are not taken by the companies, such as, internet
screening and tracking, monitoring and controlling. Moreover, there is high chance of privacy,
trust and security issues as there is a high level of monetary transactions for online shopping.
Hence, security regarding data protection is very crucial. Hence, there should be trust assurance
by the companies regarding the confidential personal data of the customers, such as, personal
information, card details, etc. With advancement of technology, the instances of data hacking
have increased, which is alarming for the social media companies and social commerce.
The user-generated contents (UGC) allows the internet users to write reviews or make
comments in different types of contents, such as, videos, photos, podcasts, reviews, blogs,
articles, ratings etc. and these contents have high level of credibility for the other customers.
Thus, if there is any negative feedback regarding any product or service or the brand image by
the users, that is harmful for the company’s reputation in the long run. As social media converts
the customers into the marketers and advertisers through user generated contents, hence, any

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negative reaction from the users, which cannot be controlled by the companies, can wreck havoc
the business performance of the companies. Thus, as the social media has many advantages for
the marketing purpose, it also has many disadvantages too.
2.3 Automobile industry of Australia
The automotive industry of Australia consists of a wide range of small industries that
covers various aspects of the automobile manufacturing and distribution. The sales of
automobiles have increased over the years and that has benefitted the car wholesalers, dealers
and the service agents from registration to repairing and maintenance. However, the large
automobile manufacturers, such as, Ford, Toyota and Holden have exited the Australian market
as the preferences of the customers have shifted towards imported vehicles from the locally
produced large vehicles. Thus, the industry has been experiencing an unprecedented change due
to the closure of the large car manufacturers. In 2018, the revenue of the industry is around $165
billion, however, it is predicted that over the next five years, the industry will decline at an
annualized rate of 0.5% (Ibisworld.com.au, 2019). It has been found that, the closure of the
domestic automobile production has negative impact on the supply chain in the industry. On the
other hand, the new passenger car sales have increased due to increase in the discretionary
income of the Australians. However, the demand for the imported small and sports utility
vehicles is dominating the automotive market. According to a report by Australian Bureau of
Statistics (2019), as of 31 January, 2018, there are 19.2 million registered vehicles in Australia.
Between 2017 and 2018, there is a 2.1% growth in the national vehicle fleet. Toyota is the most
preferred brand of vehicles among the Australians with 2.9 million registrations, and the diesel
cars accounts for 23.4% of the national fleet, which was 17.2% in 2013 (Abs.gov.au., 2019).
There are 17,158,159 cars in Australia, that is, 92.5% of the households have cars, and 1.8 cars

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per household (Koster, 2019). Thus, the car industry in Australia is a big one and social media
marketing plays a major role in the growth of the industry.
Over the years, the automotive industry of Australia has been applying the traditional
marketing techniques to reach out the target market. Print and digital media, such as, radio,
television, billboards and hoardings are the most commonly used marketing techniques and
channels. After the internet revolution and invention of smart technologies, such as,
smartphones, tablets, mobile apps etc. the social media has changed the marketing dynamics of
the automobile industries. Apart from publishing the company generated contents, the user
generated contents are extremely significant in case of automobile industry. However,
monitoring of all the social data is essential to avoid any negative comments, which could ruin
the company reputation. Currently, 95% of the vehicle shoppers use the digital channels for
conducting their research (Davies, 2018). Almost all the information about the cars, production
and distribution process, market competition and company background, are available on the
internet and thus, social media plays a major role in the automotive industry’s marketing. In the
past years, the automobile industry has been successful in establishing a strong grip on the
mechanisms behind the blending of the sector with social media. The automobile companies
used to rely on the expensive and flashy advertisements in the television channels for brand
promotions. But, currently the car companies are focusing on the social media for promotions. It
has been found that social media like Facebook plays a pivotal in the automobile sales and
approximately 66% of the car owners and the buyers with Facebook accounts click on the car ad
to know the details (Cocking, 2018). Thus, it indicates that social media helps the advertisements
to reach to a larger number of people and frequent publishing of the ads creates interest among
the users and make them receptive. The social media also helps in interpreting that the more a car

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company invests in social media marketing, the higher is the chance of staying ahead of other
competitors in the market. The social media platforms not only help in brand promotion, but it
also help as platforms for buying and selling of automobiles. There are mobile apps specifically
for car sales, such as, Vero (Davies, 2018).
As argued by Go & You (2016), the social media has become such an important and
dominant part of life, whenever there is an announcement of a new vehicle being launched,
majority of the users head straight to the social media accounts of the car company. In the UK,
80% of the smartphones users use social media like Facebook, Instagram, and Twitter for
researching about a car before making a purchasing decision (4spots.com, 2017).
As stated by Tsimonis & Dimitriadis (2014), brand strategies in social media include a
wide range of activities that caters to the intentions of the companies, such as, increasing market
competition and winning those, announcing the launch of new products or services, interacting
with existing and potential customers locally and globally, providing critical information about
the brand to create brand awareness and handling the customer service issues. Hence, effective
brand promotions are possible in social media and that is beneficial for the car companies in any
country. Abrahams et al. (2013) on the contrary said that the social postings must lead to
automotive component isolation. The social media postings contain numerous contents and it is
important for the users or organizations to filter out the important contents from numerous items
of the user discussions. Similar to any other products and services, the vehicle companies also
face a big challenge to isolate the essential contents for understanding the demands of the
customers. Text mining tools are used by the companies to filter out the contents from the user
discussions, such as, isolating any vehicle component from the user discussions. This helps in

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future marketing of the car companies and gaining competitive intelligence to the manufacturers,
suppliers, and distributers to address the needs of the consumers in a more precise manner.
Leeflang et al. (2014) highlighted the challenges and solutions for the marketing
activities in the digital era. The authors mentioned that internet usage and digital technologies
have become an extremely important aspect for gaining competitive advantage in both the B2B
and B2C marketing. Although there are tremendous opportunities for digital marketing,
especially using social media, there are huge challenges also. The findings of the study revealed
that the major challenges of the companies lie in filling the talent gaps, that is, increasing the
intellectual property, adjustment in the organizational structure and implementation of actionable
metrics and the companies can improve if they can address these challenges. These challenges
are seen in the automobile industry also and hence, the car companies must focus on addressing
these factors for having an effective B2B and B2C marketing on the social media.
Another disadvantage of social media is that people often purchase products to gain
popularity among the peers on the social media, which is affecting the mental health of the users.
This is more prevalent in case of luxury items or brands, such as, luxury cars (Madden et al.,
2013). Though, the increase in the purchases of the luxury cars helps to boost the businesses of
these companies along with other related service agents, it can be inferred that for the growth of
the automotive industry, the social media plays a major role, however, it has a negative impact
on the society’s mental health.
Felix, Rauschnabel & Hinsch (2017) addressed the necessity of holistic approach towards
social media marketing. The authors highlighted that the scope of this type of marketing includes
a wide range from defenders to explorers; the culture of social media marketing includes the

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extreme poles of modernism and conservatism; the structures of this type of marketing fall
between the networks and hierarchies and the governance system ranges from autocracy to
anarchy. Thus, for all types of industry including the automobile industry, the companies should
focus on all the four aspects of social media marketing to get an effective and organized outcome
aligned with the corporate mission, vision and objectives.
2.4 Summary
Thus, by reviewing the literature in an extensive manner, it can be said that social media
is a very powerful tool for the marketing purpose. It has opened a very wide horizon in the scope
of marketing for all types of industries. It enables the companies to reach out to a large number
of local as well as global customers in a cost efficient manner. Moreover, social media marketing
can address the customers belonging to all economic and social classes, and by reviewing the
user discussions and user generated content through text mining analysis techniques, the
companies can understand the precise needs and wants of the customers, which is beneficial for
future product designing. Moreover, in the era of modern technology, social media provides an
easy platform for buying and selling of products and services in an easy manner and it is also
beneficial for establishing a direct interaction and relationship with the customers, which helps to
boost the brand image and reputation of the companies. On the other hand, there are some
disadvantages also. Social media marketing contains a high risk of data hacking and as millions
of confidential and personal information of the consumers get involved due to online payments
for buying and selling of products. Moreover, there is chance for negative feedback and user
generated content, which can affect the businesses of the companies in a significant manner.
Thus, to avoid the negative impression on the customers, the companies should focus on
providing the best products and services, which is helpful for increasing the competitiveness of

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the companies. For the automobile industry, social media marketing also has immense scopes,
while the companies should address the challenges in an effective manner to get the best
outcome.

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