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Researchers from the University of Rochester and the University of Maryland have published a study that examines whether and how firms might differentiate themselves from close competitors using a social media platform like X.

The study, in the Journal of Marketing, is titled "Retailer Differentiation in Social Media: An Investigation of Firm-Generated Content on Twitter," and is authored by Mikhail Lysyakov, P.K. Kannan, Siva Viswanathan, and Kunpeng Zhang.

Firms use social media platforms like Facebook, Instagram, and X (formerly Twitter) to disseminate information, for customer service, to target influencers, and to build online communities and create highly engaged audiences to promote their products and services. As consumers seek more personalized and community-driven content, brands are creating unique, interactive experiences on platforms like X, and leveraging platform-specific features is becoming key to capturing and retaining audience attention.

Lysyakov explains that "our study investigates whether firms traditionally recognized as close competitors exhibit the same rivalry online through similar content strategies or whether they adopt more unique approaches on X." Platforms like X offer distinct features such as real-time interaction, community building, and content co-creation that significantly enhance a firm's ability to stand out. The research team explores whether and how firms might differentiate themselves from close competitors using X.

"Our results show that firms that diverge from their competitors' strategies benefit from higher engagement and attract new followers more quickly," says Kannan.

Three tiers of tweets

A key discovery is a hierarchical structure in content creation strategies. To better understand how firms differentiate their content strategies, the study classifies tweets into ten distinct categories, grouped into three tiers.

1. All 199 firms studied produce content to some degree in the five categories that represent the bottom tier, which focus on one-way information dissemination. Examples include promotional messages or product updates.
2. A majority of firms (61%) also adopt content strategies that focus on community engagement.
3. An even lower number of firms, around 35%, add content strategies that focus on user interaction and co-creation.

Firms that focus on community building and co-creation not only differentiate their content strategies from their close competitors but also perform better in terms of engagement and follower growth. In contrast, firms that are more similar to their competitors primarily create content in the base tier, where the content strategy is focused on vertical differentiation from the closest competitors.

As Viswanathan explains, "the firms that perform best on social media are those that build strong relationships with their followers. These companies excel by using strategies that go beyond simple promotions to create interactive experiences."

For example, some firms organize events or launch campaigns that encourage users to share their own content, participate in conversations, or provide feedback on new products. This level of engagement helps differentiate these firms from their competitors and results in stronger brand loyalty.

"Our research also highlights the importance of adaptability in social media strategy. As social media platforms like X evolve to offer new tools and features, firms that are quick to adapt and leverage these features are more likely to succeed," according to Zhang.

Lessons for marketers

For marketers and business leaders, the implications are clear. Firms should use novel solutions to monitor competitors' strategies and focus on differentiating their content strategies if they want to succeed on social media platforms. This means moving beyond basic promotions and embracing strategies that engage users, foster community, and encourage interaction and co-creation. Retailers that can leverage these effectively will see the greatest returns in terms of engagement and follower growth.

These findings provide vital lessons for chief marketing officers:

• Firms can rank competitors by dissimilarity of content to determine which of their top traditional competitors have a potential social media competitive advantage. This mapping of competitors can help firms better understand their own position in the social media competitive space and strategically develop their own social media content towards further differentiation.

• Firms can use this hierarchical structure to better design their social media differentiation strategies. The hierarchy connects specific content strategies with engagement on X. It is important for managers to know the capabilities of social media and how they can leverage those capabilities to increase social media engagement.

• To maximize engagement, firms could use emerging novel AI-based solutions that allow monitoring of competitors' actions and content in real time.

• Managers should use memorable hashtags to create valuable communities of social media followers around their products, events, interactive marketing campaigns, and contests involving followers in value co-creation and co-innovation.

• Platform providers can design mechanisms to facilitate co-creation interactions between firms and followers. For instance, a social media platform might offer a functionality to create "virtual design labs" where firms would initiate discussions around new products and invite ideas and user-generated content from followers. Such value-added features can be priced differently and would serve as additional revenue streams for platforms.