Communities in the 21st Century - Fact or Fiction

Acknowledgments

In front of you, you can see what I’ve been working at for during the last months, sometimes doubting that I could ever write an acknowledgement like this. I want to thank those people who did make it possible by supporting me. First I would like to thank my supervisor Gaby Odekerken-Schröder, with whom it all started, when I didn’t know what to write about. As I knew her from one of my courses, where she was my tutor, I thought it might be a start to ask her for advice. I was very surprised that she immediately helped me, and automatically offered to be my supervisor. The start was easier than I had thought before. During the course of writing she provided me with valuable and constructive feedback, and I was able to profit from her immense knowledge, especially about relationship marketing. It was my pleasure to work with her.

Furthermore, I would like to thank the staff of 999games that made it possible to do my research during the Dutch National Kolonisten van Catan competition. Thanks to the team for the support and help to get as many questionnaires back as possible.

I would like to thank all my friends and family who were there for me during the whole time. Specifically, I want to thank Bille for her motiva ting talks and her ideas when nothing worked anymore. I don’t know what I would have done without her. I also want to thank my boyfriend, who made sure I got through this process alive and healthy, who helped me with translating my questionnaire into Dutch, and foremost, who was so incredible patient and dealt with my devil- moods. And last but not least, a big thanks to my parents. They made it possible for me to study in the first place, and to be where I am right now: at the end of my studies!

Katja Hellberg

Maastricht, December, the 10 th , 2002

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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 customercustomer 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

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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 stud y 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.

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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

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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

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  List of Tables and Figures  

  Figures  

  Figure 1 1 : Chapter Outline  7

  Figure 2 1 : The Brand Community Triad  13

  Figure 2 2 : Key Relationships of Brand Communities  14

  Figure 3 1 : Key Relationships of Brand Communities  19

  Figure 4 1 : Key Relationships of Brand Communities  32

  Figure 4 2 : Model of Brand Trust and Brand Affect  42

  Figure 4 3 : A Taxonomy of Loyalty Based on Attitude and Behavioural Dimensions  45

  Figure 4 4 : Antecedents and Components of Brand Loyalty  46

  Figure 5 1 : The Marketing Research Process  50

  Figure 6 1 : Customer-Centric Model  68

  Figure 6 2 : Components of Brand Affect and Brand Trust  76

  Figure 6 3 : Components of Brand Loyalty  78

  Table  

Table 3 1  : TM and RM compared  21

Table 5 1  : Community Integration Scale Items  56

Table 5 2  : Brand Trust and Brand Affect Scale Items  57

Table 6 1 1  : Statistics for Demographic Variables: Sex  62

Table 6 1 2  : Statistics for Demographic Variables: Age  62

Table 6 1 3  : Statistics for Demographic Variables: Playing Games  63

Table 6 1 4  : Statistics for Demographic Variables: Experience Level  64

Table 6 2  : Statistics for Relationships  69

Table 6 3  : Statistics for Antecedents and Components of Brand Loyalty  75

Table 6 4  : Statistics for Brand Loyalty  77

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Communities in the 21 ^st century: Fact or Fiction? Chapter 1- Introduction

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. L ater 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

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Communities in the 21 ^st century: Fact or Fiction? Chapter 1- Introduction

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. pointof-sale, sampling, etc. by 1.5%. Companies view the latter two (non-traditional advertisement and selling strategies) as being better possibilities to reach customers

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Communities in the 21 ^st century: Fact or Fiction? Chapter 1- Introduction

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 nontraditional 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.

1.1.1 Problem Statement

Whether the theory of brand communities, established by McAlexander, Schouten & Koenig (2002) on the basis of their investigation of Jeep brandfests, can be applied in a different setting - namely for a different product category - will be the focus of this

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Communities in the 21 ^st century: Fact or Fiction? Chapter 1- Introduction

study. Furthermore, it will be investigated whether brand communities can be seen as a new relationship marketing strategy. This study is based upon the findings of McAlexander, Schouten & Koenig’s article “Building Brand Communities” (2002). Therefore, the following problem statement arises:

To what degree are brand community relationships existent for products other than that of the automobile industry? And to what extent can relationship marketing be considered as a consequence of brand communities?

1.1.2 Subquestions

In order to answer this two- fold problem statement, it will be necessary to focus on the following sub-questions:

§ What are brand communities?

After a short introduction, the literature about communities and especially consumption communities will be reviewed. Furthermore, the concept of brand communities will be explained, where the focus is on key relationships of the customer-centric brand community model.

§ What is relationship marketing?

In this part, the field of relationship marketing will be explained. First, the development from transactional to relationship marketing will be reviewed, after which the most important components and aspects of relationship marketing will be discussed, followed by a short summary.

§ What is brand loyalty?

First, the concept of brands vs. products as well as that of branding will be discussed. In line with the customer-centric model, the literature on the relationship between the customer and the brand will be reviewed. Then, the antecedents of brand loyalty will be explained, followed by an examination of the concept of brand loyalty.

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Communities in the 21 ^st century: Fact or Fiction? Chapter 1- Introduction

These questions will be answered in the upcoming chapters. Before that, the boundaries and contributions of this study will be revealed.

1.2 Delimitations of the Study

As mentioned before, earlier studies about brand communities focused on the existence of relationships customers engage in, namely customer-product, customer-brand, customer-customer, and customer-company relationships. This will be extended in the underlying study by a focus on the existence of relationship marketing factors, like trust, affect, and commitment, which characterize the relationships within the brand community. Specifically, in this study, the relationship between the customer and the brand will be the subject of analysis, meaning that the relationship factors will only be tested for this distinct relationship. Thus, the results will also be limited to this specific factor.

Another delimitation of this study lies in its focus on the business-to-consumer (b-to-c) segment. The results that are to be obtained will only be valid for relationships between end-users and companies, brands, and products that are offered in the consumer-goods industry. However, relationship marketing is also adopted in the field of business-to-business markets (b-to-b). The possible existence and/or role of brand communities in this context have to be the focus of another study. Furthermore, this study takes a short-term perspective by only observing customer attitudes towards the product, brand, company and other customers once, at one brandfest. Changes of attitude due to the participation in brandfests can thus not be observed. Longitudinal studies, as defined by Malhotra (1999), might be necessary in order to detect changes in the attitude and relationship of the customer. Nevertheless, despite these delimitations, the study at hand also offers important theoretical and practical contributions, which will be dealt with in the next part.

1.3 Contribution

1.3.1 Theoretical Contribution

The concept of brand communities is a relatively new and unexplored concept. First of all, this study contributes to earlier findings by verifying this concept in a different setting, applying it to “less flamboyant” products than Jeep vehicles (the focal product of the article on brand communities by McAlexander, Schouten & Koenig, 2002). It

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Communities in the 21 ^st century: Fact or Fiction? Chapter 1- Introduction

furthermore verifies the argumentation of McAlexander, Schouten & Koenig (2002) that more mundane products, such as toys, provide valued bridges to family, friends, or neighbours, which suggests the potential relevance of the earlier findings to these types of product categories.

Second, this study contributes to the earlier findings by shedding light on the underlying characteristics of the relationships within brand communities. Research within the field of relationship marketing focussed on characteristics of relationships which make these successful, namely trust, affect, and commitment, as mentioned above. These are in turn argued to lead to loyalty of customers. However, previous research on brand communities does not investigate upon these relationship characteristics. This study contributes to the earlier findings of McAlexander, Schouten & Koenig (2002) by verifying whether customers truly reciprocate with increased trust and loyalty and therefore whether the investment in marketing strategies like brandfests and brand community building is justified. Especially the relationship between the customer and the brand needs considerable attention. The study at hand contributes to the theory of relationship marketing in that it verifies the existence of relationships in brand communities in a different setting by considering a different product category than previous research. It furthermore contributes to the literature on trust, commitment, and loyalty in that it determines whether brandfests can be a basis for building trust and developing attitudinal and behavioural loyalty.

1.3.2 Practical Contribution

This study and the related research will try to investigate how marketers can contribute to relationship building. By supporting the development of relationships within brand communities with the help of events, which provide a high personal context, marketers are said to support the development of valuable relationships. McAlexander, Schouten, & Koenig (2002) are the first authors who extend the traditional model of customer-brand relationships by including three additional relationships into their customer-centric model, that of customer-product, customercustomer, and customer-company relationships. To validate their findings for one brand, namely Jeep, it is valuable to test these results in a different setting for a different product category of a consumer brand.

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Communities in the 21 ^st century: Fact or Fiction? Chapter 1- Introduction

Furthermore, this study will demonstrate how c ompanies can integrate event marketing in their communication mix and how valuable this instrument could be in supporting loyalty and thus long-term profitability. Moreover, it will be clarified how event marketing can contribute to brand equity building. Thus this study might be a guide towards a new innovative way for companies to differentiate themselves from competitors and thus achieve a competitive advantage, which cannot be duplicated easily.

1.4 Chapter Outline

The study is structured in a way so that the problem statement can be answered from a theoretical as well as a practical point of view. Therefore, it is divided into a theoretical part, including chapter two through four. Chapter five and six are part of the practical research.

In part one the theoretical framework will be established. Therefore, chapter two will start with a review of the literature on communities - more specifically on brand communities. Furthermore, this chapter will explain this concept in more detail by means of an example of a brandfest and brand community, which will also be used for

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Communities in the 21 ^st century: Fact or Fiction? Chapter 1- Introduction

the practical part, namely that around the Kolonisten van Catan. Chapter three will discuss the concept of relationship marketing, reviewing the literature on the main components of relationship marketing, trust and commitment. Moreover, the relationship between a customer and a brand will be the subject of chapter four. Therefore, the concept of branding will be explained first, followed by a discussion of the relationship and the underlying factors, like trust and affect, as well as commitment and behavioural loyalty. Brand loyalty will be discussed in greater detail at the end of this chapter. Throughout part one the hypotheses for the underlying research performed in part two will be developed according to the theory used for this study.

The practical part will start by explaining the underlying research design for the empirical research of this study. This forms the basis for chapter six, in which the hypotheses will be summarized and later analysed and evaluated. This is done by means of statistical analysis. Chapter seven will summarize the results and link these to the theoretical framework of part one. Furthermore, limitations of this research and managerial implications as well as suggestions for future research will be provided in this chapter.

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Part I:

Theoretical Framework

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Communities in the 21 ^st century: Fact or Fiction? Chapter 2 - Brand Communities

2 BRAND COMMUNITIES

2.1 Introduction

“Communities: the people living in one place, district, or country, considered as a whole; group of people of the same religion, race, occupation, etc. or with shared interests; condition of sharing, having things in common, being alike in some way” (Oxford Advanced Learner’s Dictionary, 1989)

In the twentieth century the “myth of liberation of the individual” (Cova, 1997, p.298) has supported the loss of communities and feelings of social bonds among individuals. With almost unlimited possibilities of private and public choices human beings have never been so free, yet also so alone and cut off from the “spirit” of community. “Postmodernity is characterized by individualism, the logic conclusion of the modern quest for liberation from social bonds” (Cova, 1997, p.299). Although it is argued that postmodernity is a period of social dissolution and extreme individualism, there is also a tendency towards social recomposition and “a reverse movement of a desperate search for the social link” (Cova, 1997, p.298). This does not mean that there is a movement back towards the “traditional notion of community, [which is ] an

irreversible obligation imposed on each of its members to share the same fate” (Cova, 1997, p.300). It rather means a movement towards “a network of societal microgroups in which individuals share strong emotional links, a common sub-culture, a vision of live” (Cova, 1997, p.300). The emphasis lies on emotions as a basis for building communities. From this controversy, namely individualistic consumers and those who search for a social link, it is concluded that four modes of social link coexist today: “traditional communities, modern aggregations, postmodern individualism and postmodern tribes” (Cova, 1997, p.300). The main interest lies however in the postmodern tribes. Cova (1997) argues that the communities of postmodernity “are held together through shared emotions, style of live, new moral beliefs, sense of injustice and [most important] consumption practice”(Cova, 1997,

p.300). Communities that are build on the basis of consumption practice received

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Communities in the 21 ^st century: Fact or Fiction? Chapter 2 - Brand Communities

some attention by marketing theorists (Oliver 1999, Muniz & O’Guinn 2001, McAlexander, Schouten & Koenig 2002).

The following section will involve a discussion about those communities with the focus on the latest discovery of brand communities by McAlexander, Schouten & Koenig (2002).

2.2 Brand Communities

One author discussing consumption communities and their effect is Oliver (1999). He discusses the effects of social bonding as well as satisfaction, and personal determinism on loyalty. In his article “Whence customer l oyalty” he determines the effects of consumption communities on loyalty. “When these additional factors [social bonding and personal determinism] are brought into account, ultimate loyalty emerges as a combination of perceived product superiority, personal fortitude and social bonding and their synergistic effect” (Oliver, 1999, p.33). He goes beyond the cognition-affect-conation concept, where true brand loyalty will involve three decision- making phases by introducing new perspectives on customer loyalty, which are less vulnerable to competitive action than the concepts above:

§ the brand attribute beliefs must be preferable to competitive offerings (cognitive loyalty)

§ this information must coincide with an affective preference (attitude) for the brand (affective loyalty)

§ consumer must have a higher intention (conation) to buy the brand compared with that for alternatives (conative loyalty)

Oliver (1999) argues that the degree of personal fortitude (low, high) will affect loyalty, as customers with high degree of personal fortitude will more easily fight off competitor’s persuasion to switch. Additionally, low and high phases of community and social support will affect loyalty; in other words, community provides the stimulus to remain loyal. The lowest, most vulnerable state of loyalty is the one, which simply relies on product superiority (as this can be easily attacked by competitors) where the customer has a low level of personal fortitude and there is no social support when consuming this product. The highest level of loyalty is the one

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Communities in the 21 ^st century: Fact or Fiction? Chapter 2 - Brand Communities

where personal fortitude and social bonding are both high. Here “the consumer finds a natural match with both the consumable and its environment” (Oliver, 1999, p.40). The consumer will see the product/service as a part of him and regards it as embedded into his lifestyle. This is the most stable state of loyalty where competitors’ actions will not influence the consumer and ultimate loyalty is achieved. “In essence, consumers can become near-zealots on the basis of adoration and devotion and can be placed in self-consuming social environments that reinforce their brand determination” (Oliver 1999, p.43).

The role of communities in establishing loyalty is also discussed by Muniz & O’Guinn (2001). They conclude that “developing a strong brand community could be a critical step in truly actualising the concept of relationship marketing. A strong brand community can lead to socially embedded and entrenched loyalty, brand commitment, and even hyper-loyalty” (Muniz & O’Guinn, 2001, p.427). The definition of brand communities provided by Muniz & O’Guinn (2001), “a brand community is a specialized, non-geographically bound community, based on a structured set of social relationships among admirers of a brand” (Muniz & O’Guinn, 2001, p.412), shows that the “linking value” (Cova, 1997) of a product or brand is important. However, brand communities are not geographically bound and may very well be stable and relatively strong groupings, in contrast to the view of Cova (1997), who sees communities as rather unstable and temporary phenomena. Cova (1997) argues that “the goods and services which are valued are mainly those which, through their linking value, permit social interaction of the communal type” (Cova, 1997, p.304). Brand communities are however more than compensatory communities for any missing social link among people, in other words, more than mere relationships among customers. “The leitmotif of societing and tribal marketing: the link is more important than the thing” (Cova 1997) is valid concerning the notion that the link is important. However, “brand communities, … are united predominantly by their common interest in a brand” (Muniz & O’Guinn, 2001, p.413) and evolve around this brand. Thus, there is more to brand communities than simply a link among customers. Muniz and O’Guinn (2001) developed a model of brand communities summarized in a brand community triad:

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Communities in the 21 ^st century: Fact or Fiction? Chapter 2 - Brand Communities

Muniz & O’Guinn (2001) found evidence for the existence of characteristics of traditional communities in brand communities, namely consciousness of kind, rituals and traditions, and moral responsibility. Brand community members feel a connection towards each other and perceive themselves to be different with respect to non-community members. This phenomenon is known as consciousness of kind. “Consumers use brand choices to mark both their inclusion and exclusion from various lifestyles” (Muniz & O’Guinn, 2001, p.420). In other words, they are not only committed to the brand around which the community evolves. They also exhibit “oppositional brand loyalty, … another social process involved in perpetuating consciousness of kind” (Muniz & O’Guinn, 2001, p420). This is especially important for marketers, who face severe competition for their brand. Community members with oppositional brand loyalty are not vulnerable to competitive messages, which clarifies the strength of communities. McAlexander, Schouten & Koenig (2002) validate the existence of this characteristic by observing a “fear of not belonging” from the part of event participants. The second characteristic, i.e. shared rituals and traditions, is also evident in brand communities. “These rituals and traditions typically centre on shared consumption experiences with the brand” (Muniz & O’Guinn, 2001, p.421). Greeting rituals for example reinforce consciousness of kind, a feeling of belonging. Moreover, storytelling helps to create meaning around the brand and can provide the marketer with a way to spread information, as brand stories sometimes originate from commercial text. “All of this highlights the active role brand community members have in the social construction of brand meaning, and thus the brand” (Muniz & O’Guinn, 2001, 426). Especially during events marketers can support storytelling and other rituals and traditions by providing brand community members the environment

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Communities in the 21 ^st century: Fact or Fiction? Chapter 2 - Brand Communities

necessary for interaction, e.g. barbeques and round table discussions (McAlexander, Schouten & Koenig, 2002). The third characteristic is also evident in brand communities. Members are said to have a moral responsibility, “a felt sense of duty or obligation to the community as a whole” (Muniz & O’Guinn, 2001, p.421). Due to the fact that the community forms around the brand, and customers feel connected to others on the basis of the brand and not other shared interests, moral responsibility is limited in brand communities. Assisting brand community members in the proper use of the brand is one very important aspect in these communities. McAlexander, Schouten and Koenig (2002) observed moral responsibility during the brandfests, e.g. as experienced owners helped less experienced ones with difficult stretches of the trail or with finding the right route. All those characteristics of brand communities are validated by McAlexander, Schouten & Koenig (2002) in their study “Building Brand Community”. In contrast to Muniz & O’Guinn (2001) who observed brand communities that developed on the basis of actions of community members or brand consumers, McAlexander, Schouten & Koenig (2002) study brand communities supported by marketers in the form of brandfests. During a brandfest they observed relationship building between the customer and four different components (see Figure 2.2), thus extending the triad- model (Figure 2.1). “Construing brand community as a social aggregation of brand users and their relationships to the brand itself … overlooks other relationships that supply brand community members with their commonality and cultural capital” (McAlexander, Schouten & Koenig, 2002, p. 39).

Communities in the 21 ^st century: Fact or Fiction? Chapter 2 - Brand Communities

The customer is not only said to build relationships with the brand - as in the traditional model of customer-brand relationship, but also with other customers, with the product (in this case, Jeeps) and with the marketer. They argue that brand communities are best represented by a customer-centric model of relationships in which “the existence and meaningfulness of the community inhere in customer experience rather than in the brand around which that experience revolves” (McAlexander, Schouten & Koenig, 2002, p.39). Events provide ownership and consumption experience, entertainment and education about the product and brand, which is said to incline customers to reciprocate with increased trust and loyalty. “By proactively providing the context for relationships to develop, marketers can cultivate community in ways that enhance IBC (Integration in the Brand Community) and thereby increasing customer loyalty” (McAlexander, Schouten & Koenig, 2002, p.51). Brand communities actively supported by marketers in form of events are therefore a new concept for relationship marketing, which could provide the basis for long-term relationship formation and a sustainable competitive advantage. Such marketing programs have several advantages, which are discussed by McAlexander, Schouten & Koenig (2002) as the four dynamic dimensions of brand communities, namely geographic concentration, social context, temporality and identification. “The temporary geographic concentrations [during events] provide a rich social context for communications” (McAlexander, Schouten & Koenig, 2 002, p.43). Events offer temporal face-to- face interaction between consumers, as well as between consumers and marketers. Therefore, identification within the community is facilitated. Furthermore, face-to- face communication provides two distinct advantages. It can reduce misinterpretation of marketing communication and thus avoid noise of communication messages, and enable consumers to see, feel, and hear demonstration of product use (Belch & Belch, 1998). Moreover, temporary geographic concentration and contextual rich events may provide a good basis for forming more temporary stable relationships and thus lead to community longevity. Therefore it is argued that events are very appropriate as they help presenting a product and/or brand in an experience-oriented way (Zanger & Drengner, 1999). The customer-centric model constitutes a new perspective for relationship marketing and has several important implications. “The more each relationship is internalised as part of the customer’s life experience, the more the customer is integrated into the brand community and the more loyal the customer is in consuming the brand”

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Communities in the 21 ^st century: Fact or Fiction? Chapter 2 - Brand Communities

(McAlexander, Schouten & Koenig, 2002, p.48). It is therefore important to discuss each relationship in more detail in the next chapters from a relationship marketing perspective and also a branding perspective. However, it will first be discussed which brand community will serve as a basis for the empirical part of this study and how it is related to the previously discussed characteristics of brand communities. This will be the topic of the next section.

2.3 The Kolonisten van Catan Community

In order to validate the findings of McAlexander, Schouten & Koenig (2002) another brand community possibly with the same characteristics is needed. Their search for an understanding of “the Holy Grail of brand loyalty” led them to a brandfest in which they observed several relationships and studied the process that led the customers to their loyalty. In the same manner this study will seek out places where loyal customers can be found, and study the process that leads to their loyalty (McAlexander, Schouten & Koenig, 2002). The loyal customers observed in this study will be those of the board game “Kolonisten van Catan”. The Kolonisten van Catan board game was developed in 1995 by a German, called Klaus Teuber, and was originally called “die Siedler von Catan”. In the first year the game was elected as the game of the year 1995 (“Spiel des Jahres”) in Germany. In the Netherlands the game got this distinction in the year 1999. The Kolonisten van Catan became a hype in Germany followed by the Netherlands, England - even Japan - and many others. According to the German distributor Kosmos the game was sold more than four million times in Germany alone (www.kosmos.de). Due to the huge success, several extensions were developed. An extension for 5-6 players, a Kolonisten van Catan card game, Kolonisten van Catan computer games, and several different settings (e.g. Seefahrer, Städte und Ritter, Sternenfahrer) have been added. Since two years, the supplying company in the Netherlands, 999games, organizes tournaments during which customers can play this game on a competition basis with other customers from all over the country. This kind of brandfest takes place in many countries. There are national tournaments, international tournaments, world championships, Kolonisten van Catan weekends, and the like. The focus of this study will be on the Dutch national championship pre-rounds. They take place in the twelve districts of the Netherlands and end with a final.

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Communities in the 21 ^st century: Fact or Fiction? Chapter 2 - Brand Communities

In contrast to virtual communities (e.g. http://catan.pagina.nl, www.die-siedler.de), which evolved around the Kolonisten van Catan, these tournaments offer the possibility of temporary geographic concentration with high social context, as was the case of McAlexaner, Schouten & Koenig’s (2002) brand communities. Despite the large evolvement of communities - virtual and real - around the Kolonisten van Catan, that became a means to socialize with others - friends, neighbours, chatters etc. - 999games aswell as other distributors like Kosmos, “contribute to the process of community building by creating the context in which owner interaction occurs” (McAlexander, Schouten, and Koenig, 2002, p.42). Previous Kolonisten van Catan brandfests already provide evidence of an “increased sense of community longevity [which directly resulted from] the qualities of relationships facilitated by the temporary geographic concentration and the contextual richness of the events” (McAlexander, Schouten & Koenig, 2002, p.43). ‘See you next year at the Kolonisten van Catan weekend’ was only one representative claim on the internet, where pictures from last year were posted (www.die-siedler.de). McAlexander, Schouten and Koenig (2002) argued that events such as their observed Jeep Jamboree or Camp Jeep bring together people that share an interest in a brand and its consumption, and provide the opportunity for context-rich interaction. The brandfests organized by 999games follow the same principle and thus offer participants the opportunity to share extraordinary consumption experience and therefore:

§ strengthen interpersonal ties (which is represented by the relationship between the focal customer and other customers),

§ enhance mutual appreciation for the product (that is the Kolonisten van Catan),

§ enhance mutual appreciation for the brand (in this case the company brand 999games which is behind the board game), and

§ enhance mutual appreciation with the facilitating marketers (the people behind the brand, in this case those that are present during the event).

Furthermore, during those tour naments, the customer experiences the product and the brand in an environment that is directly connected to his personal life. In other words there is a natural match between the consumer and the consumable. Moreover, the

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Communities in the 21 ^st century: Fact or Fiction? Chapter 2 - Brand Communities

product becomes a means to achieve personal goals, namely to socialize with other people. The product and/or brand obviously has a linking value.

2.4 Summary

Despite the general tendency of individualism and social dissolution of today’s society, there is a new trend back towards a search of social link by consumers. Shared consumption experiences as well as shared emotions, and a common lifestyle are becoming the most important basis for communities. An important feature of products and/or brands is therefore its linking value, permitting social interaction of the communal type. Brand communities however, don’t only exist for compensating consumers for any missing social links. They exist also for the sake of “celebrating” a product and/or brand which is liked, or even adored, by the community members. The brand and the product are clearly important in brand communities as they are the basis for customer experiences. The existence and meaningfulness of brand communities however, inhere in customer experience rather than in the brand around which that experience revolves. The customer-centric model of brand communities (McAlexander, Schouten and Koenig 2002) presents this issue, by arguing in favour of four relationships a customer develops in a brand community and which are central to his integration in the community. By developing relationships with the brand, with the product, with the marketers, and with other customers, the focal customer will be highly integrated into this brand community. This integration in the brand community (IBC) is cent ral to marketers concern as it is argued to lead to high loyalty and thus increased profitability.

In the following the relationships that are central in the customer-centric model will be discussed as they are the foundation for integration in the IBC. Therefore, it is necessary to discuss important concepts of relationship marketing in the next chapter, and branding in chapter four.

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Communities in the 21 ^st century: Fact or Fiction? Chapter 3 - Relationship Marketing

3 RELATIONSHIP MARKETING

3.1 Introduction

The broad topic of this chapter will be the relationship between the focal customer and the marketer.

Forming relationships with the customer is a widely known and accepted concept in marketing nowadays. In order to clarify the concept, section 3.2 will discuss several important aspects of relationship marketing. This section will start by comparing the traditional marketing perspective - transactional marketing - with a new perspective, that of relationship marketing, followed by an a ttempt to define relationship marketing, as well as a summary of the objectives of relationship marketing. In general, the key objective for organizations is to build long-term relationships ensuring intentions of future exchanges. The desire to maintain a valued relationship is defined as commitment (e.g. Morgan & Hunt 1994, p. 23). Various authors claim that commitment is central to all relationships (e.g. Garbarino & Johnson 1999; Morgan & Hunt 1994; de Ruyter & Wetzels 1998). Moreover, commitment is said to be established by trust. This chapter will thus further determine the concepts of trust and commitment in section 3.3 and 3.4 respectively. The organization must focus on building trust and commitment with the customer in order to obtain valuable relationship marketing outcomes and increase customer loyalty. McAlexander,

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Communities in the 21 ^st century: Fact or Fiction? Chapter 3 - Relationship Marketing

Schouten & Koenig (2002) argue that participants of events like Camp Jeep reciprocate with increased trust and loyalty. It is commonly argued that trust in the relationship partner dir ectly affects customer loyalty. This concept will be explained in greater detail in the next chapter, after important branding concepts, which are necessary for an overall understanding of the concept of loyalty, will be provided. At the end of this chapter, a summary of the most important aspects and contributions of this chapter to brand community theory will be given.

3.2 Aspects of Relationship Marketing

The globalisation and with it increased competition forces companies to differentiate themselves from t heir competitors. This is not an easy task considering the technological advancements, which imply that companies can more easily copy competitors’ offers. Not only must the company offer a highly valued, and hopefully unique product/service - at least unique in the eyes of the customer - it must also provide a satisfactory one, which is another challenge for companies as the consumers today are more demanding than ever before. Already in the early 1980s marketing theorists claimed that companies can differentiate themselves from competition by offering an augmented product - “a product [that] is not merely an item but a whole bundle of values that satisfy buyers” (Levitt 1983, p.89). Intangible service offerings and customer service complementing the core p roduct/service became important considerations for competitive advantage and success (Grönroos 1999; Payne, Christopher, Clark, & Peck, 1995). These supporting service promises additionally to the actual product imply increasing interdependence between supplier and seller. Thus, “more and more of the world’s economic work gets done through long-term relationships between sellers and buyers” (Levitt, 1983, p.89). Though Levitt’s (1983) view was provided almost two decades ago it still holds today. Marketers respond to the increasing demand for a product as a total service offering (Grönroos, 1999) and to increased global competition with a shift from one-time transactional exchanges, i.e. transaction marketing, towards relationship marketing (hereafter referred to TM and RM, respectively).

In light of the above mentioned changes the traditional transaction marketing model with its “narrow, transactional, one-sale-at-a-time view of marketing” (Payne, Christopher, Clark, and Peck, 1995, p.4) was increasingly criticized. A shift from a

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Communities in the 21 ^st century: Fact or Fiction? Chapter 3 - Relationship Marketing

transactional towards a relational view was more and more accepted. A first step to fully understand RM is by distinguishing it from transaction marketing:

Table 3.1: TM and RM compared

This table shows one key aspect of RM as opposed to TM, namely that the focus of RM is exclusively on the customer, on long-term contact with him and on satisfying this customer over a period of time. The customer is the centre of marketing efforts and those efforts should be adopted throughout the whole company, which means that the culture and the climate of the whole organization have to support relationship building (Bennett, 1996). It has to be considered however, that customers differ in their orientation to a relationship. It is argued that customers’ orientation ranges from transactional to relational orientation (Garbarino 1999, Jackson 1985). This implies that “an firm may need to practice both transactional and relational marketing because of differing customer orientations (Garbarino, 1999, 78).

3.2.1 Relationship Marketing Definitions

A vast variety of marketing theorists tried to define relationship marketing (Berry 1983; Grönroos 1996; Payne, Christopher, Clark & Peck 1995, Sheth & Parvatiyar 2002). One of the earliest and most widely known definitions is given by Berry (1983). “RM is attracting, maintaining, and -in multi-service organizationsenhancing customer relationships” (Berry, 1983, p.25). Building on this, Grönroos

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