Improving consumers’ willingness to pay using social media activities

Abstract

Purpose: This study examines the impact of social media activities on consumers willingness to pay a premium (WTPp) in the banking industry, and investigates the role of consumer-brand identification (CBI) on this relationship. For the first time, the effect of electronic word-of-mouth (eWOM) is considered separately from other social media marketing efforts (SMME). Design/methodology/approach: Data from a sample of 145 banking customers that follow bank social networks was analysed using structural equation modeling (SEM) and fuzzy-set qualitative comparative analysis (fsQCA) to test a proposed structural model. Findings: Findings indicate that the effect of eWOM and SMME on WTPp is fully mediated by CBI. The results uncover a viable path to achieve WTPp in the banking industry, which includes the joint presence of SMME, eWOM, and CBI. Research limitations/implications: The study was conducted in the banking sector in Portugal. It is advocated that further research would investigate the results in other service sectors, across different countries. Practical implications: Findings highlight the importance of social media marketing in banking. Results reveal opportunities for managers in the banking sector to enhance CBI and ultimately WTPp, through SMME and eWOM. Originality/value: The study is the first to consider the influence of SMME and eWOM as separate antecedents of WTPp. The findings indicate that the effect of eWOM and SMME on WTPp is fully mediated by CBI. In particular, the results of the fsQCA indicate that the combined presence of SMME, eWOM, and CBI, is sufficient to obtain WTPp.