Excerpt
Table of Contents
1 Introduction
1.1 New Perspectives of Relationship Marketing
1.1.1 Problem Statement
1.1.2 Subquestions
1.2 Delimitations of the Study
1.3 Contribution
1.3.1 Theoretical Contribution
1.3.2 Practical Contribution
1.4 Chapter Outline
2 Brand Communities
2.1 Introduction
2.2 Brand Communities
2.3 The Kolonisten van Catan Community
2.4 Summary
3 Relationship Marketing
3.1 Introduction
3.2 Aspects of Relationship Marketing
3.2.1 Relationship Marketing Definitions
3.2.2 Summary Relationship Marketing Definitions
3.3 Trust
3.4 Commitment
3.5 Summary
4 Branding
4.1 Introduction
4.2 Brands vs. Products
4.2.1 Products
4.2.2 Brands
4.3 Customer-Brand Relationships
4.3.1 Conceptualisation
4.3.2 Determinants of Brand Relationship Quality
4.3.3 Hypotheses Development
4.4 Brand Trust and Brand Affect
4.5 Brand Loyalty
4.5.1 Components of Loyalty
4.6 Summary
5 Research Design
5.1 Introduction
5.2 Problem Definition and Research Approach
5.3 Research Designs
5.3.1 Descriptive Research
5.3.2 Survey Method
5.3.3 Sampling Plan
5.3.4 Questionnaire Development
5.4 Summary
6 Analysis and Results
6.1 Introduction
6.2 Hypotheses Development
6.3 Analysis
6.3.1 Analysis of Relationships
6.3.2 Analysis of Differences Between Events
6.3.3 Analysis of Differences With Respect to the Experience Level
6.3.4 Analysis of Antecedents of Brand Trust and Affect
6.3.5 Analysis of Consequences of Brand Trust and Affect
6.4 Summary
7 Conclusion
7.1 Introduction
7.2 Overview
7.2.1 Overview of Theoretical Findings
7.3 Match of Practical Findings With the Theory
7.4 Managerial Implications
7.5 Limitations and Suggestions for Future Research
8 References
9 Appendix
List of Tables and Figures
Figures
Figure 1.1: Chapter Outline
Figure 2.1: The Brand Community Triad
Figure 2.2: Key Relationships of Brand Communities
Figure 3.1: Key Relationships of Brand Communities
Figure 4.1: Key Relationships of Brand Communities
Figure 4.2: Model of Brand Trust and Brand Affect
Figure 4.3: A Taxonomy of Loyalty Based on Attitude and Behavioural Dimensions
Figure 4.4: Antecedents and Components of Brand Loyalty
Figure 5.1: The Marketing Research Process
Figure 6.1: Customer-Centric Model
Figure 6.2: Components of Brand Affect and Brand Trust
Figure 6.3: Components of Brand Loyalty
Table
Table 3.1: TM and RM compared
Table 5.1: Community Integration Scale Items
Table 5.2: Brand Trust and Brand Affect Scale Items
Table 6.1.1: Statistics for Demographic Variables: Sex
Table 6.1.2: Statistics for Demographic Variables: Age
Table 6.1.3: Statistics for Demographic Variables: Playing Games
Table 6.1.4: Statistics for Demographic Variables: Experience Level
Table 6.2: Statistics for Relationships
Table 6.3: Statistics for Antecedents and Components of Brand Loyalty
Table 6.4: Statistics for Brand Loyalty
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.
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 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.
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 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, customer-customer, 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.
Furthermore, this study will demonstrate how companies 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.
Figure 1.1: Chapter Outline
illustration not visible in this excerpt
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 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.
Part I:
Theoretical Framework
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 micro-groups 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 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 loyalty” 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 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:
Figure 2.1: The Brand Community Triad
illustration not visible in this excerpt
Source: McAlexander, Schouten, & Koenig (2002)
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 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).
Figure 2.2: Key Relationships of Brand Communities
illustration not visible in this excerpt
Source: McAlexander, Schouten, & Koenig (2002)
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, 2002, 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” (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. 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 as well 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 tournaments, 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 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 central 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.
3 Relationship Marketing
3.1 Introduction
The broad topic of this chapter will be the relationship between the focal customer and the marketer.
Figure 3.1: Key Relationships of Brand Communities
illustration not visible in this excerpt
Source: McAlexander, Schouten, & Koenig (2002)
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 attempt 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, 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 directly 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 their 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 product/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 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
illustration not visible in this excerpt
Source: Payne, Christopher, Clark, and Peck (1997)
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 organizations – enhancing customer relationships” (Berry, 1983, p.25). Building on this, Grönroos (1994) argued that the objectives of RM are to “identify and establish, maintain and enhance and, when necessary, terminate relationships with customers and other stakeholders, at a profit so that the objectives of all parties involved are met; and this is done by mutual exchange and fulfilment of promises”. Both parties are expected to make promises and, more importantly, keep their promises (Grönroos 1990, Levitt 1983, Bennett, 1996). This expectation is based on the theory of reciprocity, implying that parties “should return good for good, in proportion to what they receive” (Bagozzi, 1995, p.275). Reciprocity is a very important concept for relationship marketing. It can provide profound explanations for the occurrence of exchange relationships (de Wulf, Odekerken-Schroeder& Iacobucci, 2001) and is seen as the core of RM by Bagozzi (1995). The notion of reciprocity implies that relationship marketing involves one-to-one relationships, in other words “reciprocal interaction between a consumer and a company would require a one-to-one interaction with every customer” (de Wulf, Oderkerken-Schroeder & Iacobucci, 2001). The consequences of reciprocal behaviour are very desirable for companies. It is assumed that customers reciprocate companies’ efforts by increased loyalty (Bagozzi 1995; McAlexander, Schouten & Koenig 2002; de Wulf, Oderkerken-Schroeder & Iacobucci 2001).
One of the most recent attempts to define relationship marketing is provided by Sheth & Parvatiyar (2002) in their attempt to guide RM towards a discipline. They identify three unique aspects of RM:
1. it is a one-to-one relationship between the marketer and the customer; relationships cannot be at an aggregate level; it has to be an individual-entity level
2. it is an interactive process and not a transaction exchange; RM is about interaction and activities; RM is co-production and co-consumption
3. it is a value-added activity through mutual interdependence and collaboration between suppliers and consumers
Sheth & Parvatiyar (2002) argue that RM involves an interactive process (see also Bennett, 1996). This aspect of RM is also discussed by Grönroos (1999) in his framework of central processes in relationship marketing. RM can be seen as a process (see also Egan, 2001), in which value is created, and which is made up from three distinct processes: 1) an interaction process, being the core of RM, 2) a planned communication process, supporting the relationships and supporting the interaction process, and 3) a customer value process, which is the starting and ending point of RM. “A relationship, in these term, [is] definable as the sum total of ‘meaning-filled episodes’ where relationship partners co-produce value” (Egan, 2001, p.21). The concept of RM as a process further clarifies the distinction between TM and RM. An ongoing interaction process will occur after the first contact is made between the buyer and the seller. “To initiate a relationship, one of the parties must present an attractive proposition to the other side and, crucially, has to be liked” (Bennett, 1996, p.418). Grönroos (1999) divides the interaction process into four levels of aggregation: the act, episode, sequence, and relationship level. Furthermore, the marketer following a relationship approach should try to create a two-way communication process. This and the interaction process should support each other, as expectations are created in the one process and should be followed up in the other, e.g. a personally addressed letter creates an expectation which should be met during the interaction of customer and supplier. During the on-going relationship value for customers is created over time. The essential thing is that “the customer has to perceive and appreciate this value…” (Grönroos, 1999, section: the value process of relationship marketing). Seeing RM as a process will help management to direct effort and manage the relationship in a meaningful way.
The objective of RM is to increase profits by increasing the lifetime value of consumers by building customer loyalty. By a shift from TM with an emphasis on winning new customer, to relationship management with a focus on retaining existing customers, companies can improve long run profitability. A study of Reichheld (1996) concerning the impact of an increase in retention rate lead to the following results(as cited in Ryals & Knox, 2001). “The findings, indicate that a 5% increase in customer retention results in an increase in average customer lifetime value of between 35 % and 95 %, leading to a significant improvement in overall profitability” (Ryals & Knox, 2001, p.534). Reichheld and Sasser (1990) argue that customers that commit themselves to a firm/brand over a long period will be more profitable as customer acquisition costs are high and can only be recovered when the customer is retained for more than one year (as cited in Ryals & Knox, 2001). Moreover, the customer who can be retained is a source of continuous streams of profits; can be served more efficiently over time as a result of experience effects (Gundlach, Achrol & Mentzer, 1995); is a source of positive word-of-mouth; will become less price-sensitive as the relationship has a value also for the customer. In general, RM strives for customers that will commit to the firm/brand over the long run, and will thus be more brand loyal and in turn more profitable.
3.2.2 Summary Relationship Marketing Definitions
From the summary of definitions above we can extract some of the most important notions of relationship marketing. RM involves interaction activities over a long, continuous time period. It is furthermore a process involving the identification, establishment, maintenance and enhancement of relationships. Key concerns are mutuality, creating a win-win situation, and making and keeping promises, which is incorporated in the concept of reciprocity. Reciprocity, it is hypothesized (Bagozzi, 1995; McAlexander, Schouten & Koenig, 2002; de Wulf, Odekerken-Schroeder & Iacobucci, 2001), will lead to loyalty behaviour. This will be further discussed in subsequent sections.
It has to be acknowledged that RM goes beyond repeat purchase behaviour and inducements (Sheth & Parvatyiar, 1995). Traditional retention programs focus on short term behaviour of consumers, such as purchase, repeat purchase and more frequent purchase actions, i.e. the behaviourist approach. However, a company that wants to follow a relationship marketing approach should not only focus on behavioural outcomes like repeat purchase behaviour. Neglecting attitudes like comfort, loyalty, and trust will limit the efficiency of relationship tactics. Incorporating an attitude-based model will lead to longer relationships (Morgan, Crutchfield, & Lacey, 2000). Bennett (1996) incorporates these aspects while identifying the objectives of RM. “Consumer relationship marketing seeks to establish long-term, committed, trusting and co-operative relationships with customers, characterized by openness, genuine concern for the delivery of high-quality goods and services, responsiveness to customer suggestions, fair dealing, and (crucially) the willingness to sacrifice short-term advantages for long-term gain” (Bennet, 1996, p.419). Furthermore, it is argued that in the absence of trust and commitment of each party, the company runs the risk of vulnerability as the consumer not truly values the efforts of the firm and might switch to a competitor whenever there is a more valuable offer. These building blocks of RM, commitment and trust (Sheth & Parvatiyar 2002), will be further considered in the following two sections.
3.3 Trust
As in every form of relationship, trust is the key in relationships between customer and marketer. Morgan & Hunt (1994) argue that relationship commitment and trust are central to RM, and in the presence of both they “produce outcomes that promote efficiency, productivity, and effectiveness” (Morgan & Hunt, 1994, p.22). In a relationship the relationship partners are subject to possible opportunistic behaviour. In order to decrease the possibility to be vulnerable the parties will search for a partner in which they have confidence. Hart and Johnson (1999) define trust as “having confidence that the other party will not exploit one’s vulnerabilities” (Hart & Johnson, 1999, p.12). In more general terms, trust exists when “one party has confidence in an exchange partner’s reliability and integrity” (Morgan & Hunt, 1994, p.23). Reliability and integrity are linked to characteristics that a trustworthy partner has to exhibit, namely consistency, competence, honesty, fairness, responsibility, helpfulness, and benevolence. These dimensions of trustworthiness are comparable to the ingredients of Hart & Johnson’s (1999) definition of ‘total trust’. “It is the belief, confidence, and faith that a company and its people will be fair, reliable, competent and ethical in all dealings” (Hart & Johnson, 1999, p.12). Therefore, trust is argued to arise when a party believes that the other party will behave in a trustworthy manner. Sirdeshmukh, Singh & Sabol (2002) find that trustworthy behaviour, in this case benevolence, competence and problem-solving orientation of the marketer, will lead the customer to increased trust towards the marketer. In other words, trustworthy behaviour will lead to an attitude and expectation held by the consumer that the marketer is “dependable and can be relied on to deliver its promise” (Sirdeshmukh, Singh & Sabol, 2002, p.17), i.e. customer trust. Therefore, a party that does not exhibit trustworthy characteristics will not be trusted. Morgan & Hunt (1994) discuss three factors that influence trust, namely shared values, communication, and opportunistic behaviour. Opportunistic behaviour is the inverse of operational benevolence, which is discussed as an antecedent of trust in the model of Sirdeshmukh, Singh & Sabol (2002). A benevolent partner, as well as a partner who is believed not to act opportunistically, will “refrain from unfair advantage taking” (Sirdeshmukh, Singh & Sabol, 2002, p.18). Operational benevolence means the desire to do good, as means opportunistic behaviour, the desire to “do bad” by acting in self-interest and not in the consumer’s interest. Moreover, benevolence includes honesty as the partner must be honest towards his partner concerning the intentions to do good. Moreover, “communication fosters trust by assisting in resolving and aligning perceptions and expectations” (Morgan & Hunt, 1994, p.25). By communication a company should also communicate operational competence, as this is determined to be another antecedent in Sirdeshmukh, Singh & Sabol (2002) model of “Interrelationships among Trustworthiness, Trust, Value, and Loyalty” (Sirdeshmukh, Singh & Sabol, 2002, p.16). Moreover, when a partner believes that the other party will engage in opportunistic behaviour, trust will be decreased. Another factor, which should be considered important for building trust, is a perceived problem solving orientation by the organization (Sirdeshmukh, Singh & Sabol, 2002).
Trust will in turn lead to higher commitment, as “relationships characterized by trust are so highly valued that parties will desire to commit themselves to such relationships” (Morgan & Hunt, 1994, p.24). By this, trust will indirectly lead to acquiescence, and lower propensity to leave. Furthermore, it leads directly to increased cooperation, functional conflict resolution and decrease of uncertainty. It should be emphasised that cooperation is a very important issue for relationships, as it enables the achievement of mutual goals (Morgan & Hunt, 1994), resulting in many more benefits (Morgan, Crutchfield & Lacey, 2000). Moreover, trust plays an important role in gaining loyalty of customers (Sirdeshmukh, Singh & Sabol, 2002). More specifically, these authors found evidence that trust will indirectly lead to loyalty, mediated by value. Value, defined as “the consumer’s perceptions of the benefits minus the costs of maintaining an ongoing relationship with a service provider” (Sirdeshmukh, Singh & Sabol, 2002, p.21), is hypothesised to be created by trust in two ways. “…by 1) providing relational benefits derived from interacting with the service provider that is operational competent, benevolent toward the consumer, and committed to solving exchange problems and 2) reducing exchange uncertainty and helping the consumer form consistent and reliable expectations of the service provider in an ongoing relationship” (Sirdeshmukh, Singh & Sabol, 2002, p.21). The role of value for building trust is however twofold. It is not only a mediating variable between trust an loyalty but also an antecedent. This is argued by Morgan, Crutchfield & Lacey (2000), in their “Relationship model of customer retention programs”. Here they discuss three antecedents of customer trust and commitment, being economic content, resource content, and social content. The economic content includes “economic benefits and costs of participating in the relationship” (Morgan, Crutchfield & Lacey, 2000, p.79), which is in line with the definition of the mediating variable “value” in Sirdeshmukh, Singh & Sabol (2002). Thus the perception of superior value provided by the relationship and by relationship partners will both motivate the customer to trust the marketer and will be a consequence of trust, as the parties perceive a relationship characterised by trust as valuable.
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