The Impact of Social Media Engagement on Market Share: A System Dynamics Model

Abstract

Background: Some studies have shown that Return on Total Assets is a strategy to increase market share. Other studies have also shown that social media like WeChat can increase market share. However, no studies have considered Instagram engagement in increasing market share. Objective: This study aims to identify variable linkage that increases market share through a dynamic system approach in small and medium-sized enterprises (SMEs). Methods: Using a System Dynamics approach, this study presents a model simulation with a proposed increase in market share by considering Instagram features. This approach creates a Causal Loop Diagram converted into a simulated Stock Flow Diagram. The value generated from the simulation is validated with the mean comparison and % error variance formulas. Results: Instagram engagement increases market share from 0.009 to 0.018. Such engagement can be increased by posting regularly and doing more activities, such as increasing post frequency, holding contests, and maximizing all features. Conclusion: This study has successfully modeled information technology, i.e., a promotion module on social media. However, this work has not yet demonstrated how the features can gain more market share, so future research is needed. Keywords: Causal Loop Diagram, Engagement, Market Share, Stock Flow Diagram, System Dynamics