"Influencer Marketing for Small Businesses to Target Generation Z" by Isabella Hoffer

Small Businesses with Big Dreams: Influencer Marketing for Small Businesses to Target Generation Z

Isabella Hoffer, Salisbury Univeristy




Abstract: Small businesses are important for the stability and growth of the United States economy, yet they are facing adversity because large corporations are in control. Small businesses are at a disadvantage because they do not have the resources or knowledge necessary to succeed. Small business failure can be attributed to inadequate marketing which can be fixed with a new, more progressive marketing strategy. I used peer-reviewed research by exploring the keywords: small business, marketing, social media, and influencers. This scholarly research proved the effectiveness of social media marketing for small businesses due to the growth of online commerce. In fact, social media can be a great way for small businesses to reach Generation Z who represent the emerging digital consumer. Additionally, influencer marketing is proven to be effective in creating a stronger connection between consumers and businesses. There are several processes for implementing influencer marketing as well. After evaluating the research, I argue that small businesses should use influencer marketing on social media because they can target Generation Z and maximize their limited resources. By applying an implementation strategy that narrows the marketing objectives and audience, small businesses can have a positive return on investment. Ultimately, if small businesses have access to effective marketing strategies, they will be able to differentiate themselves and succeed in the long run.



 

Introduction


As large corporations continue to expand, there is the growing problem of small business failure. Sometimes, they cannot survive because they lack the resources and knowledge possessed by large corporations. This poses an issue because small businesses make up 99.9% of the United States economy (United States Small Business Administration Office of Advocacy, 2020). Therefore, they influence all individuals in the workforce. One way to help small businesses succeed is to offer an innovative marketing strategy that will help them grow their business and better manage resources. Influencer marketing is a new form of social media marketing that can be implemented by small businesses. Croes and Bartels (2021) established that there are benefits to influencer marketing because they form a closer connection to consumers, and they advocate for brands (p. 2). Their unique relationship with consumers and brands can be especially effective for Generation Z. Yaman and Cakin (2018) emphasized that influencer marketing will be effective for Generation Z consumers because they trust and rely on influencers to make decisions (p. 968). Previous research has determined that influencer marketing is effective, and Generation Z is an important consumer, but there is limited research on if small businesses should use this new method. Although small businesses have limited resources, small businesses should use influencer marketing on social media because they can target Generation Z. Influencer marketing should be implemented with a specific 5-step process to maximize the return on investment.

Small Businesses


Small businesses are important to the United States economy. According to the United States Small Business Administration Office of Advocacy (2020), there are 31.7 million small businesses in the United States, and they make up 99.9% of all firms in the country. This emphasizes the variety of small businesses in the United States. It also shows that collectively they are the leading source of income and have a significant impact on the economy. Specifically, small businesses are important because they create jobs, foster innovation, drive competition, and make a substantial portion of the country’s revenue, making them a valuable asset to the economy.


The term, small business, must be defined and explained so the following information can be used properly. Small businesses are defined by the number of employees and annual revenue. Small businesses have less than 1,500 employees and have annual revenue of less than $40 million (Hait, 2022). Additionally, there are more strict guidelines depending on the industry. The retail trade small business sector contains all businesses that sell merchandise directly to consumers. This includes food, health, personal care items, clothing and shoes, furniture, and electronics, among other goods. According to the small business size regulations from the Code of Federal Regulations (1996), this sector of small businesses must have less than 500 employees. The revenue cap depends on the specific goods being sold by the business. With the employee count and revenue cap defined, the appropriate small retail businesses can use the following information.


Despite the importance and prevalence of small businesses, they are failing at a rapid rate. The Bureau of Labor Statistics notes, 20% of small businesses fail within the first year and 50% fail within the first five years (BLS, 2021). This means that most startups are not able to stabilize or grow. The prominent indicators for small business failure include lack of finances, inadequate business planning, limited knowledge, and poor marketing. They simply lack the resources, engrained marketing research, and knowledge that large corporations possess. Therefore, small business failure can be reduced if business owners have what they need to succeed. The necessary knowledge and resources can be retrieved through the proper marketing strategy, which will ultimately limit small business failure.


Marketing research, knowledge, and implementation are major issues that small businesses face but can be improved with this new strategy. First, marketing is important because it helps businesses manage scarce resources, promote products and services, develop brand identity, and build customer relationships. These factors are crucial to small business success. However, small businesses are struggling with marketing because many are relying on traditional methods. According to Sullivan (2021), these traditional methods of marketing include print, radio, and television; and they are familiar, affordable, and easy to control by small businesses (p. 82). However, in a digital world, these are not the most effective strategies. Digital marketing makes use of online platforms to promote products and services, which is often done through social media.


Social Media Marketing


Social media is a great tool for businesses to connect with customers. Social media is a form of technology that allows users to create and share content and interact with others (Dollarhide, 2021). There are many platforms of social media, with some of the most popular platforms being Facebook, Instagram, Twitter, Snapchat, and Tik Tok. Regardless of the platform, social media is used to make connections, get information, and find entertainment. Users of social media also encounter businesses. Businesses should take advantage of these platforms by making marketing efforts to interact with social media users.


Many retail businesses use social media as a tool for marketing and sales. Social media marketing is the use of social media platforms to promote products and services. This can have many benefits for small businesses. Viet-Blaszczyk and Lerman (2020), emphasized that social media marketing allows businesses to increase brand awareness, build customer relationships, increase exposure, and boost sales (p. 48). Long-term social media use can help develop customer loyalty and brand credibility. Social media allows businesses to be successful because it opens the door to all online consumers. It allows businesses to reach a large audience cost-effectively. However, having a business account on a social media platform is not enough to gain traction. Businesses must implement marketing plans to use social media marketing effectively.


The knowledge and resources needed to develop marketing plans can create barriers to social media use for small businesses. He et al. (2015), found these barriers to be “perception of social media, personal characteristics, social influence, current business performance, and business purposes” (p. 155). These barriers stem from personal beliefs, outdated business standards, and fear. However, they can be broken if business owners accept change and have access to the resources they need. Small businesses can conquer social media marketing challenges if they have the best strategy. Despite these barriers, small businesses should be motivated to implement social media marketing to take their business to the next level and reach new consumers.


The Digital Consumer


Small businesses can use social media marketing to target a specific group of consumers, such as Generation Z (Gen Z). This demographic cohort contains the population born between 1997 and 2012, and it makes up about 20% of the United States population, according to Statista (2022). Gen Z is the first generation to grow up with the internet, so they heavily rely on it. Yaman and Cakin (2021), found that Gen Z uses social media to satisfy their needs and make decisions (p. 968). This is important for businesses to know because they can strongly influence this group of people on social media with their content. Another reason Gen Z is important is that they have high purchasing power. According to Cardador et al. (2018), Gen Z’s spending power has reached 143 billion dollars and they make up about 40% of all consumers in the United States. This emphasizes the power they have, even as a younger Generation, ages 9 to 24. Gen Z may even be the most populous consumer in a business’s range of followers. Additionally, this generation has yet to reach its full potential as a member of the economy. Therefore, Gen Z is a powerful group of consumers that small businesses should be targeting.


Gen Z consumers are important for small businesses to be targeting using social media. The most effective way to reach Gen Z is through social media marketing because Gen Z is an active social media user, and their consumer behavior is influenced by social media. When examining a business’s range of followers on social media, this group may be the most profitable as well. Viet-Blaszczyk and Lerman (2020), found that social media influences purchasing decisions of young consumers because they can use social media to discuss products with others, interact with brands, and make purchases (p. 55). This emphasizes that Gen Z uses social media intentionally to find products and make decisions. Additionally, they are influenced by other users they trust. However, it may be difficult for small businesses to make an impact on social media where users are facing information overload. This means users observe and process an excessive amount of information in a short amount of time. Despite this barrier, small businesses can still make an impact on Gen Z consumers by using influencers.


Influencer Marketing


Influencers are the best way for small businesses to battle information overload on social media. Influencers are social media users that have developed popular identities by displaying authentic narratives. They share their personal information, interests, lifestyle, and favorite products on social media to build relationships with their followers. They are perceived as experts in their specific niche or interest. Since influencers are viewed as trustworthy and relatable by their followers, influencers shape the thoughts and behaviors of their followers. Influencers can be used by businesses as a marketing tool because they implement the word-of-mouth marketing strategy. According to Yaman (2018), word-of-mouth marketing works because individuals who had a positive experience with a brand and the quality of its products will loyally recommend them to others (p. 181). This type of marketing increases credibility and therefore encourages purchases. Word-of-mouth marketing explains the process by which influencers talk about a product they like and their followers proceed to purchase the product. The process of building trust between influencers and consumers allows them to be effective marketing tools for small businesses.


Since influencers are authentic identities but are also used for marketing, there is an ethical question. Businesses may be hesitant to use influencers because they are supposed to be honest with followers and advertise a product simultaneously. This presents an honesty issue because advertising is not an honest, transparent act. Wellman et al. (2020) addressed this ethical issue and found that influencers put their brand and their audience before the commercial brands they are employed by. To do so, they use tactics that create an environment where they can be authentic, including working with brands that match their interests, creating content that meets their audience’s needs, and excluding some negative experiences (p. 78). These strategies that influencers use allow them to appear authentic to their audience, while also satisfying brands. Authenticity is an act where influencers display their identity to gain credibility, or trust, from their audience. This strategy allows influencers to balance their audience and the brands they work for in an authentic environment. Since influencers have effective strategies to connect with businesses and consumers, small businesses can be confident in using them as a marketing tool.


In fact, this performance is incredibly effective on Generation Z. Influencers can help small businesses target Gen Z because Gen Z relies on them. Croes and Bartels (2021), found that young adults who are a part of Gen Z are motivated to follow social influencers for entertainment, to pass time, and for information (p. 7). This aligns with their dependence on social media because they rely on influencers for creative and informative content. Because they trust the thoughts and opinions of influencers this can also lead to purchases. Croes and Bartels (2021) also found that once these young adults socially identify with an influencer, they are more likely to exhibit clicking behavior, and therefore buying behavior (p. 7). Clicking behavior is the amount of interaction with a business, and buying behavior is the frequency of purchases that follow. Both are increased with the use of influencers. This emphasizes the connection between social identification with influencers and purchasing behavior. Influencers are effective marketing tools to target Gen Z because of the deep connection formed with them. An influencer marketing strategy is necessary for small businesses to be successful.


Influencer Marketing Strategy


Many small businesses have used influencers to help their business take off. However, their influencer marketing strategies can be slightly different, depending on their products, goals, and resources. To illustrate, the United States Chamber of Commerce (2019) compiled examples of successful influencer marketing campaigns. Banza is a business that sells pasta made from chickpeas. They used influencers by sending emails to a plethora of influencers and offering free samples. The influencers that were interested were able to try the product and review it online, which ultimately increased brand awareness and brand loyalty. Due to their marketing strategies, their products are now sold in grocery stores nationally and their annual revenue has reached 20 million. Another example is MVMT, which sells stylish watches at an affordable price. To kickstart their business, they paid a select group of popular influencers to promote their watches and they created a brand culture with user content by promoting hashtags. As a result of this campaign, their Instagram followers now exceed 1 million. The objectives, type of influencer, and pay can vary between businesses. Despite these differences, both allowed the small businesses to become nationally recognized brands.


There are many strategies, but for small retail businesses looking to target Generation Z, there are best practices to follow. The process of finding, collaborating, and tracking influencers can be done in many ways. Krywalski Santiago and Moreira Castelo (2020) created a framework for developing an influencer marketing campaign, which includes planning, recognition, alignment, motivation, and coordination (p. 36). This process will allow small businesses to build a successful marketing plan and use their resources effectively. The planning step consists of defining the objectives of the campaign, defining the target audience, and setting a budget (Krywalski Santiago & Moreira Castelo, 2020, p. 36). Applying this to small retail businesses, their objectives could consist of creating brand awareness, promoting the product, increasing followers, or increasing sales. The objective can vary, but it must be clear and specific. In this case, their target audience should be Generation Z. Influencers will be most effective on this generation, making this an effective investment.


The next step of the process is recognition, which includes searching for and recruiting influencers (Krywalski Santiago & Moreira Castelo, 2020, p. 36). To implement, small businesses must know the type of influencer they are looking for. Often micro-influencers, or those with 1,000 to 100,000 followers, are more effective because they have a stronger connection with their followers, meaning they have a greater influence on their purchasing decisions. Tafesse and Wood (2021), confirmed this when they found that Instagram influencers with a lower follower count, higher followee count, and lower content volume foster the most follower engagement (p. 18). A lower follower count means they have a better connection with their followers, a higher followee count means they are invested in other users, and a lower content volume means their content is more original and creative. This method of selecting influencers will be a beneficial framework for small businesses to use. Small businesses also need to know how to contact influencers. Goldenberg et al. (2022), concluded that businesses should target influencers through follows, private messages, likes, and reposts (p. 2). This is a simple and low-cost strategy for small businesses to use. Once the business has contacted and found a group of influencers, they must decide which ones they want to work with.


Alignment is the step in the influencer marketing process where the small business must identify the influencers that best fit the product (Krywalski Santiago & Moreira Castelo, 2020, p. 37). Most influencers have a specific niche or area of interest. A niche is based on the influencer’s expertise, interests, identity, and content. Tafesse and Wood (2021), found that influencer content that aligns with their domain of interest creates a positive follower response (p. 10). This emphasizes that followers value these domains of interest and are more likely to trust them if they post within them. As a result, businesses should only work with influencers whose niche aligns with their product. Common niches are fashion, travel, fitness, food, sports, and business. A match between niche and product is so important because if there is a correct match, followers who are interested in the influencer’s niche, will be interested in the product as well. Next, the business must give specific guidelines so the influencer can be successful.


The motivation step involves the process of helping the influencer do their job effectively through guidance and compensation (Krywalski Santiago & Moreira Castelo, 2020, p. 37). This includes offering content ideas, like photos, videos, or phrases they want the influencer to use. They want to give the influencer guidance so the marketing objectives can be achieved, while also giving them enough creative freedom. Another phase of motivation is identifying a form of payment. This is when the logistical conversation begins between the influencer and the business. As illustrated with the Banza and MVMT examples, there are a few ways for businesses to pay influencers. They can directly compensate the influencers for their marketing services, or they can send them free samples of the product for them to review online. Depending on the number of influencers being used and the nature of the product, either can be effective for small retail businesses. Once the terms of the influencer relationship are outlined, there must be coordination.


Coordination is the step where formal agreements are made and there are continuous conversations between the business and influencer about the status of the campaign (Krywalski Santiago & Moreira Castelo, 2020, p. 37). The formal agreement between the two parties will be an oral or written agreement where they will determine the services provided, pay, time, and performance factors. The coordination step of influencer marketing may be the hardest for small businesses because they must determine if their limited resources are being used effectively. This is an issue of return-on-investment, which compares the cost of an investment to the gain. In this case, small businesses are investing in influencers. The Forbes Agency Council (2020) found the best ways to measure return on investment are establishing a marketing goal, tracking sales, monitoring comments, and using influencer analytics platforms. Establishing a marketing goal is important because it allows businesses to measure results more accurately. To reiterate, common goals are to create brand awareness, promote the product, increase followers, or make sales. By having a specific objective, small businesses can measure results. Next, they can track specific sales. This can be done using promotional codes or affiliate links. These codes and links are distributed by the influencers to their followers, and they are used by their followers to find products and make purchases. Both allow the business to determine the sales of each influencer they work with. Businesses can also monitor comments on influencer posts because it measures the level of customer engagement. Influencer analytic platforms are effective because they measure and analyze influencer performance based on several factors, including follower engagement, reach, growth, and conversion. Small businesses can use one or all these methods to manage influencer marketing. Since there are ways to manage influencers and ensure they are the best fit, small businesses should feel secure in using this strategy. This five-step process is a beneficial framework for small retail businesses to use when creating an influencer marketing plan.


Conclusion


Influencer marketing is a useful tool for small retail businesses to stabilize and grow their business. However, small businesses may be limited by the market knowledge and financial resources possessed. Many small businesses are using social media marketing, but there are limited strategies on how to effectively connect with the consumer. Influencer marketing is an effective way for businesses to connect with customers because these virtual identities form connections with their followers. Generation Z represents the most powerful digital consumer demographic because they grew up with social media and they rely on it to make decisions. Influencers are successful in maximizing the power of small business resources and the power of the Gen Z consumer. With the growing problem of small business failure, there must be strategies for them to succeed. The implementation process presented by Krywalski Santiago & Moreira Castelo (2020) of “planning, recognition, alignment, motivation, and coordination” as it applies to small retail businesses targeting Gen Z, gives a framework for small businesses to follow. Ultimately, giving small businesses more guidance in marketing will help them create brand awareness, promote their products, and increase sales. If small businesses have the resources they need to succeed, the economy will thrive. Influencer marketing is one crucial step in the feat of saving small businesses.


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