Effect of brand communities on creative industries : the case of fashion companies

Effect of Brand Communities on

Creative Industries: The Case of

Fashion Companies

Kamila Ishalina 10621318 29.06.2015 2015/2016

Supervisor: Professor Marco Mossinkoff Branding strategy, Fashion business, ……… Creative Economy

Effect of brand communities on Creative Industries; The case of fashion companies

Abstract

The study is aimed at investigating and identifying the present opportunities and threats of creating and developing brand communities in creative industries to provide involved companies with relevant recommendations. An exploratory study design was adopted. The first part presents an overview of existing literature to describe the underlying characteristics of modern branding as well as major purchasing motivations of fashion consumers. The review shows that there is growing demand for a sense of affiliation and belonging among customers. However, the trend is still often ignored by product centric, rather than consumer centric companies. The study then identifies the opportunities brand communities present for value creation for a firm. It further outlines the activities the company can get involved in to maximize customer engagement and loyalty through employment of social media platforms as well as non-online activities directed towards community building. The thesis draws on a number of case studies on brand communities in fashion industries. A qualitative survey is conducted using structured questionnaires and a focused group research is performed to measure attitudes of customers towards brand communities in a context of fashion industry. In conclusion, the thesis argues that brand communities are essential for companies which strive to increase consumer loyalty and is a way to create a sustainable competitive advantage and differentiate from competitors.

Table of Contents

Abstract ... 2

CHAPTER ONE ... 5

INTRODUCTION ... 5

1.1. Background ... 5

Statement of the problem ... 9

1.2. Purpose of the study ... 9

1.3. Objectives of the study ... 9

1.4. Research Methodology ... 9

1.5. Theoretical and Conceptual Framework ... 10

1.7. Organization ... 12

CHAPTER TWO ... 12

LITERATURE REVIEW ... 12

2.1. Theoretical Literature ... 12

2.1.1. Dialectical theory of consumer culture and branding ... 13

2.1.2. Social Capital Theory ... 14

2.1.3. Symbolic Interactionist Social Theory ... 15

2.2. Empirical Literature ... 16

2.2.1. Definition of communities ... 16

2.2.2. Brand communities ... 17

2.2.3. Core Commonalities of Communities ... 20

2.2.4. Brand tribes ... 20

2.2.5. Luxury fashion companies’ communities ... 22

2.2.6. Definition of value ... 24

2.2.6. Communications in brand communities ... 25

2.2.7. Online Brand Communities ... 26

2.2.7.1. Value creation through online brand communities ... 26

2.2.8. Brand communities’ events ... 27

2.2.8.1. Brand Events and Marketing Implications ... 28

2.2.9. Brand Loyalty ... 29

2.2.10. Overview of Literature ... 29

CHAPTER THREE ... 30

3.1. Research Design ... 30

3.2. Theoretical Framework ... 30

3.3. Conceptual Framework ... 31

3.4. Target population ... 31

3.5. Sampling technique and sample size ... 31

3.6. Validity and Reliability test... 32

3.6.1. Instrument Validity ... 32

3.6.2. Reliability of instruments ... 32

3.7. Data collection procedure... 33

CHAPTER FOUR ... 34

RESULTS ... 34

4.1. Response rate... 34

4.2. Demographic character ... 34

4.3. Preferred Shop ... 35

4.4. Brand and shopping rate ... 35

4.5. Choice Criteria for fashion products ... 37

4.6. Attitude towards fashion ... 37

4.7. Social Media ... 38

4.8. Preferred fashion-related events ... 38

4.9. Importance of the brand to the fashion... 39

4.10. Benchmarks in shopping ... 39

4.11. Influence of other people’s opinion ... 40

4.12. Importance of customer service ... 40

CONCLUSION AND RECOMMENDATIONS ... 42

5.1. Discussion ... 42

5.2. Conclusion ... 44

5.3. Study Recommendations ... 44

5.4. Suggestions for further research ... 45

5.5. Limitations ... 45

References ... 46

Appendix ... 53

Qualitative Survey ... 53

CHAPTER ONE

INTRODUCTION

1.1. Background

The mass fashion industry, as a product of a postmodernism society, has a significant impact on the society. With fashion no longer being available to just a privileged few, it shapes many of people’s everyday decisions – which clothes to wear, where to go on vacation, how to spend free time, etc. (Lipovetsky et al, 1994). Moreover, fashion industry is characterized by short production cycles, high product variety and frequent changes in demand, which makes the industry attractive for business (Djelic et al, 2009). With emergence of television, media and internet, consumers become more aware of current product offerings, quality and price. While price competition is still intensive in some companies within the industry, a competition for differentiation and brand recognition becomes increasingly preferable (Delgado-Ballester et al, 2001).

One of the ways to deal with pressures of the competitive advantage race is to redefine the terms of competitive advantage itself. Modern successful brands differentiate not merely on the product itself, but on the base of experience of ownership and consumption they provide for their consumers. For most consumers’ price and quality are not the sole reason affecting purchasing decisions, with brand recognition and image regarded as important factors. Affiliation with a specific brand in a context of a fashion industry becomes more than just a preference towards particular products, it is associated with lifestyle choices. Therefore, by choosing to associate with specific brands a customer is able to demonstrate certain aspects of his personality (Bagozzi et al, 2006).

Consequently, selecting specific brands serves as a common base for company’s consumers, thus forming a consumer group united by specific demographical and physiological characteristics. Additionally, purchasing specific familiar brands for consumers is a shortcut in decision making process – it saves them time and effort associated with researching and comparing all existing alternatives (Parrott, Danbury & Kanthavanich, 2015). With emergence of social media, it became extremely easy for such groups to connect and establish communities. Royo-Vela (2001) claims that loyal customers are likely to serve as brand ambassadors and strive to connect with fellow consumers. Therefore, they promote creation of communities connected by the brand and the values it represents. Therefore, organized groups of consumers are potentially beneficial for the companies. These groups are defined as brand communities, which can be described as “geographically not bound, specialized groups of customers based on a structured set of social interactions among admirers of a brand” (Muniz, O’Guinn, 2001).

Research shows that members of a brand community are characterized by increased loyalty towards the concerned brand (Thompson et al, 2008). Furthermore, consumer loyalty is frequently associated with increased profitability, as loyal customers are more likely to be interested in company’s new product offerings and purchase on continuous basis (Delgado-Ballester, 2001). With regard to the fashion industry, during the past several years’ online fashion communities started to become an increasingly powerful social platform for user-generated content, and, because of that, the fashion industry shows a great interest in such communities (Algesheimer, Dholakia & Herrmann, 2005).

According to Katz (2014), in post-modern societies people form consumption communities in order to replace lost social structures. Many of them incorporate extended consumption practices, therefore providing added value to customers, which extends beyond mere consumption of a product (Royo-Vela, 2011). Consequently, in the process of establishing,

developing and managing consumer communities lie numerous opportunities for increasing consumer loyalty and strengthening brand image. However, existing literature at the time largely focuses on researching rituals and specific brand-mediated events in brand communities, leaving out other practices in which customers engage (Zaglia, 2013). Therefore, further conceptualization on the topic is required in order to understand what practices would benefit the company and how they should be executed. Furthermore, potential dangers of brand communities should be discussed. As an example of that, Delzen (2014) pointed Tommy Hilfiger as one of the companies that focused on a trend on hip hop brand community, resulting into brand negligence.

While developed brand communities are constituted of the most loyal and engaged customers, these customers also represent a powerful force, which could hold potential for value destruction or change, as bad news tend to spread fast and create bad publicity which remains in minds of customers for extended time periods (Richins, 1983). Also, a powerful group of consumers may be able to lobby their interests, which may result into deluding brand image (Kapferer, 2002). Bryson et al., (2013) argued that negative brand consumer stereotypes have strong result on associated brand hatred. An example is the Lonsdale clothing brand that was associated with neo-Nazis in Europe, creating an extreme negative attitude due to associated stereotypes with consumer-far right tendencies (Complex Mag, 2012). Consequently, if consumers perceive the community to be externally controlled, they tend to put less trust to it than to the community which is developed internally, thus making management of brand communities a complex task (Delgado-Ballester, 2011).

Consumers value a sense of belonging and unity while interacting with brands. Some of the fashion brands strive to fulfill this consumer need with the use of social media techniques and particular physical experiences in order to create brand communities which unite people with similar interests. These communities, in turn, are set to prompt brand loyalty and

connectedness with the company. Companies attribute brand loyalty to customer retention, which implies long term profitability and increased market share (Patterson & Spreng, 1997). Marketers strive to create strategies and programs with the aim of establishing customer loyalty however they often do not have sufficient information about impact of these initiatives or their consequences (Dowling and Uncles 1997). Currently it is widely acknowledged that a focus on customer relationships is essential to establish a competitive advantage practice (Berry 1995; Deighton 1996; Gundlach, Achrol, and Mentzer 1995; Webster 1992). Therefore, it is important to build a brand community jointly, with both marketers and consumers cooperating.

Among the apparent advantages of brand communities are that they allow utilizing consumer creativity and encourage active participation. Therefore, they ensure that customers have a say on products and services they consume and are able to shape them according to their needs (Kapferer, 2002). Additionally, brand communities stimulate a sense of community and belonging, as communities are developed through the sense of similarity with others. At a base of many human interactions is a desire to gain positive social identity and prompt sense of belonging, and brand communities can serve as means to fulfill this need (Katz, 2014). They allow connecting with fellow consumers on a new level. These communities can also be considered hedonistic in nature, because they create a positive experience through interaction (Royo-Vela, 2011). However, consumers are not ready made community members and the research also focuses on which efforts should be exerted to stimulate creation and maintenance of it. The production of the highest quality production is no longer the main objective for some companies. Frequently, the focus shifts from the product itself to what it represents, its’ symbolic meaning and status value (Thompson, 2008). Therefore, this represents a plethora of opportunities in terms of branding in marketing, because of increased value added benefit, which makes it interesting and relevant for research.

Statement of the problem

Given the particular importance of building a brand community in sustaining a customer-company relationship, it is interesting to research more on this topic to be able to develop relevant marketing implications. Therefore, this paper is concerned to explore to what extent brand communities are beneficial in a context of fashion industries and what activities marketers should get involved in to utilize them to the full potential.

1.2. Purpose of the study

The study is aimed at investigating and identifying the present opportunities and threats of creating and developing brand communities in creative industries to provide involved companies with relevant recommendations.

1.3. Objectives of the study

The general objective of the study was to evaluate the effect of brand communities in creative industries. Specifically, the study is sought to:

i. Evaluate to what extent brand communities contribute to value creation.

ii. Determine the influence of social media on brand communities in a context of fashion companies.

iii. Evaluate the influence of brand communities on purchasing decision.

The central research questions of the paper are the following:

1. To what extent do brand communities contribute to value creation?

2. How do social media influence brand communities in the context of fashion companies? 3. How do brand communities influence consumers purchasing decision?

In order to answer these research questions, a conceptual framework was established and a research is conducted among the dimensions of this framework.

1.4 Research Methodology

The study adopted exploratory research design to evaluate the effect of brand communities on fashion companies in Netherlands. Exploratory studies answer questions of who, what, when, where and how. From the topic in this case how brand communities affect creative industries (Cooper and Schindler, 2010). The design was appropriate for the study since the study relied on a flexible and interactive research strategy using questionnaire. Also, the design enabled the researcher to collect data from the desired population of fashion customers to brand communities. Qualitative data was collected using survey through structured questionnaires. Moreover, to deepen our knowledge on the topic a focus group consisting of 10 people was invited to participate in the discussion on brand communities and their effect on value creation for the company. The major point of discussion was on how the brand communities influence consumers purchasing decision. Among the major benefits of the focus groups is that they provide a stimulating and non-threatening environment for the participants to express their views and opinions on the topic, therefore allowing to obtain a great deal of information in a relatively short period of time (Morgan, 1997). Focus group research was adopted because of limitations of the qualitative survey, which provided a number of numerical data however did not succeed at fully capturing people’s attitudes and feelings towards brand communities.

1.5 Theoretical and Conceptual Framework

The study was anchored on the social capital theory. According to the theory, community sentiment and involvement partially represents the resident’s degree of community attachment (Miller, 2001). The theory predicts that consumers networking among a brand

community create economic value. It emphasizes the importance of brand communities. However, the consumer’s primary consumption motivations have a stronger influence on the relationship with varied aspects of brand communities creating the need for company involvement in brand communities’ activities.

The main theoretical constructs identified from the brand communities and creative industries literature and elements of the social capital theories were combined to draw the dimensions of the framework. The framework conceptualized comprises of brand tribe and community participation, social media, non-online activities, consumer brand loyalty and buying intent. The schematic diagram of the conceptual framework of the study is portrayed in Figure 1.2.

Figure 1.2

Brand Community and brand Tribe Participation Social Media (Online brand) Customer brand loyalty Brand Affiliation Fashion related events (Non-online brand) Purchasing Intent

1.7 Organization

This chapter covers the background of the problem and the statement problem of the study, the general objectives, specific objectives, importance of the study highlighting who will benefit from the study, scope of the study and definition of terms. In the next section the concept of communities and particularly brand communities, its societal value and major opportunities and threats is discussed in greater detail. Several theories underlying creation of such communities are assessed. Motivations to choose a specific brand is of particular importance in establishment of brand communities and therefore needed to be discussed in great detail. Moreover, advantages as well as drawbacks of brand communities are discussed. Next, branding in creative industries with the focus on fashion industry was assessed. Also, economic aspect of such communities was discussed. As the research design of the paper is exploratory, the main aim of it is to gain greater familiarity with the phenomenon of brand communities and its overall effect for value creation for the companies. In order to do that, it was essential to conduct a literature review for a better understanding of the existing thought in the field. The design of the research was flexible, thus allowing for a greater freedom in the data collection process, which allowed reviewing of diverse perspectives on the topic. Then qualitative survey was conducted in order to gain further insights in the issues. Subsequently, insights obtained with the help of the survey are analyzed. Moreover, a focused group research is performed to gain broader insights on the topic and analyze them in line with a proposed conceptual framework. The problem at hand is process problem, as the phenomenon involved is not constant and changes significantly over time. Consequently, conclusion regarding brand communities is summarized and proposed.

CHAPTER TWO

LITERATURE REVIEW

2.1. Theoretical Literature

A number of consumer behavior theories are relevant to the discussion of brand communities and tribes. The theories discussed in this section were chosen on the base of their capacity to describe relevant motivations of consumers and to allow us to understand better what the brand communities and tribes are capable to provide them in terms of value creation. The first relevant theory is dialectical theory of consumer culture and branding.

2.1.1. Dialectical theory of consumer culture and branding

The dialectical theory of consumer culture and branding was proposed by Holt (2002). The theory is founded in a historical recap of the transitions in consumer culture and the dominant branding paradigms. It states that branding paradigms transform and adjust over time so that the industry’s mechanisms and conducts become aligned. In organizational studies this is known as isomorphism (DiMaggio and Powell, 1983). Based on this notion, Holt builds a dialectical institutional model to explain the shifts of the dominant branding paradigms over time. The model refers to the dynamic dialectical relationship between the dominating branding paradigm, i.e. the marketers on one hand and consumer culture on the other. The model shows that, the contradictions between consumer culture and the branding paradigm over the course of time propel institutional shifts in both. The argument is that when each participant, i.e. corporations and consumers in this dialectical relationship pursue their own interests, they will eventually engage in a collective selection process through which a new consumer culture and new branding paradigm becomes institutionalized. In short, when contradictions between consumer culture and the dominant branding paradigm occur, it paves

the way for a new branding paradigm (Holt, 2002, pp. 80-88).

Figure 1 – Holt’s Dialectical Model of Branding and Consumer Culture (Holt 2002, p. 81)

His research and the dialectical model enable Holt to outline some general ideas of what characterizes contemporary consumer culture and which emerging societal contradictions may pave the way for a new 21st Century branding paradigm.

Consumers are becoming increasingly savvy and critical towards the continued efforts and capering of marketers to lure them into buying their products. Holt isolates and delineates five interesting trends or ways of communicating, which characterizes contemporary brand communication (Holt 2002, pp. 85-88). These five trends highlight how marketers attempt to connect and circumvent the changes occurring in contemporary consumer culture, and provides us with a picture as to how difficult it actually is to reach contemporary consumers, i.e. ironic distance compressed, sponsored society, authenticity extinction, peeling away the brand veneer, and sovereignty inflation (postmodern paradigm) (Larsen, 2009).

The theory review was crucial to inform the study on the need for constant review of branding paradigm to align with industry needs. In fashion industry, as one of the dynamic fields, the theory remains crucial to the industry stakeholders. Moreover, this theory is

relevant for the discussion of how to attract consumers to brand communities and make participation in them more appealing.

2.1.2. Social Capital Theory

Another relevant theory to the discussion of brand communities is a social capital theory. According to it, community sentiment and involvement partially represents the resident’s degree of community attachment (Miller, 2001). Throsby (1999) and Goodwin (2003) define social capital as the resources available in and through personal, or a network, of relationships. The theory posits that consumers are able to create some economic value through a brand community networking. Mc Alexander et al. (2002) support the proposition by emphasizing that consumers gain utilitarian value on participating in so-called brand-fests. Further, Schau et al. (2002) in his study on brand community creation of value expound on some brand use practices that directly aim at enhancing the use of the brand by consumers. According to Zaglia (2013), one of the main motivations for consumers to join brand communities is to obtain the necessary information or skills on how to better use their favorite brand product. A brand community consists of peers sharing the same values and passions making it more convenient to obtain skills and information than obtaining it from other sources. Ouwersloot and Odekerken-Schröder (2008) show that members can be categorized within brand communities according to their initial motivations. They conclude that consumers make stronger relationships with different aspects of brand communities based on their primary consumption motivations. Thus, motivations can be an indicator of the future behavior of consumers in a brand community.

In a nutshell, the theory remains relevant in the study by indicating the importance of initial motivation of the brand community. Hence, companies need to have a central role in influencing the brand community’s objectives to exploit the available opportunities and mitigate any threats. This will lead to value creation for the creative company.

2.1.3. Symbolic Interactionist Social Theory

Last theory discussed in literature review is the symbolic interactionist social theory. The theory was first proposed by Herbert Blumer in 1950’s. The theory addresses the manner in which individuals create and maintain society through face-to-face, meaningful interactions. The theory was further advanced by Burke (1969) and Bormann (Littlejohn, 2002). The proponents believed that a man creates his own meaning through interaction and sharing of experiences. The core belief had a direct link to the concept of brand community in which members get meaning, interact with one another, and build a portion of their identities with other members around the common themes afforded by brand experiences. Using a symbolic interactionist perspective, a researcher sees brand communities as not only an opportunity to share common interests but also as a source of meaning and identity for consumers (Komaromi, 2003).

The theory review was important in the study to inform on the importance of brand community interactions. It also adds on value and identity associated with brand communities.

2.2. Empirical Literature

The section discusses what other researchers have found regarding brand communities in creative industry. A discussion on the existing communities in the creative industry is vital before delving into specifics of brand communities characteristics and engagements. Hence, the study begins by elaborating and defining communities.

2.2.1. Definition of communities

First and foremost, it is essential to provide a clear definition of what a community is and its societal value and role. Community is considered to be a core construct in the social thought with a long and ample history (Pihl, 2014). It is a concept of interest for numerous

psychologists, historians, economists and philosophers. A community consists of its members and relationships connecting them and is identified on the basis of its similarity and unity either a common interest, area of residence, profession or brand devotion (Pihl, 2014).

Communities are regarded as an essential element of human conduct. They help people share major resources that are emotional, material or cognitive. The main things which constitute the basis for a community and are always shared within it are value co-creation and negotiation of meaning (Nelson, 1970). It is characterized by specific rituals and traditions, a sense of moral responsibility and shared in-group identity (Algesheimer et al., 2005). What distinguishes brand communities from the others is that they are specifically situated within a commercial and mass mediated context, which is characterized by its own specific expression (Muniz Jr & O’Guinn, 2001).

Brand communities participate in the brand’s larger social construction and play a vital role in the brand’s overall image and competitive position. In order to understand the nature of brand communities it is important to start off with defining consumption communities, which are described by Boorstin (1974, p. 89) as “invisible new communities, which are created and preserved by how and what men consumes”. Boorstin remarks that a sense of community in the United States has moved away from close interpersonal bonds bound in a commonly shared location into bonds attributed to specific brand usage and affiliation (Boorstin, 1974). Participating in such communities therefore prompts a sense of fulfillment, which was previously attributed to social and cultural institutions (Delgado-Ballester & Luis Munuera-Alemán, 2001). The move led to establishment of what is currently known as brand communities, which will be discussed in a more detail in the next section. To sum up, in this section the definition of communities was presented, which serves as a foundation of the brand community research, which is discussed in subsequent sections.

2.2.2. Brand communities

As brand communities is a focus of this research, it is essential to provide a detailed description of what brand communities entail and the major theoretical foundations underlying them. In the past years there is a subsequently growing interest in brand communities. Traditional brand communication is based upon the company to consumer paradigm, while brand communities focus on consumers-to-consumer’s communications (McAlexander, 2002). Research has examined the effects of brand communities on marketing performance (McAlexander et al., 2002). Therefore, brand community identity, participation and commitment lead to positive word-of-mouth and brand loyalty (Oliver, 1999). Undoubtedly, brand communities strongly impact branding, however their impact on brand relationship remains unclear (Pihl, 2014). For instance, there is a direct relationship between commitment to the brand community and brand loyalty (Parrott et al., 2015). However, brand communities and consumer-brand relationships operate on different levels, therefore the effect of brand community on consumer-brand relationship is not yet clear (McAlexander et al., 2002). Particularly, it is important to understand how consumers’ relationship with a brand community translates into the relationship with a brand itself, such as commitment to the brand (Cova & Cova, 2002).

Furthermore, brand community is a specialized group of brand users founded on a structured set of social relationship who are not limited by geographic boundaries. A number of information and communication technologies were developed with the rise of internet, which serve as platforms facilitating interaction with and among consumers and thus prompt establishment of brand communities. One of the dimensions on which communities differ is geography. Despite being defined as non-geographically bounded (Muniz and O'Guinn 2001), they may be concentrated, or, on the contrary, scattered geographically (Boorstin 1974). Moreover, they may exist entirely without a physical space on the internet (Kim & Ko,

2012). Furthermore, another dimension of brand communities is social interaction. Interactions within brand communities may have a wealthy social context, or, on the contrary, be deprived from it (Kaplan & Haenlein, 2010). Communication may be an interpersonal face to face interaction facilitated by electronic devices or be prompted by the corporate mass media (Zaglia, 2013). Research up to date focuses on the social aspect of communities. A brand community is founded on a product attachment among users. Research highlights the connection between the brand, individual identity and culture. Within the concepts developed to explain behavior of consumers the concept of brand community focuses on connections between consumers. Thus, a brand community is a lasting self-selected group which shares specific common values and culture and has bonds between the participants and the company (Kalman, 2009).

Engagement is a term which is frequently used with regard to brand communities. Consumer engagement is a complex and dynamic phenomenon with different levels of intensity over time. Furthermore, consumer engagement consists of multiple processes which reflect consumer’s interactive experience with online brand communities and specifically focuses on value co-creation among community participants (Kim et al., 2015). Consumers which are fully engaged show greater consumer loyalty, satisfaction, connection, emotional involvement, trust and commitment (Bagozzi & Dholakia, 2006). Another dimension of brand communities is the basis for identification. Communities can be based on a variety of interest or determinants, that being, for example, profession, religion, sports or fashion affiliation or leisure pursuits. In regard to person’s life, some communities may significantly overlap while others may differ significantly. For the future research, it might be interesting to discover whether interconnection between communities strengthens community ties. For example, does commitment to a brand community increase if other family members or work colleagues also participate in that community?

The emergence of consumer culture is attributed to replacement of unidentified commodities to branded goods. In an era when mass advertising replaced personal selling, the growing focus on the individual consumer and his wants and desires is frequently attributed to deterioration of community and is often put forward as a critique to the consumer culture. Consequently, branded products are associated with an alleged loss of the community (Zhou et al., 2012). Thus, the brand itself has a central role in the society, community and modernity (Muniz & O’Guinn, 2001).

Organized brand communities have a potential to become a major marketing instrument and thus there are some underlying managerial implications related to them. Brand communities are an effective way to influence consumer purchasing behavior and also they allow companies to gain further insight into consumers’ minds by monitoring their opinions, suggestions and wants (Brodie et al., 2013). The fundamental basis for a brand community is its members’ ability to interact with one another, exchange knowledge and information of the brand or expressing passion towards it, therefore affecting the relationship with a brand. The major component of the brand community is the brand itself, but after a certain time brand communities grow based on relationships among their members.

Modern internet technologies resulted into shifting of market power from marketers to consumers themselves – in case when consumers are dissatisfied, they received an opportunity to cooperate, easily spreading a negative word of mouth and thus representing a potential risk to the brand (Katz, 2014). It is relevant to note a major component of brand communities, which is interaction of its members, which involves, for example, the extent of involvement with a community. They directly impacts the content of the community, that been comments, posts, suggestions, etc. Additionally, the quality of communication, and, subsequently, the context, is greatly important. These factors significantly influence brand promotion and prompt loyalty of brand members (Kim & Ko, 2012). The process of

participation in the brand community additionally involves usage of the human capital in order to establish brand knowledge, which has a positive influence on brand innovation (Sirgy, 1982). The exploitation of the skills, knowledge and experience in the collaborative online environment lead to creation of new brand features. Summing up, in this section a detailed theoretical foundations of brand communities were discussed, which provides a solid base for the subsequent research. Interaction among members is fundamental to brand community. Brand community members appreciate the sense of affiliation and opportunity to establish meaningful connections by taking part in the community, therefore it can be concluded that a social component plays a crucial role for the creation of brand communities.

2.2.3. Core Commonalities of Communities

Despite many definitions attributed to brand communities, a research up to date reveals at least three major components of the community. To further elaborate the discussion on brand communities, it is essential to describe them in detail. The first and the most important component of brand communities is what Gusfield (1978) referred to as consciousness of kind. Consciousness of kind is the connection members of the community feel towards one another and sense of difference from people outside of the community. This consciousness is shared and it is more than just a perceived similarity or shared attitudes, it is a shared knowledge of belonging (Esmaeilpour, 2015). It often implies two social processes: legitimacy and oppositional brand loyalty. The first is used to describe the behavior by which members, who know and appreciate the culture, history, traditions and symbols of the brand, tend to marginalize those who are not. The second is defined by what not the brand is and what the brand community members are not, characterizing the antagonism toward competitive brands (Moore & Fairhurst, 2003).

The second element of brand communities is existence of shared rituals and traditions. They stimulate development of community’s culture, history and shared history. Traditions are

described as a number of social practices which prompt certain behavioral norms and specific values (Royo-Vela & Casamassima, 2011). The conventions increase social solidarity and awareness of the community by its members as well as outsiders (Shephard et al., 2016). The third indicator of community is moral responsibility, which is a sense of obligation to the community as a whole and its individual members. Muniz and O’Guinn (2001) state that the moral responsibility displays itself through the attitudes of community members towards integrating new and retaining old members and supporting them to enjoy a brand experience. This is a sense of responsibility which produces collective action, particularly in times of instability. Much of the development of thinking of brand communities has to do with the rise of mass media. Habibi et al., (2014) argued that social media is an ideal environment for building brand communities. The researcher found that customer-brand, customer-product, and customer-company community relationships built on mass media had positive impact on brand trust and loyalty. To a large extent, detachment of communities from a specific geographic place is attributed to media, such as newspapers, magazines, radio and television. Like other kinds of communities, brand communities delve on differentiation. To sum up, in this section three core commonalities of brand communities were presented and described, those are the consciousness of a kind, brand rituals and traditions and moral responsibility. These commonalities are important for the discussion on brand communities because they allow to understand the major aspects, underlying creation and development of the brand community. Moreover, it is important to distinguish brand communities from brand tribes, which have some major differences. In order to do so, description of brand tribes should be provided and the concept of brand tribes should be discussed.

2.2.4. Brand tribes

Conceptualization on neo-tribalism is relevant to the discussion of brand communities. Based on the work of Maffesoli (1996), neo-tribalists state that the society at the moment

experiences decline in individualism, which is a claim which runs in opposition to a widely accepted view of impetuous growth of individualism in post-modernist society. Neo-tribalists state that we currently experience a development neo-tribes characterized by fluidity, occasional gatherings and dispersal (Shields 1996). Therefore, they represent constantly changing identities of post-modern consumers.

Modernity is characterized by extreme individualism and increased social dissolution. However, at the same time social decomposition is visible: people who managed to get rid of social constraints embark on a reverse journey to join communities. In these groups, social aspect has a greater influence on people’s behavior than formal social institutions or cultural establishments (Maffesoli, 2016). Taking that into account, it can be stated that our time could represent the end of individualism in the society the way it was perceived before. Therefore, a tendency reverse to individualism can be discussed, which is a search and recreation of lost social structures. Moreover, postmodernism is characterized by a variety of dimensions of social interactions, which are not understood completely. An example of such difference in dimensions is an emergence of so-called tribes, co-existing with widespread individualism in the society (Maffesoli, 2016).

Among the motives of people joining the groups is the search of emotional experience, which may symbolize reestablishing lost pre-modern social structures which were rejected by the modernity. Postmodern consumers are self-aware and tend to self-reflect on issues of identity and authenticity. Therefore, it can be stated that attempts to build a community based on consumption practices should evolve in them more than just compensatory acts. Brand communities can be formed around any brand but are more likely to be formed around firms with a strong brand image and rich culture and history. Moreover, goods consumed publicly are more likely to help establishing a community around them than those consumed in private (Zhou, 2012).

The concept of tribes implies the sense of identification, syncretism, group narcissism, etc. Consumer tribes can be identified as tribes because, similar to the tribes in archaic societies, they cannot rely on central power to maintain social order and they seldom have formal rules submission to which could be demanded. Additionally, tribes represent a collective actor who acts as a counter-power to institutional power (Shields 1996). Another defining characteristic of consumer tribes is that they are not formed around rational characteristics of a person, such as professional occupation, education or income, but instead are built on emotion and passion (Cova and Cova, 2002). In a modern society, each individual belongs to a number of tribes, in which he plays a different role. This implies that belonging to these tribes is more than just belonging to a social class, which is currently being replaced by flexible and dynamic placement of individual between tribes (Cova & Cova, 2002). Tribes serve as a manifestation of commitment of its members. They should not rely on frequent exchanges or reciprocity. Tribes constantly move and change, and their existence is supported by symbolic rituals. However, they cannot stay in being longer than attraction of its members to these rituals last (Maffesoli, 1996). Therefore, the major way to maintain tribe’s identity is through creation of shared experience and supports it by shared rituals.

Therefore, brand tribes differ from brand communities in a way that the tribe focuses on the relationship between its members, the consumers, without regard to specific brand, unlike brand communities, which are usually built around a brand or product (Parrot et al., 2015). D’Alessandro (2001) argued that the tribes that consumers belong to rely greatly on education and accomplishment with manifestation on what they consume. Community members may have much information about one another, which includes data about age, gender, appearance and personal history, or they may not know a great deal about one another, except for the expressed interest in the specified topic and selected nicknames (Yu & Dean, 2001). The distinguishing characteristic of tribes is that they convey signs with

which members identify themselves (Andriopoulos & Gotsi, 2000). The tribal approach views the company as a pole of the relationship in a sense that its’ goal is to support the connection between consumers (Nelson, 1970). Therefore, this section allowed us to understand what brand tribes constitute and how they differ from brand communities, thus allowing to establish foundations for the research.

2.2.5. Luxury fashion companies’ communities

Luxury fashion companies prompt a stronger sense of affiliation among its consumers as consumers are more willing to associate with luxury companies in comparison to economy ones (Saran et al, 2016). Therefore, in a discussion on brand communities it is important to focus on luxury fashion companies as they are more likely to form associated brand communities due to higher potential to hold relevant resources and be to provide added value to its members. Relatively short time ago, luxury fashion companies were supported by their regular customers and considerable brand assets (Yu & Dean, 2001). However, fierce competition in the industry attributed to a great number of new entrants caused significant changes in the industry. Certainly, development of new communication technologies and increased globalization made luxury fashion more accessible than before. Consumers now can shop through the internet, access a variety of fashion goods and instantly share their impressions with others. Moreover, online fashion customers are well-informed and demanding. Luxury companies, on their side, have evolved together with their consumers, which prompted development of new innovative forms of marketing. Particularly, internet has significantly impacted a variety of aspects of fashion industry (Kim et al., 2015). In such conditions, many fashion brand communities developed and expanded online, allowing their members to post their comments, share ideas and provide suggestions of directions to change in the fashion industry. Therefore, it is certainly beneficial for creative companies to exploit brand communities in order to build stronger relationships with a consumer.

There are two main types of brand communities in fashion companies: official communities and spontaneous communities. Official communities are the ones which are created and sponsored by the fashion company itself, with the goal to enable the participants to share opinions while also presenting to them new brand offerings. They connect participants with mutual interests and strive to develop a collaborative community that serves the needs of both the brand and its consumers. Spontaneous brand communities, moreover, is a fan-made communities, which consist of the enthusiasts of the brand. They join by their own initiative and often without prior consideration (Kim & Ko, 2012).

In current competitive environment it is important for luxury fashion brands to recognize importance of modern consumers’ ability to shop across multiple channels. In this regard, luxury retailer Michael Kors serves as a good example of successful implementation of luxury fashion using multiple channels. It provides its consumers with the omnichannel shopping experience through a variety of channels. The retailer capture leadership through their newsletters and strongly engage with their social media followers across Facebook, Instagram, Twitter and Youtube, with Instagram been particularly important because of its particular focus on visual aspect of its content. Therefore, research on brand communities is particularly relevant with regard to luxury companies because of increased competition in the industry as well as exactingness of its consumers. Thus, in such conditions brand communities provide an additional competitive edge and help to reaffirm customer loyalty.

2.2.6. Definition of value

As was mentioned above, communities and tribes provide an opportunity to create additional value to the consumer, which is not bounded to just the product itself and its materialistic value. Therefore, it is necessary to further discuss the concept of value in a context of consumer-company relationship and its implications. Customer’s perceptions of value and satisfaction are among the major issues of marketing. The importance of these concepts is

attributed to their interconnection with market share and subsequently purchase and repurchase intentions. Both consumers and marketers are increasingly concerned about the role of value, as it is considered to be one of the most powerful forces in today’s market (Dodds, 1991). With regard to consumers, obtaining value is a fundamental aim of the purchase (Holbrook, 1994). Perceived value is described as a ration of perceived benefits and perceived costs (Liljander and Strandvik, 1992).

Consumer value is a key variable in explaining repeat purchase behavior and brand loyalty. However, value is an abstract concept meaning which may vary with the context (Sweeney, 1994). For example, in economics value is attributed to utility, while in social sciences it is conceptualized in a context of human values, such as, for example, terminal and instrumental values, as suggested by Rokeach (1973). Furthermore, in marketing value is identified from a standpoint of a consumer. In a context of marketing, the most common definition is a ratio of total benefits received to total costs (Buzzell and Gale, 1987). However, perceptions of value are not just bound by social aspects but may also include social and emotional components (Sheth et al., 1991). A key consequence of a value perception is willingness to buy, which is a purchase intention. As highlighted by Bolton and Drew (1991), a perceived value is a “richer, more comprehensive measure of customers’ overall evaluation of a service than service quality”. Thus, the idea behind is that value is among the key linkages between cognitive elements of perceived quality and behavior intentions, largely as it involves monetary involvement.

The consumer value creates satisfaction which can be described as consumer’s post-purchase evaluation and emotional response to purchase or experience (Muniz & O’Guinn, 2001). Satisfaction is normally portrayed as a ratio of expectations preceded consumption to reality (Lipovetsky & Sennett, 1994). Emotions are a major component, which is associated with a state of arousal which results into focusing one’s attention on particular objects and thus can

impact behavior. Emotions are frequently a better predictor of behavior than cognitive evaluations (Nelson, 1970). Furthermore, past research identified that satisfaction is a good indicator of future repurchase intentions (Patterson, 1995). Perceived performance has a direct impact on satisfaction, and this is particularly the case with regard to products and services which imply high involvement (Mitchell & Imrie, 2011). In regard to brand communities, the reason consumers are interested in participating is because of associated added value. As was mentioned above, a social component is an inseparable component of brand communities. Therefore, what this paper strives to research is the link between the sense of affiliation, communicative value and, subsequently, a purchase intent.

2.2.6. Communications in brand communities

As aforementioned, communication is the major aspect of establishing and sustaining brand communities. Therefore, it needs to be discussed in further detail. In modern age, communication is significantly simplified by digital developments. They allow for almost instant exchange of information through social media for online brand communities. However, they also prompt an increased risk of misrepresentation (Karjaluoto et al., 2014). Often development of attachment to the community is hampered by a fear of not fitting in. The community as a whole benefits from the exchange of knowledge through reciprocal exchange of values (Gouldner 1960). Marketers can take an active role in establishing the traditions, rituals and meanings which prompt consciousness of a kind. Moreover, advertising and promotional materials depicting the product can help the consumers to establish shared aspirations. Marketers together with owners should exercise moral responsibility to the brand community. Community building activities, such as brand-related events, proved to be particularly efficient in establishment of brand community (Djelic & Ainamo, 1999). Ritual consumption prompts development of intimacy and a newfound understanding of the brand (Andriopoulos & Gotsi, 2000). Important point to note is that behind the corporate

communication and the product itself are real people who care about and try to fulfill the needs and desires of its consumers. Hence, brand communities’ events and online brand communities are crucial to enrich the information flow and needs a focus on. Thus, communication is an important aspect of brand communities, therefore sufficient effort should be exerted by marketers to reassure its efficiency. Also, an importance of digital communications for modern day consumers should be highlighted and efficient usage of these mediums of communication should be supported.

2.2.7. Online Brand Communities

This research is particularity sought to discover the value of social media and digital information technologies for brand communities and, subsequently, a purchasing intent. The current generation is characterized by high use of internet in forming virtual brand communities, with consumers capable of following their favorite brand on the internet. As Jeng et al. (2008) described the online brand community is “a specialized, non– geographically bound community, based upon social relationships among admirers of a brand in cyberspace” (p.57). Thus, online brand communities create value for the brand, which will be further discussed in subsequent sections.

2.2.7.1. Value creation through online brand communities

As was previously stated, social interactions within a brand community create value for a brand. Hence, brand communities create a platform to enhance consumer loyalty and consequently influence the purchasing decision. Through brand communities, companies have access to a selection of highly motivated customers to communicate with hence reducing marketing cost targeting unresponsive consumers and enable raise their brand loyalty (Zaglia, 2013). Online brand communities also offer an interaction platform for likeminded consumers of a brand. Further, through brand communities companies have an

additional communication channel for valuable information exchange (Kaplan & Haenlein, 2010). A further discussion on value creation through brand loyalty will follow.

2.2.8. Brand communities’ events

One of the ways to encourage participation in brand communities is through specifically organized brand communities events. Among the benefits of these events is that in comparison with regularly spread-out nature of a brand community, they allow its participants to experience socially rich communication. When physically close to one another, they get to know each other in a way which would not be possible through social or mass media. Additionally, face to face interaction leverages a thread of mispresenting oneself. Moreover, brand events frequently bring together people who do not share other interests than the brand itself. An excellent example is the Porsche Club rallies in USA. The brand-created event brings owners together to experience the performance capabilities of their vehicle in a safe environment (Komaromi, 2003). In fashion industry, the annual galas that are organized locally, nationally and internationally like Miss Universe concerts offer a good opportunity to showcase the brand. The same concept applies to the entire creative industry.

When brand community participants are given an opportunity for a socially rich interaction, given previously limited communication through means of social networks, participants receive an opportunity to share extraordinary brand related experiences (McAlexander and Schouten 1998). Sharing this kind of experience enhances interpersonal ties and mutual appreciation of one another between the participants and strengthens involvement with a brand. Therefore, virtual ties can become real ties, strengthening weak connection and giving a new dimension and points of attachment to already strong one (Karjaluoto et al., 2014). Therefore, it can be suggested that diverse and strong points of attachment result into a greater integration in a brand community. This is an underlying notion to the concept of

brand loyalty, in terms that it conveys an emotional and behavioral attachment to the brand that is grounded in consumer’s lifelong experience with a brand (Ehrenberg 1988).

2.2.8.1. Brand Events and Marketing Implications

Considering today’s competitive market conditions, it proves increasingly important to sustain a competitive advantage, which is however often a very complex task. Even when the company is able to provide superior product or service, this advantage is frequently disrupted by imitation or development of superior technology by competitors (Kaplan & Haenlein, 2010). Differentiation based on ownership experience can be achieved with the help of programs that are specifically designed to improve customer-brand relationships. Thus, events facilitated by brand communities provide an opportunity for consumers to experience product benefits that they did not realize existed before. They also get an opportunity to share the benefits with others as well as to get to know previously faceless and nameless people behind the brand and consequently to learn more about brand’s history and values (Pihl, 2014). Research suggests that these kinds of programs have a potentially significant impact on a whole range of customer-centered relationships. Thus, by providing a context which would allow relationships to develop, marketers can cultivate a community in ways that increase customer loyalty. There are many benefits associated with promoting a brand community. Customers who are community members serve as brand missioners by carrying out a marketing massage to the wider community. These consumers are more tolerant to product or service failures (Berry 1995). Consequently, they are less likely to switch brands even when presented with higher quality products by competitors. Moreover, they are willing to tell a company about points of improvement and cooperate towards improving a product. They also represent a strong market for new company’s products. In some cases, loyal consumers decide to invest in the company further by investing in firm’s stock (Parrott et al., 2015). Customers who are highly involved in a brand community feel emotional connection

to the company and have a strong incentive to increase welfare of the company and thus are willing to contribute to its success (Brodie et al., 2013). Therefore, it can be stated that organizing brand events allows customers to become closer to the fellow customers and the brand itself, allowing to transom customers to loyal followers and increase involvement.

2.2.9. Brand Loyalty

In a discussion on brand communities, brand loyalty plays a significant role as it has a number of strategic values for companies (Katz, 2014). First, it reduces associated marketing costs as it is costly to get new customers than to retain existing customers. Loyal consumers of a brand cannot take a risk of trying a new brand increasing the cost attracting them. Second, brand loyalty provides trade leverage since manufacturers will only stock products that are vast moving. Third, brand loyalty attracts new customers through creating awareness by word of mouth and reassurance on new customers due to the high number of consumers (Katz, 2014). To evaluate the effect of the brand community in fashion industry, a research methodology proposed above was used. The study adopted social capital theory by Mc Alexander et al. (2002), which recognizes the economic value created through brand community networking.

2.2.11. Research gap

The study aimed at enhancing previous studies already done on brand communities by other scholars. The study adds knowledge base on brand communities in creative industry. However, the study added a new twist in the study by evaluating brand affiliation resulting from brand community participation in context of fashion companies and the associated value of utilizing social media in regard of establishing and supporting brand communities.

CHAPTER THREE

RESEARCH AND ANALYSIS

This section provides the results and analyses of the research, conducted along the conceptual framework. To begin with, demographic characteristics of the researched population will be presented. Furthermore, validity and reliability will be discussed. Moreover, the results and interpretation of the questionnaire is presented, which provides us with a greater background information on attitudes and values of respondents. Then, the results and interpretation of the focus group research is presented, which provides a more elaborate picture on feelings and thoughts on brand communities among the focus group participants.

3.1. Target population

The study target population comprised of fashion-conscious Millennial living in Netherlands capital city of Amsterdam. Amsterdam has a population of 839,360 people with over 50 percent comprising of Millennial (Europa, 2015).

3.2. Sampling technique and sample size

Purposive sampling was used to select a sample size of 50 fashion customers to brand communities participants. Focus group participants were selected on the base of their affinity with the topic and interest in fashion and brand communities associated with them. Participants were recruited in the city of Amsterdam, aged between 18 and 32, which is a representative sample of the target population. Demographic characteristics of the focus group are similar to those of the survey respondents, allowing for the consistency between the two forms of research. Participants were recruited with the aid of social media. Prospective participants were sent an invitation to participate in the focus group, explaining the purpose of the research and the nature of the study. Out of 15 sent invitations, 10 people agreed to

partake in the focus group, which is considered a sufficient number to exert optimal information with regard to specified topic (Morgan, 1997).

3.3 Validity and Reliability test

3.3.1. Instrument Validity

Validity determines the degree to which the research instrument justly measures that which it is planned to measure or how truthful the research results are (Joppe, 2000, Polit and Beck, 2004). This is further noted by Drost, (1995), who states that, validity is concerned with the meaningfulness of research instruments, in this case with whether the instruments are measuring what they intended to measure. In this research, the questionnaire covered the objectives so that the data attained was clarified. Focus group offered a discussion forum on brand communities extensively. This harmonization of the research instrument helped to support the validity of the research as a whole. Further content validity was used to check the representation of the research questions in the research instruments. According to Drost (1995), content validity is qualitative means that guarantees indicators tap a meaning of a concept as defined by the researcher. This is further supported by Orodho, who notes that content validity is concerned with whether or not the instrument is representative of the full content of the thing being measured (2009). This was done in order to examine the representativeness of the questionnaires. The draft questionnaire was piloted for validity and reliability.

3.3.2. Reliability of instruments

According to Kombo and Tromp (2006), reliability is a measure to which a research instrument yields consistent results after repeated trials. This is extended by Kothari, (2004) who states that an instrument is reliable if it yields consistent results over a period of time. To determine reliability of the instrument Split-half approach was employed to determine

consistency of the questionnaires to be administered. Drost (1995) noted that split-half approach is a method to test reliability which assumes that a number of items are available to measure behavior. The Spearman-Brown Prophecy formula was applied to determine the reliability.

Orodho, (2009) notes that a correlation coefficient (r) of about 0.7 should be considered high enough to judge the reliability of the instrument. A correlation coefficient of 0.68 was found hence the instrument was considered reliable.

Further, focus group discussion captured vital ideas and inputs that questionnaires could not capture. However, due to the large population, focus group needed a compliment to improve on the study reliability. Hence, the study was considered reliable.

3.4. Data collection procedure

In order to gain a deeper insight on attitudes of fashion customers to brand communities a qualitative survey was conducted. Qualitative data collection methods were selected due to exploratory nature of the study since it allows obtaining richer insights. Part of the respondents was contacted personally or with the help of social media to seek for their cooperation to participate in this study. If they agreed to participate they were issued with the qualitative questionnaire, which contained a cover letter and a questionnaire itself. The cover letter explained the nature and purpose of the study. The questionnaire consisted of 15 open-ended questions, the major goals of which are to explore the attitudes of participants towards fashion, brand communities and social media. The participants were purposely selected based on their affinity with fashion industry and its importance to their lifestyle.

Focus group discussed the effect of brand communities on value creation for fashion companies into details guided by set questions. The questions were centered on the brand communities and brand tribes influence in fashion industry. A sample of questions was prepared to mediate the discussion, which is attached in the appendix.

CHAPTER FOUR

RESULTS

4.1. Response rate

The study sample comprised of 50 fashion-conscious Millennials from Amsterdam -the Netherlands. After the administration of the questionnaires, 40 respondents out of the 50 respondents returned their fully filled questionnaires giving an 80 percent response rate. According to Mugenda and Mugenda (2009) a response rate of 50.0% is adequate for analysis and reporting, 60% is good and a response rate of 70% and over is excellent is adequate for generalization. The ten member focus group fully cooperated in discussing the set questions in details. The study first concentrated on questionnaires analysis.

4.2. Demographic character

The Millennial who filled the age had an age distribution of between 14 to 29 years.

Table 4.1: Respondents age

Age category Frequency Percent

14-18 years 12 30.0

25-29 years 10 25.0

Total 40 100.0

As illustrated in table 4.1 above, majority of the respondent 18 (45%) were aged 19-24 years, 12 (30%) were aged 14-18 years whereas the other 10 (25%) respondents were in the age category of 25-29 years. These findings have the indication that majority of the respondents who took part in this study were still within their early ages, being born from the 1980s to 2000’s. It was therefore expected that they would be the best audience to provide the information required for this study.

4.3. Preferred Shop

This section covers the preferred shop for fashion industry customers. The information captured was whether they shop online or in shop. The importance of capturing this information was to provide information on the brand communities existing. Hence, it enabled to form opinion on the functional brand communities.

Figure 4.1: Respondents preferred shop

As shown in figure 4.2, majority of the respondents who took part in this study prefer to shop in a physical shop 21 (52.5%), whereas the remaining 19 (47.5%) prefer online shop. This provides an indication that even though the generation is technology savvy, they still have a higher preference for in-shop shopping. However, the variation is little, with a difference of only 5 per cent. The preference for in-shop shopping creates an opportunity to form a “hard” membership that allows for physical contact and exchange among brand community members.

4.4. Brand and shopping rate

Variable Category Frequency Sample %

Shopping rate Monthly 5 12.5

Quarterly 16 40.0

Half year 12 30.0

Yearly 7 17.5

Shopping motive Recreational 19 47.5

Social 16 40.0 Economic 5 12.5 Brand Armani 2 5.0 Burberry 7 17.5 Gucci 5 12.5 Ralph Lauren 8 20.0 Louis Vuitton 10 25.0 Chanel 5 12.5 Prada 3 7.5

Brand characteristics Quality 15 37.5