The impact of Social Media on Marketing Strategy

The Impact of Social Media on
Marketing Strategy

Richard Fullerton
May 2012
Slideshare.net version

There are no secrets. The networked market knows more
than companies do about their own products. And
whether the news is good or bad, they tell everyone.
The Cluetrain Manifesto, Thesis 12.

2

About this document
• This document is a précis of a dissertation of the same name
produced by Richard Fullerton for his Masters in eMarketing degree
in 2010/11.
• Its aim is to make the dissertation more readable and accessible, and
is aimed at practitioners as much as academic students.
• There are 133 slides and most slides have a lot more information
than is ‘typical’ in a slideshow. This is NOT a presentation. It is still an
academic rather than practitioner document.
• This research is as much about marketing strategy as it is about social
media’s impact. It is not about social media strategy.
• Academic and some practitioner authors are cited in support of the
material on each page but full references and bibliography are
available in the original dissertation only.

3

About this document
• One additional benefit is that it does contain some material which
was cut from the original dissertation due to word count and page
limit restrictions.
• The document consists of:
– Introduction section + Background to the Social Web (section 1).
– Literature Review (sections 2, 3, 4, 5).
– Methodology (section 6).
– Findings & Discussion (section 7).
– Conclusion (section 8).
• A full copy of the dissertation can be downloaded from
www.newrivermarketing.co.uk/downloads
• You can follow the Author on Twitter via @newriverm and connect
via www.linkedin.com/in/richardfullerton

4

Contents
About this document 2. Exploring Marketing 3. The3. The Decline
Decline of 4.4. The Promise of the
The Promise of the 5. Conclusion to the
5. Conclusion to the
About this document
& Strategy Marketing
of Marketing Social Web Web
Social Literature Review
Literature Review
Contents What is Strategy? Marketing in Decline The Promise of the
The Promise of the 6. Research Methodology
Contents What is Strategy? Marketing in Decline 6. Research Methodology
Social Web
Social Web

Background to the Study Alternative views of
Alternative views of Strategy Loss of Ascendancy Restoring the Lost Art 7. Findings && Discussion
Background to the Study Strategy
The Loss of Ascendancy Restoring the Lost Art
7. Findings Discussion
of Marketing
of Marketing of Engagement
of Engagement

Research Objectives Effectiveness, Efficiency
Effectiveness, Efficiency The Challenge of
The Challenge of Influencing Buyer Behaviour
Influencing Buyer 8. Conclusion to the Study
Research Objectives 8. Conclusion to the Study
&& Strategy
Strategy Value Creation
Value Creation via Social Media
Behaviour via Social Media

1.Background to the The Impact of the Internet
The Impact of the Internet The Struggle for Innovation Social Media bringing
Social Media bringing
The Struggle for Innovation
Social Web on Strategy
on Strategy Organisational Change
Organisational Change
What are Social Media? Challenge to the Hierarchy
Challenge to the Hierarchy The Rise of the
The Rise of the Creating Value with
Creating Value with
What are Social Media?
of Strategies
of Strategies New Consumer
New Consumer Social Media
Social Media
Rise of the Social Web What is Marketing Strategy? The Limitations of
The Limitations of Social Media as a a source
Social Media as source
Rise of the Social Web What is Marketing Strategy?
Relationship Marketing
Relationship Marketing of Innovation
of Innovation
The Power of Social Media Value as the new
Value as the Questioning of the
Questioning of the Gaining a a Competitive
Gaining Competitive
The Power of Social Media
Marketing Paradigm
Marketing Paradigm Marketing Mix
Marketing Mix Advantage via Social Media
Advantage via Social Media
The Strategic Nature of
The Strategic Nature of The Challenge for Branding
The Challenge for Brand-building via
Brand-building via
Social Media
Social Media Branding Social Media
Social Media
Marketing’s Mid-life Crisis
Conclusion to the Decline
ofof Marketing
Marketing

Click on any heading above to navigate to the relevant part of the document. You can return to this Contents
page at any time by clicking on the ‘Return to Contents page’ link below the page number on every page.

5

Background to the Study

• The a priori assumption is that social media have eroded
marketers’ control1 and the power is now with the consumer2.
• Consumers are having conversations about brands in which
the brands are not involved, forcing these brands to listen3.
• Some researchers even suggest now that the consumer
defines the brand4.
• In the context of the study Problem, marketing strategy
includes areas such as branding, consumer behaviour, the
mix, relationship marketing, value creation, and organisational
orientation.
1 Strategic Direction (2010).
2 Constantinides and Fountain (2008).
3 Weinberg (2009).
4 Li and Bernoff (2008).

6
Return to Contents page >

Research Objectives

1. To explore the contemporary issues raised by the literature
within strategic marketing.
2. To establish the gap between practitioner perspective and
activity, and the published literature.
3. To analyse the impact of social media on marketing strategy.
4. To create a conceptual framework of social media’s influence
on marketing strategy.
The following companies were interviewed as part of the
research: first direct (two interviews); Marks & Spencer; Birds’
Eye Iglo Group, Dell, Nokia, British Gas, and
Moneysupermarket.com.

7

Background to the Social Web

8

Social Description Examples
media
Blogs Individuals’ or companies’ online journals. John Battele’s
• ‘Social media’ and ‘Web 2.0’ are
Microblogs
Readers can often leave comments.
A form of blogging that allows a user to
FM Signal blog
Twitter
used interchangeably.
Social
publish short text updates,
Applications allowing users to build Facebook; • But other synonyms include the
network personal web sites accessible to other
users for exchange of personal content
LinkedIn;
‘social web’, the ‘groundswell’,
and communication. MySpace
Content User-generated content web sites. YouTube; ‘consumer-generated media’
communities

Virtual brand Brand-specific websites where people
Flickr
Lego’s LUGNET and just simply, ‘social’.
communities with a common interest can interact. P&G’s Beinggirl
Forums/
Bulletin
Sites for exchanging ideas and
information usually around special
Numerous, all
unique.
• To reconcile the various types of
boards
Content
interests.
Applications allowing users to customise Technorati;
social media and their
aggregators the web content they wish to access.
Stumbleupon categories, see left.
Collaborative A wiki is a web site that allows online Wikipedia
websites collaboration by allowing multiple users to
(Wikis) add, remove or edit and change content.
Social Users can recommend and share Digg; del.icio.us,
bookmarking interesting and relevant content with one Newsvine;
sites another. Reddit

Sources: Constantinides and Fountain (2008); van Zyl (2009);
Mangold and Faulds (2009); Stokes (2009).

9

Rise of the Social Web
Why Consumers use Social Media
• They see social as a more trustworthy source of information than
organisations themselves.
• Social media “simply unlocked an existing human need”1.
• “Darwinian models” of “socio-biology” involving altruism are a factor2.
• Social is popular because of its advantages – transparency, referrals,
contact with others3.
• A study into Facebook user experiences found most motives were
curiosity, enjoyment, fun, excitement and pleasure4.
• Addictive – a 1/3 of all women aged 18-34yrs check Facebook on
waking before even visiting the bathroom5.
1 Meadows-Klue, 2008, p.249.
2 Palmer and Koenig-Lewis, 2009, p.169.
3 Constantinides and Fountain (2008).
4 Hart et al. (2008), cited in Palmer and Koenig-Lewis (2009).
5 Parr (2010).
10

Rise of the Social Web
Why Organisations are adopting the Social Web
• It’s where customers are (interacting)1.
• The competition are doing it2.
– No evidence that online ‘buzz’ leads to sales but proof is emerging
that online WOM is an indicator for sales3.
• Knowledge-sharing, a ‘collaborative learning environment’4.
• Productivity and workflow efficiency5.
• Cost-savings as expensive call centres made redundant by
support forums6.
• Open platforms facilitate collaboration and increase job
satisfaction and productivity7.
1, 2
Fisher (2009). 6 Hoffmann and Fodor (2010); Li and Bernoff (2008).
3 Liand Bernoff (2008). 7 Tapscott and Williams (2006), cited in Vany Zyl (2009)
4 Van Zyl (2009).
5 Van Zyl (2009).

11

• Powerful because they amplify “consumer-to-consumer
conversations in the marketplace”1.
• Achieve “results no media campaign can achieve”2.
• WOM is a marketing tool, relationship builder, and has
financial advantages3.
• Negative – examples of consumer power in social:
– Digg.com and its revealing of the HD DVD encryption key4; ‘Dell Hell’5;
‘United Breaks Guitars’6; Thomson Holidays’ ‘Tunisia trip hell’7.
• Positive power:
– 25% of Dell’s new customers come via referrals8.
– The power of ratings and reviews e.g. eBags.com – 30% growth9
– Snakes on a Plane – bloggers influenced script changes10
1 Mangold and Faulds, 2009, p.361. 6 Ayres (2009); HennigThurau et al. (2010).
2, Liand Bernoff, 2008, p.130. 7 Creston (2010)
3 Harridge-March and Quinton (2009). 8 Reichheld (2006).
4 Li and Bernoff (2008). 9 Li and Bernoff (2008).
12
5 Jarvis (2005). 10 Li and Bernoff (2008).

The Strategic Nature of Social Media

• Not just another traditional marketing communications tool1.
• Evidence of its strategic nature:
– Ford’s spending of 25% of its marketing budget on digital and social
media, twice the industry average. Blogging, uploads to YouTube,
Facebook activity and ‘tweeting’ raised awareness of the Fiesta −
unknown in the US − amongst Generation Y to 37%, equivalent to
hundreds of millions of dollars of traditional advertising spend2.
– Dell: social media is “probably the most important thing we do today
from the marketing standpoint” (Andy Lark, VP of Global Marketing)3.
– Li and Bernoff (2008) compared existing business functions within
organisations with social media objectives (see next slide).
• But only ¼ of marketers have made social a strategic activity4.
1 Hoffman and Fodor (2010).
2 Kiley (2009).
3 Lark (2008).
4 MarketingSherpa (2010), cited in eMarketer (2009a). 13

The Strategic Nature of Social Media

Evidence that social media
are strategic is the fact
that the 5 groundswell
objectives mirror those of
organisational functions.

14

Exploring Marketing and Strategy

Since this study seeks to identify the impact of
social media on marketing strategy, it is necessary
to explore strategy and marketing strategy first.

15

What is Strategy?
• An organisation has two levels of strategy:1
1. Organisational strategy – defining what businesses the firm should
compete in and how.
2. Business unit (Competitive) strategy – role is to create a competitive
advantage.
• Competitive strategy theory2 broadly states that firms can
follow one of three generic strategies:
1. Cost leadership strategy (low prices, standard product)
2. Differentiated strategy (added value, higher price)
3. Focus strategy (serve a particular segment very well leading to
differentiation or cost leadership for this segment)
• “The essence of strategy is in the activities – choosing to
perform activities differently or to perform different activities
than rivals”3.
1 Porter (1987).
2 Porter (1980).
3 Porter, 1996, p.64. 16

What is Strategy?
• Numerous definitions of Strategy:
– “Strategy is the route to achievement of specific objectives and
describes how objectives will be reached”1.
– “Strategy is the creation of a unique and valuable position”2 obtained
by activities that differ from the competition. It is also about making
trade-offs* and “creating fit among a company’s activities”3.
– “Strategy is about competitive advantage through differentiating
against the customer’s alternatives, continuous innovation to sustain
that advantage, and organizing to achieve ‘fit’§ in maintaining the
advantage”4.
– Strategy is “the business’s overall plan for deploying resources to create
competitive advantage in its markets”5.
1 McDonald, 2007, p.298. * In Porter’s context, a ‘trade-off’ is a sacrifice of part of a service in order to enhance another one. An example he gives is
2 Porter, 1996, p.68. Ikea which has a clear strategic positioning compared with a traditional furniture store. The trade-off is customer service –
3 Porter, 1996, p.75. but customers don’t mind and Ikea can offer things other stores cannot such as extended opening hours.
4 Piercy, 2002, p.75.
$ ‘Fit’ here refers to strategic fit – whether an activity contributes to overall performance.
5 Doyle, 2008, p.11.

17

Alternative views of Strategy

• “Strategy is revolution; everything else is tactics”1. In
contradiction to the ‘fit’ model, growth comes from a ‘stretch’ –
a gap between strategic resources and ambitions, and trauma to
the organisation is ‘good’.
• Firms should pursue a ‘blue ocean strategy’ and seek un-
contested market space instead of trying to compete head-on2.
• Strategy is “the policies and key decisions adopted by
management that have major impacts on financial
performance”3.
• ‘Strategy’ is an overused word, implying that its overuse has
muddled its true meaning4.
1 Hamel , 1996, p.70, cited in Prassad (2010).
2 Kim and Mauborgne (2005).
3 Buzzell and Gale, 1987, p.18.
4 Brennan et al. (2008).
18

Effectiveness & Efficiency & Strategy
• UK organisations that are inward-looking are adopting the wrong
approach to strategy. By making themselves more efficient e.g.
cutting costs, instead of more effective e.g. achieving strategic goals
such as a competitive position, they threaten their own survival1.
• Organisations must pursue both effectiveness – “doing the right
things” and efficiency – “doing things right” since an absence of
either threatens survival2.
• Another view is that operational effectiveness includes efficiency and
means “performing similar activities better that rivals”3. But
competition by this means alone is “mutually destructive”4 – so a
company must adopt a different strategic position from its rivals.
• Thus the logic is that “operational effectiveness and strategy are both
essential to superior performance”4.
1 Wilson and Gilligan (2005).
2 Brennan et al., 2008, p.13 & 14.
3 Porter, 1996, p.62.
4 Porter, 1996, p.62.
5 Porter, 1996, p.61.
19

The Impact of the Internet on Strategy
• Consider the impact of the web on strategy – could it be a model
for its impact on marketing strategy?
• The internet did not make strategy redundant or provide first-
mover advantage – the switching costs were lower, not higher – and
the promised benefit of network effects*, did not materialise at
first1. But the latter has now been realised e.g. eBay2.
• In fact the web has eroded competitive advantage traditionally
enjoyed by firms3.
• The internet has changed our understanding of strategy:
– “Strategy is redundant”4 because of the speed of change brought about by
the internet.
– We should “redefine strategy as the art of surviving rapid transition”5.
* Network effects: the process by which a company’s products and services become more valuable as more
people use them. Examples are email, instant messaging and of course, social networks.
1 Porter (2001). 4 Piercy, 2002, p.206.
2 Kumar (2004). 5 Evans and Wurster, 2000, cited in Piercy, 2002, p.206.
3 Wilson and Gilligan (2005).
20

Challenge to the Hierarchy of Strategies
• Organisational strategy structure has traditionally been hierarchical –
below Corporate and Strategic Business Unit (SBU) level strategy is
Functional level strategy1.
• But recently this concept has been challenged – a new heterarchichal
relationship between the strategies has been suggested2.

‘Old’ hierarchy Source: Chakravarthy and
‘New’ heterarchy
structure Henderson, 2007, p.650. structure

1 Hofer and Schendel (1978); Webster (1992); Varadarajan and Jayachandran (1999).
2 Chakravarthy and Henderson (2007).

21

Challenge to the Hierarchy of Strategies
• The reason for this revision is that studies have shown that the
traditional portfolio planning role of corporate strategy does not lead
to better performance and that “strategy formulation is not always
top down”1.
• Corporate, business and marketing strategies interact to define the
competitive advantage of SBUs in a company. The merging of these
strategies defines the degree to which a business can gain and
sustain that advantage2.
• The challenge of this heterarchy is continuous renewal, not just of
positioning the firm in a more attractive market space but of
developing competencies to defend these positions3.
• Could social media be one of these ‘competencies’ and offer the
organisation a competitive advantage in some way?
• Can social media play a role in this ‘bottom-up’ strategy formulation?
1 Chakravarthy and Henderson, 2007, p.647.
2 Varadarajan and Jayachandran (1999).
3 Chakravarthy and Henderson (2007).
22

What is Marketing Strategy?
• The Author’s study has shown that some academics define marketing
strategy in almost tactical terms e.g.
– “the selection of which marketing opportunities to pursue, analysis of target
market(s), and the creation and maintenance of an appropriate marketing
mix that will satisfy those people in the target market(s)”1.
• However, he argues that it should be defined strategically:
– “Marketing strategy should be set in the context of overall corporate
strategy”, because the marketing must be aligned to ensure the overall
direction of the organisation is followed2.
• And some do define it in terms of gaining and sustaining a
competitive advantage3.
• But the essential idea of marketing is to create value4.
– “Businesses not offering value to customers are seeing their market shares
eroding at accelerating rates”5.
1 Dibb et al., 2006, p.20.
2 Hooley et al. 2008, p.31.
3 Day et al. (1990); Sudharshan (1995).
4 Sheth and Uslay (2007); Doyle (2008).
23
5 Doyle, 2008, p.12.

What is Marketing Strategy?
• Thus the link between corporate and marketing strategy comes
from the latter’s ability to create a competitive advantage by
“leveraging a firm’s unique skills and resources to implement a
value-creating strategy that its competitors cannot implement as
effectively”1.
• So the Author’s preferred definition is:
“Marketing strategy seeks to deliver superior customer value by
combining the customer-influencing strategies of the business
into a coordinated set of market-driven actions”2.
• Note that it is now argued that value is jointly created between the
customer and the producer3, a recurring theme in this research
document.

1 Barney (1991), cited in Varadarajan and Jayachandran, 1999, p.121.
2 Cravens and Piercy, 2009, p.13.
3 Prahalad and Ramaswamy (2004a); Payne et al. (2008).
24

Value as the Marketing Paradigm
• Numerous scholars assert that Relationship Marketing has been
displaced as the current paradigm1. But there is no consensus
amongst academics on the replacement marketing paradigm2.
• A full examination of marketing paradigms is outside the scope of
this study but Various replacement candidates have been
suggested, such as Electronic Marketing3 and Experiential
Marketing4, but there is strong support in academia for Value
Marketing5, the choice of the Author as the current paradigm.
• Value is a universal requirement. Coca Cola now talks about ‘value
marketing’ and not ‘brand marketing’6.
• For the new paradigm candidate list, see Appendix B in the full
dissertation at www.newrivermarketing.co.uk/downloads
1 Wilson and Gilligan (2005); Piercy (2002); Kotler (2008). 5 Piercy (2002), Poiesz and van Raaij (2007), Porter (1996),
2 Egan (2008). Cravens & Piercy (2009), Doyle (2008), McDonald (2007).
3 Wilson and Gilligan (2005). 6 Piercy (2002).
4 Pine and Gilmore (1998), Schmitt (1999). 25

Progress check...
About this document
Literature Review
Social Web
Social Web

of Marketing
of Engagement

Effectiveness & Efficiency The Challenge of
&& Strategy

Creating Value with
of Strategies
Social Media
of Innovation
Gaining Competitive
Marketing Paradigm
The Strategic Nature of YOU ARE The Challenge for Branding
The Challenge for Brand-building via
Brand-building via
Social Media
Social Media HERE Branding Social Media
Social Media

ofof Marketing
Marketing

26

The Decline of Marketing

The Author’s reading has revealed that many
academics believe Marketing to be in decline.

27

Marketing in Decline

• According to many academics, Marketing is in decline1.
• For others, marketing is ‘in crisis’2, ‘dead in the water’3, ‘in mid-
life crisis’4, ‘at saturation point’5, or even ‘broken’6.
• This section examines these controversial assertions, including:
– Marketing’s decreasing role within the organisation.
– Problems with value creation and innovation.
– Difficulties with influencing consumer behaviour.
– The limitations of relationship marketing.
– Criticism of the Marketing Mix.
– Exploration of the current issues facing branding.
– Marketing’s mid-life crisis.
1 Kumar (2004); Parsons and Maclaren (2009); 5 Poiesz and van Raaij (2007).
Grönroos (2009); Webster et al. (2005). 6 Lovatt (2010).
2 Grönroos (2009).
3 Piercy (2002).
4 Wilson and Gilligan (2005). 28

The Loss of Ascendancy of Marketing
• Marketing has a reduced role and influence
– Doubts exist about its value1 and future role2.
– Executives are united in stating that marketing is an ambiguous concept
with unclear responsibilities3.
– Less than 10% of the board’s time is spent discussing marketing and
customer-related issues4.
– The ‘tyranny of P&L’ - an obsession with short-term financial metrics5.
– Marketing is seen as a variable cost that can be cut6.
– Resources are being shifted to Sales, with the latter taking over more
responsibility for customer management7.
– Marketers are creative thinkers but lack the analytical skills of IT, finance
and data analysis required in business8.
– Marketing has lost credibility9 and needs to “regain its seat at the table”10.
1 Kumar (2004). 6 Sheth and Sisodia (2005).
2 Wilsonand Gilligan (2005). 7 Webster et al. (2005).
3 Webster et al. (2005). 8 McGovern et al. (2004).
4 McGovern et al. (2004); Kumar (2004). 9 Sheth and Sisodia (2005); Grönroos (2009).
5 Webster et al. (2005). 10 Webster, 2005a, p.124.
29

• Diminishing Corporate Marketing function
– Marketing has all but disappeared at corporate level1
– Responsibility for marketing has been given to the SBUs2 but this often
fails because SBU managers lack marketing skills and are driven by
short-termism3.
– Few CEOs have marketing experience4 so Chief Marketing Officers
(CMOs) are appointed to fill the gap left by the corporate marketing
function but often lack the necessary strategic and analytic skills5.
– Marketing is now a cross-functional process6 with a disappearance of
boundaries between marketing and other functions7. This gives rise to
a Marketing paradox:
 “The deeper marketing is embedded within an organization and becomes
the defining theme for shaping competitive strategies, the more likely is
the role of marketing as a distinct function to be diminished”8.
1 Webster (1992) & (2005a); Wilson and Gilligan (2005); Wind (1996). 6 Cravens and Piercy (2009).
2 Kumar (2005); Webster (2005a). 7 Poiesz and van Raaij (2007).
3 Webster (2005b). 8 Day, 1992, p.323.
4 McGovern et al. (2004).
30
5 Webster (2005b).

• Disconnect between marketing and corporate strategies1.
– In fact, “many CEOs believe that marketing is failing at the strategic level
because marketing efforts are not aligned with the strategic goals and
overall strategy of the firm”2.
– “When marketing activities are tightly aligned with corporate strategy,
they drive growth. But in too many companies, marketing is poorly linked
with strategy. Marketing may seem to be performing well according to
standard metrics, like the number of repeat purchases customers make,
but if the company's strategy is to, say, build market share, simply boosting
repeat purchases isn't enough. In many organizations, marketing exists far
from the executive suite and boardroom. Marketing managers are rarely
held accountable for ROI and rarely expected to explain, exactly, how what
they do supports corporate strategy... it's a case of myopia. No one in the
organization sees the relationship between marketing and strategy well
enough to diagnose the problem and begin to fix it. The failure of
marketing strategy is a crisis that requires attention at the highest levels of
the organization-from the corporate board itself”3.
2 Kumar,
2004, p.19. 31
3 McGovern et al., 2004, p.72.

The Challenge of Value Creation
• The challenge for marketing is to ensure it fulfils its promise to
deliver consumers superior value.
– “Today’s marketing challenge is to bridge the widening gap between
brand and customer value which is increasingly generated through
supply chain leadership, networks of relationships, and individualised
customer service”1.
• Difficulties with the concept of value
– The problem with value is that it means different things to different
people, and ultimately it is defined by the customer2.
– The concept is riven with paradoxes e.g. Ryanair – the low-frills, cheap
airline – and Starbucks, which charges £3 for a cup of coffee (which
customers are willing to pay for)2.
– What matters is perceived value – it is this that attracts a customer or
lures him from a competitor3.

1 Maklan and Knox, 1998, p.47.
2 Piercy (2002).
3 Rust and Oliver (1994). 32


• Difficulties in creating value
– Since marketing is ‘dis-integrated’ or ‘centrifuged out’ to various parts
of the organisation, it is without a ‘centre of excellence’ so companies
find it hard to create value and deliver it to customers1.
– Difficult to create value in increasingly crowded markets, with the
impact of the internet, and with increasingly sophisticated customer
databases each ‘competing’ against the other2.
– Brands can only now compete either on price or by consistently adding
value. This is increasingly hard as brands exhaust ways of doing this
e.g. 24hr delivery is no longer a competitive advantage3.
– “Added value, as the core concept of marketing, is gradually but
definitely becoming an illusion”4.

1 Webster et al. (2005).
2 Poiesz and van Raaij (2007).
4 Poiesz and van Raaij, 2007, p.8. 33

• Difficulties over how Value is created
– Traditionally, value creation occurred during the exchange of goods or
services with the customer1.
– The term ‘delivering value to customers’ is no longer accurate2 and
firms cannot continue to rely on extracting costs from value chain
activities – efficiency savings − as their main source of value creation3.
– Scholars now suggest that this ‘value-in-exchange’ concept has been
superseded by one of ‘value-in-use’4.
– There is no ready-made value embedded in products − value is created
in the use of the product by the customer and not during exchange5.
– The proposal therefore is that the consumer is now the co-producer
(co-creator) of value6.

1 Kotler(1972); Hunt (1976). 5 Grönroos (2008); Payne et al. (2008).
2 Grönroos (2009). 6 Vargo and Lusch (2004).
3 Prahalad and Ramaswamy (2004b).
4 Gummesson (2002); Vandermerwe (1996);

Woodruff and Gardial (1996). 34


• The need for Innovation
– Product innovation is key to long-term profitability1 , however, long-
term growth requires continual breakthroughs in all areas, not just
product development2.
– Successful innovation is a major business challenge and can be
categorised by how novel it is, and the extent to which customer value
is created3.
• The stifling of Innovation
– Instead of innovating, firms compete head-to-head for a greater
market share but this is the road to long-term decline4.
– Organisational transformation agendas include “downsizing, overhead
reduction… portfolio rationalisation” – anything but innovation5.
1 Webster et al. (2005).
2 Piercy(2002).
3 Cravens and Piercy (2009).
4 Mauborgne and Kim (1999).
5 Hamel and Prahalad, 1994, p.124. 35

• The stifling of Innovation (cont.)
– The ‘innovation spiral’, whereby a downward spiral exists because of
the pressure to innovate, high innovation frequency and shorter
innovation duration e.g. laptop market1.
– Innovation is intrinsic to marketing but real innovation that abandons
the ‘rule-book’ is rare2.
– Increasing lack of creativity in advertising3.
– 6 obstacles to innovation include: lack of resources, a short-term
focus, a lack of a systematic innovation process, it’s judged too ‘risky’,
that financial targets deter it, and that “we punish innovation failure
but don’t reward innovation success’’4.
– An organisation must harness the creativity of all its people –
innovation should not just be the preserve of the R&D department5.
2 Piercy(2002).
3 Sasser (2008).
4 Loewe and Dominiquini, 2006, p.24.
5 Loewe and Dominiquini (2006) .
36

Rise of the New Consumer
• Characteristics of the New Consumer
– The ultimate aim of marketing is to change behaviour1 but marketers
are finding it increasingly hard to do this2.
– The new consumer has changed: He/she is more demanding, more
discriminating, less loyal, and more willing to complain3. Additionally
they are ‘time-starved’ and low on attention and trust4.
– Modern consumers are involved, independent, better informed and
more critical5.
– They are existential6 and strive for self-actualisation as they seek to
close the gap between their real and ideal selves7.
– They are “smart” and demand “openness and transparency”8.
– This media-, advertising-, brand- and technology-literate consumer
presents one of the biggest challenges facing marketers9.
1 Brennan et al. (2008). 6 Christopher (1989).
2 Poiesz and van Raaij (2007); Wilson and Gilligan (2005). 7 Burnett and Hutton (2007).
3 Wilson and Gilligan (2005). 8 Piercy, 2002, p.58.
4 Lewis and Bridger (2000). 9 Wilson and Gilligan (2005).
5 Capon and Hulbert (2000); Lewis and Bridger (2000).
37

Problems with the Consumer Buying Decision-Making Process
The dominant theory amongst academics for how and why consumers buy is
a five-step process:
1. Problem definition A stimulus from the internal or external environment causes a
need to develop in the consumer.

Information is collected in order to satisfy the need.
2. Information search
Problem
exists here Process of problem-solving – criteria for comparing products
3. Evaluation of alternatives is established.

4. Purchase A product or service is selected.

Consumption of product followed by
5. Post-purchase evaluation evaluation to check if need has been met.

Source: Author’s own based on Dibb et al. (2006); Wilson and
Gilligan (2005); Constantinides (2004), Cravens and Piercy (2009).

38

The Communications Spiral
• However a problem exists in stages 1-3 above – a downward communications
spiral1 exists caused by competitive pressures between brands which force
them to increase message frequency, thereby increasing clutter2.
• There is a “feeling of overwhelming mass media spam”3.
Increased number of
communication
attempts

Stronger urge to Information
communicate overload for
consumers

Decreased impact of
average message
1 Poiesz
2 Rotfeld
and van Raaij (2007).
(2006); Keller (2009).
The Communications Spiral
3 Rotfeld, 2006, p.181.
39

• The marketing funnel metaphor demonstrates the problem:

Source: Li and Bernoff, 2007, p.101.

– Brands end up ‘shouting’ at consumers to gain their attention and engage in
‘interruption marketing’1.
– There is too much advertising from competing brands, as well as conversations
occurring between consumers via social media within the funnel2. A battle of
wills occurs, with consumers trying to avoid commercials whilst marketers are
continually thinking up ways of slipping past consumer defences3.
– But marketers persist with the funnel because they can still measure the
effectiveness of their campaigns via trusted methods4.
1 Godin (1999).
2 Liand Bernoff (2008).
3 Weber (2009).
40
4 Haven et al. (2007).

The Rise of the New Consumer

• The transparency of the market − that the internet promised
to bring by enabling brands and products to be compared
easily1 – is lost2. Due to the overload, consumers cannot make
rational choices.
– Organisations are guilty of ‘overmarketing’3.
– “Marketing has become its own competitor”4.
– In reality, “the marketing funnel is a broken metaphor that
overlooks the complexity social media introduces into the
buying process”5.

1 Kapferer (2001); Sinha (2000).
3 Author.
4 Poiesz and van Raaij, 2007, p.8.
5 Haven et al., 2007, p.1.
41

The Limitations of Relationship Marketing
• As revealed earlier, relationship marketing is no longer considered
the current paradigm. However, this does NOT mean brands do not
want relationships with their customers since its role remains to
help build a competitive advantage1.
• The benefits of (e)CRM*2 include no acquisition costs, limited need
to incentivise, less price-sensitivity of customers, more referrals and
increased spend per relationship3.
• But there have been high failure rates of CRM systems4 and the
dot.com crash in the early 2000s was caused largely by the failure
of the firms to build relationships and thus gain repeat business5.
• Additionally, high customer churn rates of 10-30% remain, in spite
of CRM6.
* In the academic community, the terms ‘relationship marketing’ and ‘CRM’ are used interchangeably.

1 Harker and Egan (2006). 4 Fosset al. (2008).
2 Parvatiyar and Sheth (2001). 5 Chaffey et al. (2009).
3 Chaffey et al. (2009). 6 Brennan et al. (2008). 42

The Limitations of Relationship Marketing
• And whilst CRM involves sophisticated data storing and
mining techniques, from the consumers’ perspective it is still a
crude tool involving “aggressive email, phone and internet
promotions. With or without their permission”1.
• It is also suggested that the relationship between loyalty and
profit is much weaker than is realised, and existing claims
about loyalty, such as that it costs less to serve a loyal
customer, are being challenged2.
• Some question not just the return that companies get for
investing in CRM, but whether it actually works! It should not
be CRM but CMR, the customer management of relationships
where the customer dictates the relationship3.
1 Urban, 2004, p.79.
2 Kumar and Reinartz (2002).
3 Newall (2003).

43

Questioning of the Marketing Mix

Three problematic areas of the Mix1
1. Lack of customer orientation
– The Mix’s origins lie in the era of mass marketing which did not
accommodate the needs of the consumer.
2. The Mix lacks the ability for personalisation
– Mass customisation/ mass individualisation is desired by the consumer.
3. Lack of strategic content
– This renders it deficient as a framework for marketing planning in an
environment where strategic opportunities and threats are defined by
uncontrollable and external factors.
• As a result, the Mix’s ability to give a brand the differentiation it
requires to offer value to the consumer and competitive advantage
is in doubt2.
1 Constantinides (2006).
2 Wilson and Gilligan (2005); Poiesz and van Raaij (2007). 44

The menace of the Marketing Spiral
• It is suggested that the 4Ps
are each operating as four,
Innovation spiral Communication spiral
downward spirals creating a
marketing spiral1.
• Since each spiral is
downward, the output of the
mix is an increasingly
undifferentiated, Price spiral Distribution spiral
commoditised product or
service2, effectively
‘Walmartisation’3. The Marketing Spiral
1 Poieszand van Raaij (2007).
2 Roberts and Alpert (2010).
3 Prahalad and Ramaswamy (2004a).

45


• Tactical marketing is subject to the spirals – what is required
to escape the marketing spiral is strategic innovation1.
• “There is an urgent need for a reconsideration of the
marketing paradigm. Marketing needs a new strategy”2.
• The mix should “not be considered as the foundation of
Consumer Marketing management any longer”3.
• The model’s rigid decision making attributes have become a
“straitjacket (sic) for the development of marketing theory
and practice”4.

1 Poieszand van Raaij (2007).
2 Poieszand van Raaij, 2007, p.40.
3 Constantinides, 2006, p.413.
4 Grönroos, 2009, p.352.

46

The Challenge for Branding
Introduction to Branding
• Because the Mix has reduced ability to contribute to a competitive
advantage, marketers have switched attention to the Brand to seek
differentiation1. Branding is now a priority2.
• Growing brand equity creates value for the organisation3, however
this is made difficult because often the marketing function is
distanced from top management4.
• Branding must be a key part of any marketing strategy because
“branding is strategy”5.
• Brands have a strategic role and can influence the corporate
direction, indeed survival, of organisations6.
• But the paradox is that brands are in decline so marketers face a
major challenge.
1 Wilson and Gilligan (2005). 5 Piercy, 2002, p.471.
2 Aaker and Joachimsthaler (2000); Kapferer (2005). 6 Cravens and Piercy (2009).
3 Aaker (1992).
47

The Challenge of Branding
The Rising Importance of Brand Equity
• Definitions of Brand Equity:
– “The differential effect that consumer knowledge about a brand has on their
response to marketing for that brand”1.
– “The value of a brand as a signal to consumers”2.
• Brand equity, if measured, is a better way of providing an
understanding of short and long-term performance than traditional
financial methods3.
• Consumer-based brand equity (CBBE) is an intangible asset that can
offer a sustainable advantage4, and differentiation is the “anchor of a
brand’s equity”5.
• So scholars are building brand equity models that link brand
development, marketing activities and the resulting customer response
to long-term shareholder value6.
• Thus the building of brand equity is now a key objective for marketers7.
1 Keller,2003, p.60. 5 Thomas and Kohl, 2009, p.9.
2 Erdem and Swait, 1998, p.140. 6 Webster et al. (2005).
3 Christodoulides and de Chernatony (2010). 7 Webster et al. (2005).
4 Christodoulides and de Chernatony (2010). 48

The Challenge of Branding
Brands and Value
• Brand equity creates value for the organisation in 6 ways1.
1. Enhances the efficiency and effectiveness of marketing.
2. Strengthens brand loyalty.
3. Enables higher margins via premium pricing.
4. Provides a platform for brand extensions.
5. Offers leverage in the distribution channel.
6. Creates a barrier to stop customers switching.
• Brands offer value to consumers by2:
– Assisting in identifying and interpreting products.
– Giving confidence and saving time in the purchase decision.
– Offering a psychological comfort via brand association.
• But the traditional (offline) branding model, whereby customers are
passive recipients of value, is not represented online. Here customers are
“active co-producers of value” via social media and thus they also add
value to the brand3.
1 Aaker(1992).
2 Dibbet al. (2006); Cravens and Piercy (2009); Aaker (1992).
3 De Chernatony, 2001, p.191. 49

Branding and Strategy
• “Brands can transform markets, and change competitive structures”
because of their effect on consumer perceptions, e.g. Virgin Direct
and The Sainsbury Bank which were able to grab market share in the
banking sector quickly by leveraging the strength of their brands1.
• Companies are increasingly looking to revitalize dying or dead brands
as a strategy because of the high costs of launching new brands e.g.
Puma and Ovaltine’s revival2.
• “Traditional brand engineering no longer works” and value for
customers is increasingly being created by business processes
outside the auspices of brand managers3.
• However, at the same time, forces are working against the brand...

1 Piercy, 2002, p.471.
2 Thomas and Kohl (2009).
3 Maklan and Knox, 1997, p.120.
50

Reasons for Brand decline
• Weakening of brands
– Brand loyalty has seen a decline, notably in retailing, as a result of
discounting and promotion wars1.
– Impact from competition2.
– Brand switching by ‘new’ consumers who are less loyal3.
– ‘Category killers’* such as Ikea and Toys ‘R’ Us have forced prices down,
de-valuing brands and undermining company brand-based strategies4.
• Internal forces
– Incorrect managerial strategic and tactical actions e.g. raising prices with
no increase in benefits5.
– Day-to-day pressures distracting managers from brand management6.
– Funds being taken away from brand equity-building initiatives in favour of
those which offer immediate results, such as retail promotions7.
* A ‘category killer’ is a ‘destination store’ which consumers visit with the sole intention of purchasing items in one product category which are offered at
low prices. Examples are large discount toy chains, sporting goods chains, and office supply chains.
1 Dibb et al. (2006). 5 Thomas and Kohl (2009).
2 Thomas and Kohl (2009); Piercy (2002); Sinha (2000). 6 Aaker(1996).
3 Lodes and Buff (2009). 7 Webster et al. (2005).
51
4 Piercy (2002).

Reasons for Brand decline (cont.)
• Erosion of trust
– Via brand extensions1.
– Via marketers’ actions, such as audience manipulation and offensive
products 2.
– Via charging premiums for undifferentiated products3.
• Loss of control
– Marketers are ceding much control of brands to consumers4, and brand
communities and social networks now lay claim to ownership of brands
and they influence the brand choices of consumers as well as company
decisions5.
– Branding strategies have been turned upside down – branding now occurs
via consumer actions within social media and “post-internet branding is
about facilitating conversations around the brand”6.
1 Loken and John (1993); Gürhan-Canli and Maheswaran 4 Sawhney et al. (2005); Muniz and O’Guinn (2001).
(1998); John et al. (1998). 5 Christodoulides (2008).
2 Rotfeld (1998). 6 Christodoulides, 2009, p.142.
3 Sinha (2000).
52

Progress check...
About this document
Literature Review
Social Web
Social Web

of Marketing
of Engagement

Effectiveness & Efficiency The Challenge of
&& Strategy

Creating Value with
of Strategies
Social Media
of Innovation
Gaining Competitive
Marketing Paradigm
The Strategic Nature of The Challenge for Branding
The Challenge YOU ARE Brand-building via
Brand-building via
Social Media
Social Media for Branding HERE Social Media
Social Media
Marketing’s
Mid-life Crisis
ofof Marketing
Marketing

53


The Marketing Concept under pressure
• Academia began questioning the whole concept of marketing in
the 1990s.
– Suggestions arose that it lacks strategic intent1 and thus cannot add value2.
For this to happen, marketing must become a “strategic activity rather
than a supporting activity”3.
– The concept is unclear as to how the organisation should compete, how to
align its capabilities, and in understanding the customer4.
– “Something is amiss, that the (marketing) concept is deeply, perhaps
irredeemably, flawed… and… is… on the brink of serious intellectual crisis”5.
– However, it is also suggested that the problem in the past has lain with
marketing managers who have not understood marketing as a concept6.
1 Varadarajan and Jayachandran (1999); Wilson and 5 Brown, S., 1995, p.42.
Gilligan (2005). 6 Hooley and Saunders (1993)
3 Poiesz and van Raaij, 2007, p.47.
4 Varadarajan and Jayachandran (1999) . 54

Lack of Market-orientation in Organisations
• Many firms just pay lip-service to customer-orientation1 and in fact are
product-oriented2. This is the “customer conundrum”3 – they can only find
customers by slashing prices4.
• To become more customer-focused, corporate marketing can help build
capabilities5, but this function is disappearing! And anyway, instead of
trying to influence customer behaviour, brand managers need to “go back
to basics and seek to better align their marketing with people’s needs”6.
• Two types of organisation7:
– Left-handed ones are financially-driven and look to grow profits by cutting areas
such as costs, or trimming the marketing mix.
– Right-handed ones are market-driven whose main focus is satisfying the customer.
• “There are now two types of corporation: those with a marketing
department and those with a marketing soul”8. The latter are the top
performing companies.
1 Webster (2005b) . 5 Kumar (2004).
2 Poiesz and van Raaij (2007). 6 Christodoulides, 2008, p.292.
3 Piercy, 2002, p.18. 7 Doyle (1994).
4 Doyle (2008). 8 Brown, A. (1995), cited in Piercy, 2002, p.6.
55

What the Academics and Practitioners say
• Marketing has reached a “mid-life crisis”1, is “broken”2, is “dead in the
water”3, is “suffocating under its own weight”4, “appears to be in decline”5, is
“no longer delivering”6, “no longer seems to make sense”7, and should be
given “the dignified burial it deserves”8.
• Twin paradoxes: “Consumers have more choices that yield less satisfaction.
Top management has more strategic options that yield less value”9.
• Marketing is becoming less successful at its purpose – to synchronise supply
and demand. Consumers buy products they do not need, or cannot use
because they do not understand them10.
• Paradox: “Marketing is becoming more important, but less visible”11.
• “Customers evolved, but did marketing?”12.
• “There doesn’t seem to be any time for marketers these days to actually do
any marketing”13.
1 Wilson and Gilligan, 2005, p.22. 8 Holbrook and Hulbert (2002) , cited in Egan, 2008, p.14.
2 Lovatt (2010). 9 Prahalad and Ramaswamy, 2004a, p.4.
3 Piercy, 2002, p.6. 10 Poiesz and van Raaij (2007).
4 Poiesz and van Raaij, 2007, p.10. 11 Poiesz and van Raaij, 2007, p.48.
5 Wind, 1996, p.6. 12 Meadows-Klue, 2008, p.245.
6 Wilson and Gilligan, 2005, p.33. 13 Lee (1997) cited in Piercy, 2002, p.288. 56
7 Poiesz and van Raaij, 2007, p.39. Return to Contents page >

What the Academics say (cont.)
• Marketing’s core problem: “Products and services are facing commoditisation
as never before… if consumers do not see any differentiation they buy smart
and cheap”1.
• Many CEOs of major companies are frustrated at marketing’s inability to
produce measurable results2.
• Some warn against those who believe that social media offers a panacea for
marketing, by suggesting it is a cause of some of its problems3.
• A.G. Lafley, CEO of Proctor & Gamble, told his executives: “We need to
reinvent the way we market to consumers. We need a new model”4.
• “Somewhere along the journey of marketing, the skill to listen has weakened
and the art of engagement lost in favour of ever grander and louder
messaging techniques... doing little to create true dialogue with the
customers”5.
1 Prahalad and Ramaswamy, 2004b, p.7. 4 Weber 2009, p.11.
2 Kumar (2004). 5 Meadows-Klue, 2008, p.245-246.
3 Sasser (2008).
57

Conclusion to the Decline of Marketing
As a result of this analysis of the state of marketing, the Author
believes marketing and the organisation face the following nine
challenges:
• Challenge 1: There is no agreement on the current marketing paradigm.
Until this is agreed, marketing thinking will remain diverged, pulling
thinkers and practitioners alike in different directions.
• Challenge 2: There has been a loss of ascendancy of marketing in
organisations and marketing as a corporate function has all but
disappeared. Since this is so, marketing competence must somehow be
dispersed across the organisation in order for marketing to ‘regain its seat
at the table’.
• Challenge 3: Organisations should pursue value-driven marketing
strategies but marketers are finding it extremely hard to create value for
customers, when there is difficulty over the concept of value itself, and
when there is no marketing ‘centre of excellence’ in many organisations.

58

• Challenge 4: Innovation is key to creating and adding value but there is an
innovation spiral, and if organisations are not geared to innovate, how can
organisations create value, differentiate and compete?
• Challenge 5: Traditional marketing techniques do not work well on the
new consumer, compounded by conditions of the marketing funnel due to
fragmented media, intense competition, and consumers having
conversations with each other. Firms must regain the ability to influence
the consumer.
• Challenge 6: Questions exist about relationship marketing and its ability to
deliver its promise. With consumers increasingly in charge of the
relationship, how can firms re-connect with their customers?

59

• Challenge 7: The marketing mix is captive to a marketing spiral which
produces a commoditised offering, thereby frustrating the brand from
creating value and differentiating. A new paradigm needs to be developed
which enables the creation of competitive advantage.
• Challenge 8: Branding, whilst experiencing some difficulties, offers
marketers a way of creating a differentiated product and thus gain a
competitive advantage. How can brand equity be built in this new era of
marketing?
• Challenge 9: Marketing is in a mid-life crisis. Academia is questioning the
whole marketing concept. Many firms that claim to be customer-led are in
fact product-led. Organisations must therefore re-align with the customer.
The next section, ‘The Promise of Social Media’ is intended to show
how social media might assist in meeting these challenges.

60

The Promise of the Social Web

This section seeks to show to what extent Social Media can
address the challenges to Marketing set in the previous section.

61

The Promise of the Social Web
As a result of the challenges identified for marketing earlier, the
following questions arise relating to social media:
A. Can social media enable brands to re-connect with their customers?
B. Can social media enable organisations to influence buyer behaviour once
again?
C. Can social media bring about change in organisations and make them
market-oriented?
D. Do social media enable organisations to create and deliver value for
customers and organisations?
E. Can social media help organisations to innovate?
F. Can social media offer a competitive advantage to organisations?
G. Can social media restore trust in brands and build brand equity?
H. Can social media provide a fix to the marketing mix which, it is claimed,
does not work anymore?

62

Restoring the lost art of Engagement
A: Can social media enable brands to re-connect with their customers?

Background to Customer Engagement
• Increasingly, CEOs and CMOs recognise “that long-term, sustainable
competitive advantage is tied to a firm’s ability to retain, sustain, and
nurture its customer base”1.
• Companies need to encourage interactions with consumers to build
two-way relationships because customers contribute value to firms in
many ways in addition to transactions e.g. WOM, new ideas for
products, mutual support2.
• These non-transactional Customer Engagement Behaviours (CEBs)3
involve consumers forming emotional bonds with brands, and inherent
in this are feelings of “confidence, integrity, pride, and passion”4.
• Not full consensus – for some, engagement is “marketing’s new key
metric”5 but for others it is a ‘management fad’6.
1 Anderson et al. (2004); Gruca and Rego (2005); Rego et 4 McEwen (2004), cited in Bowden, 2009, p.64-65.
al. (2009), all cited in Van Doorn et al., 2010, p.253. 5 Haven et al., 2007, p.1.
2 Kumar et al. (2010). 6 Saks (2006).
3 Van Doorn et al. (2010).
63

Understanding Customer Engagement
• As a concept, customer engagement is hard to lock down. There is
no accepted definition of it1:
– The “long-term ability of a brand to gain a customer’s attention on an
ongoing basis”2.
– “The creation of a deeper, more meaningful connection between the
company and the customer, and one that endures over time”3.
– “The level of involvement, interaction, intimacy and influence an individual
has with a brand over time”4.
– It is also described as being a stage beyond the measurement terms of
‘reach’ and ‘frequency’ and is likened to how far down the marketing
funnel the consumer has travelled5.
• Companies should see engagement as a holistic and reliable process
that enables mapping of the constructs such as satisfaction,
commitment, trust and loyalty – which are all difficult to measure6.
1 Tuten Ryan (2007).
2 Chaffey et al. , 2009, p.340.
3 EIU, 2007, p.2, cited in Kumar et al. (2010).
4 Haven et al., 2007, p.4.
6 Bowden (2009). 64

Drivers for Customer Engagement
• Firms are increasingly pursuing strategies that promote non-transactional
behaviour because they recognise the value of customer engagement1.
• Engaged customers contribute to brand reputation and recognition via
online communities, and can be a crucial source of knowledge and thus
co-creation2.
• Consumers have a greater propensity to communicate via both WOM and
social media when they are engaged with a brand or idea3.
• The power of WOM marketing is compelling: “Engaged customers drive
word-of-mouth marketing that is ten times more effective at resonating
with a target audience than television or print advertising”4.
• The world’s most valuable brands are finding that there is a correlation
between the depth of engagement and their financial performance5.
• However, building a customer-engaged organisation is one of the biggest
challenges facing marketers6 with one report stating that 27% do not have
a customer engagement strategy7.
1 Verhoef et al. (2010). 5 Engagementdb (2009).
2 Van Doorn et al. (2010). 6 Cravens and Piercy (2009).
3 Mangold and Faulds (2009). 7 Forbes Insights (2010).
4 Kirby (2006), cited in Roberts and Alpert, 2010, p.198.
65

The Key to creating Engaged Customers
• It is argued that the ‘typical’ marketing approach using “creative mass
advertising” and “ensuring customers are ‘satisfied’” is not enough to create
engaged customers because of various external and internal challenges.
• Four elements that must be aligned to create engaged customers:2
o Customer value proposition
o Customer experience
o Brand
o Internal culture
• Research reveals that the simple act of completing a customer satisfaction
survey engages the consumer more deeply with a firm3.
• It follows that social media such as blogs, user-generated content, forums,
aggregators, communities, and social networks are tools by which consumers
engage with organisations and vice-versa4.
• “Engagement is all about content”5 which is “no longer something you push
out. Content is an invitation to engage with your brand”6.
1 Roberts and Alpert, 2010, p.199. 4 Verhoef et al. (2010).
2 Roberts and Alpert (2010). 5 Weber, 2009, p.76.
3 Borle et al. (2007). 6 Elliott (2006).
66

Examples of Engagement via Social Media
• Southwest Airlines in the USA revised its Nuts About Southwest blog with
podcasts, videos and other social media. As a result, visits to the blog rose
by 25%, page views increased by 40% and visitors to the company’s
website stayed 26% longer1.
• In 2009 Burger King developed a ‘Whopper Sacrifice’ Facebook application
whereby members were asked to ‘unfriend’ 10 Facebook friends in return
for a free burger. This initiative resulted in the unfriending of 234,000
friends who received alerts informing them they had been sacrificed for a
Whopper. This campaign was enormously successful in engaging
consumers and gaining notable WOM2.
• The $30,000 GillettePhenom online contest, in which consumers had to
create a short video demonstrating their skill in a ball sport. They then
submitted videos to their own YouTube accounts and the top 25 videos
were then voted on by website viewers to determine the winner3.
3 Mangold and Faulds (2009).
67

Measuring Engagement
• The two biggest challenges for social are ROI and measurement1.
• Four components for measuring Customer Engagement Value (CEV):2
o Customer lifetime value (CLV)
o Customer referral value (CRV)
o Customer influencer value (CIV)
o Customer knowledge value (CKV)
• The Net Promoter Score (NPS) measures how ‘energised’ a consumer
is e.g. how likely he will promote a product3. However, the NPS can be
inaccurate and misleading4.
• ‘Buzz’ & sentiment can be measured via 36 different listening tools5*,
examples being Nielsen’s Buzzmetrics or TNS’ Cymfony6§.
• In a cScape survey, 44% of firms revealed that social networks helped
increase their online customer engagement7.
* Or ‘snorkelling tools’ (Weber, 2009). § Nielsen BuzzMetrics monitors 30m blogs each producing 500,000 to 1m posts a day (Gillin, 2009).
1 IAB (2010). 5 Chaffey et al. (2009).
2 Kumar et al. (2010). 6 Li and Bernoff (2008); Weber (2009).
3 Reichheld (2006). 7 cScape (2010).
4 Kumar et al. (2007), and Keiningham et
68
al. (2007), cited in Chaffey et al. (2009). Return to Contents page >

Influencing Buyer Behaviour via Social Media
B: Can social media enable organisations to influence buyer behaviour once again?

• It was shown earlier that the more marketing tries to reach
consumers, the more extreme their evasive behaviour
becomes1.
• But the need to be able to target consumers on the basis of
their behaviour is an ever-present objective for marketers
since people who have similar views will respond in similar
ways to any given marketing mix.
• It is therefore argued that a more psychological approach to
marketing is required2.

2 Brennan et al. (2008); Poiesz and van Raaij (2007).

69

How Social Media influence the Buying Process

• As a result of the
conversations that
consumers hold with
each other, the existing
buying process, already
complicated by the
existence of the web, is
made more complex.
• Social media play a
“massive part in
influencing consumer
behaviour”1.

Source: Constantinides and Fountain, 2008, p.240.

1 Strategic Direction , 2010, p.6. 70


Segmenting the Social Web to find Brand Champions
• The key is therefore finding those who
can champion and influence the brand
for the organisation.
• Some academics see parallels
between the traditional model of
relationship marketing and the social
web – loyalty of consumers can be
earned by organisations that engage
with them correctly1.
• Thus participants in social networks
can be advanced up this ‘virtual
ladder’2 in the same way customers
climb the traditional ‘ladder of
loyalty’3.
Source: Harridge-March
1 Harridge-March and Quinton (2009). and Quinton, 2009, p.176.
2 Harridge-March and Quinton (2009).
3 Christopher et al. (1991).
71


Segmenting the Social Web to find Brand Champions
The Social Technographics® Profile (STP)1
• Another segmentation model is the Social
Technographics® Profile (STP). Seven
segments of behaviour are identified1.
• The Adult Fans of Lego group (AFOL) are
given by the model’s creators as to how
brands can segment their customers by the
degree of engagement.
• AFOLs are important, being responsible for
5-10% of Lego sales (£50m). The most
influential segment are ‘Creators’ who act
as ambassadors for Lego and carry out
much marketing for Lego via the social web,
saving the company an enormous sum2.
1 Li and Bernoff (2008);
Bernoff (2010).

72

The impact of Social Media on Marketing Strategy

The impact of Social Media on Marketing Strategy

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