Universiteit Maastricht, Holland
Department of Marketing and Marketing Research

Master Thesis

Communities in the 21st Century Fact or Fiction

by

Katja Hellberg

Dezember 2002

Preface

In today′s globalised world, characterized by individualism, there is a trend "backwards" to community building, as human beings are increasingly looking for a social link. These communities of the twenty-first century are held together through shared emotions, style of live, and consumption practice. Applying this to the field of marketing might provide marketers a better understanding of customers′ wants and needs, namely that of communal feeling. This idea is the basis for the underlying study, which extends on previous research of brand communities. It contributes to earlier studies by exploring brand communities in a different setting. Moreover, it contributes by investigating upon relationship marketing characteristics and their existence in brand communities.
A brand community can be defined as a specialized, non-geographically bound community, based on four distinct relationships a focal customer engages in. These are customer-product, customer-brand, customer-company, and customer-customer relationships. A brandfest, where customers of a brand come together in order to ′celebrate′ the brand and share their common interest, can provide the social context, and geo-temporal concentration, which adds meaning to the customers′ consumption experience and thus enforces or reinforces relationships. In order to truly benefit from brand communities, the relationships therein should be characterised by trust, affect, and commitment, and should lead to sustainable loyalty.
In order to find out whether brand communities exist in a different product category than automobiles, the board game Kolonisten van Catan was chosen. The automobile product category is characterised by both high pleasure potential (hedonic value) and high functional value (utilitarian value). In contrast, the toys product category (to which Kolonisten van Catan belongs) has a high pleasure potential, and a low functional value, and is therefore useful to determine whether there are differences due to the product category. The relationships mentioned above were examined in the context of a brandfest; the Dutch National Kolonisten van Catan competition. The participants were questioned about their relationships with the product, the brand, the company, and other customers, in order to find out whether those are positive. Three of the four relationships were found to be significantly positive: the customer-product, the customer-brand, and the customer-customer relationship. The relationship between the customer and the company/marketers was found to be neither negative nor positive.
The relationship the participants have with the brand 999games - which serves as the brand for the board game Kolonisten van Catan - was further investigated. The relationship is indeed characterised by positive trust and positive affect, which in turn lead to increased commitment to re-buy the preferred brand/product consistently in the future, in other words to sustainable brand loyalty. This shows, that brand community relationships have the potential to be of long-term nature, and could be the basis for further relationship marketing efforts.
Although the concept of brand communities is relatively new and there is a need for further investigation, the underlying study indicates that this concept has great potential to be a valuable venture in relationship marketing and branding theory. Additionally, it may well prove to be a new and innovative way to outperform the competition and gain a competitive advantage.

TABLE OF CONTENTS:

1 Introduction ... 1
1.1 New Perspectives of Relationship Marketing ... 1
1.1.1 Problem Statement ... 3
1.1.2 Subquestions ... 4
1.2 Delimitations of the Study ... 5
1.3 Contribution ... 5
1.3.1 Theoretical Contribution ... 5
1.3.2 Practical Contribution ... 6
1.4 Chapter Outline ... 7

2 Brand Communities ... 10
2.1 Introduction ... 10
2.2 Brand Communities ... 11
2.3 The Kolonisten van Catan Community ... 16
2.4 Summary ... 18

3 Relationship Marketing ... 19
3.1 Introduction ... 19
3.2 Aspects of Relationship Marketing ... 20
3.2.1 Relationship Marketing Definitions ... 21
3.2.2 Summary Relationship Marketing Definitions ... 24
3.3 Trust ... 25
3.4 Commitment ... 27
3.5 Summary ... 30

4 Branding ... 32
4.1 Introduction ... 32
4.2 Brands vs. Products ... 33
4.2.1 Products ... 33
4.2.2 Brands ... 34
4.3 Customer-Brand Relationships ... 36
4.3.1 Conceptualisation ... 36
4.3.2 Determinants of Brand Relationship Quality ... 38
4.3.3 Hypotheses Development ... 39
4.4 Brand Trust and Brand Affect ... 41
4.5 Brand Loyalty ... 43
4.5.1 Components of Loyalty ... 44
4.6 Summary ... 48

5 Research Design ... 50
5.1 Introduction ... 50
5.2 Problem Definition and Research Approach ... 51
5.3 Research Designs ... 52
5.3.1 Descriptive Research ... 53
5.3.2 Survey Method ... 54
5.3.3 Sampling Plan ... 55
5.3.4 Questionnaire Development ... 56
5.4 Summary ... 58

6 Analysis and Results ... 59
6.1 Introduction ... 59
6.2 Hypotheses Development ... 59
6.3 Analysis ... 61
6.3.1 Analysis of Relationships ... 64
6.3.2 Analysis of Differences Between Events ... 70
6.3.3 Analysis of Differences With Respect to the Experience Level ... 71
6.3.4 Analysis of Antecedents of Brand Trust and Affect ... 72
6.3.5 Analysis of Consequences of Brand Trust and Affect ... 76
6.4 Summary ... 79

7 Conclusion ... 80
7.1 Introduction ... 80
7.2 Overview ... 80
7.2.1 Overview of Theoretical Findings ... 80
7.3 Match of Practical Findings With the Theory ... 82
7.4 Managerial Implications ... 84
7.5 Limitations and Suggestions for Future Research ... 85

8 References ... 87

9 Appendix ... 94

1 INTRODUCTION

One of the central issues in today′s marketing practices is the management of relationships with customers. Building relationships with customers and retaining them, rather than focussing on recruiting new customers is at the heart of relationship marketing. This concept has evolved in the past two decades to become one of the most widely accepted but also discussed practices of marketing theorists (Grönroos, 1999) and practitioners (Sweeney, 2001) alike. This is also reflected in the vast variety of definitions of this concept (Berry, 1983; Grönroos, 1999; Payne, Christopher, Clark, & Peck, 1995; Sheth & Parvatiyar, 2002). The common view broadly defines it as attracting, maintaining and enhancing customer relationships (Berry, 1983). It is moreover widely accepted that relationship marketing increases marketing productivity in terms of efficiency (by recognising consumer values and addressing individual needs) and effectiveness (by greater customer retention and higher profits)(Sheth & Parvatiyar, 1995). This is also discussed by Reichheld (1996) who observed that the impact of a 5% increase in customer retention rate leads to an increase in average customer lifetime value of 35% - 95%, leading to a significant improvement in overall profitability (as cited in Ryals & Knox, 2001). This shows how important it is to retain customers, by forming a relationship with them. More specifically, "a focus on relationships is presented as an avenue to competitive advantage" (McAlexander, Schouten & Koenig, 2002, p. 38).

1.1 New Perspectives of Relationship Marketing
The concept of relationship marketing was first addressed in the field of services marketing (Berry, 1983), where the main focus was on the relationship between the service provider and the customer. Later it was applied to the field of industrial marketing (Jackson, 1985), where channel relationships in form of supplier-buyer relationships were the field of concern. Moreover, relationships in the form of networks between industrial companies formed the basis for later development of network theory (Grönroos, 1999). Another field of interest, evolved with the concept of relationship marketing is the relationship between the firm and the customers in a consumer products setting. Morgan and Hunt (1994) discuss ten discrete forms of relationship marketing based on the perspective of the firm, which can be summarized into supplier, lateral, buyer, and internal relationships, all of which have to be characterized by trust, commitment, and reciprocity, the underlying concepts of RM. This illustrates the variety of the concept of relationship marketing. Recent attempts to apply the interpersonal relationship theory to relationships with brands and/or products (e.g. Ambler, Bhattacharya, Edell, Keller, Lemon, & Mittal, 2002; Fournier, 1998; Fournier & Yao, 1997) further extend the discussion. In general, a customer is said to form a variety of relationships, provided that they add value and meaning and that they are relevant to him. Companies developed various marketing programs, focussed on the direct contact with customers, supporting a dialogue, and helping them to establish a relationship with their customers. Therefore, a variety of customer relationship programs evolved helping and guiding businesses to achieve the goal of building long-term relationships with valuable customers. The focus of marketing strategies is on the individual consumer. New technological advancements like the Internet and improvements in data base systems nowadays support the development of relationship marketing. Companies are trying to differentiate themselves from competition by constantly finding new ways to bind customers to the company. By these new advancements, the customers can be targeted in the right way because more data concerning demographics and other characteristics of customers can be collected and is available. Therefore, they can be reached more efficiently and effectively through new media, by which a dialogue can be developed. The focus of relationship marketing is on one-to-one communication.

In these days, companies have a vast variety of means to communicate with their customers, directly or indirectly. The focus on direct communication is also revealed by the spending patterns of companies with respect to their communication budget. A shift from traditional practices, such as mass-media advertising, towards new methods can be observed, with which customers can be reached in a more efficient and effective way. Concerning a recent study by the GfK-Wirtschaftswoche (2002), companies expect to spend on average 3.2% less on traditional advertisements, i.e. print, TV, and radio advertisements, while they increase their spending on non-traditional advertisements, i.e. direct marketing, sport sponsoring, product-placement, company fairs, etc. by 4.5% and their selling strategies, i.e. point-of-sale, sampling, etc. by 1.5%. Companies view the latter two (non-traditional advertisement and selling strategies) as being better possibilities to reach customers directly and thus more successfully, allowing to develop a relationship with them. Furthermore, by many of these methods a direct dialogue between the customer and the marketer can be achieved. One communication mix element belonging to the non-traditional advertisement practices receives more and more attention, namely event marketing. This practise has established itself as an innovative communication instrument due to several reasons and benefits that a marketer can achieve with it. Zanger & Drengner (1999) argue that companies start to redirect their advertisement budget towards this and other non-traditional techniques, not only because of the decreasing efficiency of traditional communication instruments, but also because of the peculiarities of Event Marketing. It offers marketers the possibility to present products and/or brands in an experience-oriented way. By this, the communication content can be directly experienced by the customer and a dialogue and interaction between the marketer and the customer can be realized. This is said to have a positive effect on relationships with the customer and on recall of the advertising message (Zanger & Drengner, 1999). "Events are the key to event marketing and present company- or product-specific information in an experience-oriented way, thus converting marketing objectives" (Nickel, 1998). Events that bring people together, who often share no other connection than an interest in a brand and its consumption, provide context-rich interaction opportunities by which customers can experience the brand in a meaningful way. "Sharing meaningful consumption experiences strengthens interpersonal ties and enhances mutual appreciation for the product, the brand, and the facilitating marketers" (McAlexander, Schouten & Koenig, 2002, p.44). This reasoning is the basis for a new concept, developed initially by McAlexander, Schouten & Koenig (1998) in their first attempt to conceptualise consumption communities on the basis of Harley Davidson brandfests - as they call events - that have communal elements. Muniz & O′Guinn (2001) followed this approach in their study "Brand Communities", and later McAlexander, Schouten & Koenig (2002) extended the initial study on brand communities, by establishing a customer-centric model of brand communities.

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