Thesis Seminar Business Studies Bachelor 2012/2013
Building customer loyalty through the usage of social media: the
case of fashion brand ROYAL KID CREW
Supervisor : Dr. Ir. A.C.J. Meulemans
Name student: S.R. Playfair Student nr: 5927595
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Inhoudsopgave
Abstract………..3
1. Introduction………....4
[The case of Royal Kid Crew]………...……7
2. Theoretical framework………..….9
2.1 Customer loyalty………..……….9
2.2 Positioning in a niche market……….…………..10
2.3 Social media usage and the consumer………..11
2.4 Raising brand awareness………...13
3. Hypotheses……….15
4. Research design and method………..………16
4.1 Sample……….….17
4.2 Variables………..….17
4.3 Data collection………...…………...18
4.4 Data analysis……….………18
4.5 Data reporting………...19
4.6 Validity, reliability, generalisability……….………19
5. Results……….……...19 6. Discussion………...22 7. Conclusion………...………25 Reference list……….………..…26 Appendix A………...………...28 2 2
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Abstract
The usage of social media has caused an increase in the visibility and importance of the customer base's opinion. Companies are taking note that the market place has changed and they must adher to a new set of rules. As new companies enter the market in this digital age, (free) online media tools are used to reach the consumer in an effort to build and retain a customer base. But in such a fast pace world where information on market developments, companies and their competitors is for the most part readily available, customer relations are more important than ever and companies should therefore be in touch with their customer base, in order to stay in tune with their needs. To research the role social media plays in the consumer’s mind and decision-making, several hypothesis were tested using the variables: product positioning, customer loyalty and social media usage, with the data being gathered from parents with children aged 4-14 The relationships between these variables and thus the results of this study, will lead implications to be used by managers and business owners, with a focus mainly in the small to medium enterprises.
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1. Introduction
As the usage of social media is becoming more widespread in the everyday lives of consumers, companies have started to take notice of this growing phenomenon. Still, there are companies whose management is not yet convinced of the influence that social media might have on the visibility of their product and the profitability that could subsequently be earned. Because besides having the ability to reach a large group of consumers, another important reason for a company to include social media tools in their marketing strategy, are the costs. Due to the fact that a lot of the available online media1 such as social networking sites, blogs and virtual communities, are free of charge, it is a very accessible tool that most likely will have less impact on the financial budget than other marketing tools. And this latter fact makes it a tool, whose inclusion into the marketing strategies of small and medium sized business' who are either entering new markets or launching a product or brand, worth looking into.
Start-ups or small business’ in particular, often do not have the same resources available to launch their brand into the public eye, like some of their larger peers. What this means is that small business owners have to be creative in their attempt to reach potential customers. In fact, small and large businesses are shown to be spending their marketing dollars in substantially different ways. While small businesses tend to spend more of their budget on inbound marketing (e.g. social media, blogs), medium-to-large businesses allocate 28 percent of their budget to outbound channels (e.g. direct mail, trade shows, telemarketing). This is in contrast with small businesses, who use only ten percent of their budget on outbound marketing (Hubspot, 2011).
As this technology age is continuing to grow and more opportunities are found to reach the consumer, the overview for entrepreneurs and marketing managers may be lost. Marketing managers may be unable to see the relationship between their product or brand and how social media can effectively help bring in and attain their target customers.
The use of new media such as social networking sites as a marketing tool, not only saves costs, but is also widely evaluated as the most convenient instrument to market products to a target segment (Kirtis and Karahan, 2011). It is furthermore a great asset when a company has knowledge as to where exactly the value of a product resides from the customer's point of view (Ulaga and Chacour, 2001).
1 Online media is understood as all online activities of a company, such as: a website, social media channels,
forums
4 4
_________________________________________________________________________ While large firms take a prominent place in the available literature on social media usage, small business’ and independent entrepreneurs are crucial in the modern economy as they provide dynamism, innovation and growth (Martens,Vanhoutte, De Winne, Baesens, Sels, and Mues, 2011). Few researchers have looked into the strategic or marketing difficulties and opportunities encountered by start-up firms inside as well as the environment of the firm, in its start-to-launch process. As stated by Svensson and Nordfos (2006), getting media coverage in the very early stages of a project are most likely to have a positive effect, because at that stage the credibility gap is large, and the risks of exaggerating expectations are low.
To be more precise, the effect that more recent media channels can have in the positioning, marketing and the building of a new brand. And how they may ultimately lead to raising brand awareness and eventually brand loyalty, should be the basis of the establishment of new guidelines for entrepreneurs and small business’.
The question that is therefore central to this research is: To what extent does customer loyalty depend on the positioning of a brand and the marketing channels used. In answering this question several hypothesis’ will be formulated and tested. The ultimate goal of the research is to provide managers and entrepreneurs with insight that will enhance their understanding of the influence online media and brand positioning can have on a target customer group.
To gather these insights, the small start-up firm, Royal Kid Crew (RKC), active in the fashion industry will be the starting point for acquiring customer perspectives on new and existing brands, as it gets ready to acquaint potential customers with the brand and launch the product in a niche market of the fashion industry: boys apparel (see inset below). Convinced of the differentiation potential of its clothing range, the firm wants to know which tools are most effective and low-cost in reaching its target consumers. By producing boys apparel with an above average price tag, the company is positioning itself in a small segment of the retail industry, but also possibly limiting its potential customer base. Because the market for boys apparel seems to be marked by a lower degree of differentiation when compared to girls or adult apparel, and thus in the customer's perception less competing offerings, the company wants to know what it takes to acquire a sufficient share in the market. Gronholdt, Martensen, and Kristensen (2000), found that the more competitive a market is, the more changes in loyalty will be sensitive to changes in customer satisfaction. They also stated that it is more
_________________________________________________________________________ difficult to satisfy a large customer base, often consisting of multiple segments, compared to a smaller one.
Thus, the goal is to let the insights gathered from the research, guide RKC with focussing their social media efforts in the future.
By using a real-life start-up example that is in the process of entering a new market to launch its product, the research will be predominantly focused on managerial implications. By gathering data from the potential customer base, the relationship between consumer behaviour and online media can be further investigated to accommodate the growing literature on social media and consumer behaviour.
The next paragraph will outline a review of existing literature, followed by a conceptual framework. Then, the research method and design will be discussed. In the following section, the results of the different tests and an analysis of the data will be presented. These results will subsequently provide the input for the next paragraph, the discussion and the implications for the retail industry and RKC in particular. This section will also discuss propositions for future research and the limitations of this research. The last section will present the conclusion to this research.
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The Case of Royal Kid Crew
The Mission: Bring more vibrant and trendy colours and designs in the current offerings of boys
apparel. By having observed adult attire demand, it was noted that a retro and more colourful feel has been making its way into fashion for the past couple years. Parents wanting to recreate this style for their children (boys in the ages of 4-14 years) but who have been faced with a minimal supply.
The Product: The Fall/Winter collection, sweatshirts and hooded vests in 5 different colourways printed with colour contrasting in-house designs are slated for release. RKC depends on outside suppliers for the plain sweatshirts and vests, a printing office to put the designs on the clothing, and a tailor to put the company label in the clothing. The designs created by RKC are first digitalized and transferred to a printing office. After the shirts and vests have been picked up at the hangar (Primex), they are delivered at the printing office. After 10-14 workdays the clothing is ready for pick-up, and moved to the tailoring shop. After this process the clothing is ready for sale. The price to re-label the clothing is € 0,10 per piece. Other costs besides labelling include ordering the vests and shirts at € 8,03 per box of 20 pieces (B & C collection) and printing the designs onto the clothing at either €3 or €7,50 depending on the technique used. To not only offset the costs incurred and a profit margin, but also to convey a level of exclusivity, retail prices are set above average market prices, but below luxury brands.
The Competitors: Important competitors who serve the same niche market and price segment include Vingino (very visible) and Fresh Kids (introduction stage). Vingino started out selling mainly jeans to boys and girls, but has been able to expand their business, in 4 years. A wide range of products is currently offered, which include sunglasses, shoes, and jackets. As a strong force in the market, their visibility is high, they sell their products through independent retailers and manage a web shop. Fresh Kids, which launched its first 2 sweater designs in April 2012, is seen as a competitor because the idea and style behind the clothing comes in close range of that of RKC. While their news updates are mainly through a Twitter account, a simple Google search shows, that many others are already using the same name for different goals, making it hard to find. The fit of the clothing is poorly executed and the range of options in colours and design is extremely limited. Nevertheless this is a direct competitor that might cut into RKC’s customer base. RKC plans on differentiating not only through the clothing, but also and maybe more importantly through their branding (see paragraph: The Tools).
_________________________________________________________________________ The Industry: The barriers for entry are relatively low. The main key is owning Capital which is needed for testing, promotion, inventory, re-orders and payment of suppliers. Furthermore, companies will need sustainable capital for subsequent collections. The branch overview (Kamer van Koophandel, 2012) of web shops and mail-order firms shows a negative growth, with more shops and firms quitting than starting. There was a total of 24,151 active companies in the last quarter of year, with above average sales but below average profits in comparison to all branches. This might have to do with the fact that the supplying parties are small scale, so no offshoring and expensive inputs. There are several options to choose from, when it comes to plain vests and hoods, but RKC puts a lot of value on the fit and length of the clothing, which automatically excludes suppliers who don’t fit this bill. Prices that are thus increased in the future, by these selective suppliers, could form a burden in the future on the costs of goods incurred by RKC.
The Tools: RKC doesn’t use a physical store, but a website that includes a blog and a web shop, to accommodate the online shoppers for the winter collection. For the purpose of creating brand awareness, the company will initially also sell through retailers that carry several other brands. It is the eventual long-term goal, to only use the web shop as available supply channel. To create a community and interact with customers, Facebook, Tumblr and Twitter accounts are used.
The brand is to be launched as the brain child of a fictional 11-year old boy, who has been wanting clothing with more personality, but has thus far not found what he was looking for. Together with his mother he makes this want a reality in the form of RKC. A blog which displays among other things RKC promotions, cool gadgets, and content that relates to parents and kids, will be launched. This, in order to give the fictional child, the face of the brand a platform to engage the customers. The ultimate goal is to create a total online brand experience, (by using the website, blog and social channels as one integrated whole) personified through the little boy.
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2
. Theoretical framework
In this next section the existing literature on customer loyalty, positioning, social media and brand awareness will be discussed. In doing so, a basis is provided from where the relationships between the different variables can be looked into and made clear. This should lead to an understanding as to why these relationships matter.
2.1 Customer loyalty
Many of the marketing theories known find their origin in the early 1950’s. A time when consumers had less options, choices and channels available when it came to purchasing products (Schultz and Bailey, 2000). Some of these theories may be in need of updates, due to the changing power dynamics in the contemporary product markets. Due to an increase of options and access to information available to the consumer, a shift in marketplace power has been noticed, in the consumer’s favor. Consumers now decide where they will take their business, and therefore even a satisfied customer, sometimes simply stops buying or drifts away from the company or brand. The result is that rather than the marketer or the distribution channel being the deciding factor in the amount of brand or customer loyalty, it is a shared responsibility of both marketer and customer (Schultz and Bailey, 2000).
According to Howell (1996) the marketing literature suggests that customer loyalty can be defined in two distinct ways. In the first group customer loyalty is defined as an attitude, where different feelings create an individual’s overall attachment to a product, service, or organization. These feelings define the individual’s (purely cognitive) degree of loyalty.
The second group defines customer loyalty as behavioural. This includes repurchasing a good or service from the same supplier. Another way customer loyalty can manifest itself is through word-of-mouth marketing. Here it is important that WOM is credible, personal, and timely (it occurs when people want it to) (Kotler and Keller, 2009). Research shows that customer loyalty is tied to profitability and thus by gaining better insight in the determinants of customer loyalty, profitability can be approximated or forecasted.
Furthermore, Howell (1996) states that customer satisfaction influences purchase intentions, as well as the post-purchase attitude. While customer satisfaction is the result of a customer’s perception of the value received in a transaction or relationship relative to that of a competing
_________________________________________________________________________ vendor, loyalty behaviours stem from the belief that the quantity of value received from one supplier is greater than that available from other suppliers.
Equity or reciprocal theory mentioned by Schultz and Bailey (2000) says that customer loyalty only occurs when the two parties perceive the relationship between them as equal. Both parties have the same input as well as benefits from the relationship.
Another factor that plays an important role in the transition of marketplace power, is the usage of different sources of online media, not only by consumers but also companies. As interactive marketing grows in popularity, Gommans, Krishnan, and Scheffold (2001) find that a competitive price range is more important for e-businesses in developing and maintaining customer loyalty. As more companies are trying to reach consumers by using online tools, customer loyalty transcends into e-loyalty. Srinivisan, Anderson, and Ponnavolu (2002), present eight antecedents of e-loyalty, the most relevant for this research are: customization, contact interactivity, choice, convenience and character which will be linked to social media in the next paragraph.
The high costs of acquiring customers renders many customer relationships unprofitable during early transactions. Only during later transactions, when the cost of serving loyal customers falls, do relationships generate profit (Srinivisan et al 2002).
2.2 Positioning in a niche market
Product positioning is the creation of a specific position in the mind of the consumer, which depends on the chosen competitive strategy or the value proposition of the company (Kotler and Keller, 2009). Porter (1985) distinguishes three types of strategies: cost, differentiation and focus. As tastes differ from one consumer to another, it is impossible to please everyone all the time. This is why companies decide to segment the consumers and then target the consumer segment that shows the most similarities to the brand or product. In this light, business’ in the fashion industry need to distance themselves from what competitors do, not only with the clothes they sell (which could be seen as a homogenous good) and who they sell it to (niche market), but also by building a brand experience through associations. Brand positioning concerns placing a brand in the market, that is clearly distinguishable from competitors brands in the market (Hermann and Huber, 2000). A differentiation strategy is therefore most applicable.
To position a brand or product, it is helpful for a company to know the consumer brand preference, customer satisfaction regarding present competitors, buying behaviour, and
_________________________________________________________________________ statistical public opinion (Kotler and Keller, 2009). It is therefore important to properly articulate the product’s physical and psychological attributes as distinct from other offerings.
The positioning of a new product is referred to as the product design, and managerial decisions on this design are primarily concerned with changes in consumer perception of the product and the alternatives, in terms of various attributes (Kaul and Rao, 1995). To learn more about the positioning of a brand the literature suggests that a distinction is to be made between a consumer’s actual behaviour and his or hers stated intentions, presumably because both can be important determinants of customer loyalty. As Schultz and Bailey (2000) have stated: ‘even satisfied customers sometimes drift away from a brand or company, even the ones who have exhibited company or brand loyalty through purchases over time.’ Finding out the reasons of these lost customers, especially in an interactive marketing environment, may be a valuable contribution to a small company wanting to survive and grow in a new market.
2.3 Social media usage and the consumer
While the reports of an increase in social media usage by consumers and companies, is growing day by day, the opinions on how social media should be measured differ.
Social media entails social networks (e.g. Facebook, Twitter, linkedIn) and digital media (e.g. blogs, youtube, websites, virtual communities). These social media tools are used to engage consumers and have different degrees of visibility, thus influencing the visibility of a brand in the marketplace. For this research, focus lays on the following tools: Facebook, Twitter, blogs and a website. In the classification scheme two measures are used to determine visibility: social presence/media richness and self-presentation/self-disclosure (Kaplan and Haenlein, 2010).
Social presence
Low Medium High
High Blogs
Social network sites
Virtual social worlds
Low
Collaboration projects
Content communities
Virtual game worlds
_________________________________________________________________________ Self-presentation
Fig 1. Classification of social media
This classification makes it easier to research the effect the usage of certain tools have, which and how tools are used by the target group, and how a company could play into this information.
Blogs have been increasingly popular sites of word-of-mouth marketing campaigns. The WOM use of marketing communications can be idiosyncratic, creative, and even resistant (Kozinets, Valck,Wojnicki, and Wilner, 2010). A 2006 European surveys indicated that blogs were second only to newspapers as a trusted information source. This coincides with the network coproduction model, which is based on relationships that place increasing importance on consumer networks, groups, and communities. Here, consumers are regarded as active co-producers of value and meaning.
When marketing a product with the help of online media, most firm these days cannot go without an adequate website. Website adoption takes the use of the internet in the daily and business lives of consumers, to another level, by requiring the smaller business to register an URL and develop a website which can be accessed by visitors globally (Simmons, Armstrong, and Durkin, 2008). A firm website may be the best place to convey the brand image and displays its range of products.
The brand building concept by Gommans et al (2001) indicates that consumers not only prefer well known and easy to remember website names related to the brand, but website content also plays a significant role in enhancing the overall brand image. Content of a website has to match the preferences of its targeted customer group (besides a fast loading website, ease of navigation and search options). It is therefore important for a company to find out what they would like to hear, what they would like to talk about, and what they might find interesting, enjoyable, and valuable (Kaplan and Haenlein, 2010). And as Gommans et al (2001) have found in their research, product customization and interactivity are two unique value propositons that contribute to e-loyalty in online buyer behavior,
_________________________________________________________________________ Correa, Hinsley, and Zúñiga (2010), use personality as a predictor of social media use. By using the Big Five of personality dimensions, they find that extraversion and openness to new experiences are positively related to social media usage. Laroche, Saad, Cleveland, and Browne (2000), in addition note that the determinants of consumer information search are separated into several broad categories. The most relevant here are the market environment (the number of alternatives and information availability), situational variables (time and ease of access to informational resources), knowledge and experience, and personality/life-style variables (self-confidence). Consumer decision theory states that consumers compare products on the basis of attributes and not characteristics (Kaul and Rao, 1995).
The interactive market has provided consumers with power that greatly influences how business is done. It is now up to business’ to use their social media tools to bring their relevant content to the interactive consumer.
2.4 Raising brand awareness
Raising brand awareness in most cases follows from the market positioning of the brand and the tools that are used to communicate this position and the visibility of the brand to the consumer. As a result brand awareness is assumed to be a result of the relation between positioning and social media and will not be made a tested variable in the model of chapter 3. It is however an important part in the postioning to loyalty process and will therefore be discussed briefly.According to Kotler and Keller (2009), brands have a sensory identity, make a difference in consumer’s minds and have commercial value (they stimulate exchange of goods and services).
In the CBBE: Brand Resonance Model, the brand value originates in the mind of the consumer (Kotler and Keller, 2009). The model assumes 4 steps; from being made aware of the existence of a brand, to baring loyalty to that brand. The first step in this model is Salience/Awareness. Here the consumer is introduced to the brand. This could happen after first being exposed to the brand, and recognizing a need that the consumer has or wasn’t aware it had. This corresponds with Hoeffler and Keller’s (2002) definition of brand awareness which refers to the customer’s ability to recall and recognize the brand. Two key dimension that they distinguish within brand awareness, are the depth of brand awareness – how easily customers can recognize or recall a brand – and the breadth of brand awareness
_________________________________________________________________________ which refers to the range of purchase and consumption situations in which the brand comes to mind.
The central issue with regard to the process from positioning to loyalty, is the understanding of a company about what drives its consumers to make certain choices, and what contributes to the shaping of their preferences for some products but not others.
According to Hoeffler and Keller (2002) the power of a brand is what resides in the minds of customers, and the challenge for marketers in building a strong brand therefore lies in ensuring that customers have the right type of experiences with products and services their accompanying marketing programs so that the desired feelings, images, beliefs, perceptions, opinions and so on become linked to the brand. This corresponds to the notion of Kotler and Keller (2009), that brands need to be linked to secondary associations.
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3. Hypotheses
In this next section the concepts established in the theoretical framework are connected through several relationships. These relationships will be tested by hypotheses for which the data has been gathered through self-administered questionnaires.
Due to a changing marketplace, customers have acquired considerable power, and the information on offerings are now more readily available then ever. A company that uses social media tools, needs to know how to effectively place itself in such a dynamic, visible market. The starting point for this is the positioning of a product in a market. By differentiating from competitors, brand value can be acquired if the differentiating factors are also present in the consumer’s opinion. Especially in the market for boy's apparel, where the complaint from parents has been that clothes tend to look the same and variety is hard to find, this probably has an effect on the loyalty customers feel towards a brand.
The differentiation strategy is one of the generic strategies of Porter to reach competitive advantage. He saw it as a strategy a company takes on when they create a uniquely desirable product or service (Porter, 1985)
In the current case, instead of competing on the product companies will have to compete on the price, if their products are seen as mostly homogeneous with the offerings of competitors. Because RKC competes with a product that can visually be differentiated from a larger part of the current offerings, RKC is using a differentiated posistioning strategy to reach and keep its customers, resulting in loyalty. As such, the first hypothesis is:
H1: A clear position is positively related to the loyalty of customers
As Gommans et al (2001) have stated, the usage of interactive media can lead to an increase in loyalty. By using social media consumers can be made aware that a brand or product exists, and in their search for information on this product, they look for the attributes that distinguish a product from what they know: current offerings (Kaul and Rao, 1995). It is the perfect way for a company to stay in touch with its customer base and monitor closely their needs and wants. In order to achiev this, a company needs to make sure that not only a clearly articulated value proposition (product positioning) is in place, but in order to create brand awareness, social media is to be used and subsequently needs to enhance the lpyalty customers feel
_________________________________________________________________________ towards a brand. Because when a customer likes the product this will lead to satisfaction, satisfaction will in return lead to repeat purchase intention (cumulative satisfaction) which will result in customer loyalty, therefore:
H2: The relationship between positioning and loyalty is mediated by the usage of social media
The relationships are presented in the following model:
Fig 2. Determinant relationships of customer loyalty
4. Research design and method
Product Positioning Customer Loyalty Social Media 16_________________________________________________________________________ In the previous paragraph an overview was given of the existing literature on the relevant variables. In the following paragraph the design of the research will be illustrated and the methods for collecting and analysing the acquired quantitative data are described.
4.1 Sample
Because it is important for RKC to receive input from their target market to gain more insight into their attitudinal and behavioural perspectives, the sample is stratified. A stratified sample means that the participants in the sample are specifically chosen based on a certain requirement (Saunders, Lewis, and Thornhill, 2009). In this research context this means that the participants are chosen based on the premise that they have children that are not yet able or willing to buy their own clothing. A consequence of this method is that findings may not be generalisable in all demographic segments of the population or industries, due to different criteria applied when older individuals or adolescents evaluate marketing efforts and the attitudinal perspectives they apply in this process. Taking into account that Royal wants to understand its target group and their motives, in-depth interviews with a selected few individuals has been foregone, in order to acquire information from a larger amount of consumers. As a result the findings will be assumed to be more reliable and will provide clearer guidelines as to what a successful clothing brand needs in the eyes of the consumer.
4.2 Variables
Positioning serves as an independent variable, in this study. It is assumed to be the predictor in the consumer’s attitude towards a brand. The literature suggests that determinants of positioning are: buying behaviour, brand preference, stated intentions (Kotler and Keller, 2009) and product attributes (Kaul and Rao, 1995).
Social media is used as a moderator on the relationship between positioning and customer loyalty. Hereby the potential relevance and actual usage is determined. Previous literature mentions the following aspects that could influence social media usage: market environment, situational variables, knowledge and experience, and personality/life-style variables (Laroche et al, 2000) and product customization interactivity (Gommans et al, 2001). These influences are concerned with whether people actively search out new opportunities or if they stick to what they know, thus measuring the influence of social media in the creation of loyalty. The
_________________________________________________________________________ following measures stemming from brand awareness, are applied to social media in this study: recognition (Hoeffler and Keller, 2002) behavioural intentions and motivational orientation (Kaltcheva and Weitz, 2006).
customer loyalty serves as the dependent variable in this study and is operationalized as brand preference. The relevant measures are therefore repeat purchase intention (cumulative satisfaction), resistance against better alternatives, intention of WOM, and willingness to pay a premium price (Yi and La, 2004).
The measures described provide insight into the nature of loyal customers. By using measures already operationalized, the relevancy and validity has already been established by prior researchers.
4.3 Data collection
The research strategy used to collect the needed data, is the self-administered questionnaire. In order to reach a larger audience, and gain insight into their behaviour towards and views about boys clothing in particular, and the competitors in the market, this is the most effective strategy for this research. It gives an indication of the consumer market and how the environment in which Royal is active is perceived from the customer’s perspective. The questionnaire has been distributed in communities where parents were likely to be present. This resulted in neighbourhoods within Weidevenne with a great children's presence and at the primary schools ‘De nieuwe wereld’ and ‘OBS Weidevogels ’.
4.4 Data analysis
To analyze the acquired data, several tests and analysis´ will be performed, to gain more insight into the relationships of the different variables. Among these tests and analysis’ are: the linear regression analysis, a correlation test and testing of moderation effects to measure social media usage and effectiveness.
4.5 Data reporting
_________________________________________________________________________ After the results have been gathered and analyzed, they will be presented as guidelines that bare managerial implications for not only the RKC manager, but also other small or starting ventures, wanting to gather a better understanding of what drives consumers, and how they can apply these guidelines within their own industries.
4.6 Validity, reliability, and generalisability
Validity is described as the extent to which data collection methods accurately measure what they are intended to measure (Saunders et al, 2009) By applying measures for the variables, that have been found in existing literature, the validity of these measures has been proven before and as a consequence increase the face validity of the measures. Several questions and statements in the questionnaire have been taken from earlier research thus increasing the construct validity. Internal validity is increased by the usage of several measures per variable.
Reliability is the extent to which data collection techniques yield consistent findings (Saunders et al, 2009). By using quantitative data collection methods for the case study such as a questionnaire, the variables and measures used, can be easily replicated for the purpose of future research.
Because the research entails a case study and uses a stratified sample, the information used and the perspective with which the research is undertaken, has a negative effect on the generalisability of the study. But by using variables that include various general measures which are also used across the marketing literature, the relationships investigated are not only applicable in specific fields, but can pertain to a wide amount of industries that want to reach out to their consumers to see what drives them, thus enhancing the generalisability of the research. To acquire the gathered data, 82 participants were questioned through the means of a questionnaire.
5. results
_________________________________________________________________________ In this next section, the results of the survey will be presented, including the different tests and regressions performed. First a correlation martrix is presented, to see whether and how the variables are related to one another. Then the result of the regression analysis between the control variable (customer loyalty) and the predictor variable (positioning) is shown, followed by the tested mediation effect of the variable social media on the relationship between the predictor and control variable.
The results from the correlation test between the three variables is shown in the following table: M SD 1 2 3 1. Positioning Pearson correlation Sig. (2 tailed) N 12.33 2.59 - 0.480 0.668 82 -0.160 0.884 82 2. Social Media Pearson correlation Sig. (2 tailed) N 5.74 1.68 0.480 0.668 82 - 0.241* 0.029 82 3. Customer loyalty Pearson correlation Sig. (2 tailed) N 13.06 1.93 -0.160 0.884 82 0.241* 0.029 82 -
Note: *correlation is significant at the 0.05 confidence level (2 tailed)
Table 1. Correlationmatrix
The table shows that the relationship between the variables customer loyalty and social media is positively correlated. This implies that a linear relationship exists between the variables.
The first hypothesis that is tested, is the relationship between product positioning as the independent variable and customer loyalty as the dependent variable. The correlation matrix has already shown that a small linear relationship exists between the two variables, albeit it is not a significant one at a 0.05 confidence level. The hypothesis used to test this relationship is:
A clear position has a (direct) positive effect(/relation to) on customer loyalty.
_________________________________________________________________________ To test the causal relationship between these variables, a regression analysis was done, although the correlation matrix already indictcates an important aspect of this relationship. In this relationship positioning serves as the predictor and customer loyalty as the control variable. The results of the test are shown in the following table:
R2
Adj -R2 F P ß t P
Customer Loyalty
.003 -.022 0.021 0.884 -.040 -.147 0.884
Table 2. Regression analysis: positioning and customer loyalty.
The regression analysis shows that the predictor variable positioning, does not have a significant effect on the control variable customer loyalty (t=-.257 p>0.01). The model as a whole is correspondingly not significant with a low value for F(=0.021) and a non significant p value F. This leads to not accepting hypothesis H1. So a clear position does not have a direct positive effect on customer loyalty.
The second hypothesis of the study states that the relationship between positioning and loyalty is mediated by the usage of social media.
The prediction is thus that social media will have an effect on the relationship between the two variables. Here, positioning serves as the Independent variable, social media as the moderator and customer loyalty as the dependent variable.
To test the mediating effect of social media a multiple regression test is run. The results are shown in the following table:
R² Adj- R² F Sig. β
Positioning - Customer Loyalty .003 -.012 0.021 .884 -.040
Positioning - Social Media .241 .046 4.936 .029 .209
Social Media - Customer Loyalty .048 -0.010 0.185 .668 .074
Positioning and Social media - Customer Loyalty
.056 -.022 0.124 .883 -.030 .055
Note: N=82, p<0.01
Table 3. Positioning, social media, and customer loyalty.
_________________________________________________________________________ The four regressions shown above show that by adding the mediator social media to the relationship between positioning and customer loyalty, only a slight change in the model is noted. So by adding social media, it becomes visible that this variable helps explain variance in customer loyalty just a little bit (adj-R² goes from -0.012 with social media to -0.022 by including social media). Furthermore, the addition of social media to the model, does not make the model more significant. We can thus conclude that social media is not a complete mediating factor in this relationship, and thus hypothesis 2 is not supported.
What is remarkable in the results from the regression analysis is that the relationship between positioning and social media is the only one that moves in a different direction, and comes closest to being significant.
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6. Discussion
The results show weak links between the variables that bare no significant indications to them. This could have several explanations. In this study social media was used as a tool to measure the effectiveness that a clear positioning in the market place has on the outcome variable of customer loyalty, but as the results have shown neither of the hypotheses have proven to be acceptable. Social media as a moderator does show a small effect on the relationship,but a very slight one. This is most likely the result of the relationship between positioning and social media. By not having established a significant relationship between social media and customer loyalty, it might be considered that social media does not become relevant for customer loyalt until after the consumer has shown to be a (returning) customer. What this means is that in order to build loyalty, social media can be a helpful tool, but only after a relationship between company and customer has been established. As Howell (1996) has stated customer satisfaction influences purchase intentions, as well as the post-purchase attitude This could explain why social media does not affect loyalty; by positioning the company thorugh social media, no puchase has been made yet by the consumer, only awareness is reached. So no opinion on satisfaction can be formed as there is no experience with the companies, no recurring customers, so no loyalty.
Thus, marketing managers will first have to decide on their stratgy for awareness and can then use their social media for brand building and expanding. Which is surprising as the study was meant to show, that social media could play a significant role in establishing a brand and the subsequent satisfaction that would have a customer keep coming back, the customer loyalty. So the first stages of brand awareness. The study shows that social media may work better in the earlier stages of brand awareness, so when a company first appears on the consumer´s radar. And even then social media might serve as an introduction and not a means to rail in a consumer as a returning customer. Managers should take this into consideration when setting out a (marketing) strategy to reach its customers. Apparently engagement and community building are purposes served by social media, but according to this study not in the phase where a company enters a market and is trying to find its ground.
The end conclusion is that if a company has created a clear value proposition and is trying to market its product, through the unfulfilled needs of its target customers, launching it through several different social media channels could turn out to be a positive and inexpensive asset to
_________________________________________________________________________ the company, even though it may not play a further role in anyhting further than letting consumers know, that this company brand is now available, as social media has no effect on customer loyalty, which involves customer repurchase and customer retention.
Limitations of the study
This study has looked at consumer behavior and thinking for a particular segment of an industry and a specific company withint this industry. Because the qualifications differ for things such as children’s apparel (even there being a difference between adult or children’s apparel). Results may not be generally applicable to different industries. Even though general pre-existing measures have been used to increase the generalisibilty and useablity of the measures, survey questions asked were of a specific kind, making the results highly dependant of the specific subject used. Different stages of brand awareness should have been tested but could not be taken into the model due to elaborateness and time constraints. Also for more generalisability, because the customer´s train of thought is what it most important in this consumer´s research, the amount of participants should be increased and geographically dispersed, to test for environmental influences It could also be a valuable asset to incorporate in the existing model, especially with the usage of the CBBE model.
Future research
Positioning and loyalty were tested in a direct relationship to explain the type of relationship that existed between them. But several steps or variables must be present in a real life setting before loyalty can occur from the positioning stage. Examples could be brand awareness and satisfaction applied as mediators, to see what the strenght of these variables is on the
relationship between positioning and customer loyalty. Different stages of brand awareness linked to social media and positioning should give a better view at what stage a relationship is more likely to result in customer loyalty. Also future studies could elaborate more on what is needed to make a customer keep coming back. This could be achieved by elaborting on the different aspects of customer loyalty especially for small and medium sized businesses, as they don´t have the same power big companies hold and are thus more effected by non loyal customers. Also the effects of a brand image and how it is received by customers could perhaps uncover discrepencies between intention of the company and how the customer percieves these intentions.
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7. Conclusion
The question that was made central in this research stated: to what extent does customer loyalty depend on the positioning of a brand and the marketing channels used. In order to measure the effect of social media in the creation of a brand image and customer base, the variable socia media was introduced, which consisted not only of items directly related to it, but also showed hints of brand awareness, as it was meant as a means to get people interested in the product once the positioning was established and made visible. From the assumptions made prior to the study, it was expected that with the recent social media popularity, social media would play a mediating role in the positive relationship between positioning and loyalty. Results showed that the relationship was not significant and social media was suprisingly also not a mediator in this relationship, although the relationship between
positioning and social media did stand out. It could thus be concluded, that while not entirely signigicant in this study, the relationship between positioning and social media does show promise. This means that managers and business in general should be aware of the effects that social media can have when they try to establish their brand and the image accompanying it, into the market place. Social media could prove a valuable asset in this process.
The end conclusion is that if a company has created a clear value proposition and is trying to market its product, through the unfulfilled needs of its target customers, launching it through several different social media channels wold bare the possibility to elicit a response from the customer base and be able to further build its relationships from there, through the stages of brand awareness and eventually perhaps the establishing of customer loyalty.
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Appendix A
Enquête
Deze enquête doet onderzoek naar de relatie tussen consumenten gedrag en denkwijzen en het gebruik van online media, bij de aanschaffing van (jongens) kinderkleding.
Bij het beantwoorden van de vragen, mag u veronderstellen dat er geen verschil is in kwaliteit van de kleding.
Dit onderzoek is anoniem en resultaten hiervan zullen niet aan derden worden verstrekt, maar uitsluitend voor dit specifieke doeleinde worden gebruikt.
De enquête zal circa 3 minuten in beslag nemen.
1.Wat is uw geslacht? 0 Man
0 Vrouw
2. Bij de aanschaf van kinderkleding, vind ik de volgende attributen belangrijk :
Kleurrijk
0 Zeer mee oneens 0 Oneens 0 Neutraal 0 Eens 0 Zeer mee eens Uniek
0 Zeer mee oneens 0 Oneens 0 Neutraal 0 Eens 0 Zeer mee eens Goedkoop
0 Zeer mee oneens 0 Oneens 0 Neutraal 0 Eens 0 Zeer mee een 3. Als ik op de hoogte wordt gebracht van een merk waarmee ik niet bekend was, bekijk ik de online media van het merk (website, Twitter, Facebook etc)
0 Zeer mee oneens 0 Oneens 0 Neutraal 0 Eens 0 Zeer mee eens 4. De online media kanalen die ik het meest gebruik zijn:
0 Twitter 0 Hyves 0 Facebook 0 Blogs 0 Anders, nl….
5. Ik gebruik mijn sociale media kanalen met name voor:
_________________________________________________________________________ 0 Interactie met bedrijven (feedback, acties deelname)
0 Het ontdekken van nieuwe producten 0 Anders, nl…
6. Ik gebruik online media om nieuwe merken, diensten of bedrijven te leren kennen 0 Zeer mee oneens 0 Oneens 0 Neutraal 0 Eens 0 Zeer mee eens 7. Ik laat mij sneller beïnvloeden via sociale media, dan via traditionele reclame (vb; tv-spot, reclame bladen)
0 Zeer mee oneens 0 Oneens 0 Neutraal 0 Eens 0 Zeer mee eens
8. Ik ben bereid een nieuw kleding merk te kopen, zelfs als ik er nog nooit van heb gehoord, maar het populariteit geniet op sociale media kanalen
0 Zeer mee oneens 0 Oneens 0 Neutraal 0 Eens 0 Zeer mee eens 9. Als ik tevreden ben over een merk of kledingstuk, deel ik dit met naasten
0 Zeer mee oneens 0 Oneens 0 Neutraal 0 Eens 0 Zeer mee eens 10. Ik ben bereid meer te betalen voor een uniek of vernieuwend kledingstuk
0 Zeer mee oneens 0 Oneens 0 Neutraal 0 Eens 0 Zeer mee eens 11. Als ik tevreden ben met een aankoop, is de kans groot dat ik terug kom
0 Zeer mee oneens 0 Oneens 0 Neutraal 0 Eens 0 Zeer mee eens Dank voor uw medewerking!
