“The brand community is a concept that sheds a new light on the relationships
between consumers and a specific brand: they are no longer considered as
dyadic relationships between a brand and an isolated consumer (Fournier,
1998) but rather as relationships overlapping associations and interactions
among consumers within a specific group.” (Gruen et al, 2000)
Brand communities gained in importance in recent years for companies with a
high situated brand and as it is still an issue to define the special relationship and the concept itself, this dissertation will help to understand the meaning of a brand community and discuss the perceptions of consumers towards brand communities in context with mutual benefits. An understanding of the special relationship between company and community members is being outlined. The brand community presents a special interest both for marketing
researchers and brand managers because it gives new theoretical perspectives
on key concepts and considerable implications for marketing strategies.
(Abdelmajid & Sitz, 2004) Brand communities became a crucial factor regarding
to the marketing planning process and in terms of value of a brand. They have
become one of the most encouraging developments in relationship marketing in
recent years. (von Loewenfeld, 2004) Therefore it is important to outline and
examine the brand community concept and put it in context with the theory of
relationship marketing, brand management, buyer behaviour and customer
loyalty programmes. These four elements are the factors which play the crucial
role on which basis the brand community concept is being established. To make
this work the perceptions of the existing as well as the potential customers
needs to be explored. The author has investigated the perceptions, concerns
and opinions of 200 consumers between 18 and 30 throughout different social
groups and geographical locations. This gives an overview about the
awareness and actual use of brand communities among the target audiences.
Table of Contents
Acknowledgements
Abstract
List of Figures
1 Introduction
2 Literature Review
2.1 Relationship Marketing
2.1.1 The 30 relationships
2.1.2 Many-to-many marketing
2.1.3 Importance of relationship marketing
2.2 The Brand.
2.2.1 Branding
2.2.1.1 Relationship Marketing and Branding
2.2.1.2 Branding in context with Mallow’s Model of Hierarchy of Needs.
2.2.2 Brand loyalty
2.2.3 Brand value
2.3 Consumer buyer behaviour
2.4 The Brand Community
2.4.1 Company and Community – A specified Relationship
2.4.2 How the brand community concept works
2.4.3 The Marketing Aspect
2.5 Research Question
3 Methodology
4 Findings
4.1 Primary research – Quantitative
4.1.1 Survey results
4.1.1.1 Members and non-members
4.1.1.2 Members
4.1.1.3 Non-members
4.2 Primary research – Qualitative
4.2.1 An insight on consumers` perception
4.2.2 Discussion group results
5 Analysis and Discussion
5.1 The Brand Community Dilemma
6 Conclusion
References
Bibliography
Acknowledgements
I would like to thank everybody who has supported me in writing this dissertation.
In particular I want to thank my supervisor Renate Smith who always supported me and was helpful in discussing the topic. She always gave me professional advice which has been vital impulses on my study.
I am very thankful for all the respondents of the survey I conducted and in addition to that I would like to thank all the people who took part in the discussion group.
Special thanks go to M.F., the marketing executive of Smack Building Brand Communities in Canada who was very helpful in answering my questions and discussed with me several aspects about the brand community concept.
I also want to thank E. Gummersson who was very kind in supporting me with the English abstract of his new book about many-to-many marketing which was very helpful to understand the concept of network marketing and therefore the relation to brand communities.
Additionally I want to thank all my friends who have been very supportive and always kept motivating me when I was struggling with this piece of work.
Finally my warmest and deepest thanks go to my family who always encouraged and believed in me.
Abstract
Purpose
This work investigates the consumers` perception towards brand communities and the concept of mutual benefits which is based on two-way-communication between community members and company as the main objective. Consumers` tendency towards brands in general and their opinion about the brand community concept is being outlined.
Methodology
A critical review of the existing literature was accomplished as well as a survey among students and pedestrians. In addition to that detailed information has been gathered from a discussion group with brand community members and non-members and a personal interview with the marketing executive of Smack Building Brand Communities.
Findings
The participants of the survey as well as of the discussion group mostly think that brand communities are a research tool in the first place and in addition to that provide benefits to justify the data collection of their members. However most of the actual community members are very satisfied with the brand community they are a member of and think it is a great deal to receive the benefits by providing as less information as possible.
Research limitations/implications
The research and survey were carried out in regard of brands which are high situated in the market and actually have or have the potential for a brand community. The direct relationship and the consumers` perception towards brand communities are the main focus this work is examining. For further work it would be very interesting to explore the interactive relationship from the companies` point of view.
Practical implications
As a brand community is about mutual benefits and two-way-communication it is important to know what the consumer thinks from an outstanding point of view. Being aware of the opinion and perceptions of the consumers is a big advantage to improve the organisation and provided benefits within the brand community. A satisfied customer is one of the highest aims in today business life.
Originality / Value
The brand community concept is relatively new and has become very popular in recent years. Although there is very little published academic research within that topic, this dissertation provides useful insights of how a brand community is being perceived by the consumer, especially in regard of mutual benefits.
List of Figures
Figure 1: One-to-one marketing vs. Many-to-many marketing (Gummesson, 2007)
Figure 2: Maslow` s Hierarchy of Needs (Chapman, 2001)
Figure 3: The Route to a great Brand Relationship (McEwen, 2005)
Figure 4: Buyer Behaviour Model (mgtclass, 2005)
Figure 5: Top brand leader UK (TNS Superpanel, 2006)
Figure 6: Transmedia model (Oke, 2006)
1 Introduction
“The brand community is a concept that sheds a new light on the relationships between consumers and a specific brand: they are no longer considered as dyadic relationships between a brand and an isolated consumer (Fournier, 1998) but rather as relationships overlapping associations and interactions among consumers within a specific group.” (Gruen et al, 2000)
Brand communities gained in importance in recent years for companies with a high situated brand and as it is still an issue to define the special relationship and the concept itself, this dissertation will help to understand the meaning of a brand community and discuss the perceptions of consumers towards brand communities in context with mutual benefits. An understanding of the special relationship between company and community members is being outlined.
The brand community presents a special interest both for marketing researchers and brand managers because it gives new theoretical perspectives on key concepts and considerable implications for marketing strategies. (Abdelmajid & Sitz, 2004) Brand communities became a crucial factor regarding to the marketing planning process and in terms of value of a brand. They have become one of the most encouraging developments in relationship marketing in recent years. (von Loewenfeld, 2004) Therefore it is important to outline and examine the brand community concept and put it in context with the theory of relationship marketing, brand management, buyer behaviour and customer loyalty programmes. These four elements are the factors which play the crucial role on which basis the brand community concept is being established. To make this work the perceptions of the existing as well as the potential customers needs to be explored. The author has investigated the perceptions, concerns and opinions of 200 consumers between 18 and 30 throughout different social groups and geographical locations. This gives an overview about the awareness and actual use of brand communities among the target audiences.
This dissertation investigates the consumers` perceptions towards brand communities and brands in general as the main focus. Every consumer has a brand hierarchy of every product as the consumer is influenced by advertising, brand experience and a number of other indicators which help them to make a decision. As relationship marketing defines the interactive relationship between community members and company the meaning and indication of mutual benefits in association with two-way communication will be outlined as well. The purpose behind the brand community concept and what a company is able to achieve with it when it is applied in the right manner will be discussed and analysed. To increase brand loyalty among existing customers is by far not the only purpose. In regard to that the consumers` opinion about the additional features a brand community provides is important for assumptions for what a company might improve to meet the consumers` requirements. This work explores if there can be a win-win situation established in which the company and the community members are satisfied. According to that it is important to know how a brand community is being established and maintained which this dissertation will show. As there are different brand community concepts the author will not focus on a special brand community. The general meaning of brand communities throughout different markets will be examined by looking at diverse companies and their community members as well as the opinion of potential members.
2 Literature Review
2.1 Relationship Marketing
Relationship means at least two-way communication within business connections. It is built around mutual benefits for the parties involved. Relationship marketing is the process which keeps the relationships alive and ensures the beneficial nature for the parties. It is crucial for a company as every business is built on relationships to other businesses and consumers. The B2B (business-to-business) as well as the B2C (business-to-customer) connections are being maintained and optimised by the use of relationship marketing. (Froböse & Kaapke, 2003) A company is involved in a whole network of different relationships. These relationships are interactive as the parties enter into active contact with each other. Considerably important is that good relationships have much more value than a good marketing plan or advertising campaign. (Gummesson, 1999) After-looking at the definitions of Gummesson, Grönroos, Convergence Management Consultants, Parvatiyar and Sheth the author discovered that all the definitions slightly differ from each other. Gummesson is more focused on the interactive network aspect in relationship marketing (Gummesson, 1999) where Grönroos emphasises the mutual exchange of benefits and objectives of parties involved. (Grönroos, 1994) According to Grönroos, Convergence Management Consultants Ltd. also underlines the importance of mutual benefits and defines it as an ongoing process. (Convergence Management Consultants Ltd., 2007) In addition to that Convergence Management Consultants Ltd. agree with the definition of Parvatiyar and Sheth whereby they consider the cost factor when defining relationship marketing and are seeing it as a tool targeted to the end-user generally. (Parvatiyar & Sheth, 2000) Although all the definitions of Relationship Management differ and put their focus on different parts within relationship marketing, the key phrase is the same. Relationship marketing is responsible for interactive communication and is indicating the exchange of mutual benefits for the parties involved. Moreover the real focus of relationship marketing is customer based and enhances a mutual beneficial relationship which considers other organisational relationships to ensure the satisfaction among the parties involved, especially of the customer. Considering the aspects of the determining definitions of Gummesson, Grönroos, Convergence Management Consultants, Parvatiyar and Sheth the following definition is the most appropriate one. (Bruhn, 2003) “Relationship marketing covers all actions for the analysis, planning, realisation and control of measures that initiate, stabilise, intensify and reactivate business relationships with the corporation` s stakeholders – mainly customers – and to the creation of mutual value.” (Manfred Bruhn, Relationship Marketing, 2003, p.11)
2.1.1 The 30 relationships
As relationship marketing is a wide field and includes a number of different processes it is often defined in different ways. There are a number of possible relationships within a business and market place. Every party involved is part of a different relationship and therefore as well involved in a number of relationships. Gummesson defined 30 of them and put them into four categories. The question hereby is if the different relationships he defined cover all types of relationships existing. (Appendix 1) (Gummesson, 1999) As relationship marketing is about interacting in a network of many different relationships, the 30R model helps to define and therefore improve and maintain certain relationships. Gummesson now went one step further and defined the so called “many-to-many marketing” which is seen as the next step after relationship marketing, CRM and one-to-one marketing. (Gummesson, 2007)
2.1.2 Many-to-many marketing
According to his theory the companies have a limited focus regarding to customers and suppliers as people and organisations live in complex networks and therefore in a network society. The advantage of many-to-many marketing is that it recognises the complexity of these network relationships. It shows that everything influences everything and that in principle networks are not limited in their size which offers opportunities and challenges. Further more it offers a context which means it puts the statements, concepts, strategies and models in marketing together. The strength of many-to-many is that the concept goes a step further, addressing the whole context of a complex, dynamic world dependent on both technology and human beings. (Gummesson, 2007)
illustration not visible in this excerpt
Figure 1: One-to-one marketing vs. Many-to-many Marketing (Gummesson, 2007)
2.1.3 Importance of relationship marketing
Accordingly relationships are the main quality of an enterprise and therefore affect the whole company. (Gummesson, 2007) It is not just a further layer on the marketing cake, it is the cake. Relationship marketing is seen as a process which work is never done (Parvatiyar & Sheth, 2000) as long as the customer still has spending power and a supplier that can profit from the outflow. As customers want to get value as a pre-condition for a relationship the company may have missed the point when trying to avoid price competition by making use of the relationship. Relationships need to be constantly refreshed as they are being maintained by working with customers to create new value. Mutuality is the key in relationship marketing as the value must be shared for the company as well as the customer benefit. (Convergence Management Consultants, 2007) By continuously providing benefits for the customer a strong bond is being created. (Algesheimer, 2004) In addition to that there has to be enough new value being created to merit interest by both parties involved. Therefore an understanding of the profitability and quality of the relationship is crucial for being able to evaluate the relationship. (Convergence Management Consultants, 2007) It is all about the right benefits. How to select the benefits is due to the high perceived value from the customer` s point of view. There are three elements which have to be considered. First the high value is important in this context as every benefit has a certain value but only those benefits which stand out and create high value are the one which are attractive for the target group. Secondly the perceived value plays a decisive part. If it is not the benefit the customer desires, the value is reduced. Thirdly as a result the benefits have to be selected from the customer` s point of view. This is going to be done by constantly gaining information from the customer and to dovetail their requirements to the benefits being offered. (Butscher, 1998) In this context the `loyalty ladder´ helps to segment the customers into groups. The so called Loyalty Ladder is basically a customer hierarchy. A company focuses on the different customer types and communicates to each one in a different way as they have different perceptions and needs. The categories are as follows starting with the (1) Suspect, (2) Prospect, (3) Customer, (4) Client and (5) Advocate.
illustration not visible in this excerpt
Relationship marketing interacts with different other concepts in marketing to achieve the objectives being set. Branding is an important point within relationship marketing. (Grauel, 2007)
2.2 The Brand
In regard of the brand there has to be considered that there are two kinds of brand involved. On the one hand there is the customer / consumer or corporate brand on the other hand the so called organisation / company brand. Both of them require a different marketing as there are dissimilar target audiences and markets they appeal to. The customer brand is the one which matters in the first place and is marketed to consumers and has a limited impact on the employees. A brand must be clearly articulated and presented that it has the same impact across all stakeholders. (Buckingham & Roberts, 2006) Therefore it has as well a limited impact on the Wall Street and is always a customer brand. In addition to that it has obviously low interest to media, NGOs (non- governmental organisations) and regulators but likely to be greatly advertised. (Davidson, 2002) For this work in context with the purpose of the investigation the meaning of brands is being outlined and discussed:
The brand is a definite and distinctive picture of a product or service which is being positioned in the mind of the consumer and other target audiences. The key of re-recognition of a brand is not due to the identical duplication of a logo, but in presenting constantly recurring features within the appearance. The brand itself is a unique set of imaginations, associations, pictures and commitments which are aligned to a name or symbol and are further added to the objective value of the product, service or company. The brand is the answer to the aspiration of the human being for reliable decision guidance on the basis of solid trust in a world full of similar products, services and information. A brand helps to establish relationships between the customer and the products of the brand as it mediates particular moral concepts which embrace functional, emotional and self affirmation benefits. (FinanzXL, 2006) This makes it obvious that a brand needs to be managed for constancy and vitality as marketing tactics like price promotions or multitude of line extensions can be harmful for the identity of the brand. Basically the brand identity is what the brand stands for: its background, principles, purpose and ambitions. (van Gelder, 2005) Basically the function of a brand which has never been altered is to distinguish the goods of one producer from those of another and of thus allowing consumers freedom of choice. (Hart & Murphy, 1998) Actually brands serve a greater purpose for the marketers as well as for the consumer. Brands are inescapable as they are everywhere in the consumers` every day life. Every brand aims to have a long lasting relationship with the customer, some succeed, most of them do not. (McEwen, 2005) From another point of view, regarding that every consumer has different perceptions regarding a product or service, places him at different points on the loyalty ladder (cf., 2.1.3 The importance of Relationship Marketing). “A brand is a collection of perceptions in the mind of the consumer.” This definition makes absolutely clear that a brand - the individual meaning and emotional value - differs from a service or product as it is intangible and exists in the mind of the consumer. This is why brand value is built through the total experience. (BuildingBrands LTD, 2005) David Aaker defines the brand as follows: "A set of assets (and liabilities) linked to a brand's name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm and/or that firm´ s customers. Brands with equity provide an own able, trustworthy, relevant, distinctive promise to customers." (Aaker, Building Strong Brands, 2002, p.7/8) This is the most appropriate and detailed definition as it is the only definition where is considered that a brand does not necessarily need to be positive. (Bruhn, 2003) Factors which can influence the brand are known as the brand environment which includes the brand itself, expression, recognition and perception. Considering their factors it can be understood what role the brand plays in management and how it is affected in different markets. There are also differences to bear in mind as different brand types are affected by particular factors in various ways according to markets and consumer segments. (Wertime, 2002) Brands embody a lifestyle and therefore it is true that, “Brands identify, define and express the experience of using the particular products and services with which consumers connect.” (McEwen, Married to the brand: why consumer bond with some brands for life 2005, p.15)
2.2.1 Branding
Branding is a marketing measure which describes the process of creating and publicizing a brand name. (entbranden.de, 2006) Branding describes “the mechanism that creates and sustains 'consumption myths and consumption rituals, involving products and services endowed with symbolic meanings”. (Lannon, J. (1994) 'Mosaics of meaning', Journal of Brand Management, 2(3)) Customer Brands as well as Organisation Brands are being established by the branding process. (Davidson, 2002) The goal is to establish an as clear and re-recognisable identity of a brand as possible. (entbranden.de, 2006) It can be applied to the whole corporate identity or just individual service and product names. (Parcanschi, 2005) Today branding is concerned of maintaining a mixture of values, tangible and intangible which are important for the customer from his point of view, further to distinguish one brand from another successfully. It is about encumbering the company` s will on the consumer. (Hart & Murphy, 1998)
2.2.1.1 Relationship Marketing and Branding
Relationship marketing is a very important factor in combination with branding. Branding is the key element which connects the brand/company with the community members and goes hand in hand with relationship marketing. This means that branding however has a more effective influence on the community than relationship marketing. (Arrura, 2003) Nevertheless it is important to consider the opinion the customer has for being able to refine brand strategies. (Komjuniti, 2007) By buying a brand product or making use of a brand service, the customer is automatically branded. (Algesheimer, 2004)
2.2.1.2 Branding in context with Mallow’s Model of Hierarchy of Needs
The development in branding since the early 60´s is very conclude to Maslow` s model Hierarchy of Needs. As the consumer ascends the pyramid further and further they want their favourite brands do so as well or are very likely to switch to a higher situated brand if necessary to maintain their status. This depends partly on the consumer` s point of view but is generally dependent on the overall reputation of the brand in society. (Pringle & Thompson, 1999)
Again this is one of the crucial intentions a brand community has, the brand being positioned at the top of the pyramid by the customer. The customer joins a brand community when he is convinced of the brand, has a special interest and thinks that the brand suits his lifestyle and current stage in life. (Algesheimer, 2004)
illustration not visible in this excerpt
Figure 2: Maslow` s Hierarchy of Needs (Chapman, 2001)
illustration not visible in this excerpt
2.2.2 Brand loyalty
Brand experience is very important in order to build brand loyalty. The focus in new marketing is to make direct contact with the customer to recognise their needs and drives in addition to that deal with the consumer more openly, honestly and therefore building a real long lasting relationship. (Ford & Nicks, 2003) A community can be used as a perfect tool to build brand awareness, raise loyalty and improve the relations between customer and company. A brand community brings the customer closer to the company and in addition to that the company is more transparent for the customer which also increases trust in the brand. (Algesheimer, 2004) In terms of brand loyalty the consumer commits to repurchase the brand by repeated buying of a product or service. It can also be demonstrated by positive behaviours such as word of mouth advocacy. When the consumer has a high relative positive attitude towards the brand which is recognisable by his repurchase behaviour, true brand loyalty has been created. (Dick & Kunal, 1994) Kotler defines 4 different patterns of behaviour in regard to brand loyalty. First there is the `Hard Core Loyal´ who buys the brand all the time, second the `Soft Core Loyal´ who is loyal to two or three brands, third the `Shifting Loyal´ who is moving from one brand to another and fourth the `Switcher´ who is not loyal to any brand. (Kotler, 1991) A long- term customer loyalty can only be achieved by establishing a true relationship with the customer which is based on emotion, trust and partnership and not on financial incentives. High perceived value is the main criteria for the customer and the right combination of financial and non-financial benefits is the key. (Butscher, 1998) Before real brand loyalty can be established a brand relationship has to be built up. The following figure shows the route to a great brand relationship. The key is that the customer again needs to be persuaded and convinced about the product, in addition to that constantly reminded of the personal benefit the product provides and encouraging a further purchase. (McEwen, 2005)
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