This document is a dissertation submitted by Wansiri Supsrisanjai in partial fulfillment of the requirements for a Master of Arts degree from the European Business School London in September 2011. The dissertation examines Facebook as an effective loyalty-building tool in the cosmetic industry. Through quantitative and qualitative research methods including surveys and interviews, the dissertation aims to determine if "liking" a brand's Facebook page can lead to customer loyalty and how Facebook experiences may affect customer behavior. The key findings show that while Facebook offers engagement opportunities, companies are currently unable to leverage these interactions to achieve loyalty. The dissertation provides recommendations for how cosmetic brands can better utilize Facebook to motivate ongoing customer engagement and move customers up the loyalty ladder.
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Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
1. EUROPEAN BUSINESS SCHOOL LONDON
A Critical Analysis of Facebook
as an Effective Loyalty-Building Tool
(A study in Cosmetic Industry)
by
Wansiri Supsrisanjai
Dissertation submitted in partial fulfilment
of the requirements for the degree of
Master of Arts
September 2011
3. ABSTRACT
Increasing customer loyalty, to the company, should be the primary objective in
today‘s increasingly competitive business environment. Every company relies mainly
on its fixed customers and endeavours to increase the number of such clients as
many researches confirm that loyal customers will generate lucrative returns. With
the help of advanced technology and the internet, customer relationship
management technique is implemented through more diverse media channels;
including the newly popular social networking portal - Facebook.
The paper is aimed to examine the performance of Facebook as an effective
relationship strengthening tool to create brand loyalty among target audiences in
cosmetic industry. Like other businesses, beauty brands have started to create the
online presence on Facebook with the purpose of reaching out for amassing
numbers of potential customers and tightening a relationship with their fan base. To
provide answers to the prime research question, the research is carefully planned
and various data collection methods are employed to obtain relevant information.
This research project combines quantitative (questionnaire survey) and qualitative
(interview) methods to retrieve reliable outcomes.
The findings have shown interesting results. Facebook‘s unique features offer both
simplicity and flexibility to connect and communicate with their audiences and can
obviously be another good relationship building tool, yet companies are not able to
manage to reach their ultimate goal; the loyalty. One key problem highlighted here is
I
4. that what companies currently offer to their targets is irrelevant to their preference,
thus they fail to keep ongoing engagement with their fans.
Based on research conducted, it is imperative for companies to set a clear objective
before implementing any marketing campaigns on Facebook so as to ensure the
content relevance for their target audiences. Continuous interaction between fans
and brands is vital but it is important not to bombard fans with unnecessary
information.
II
5. ACKNOWLEDGEMENTS
This dissertation would not have been possible without the guidance and the help of
several individuals who in one way or another contributed and extended their
valuable assistance in the preparation and completion of this study.
First and foremost, my utmost gratitude goes to Mr. Richard Mannix, my supervisor,
whose encouragement, patience, guidance and support from the preliminary to the
final level enabled me to develop an understanding of the subject and to successfully
carry out this project.
Also, I am truly indebted and thankful for Khun Nunthawan Laosinchai, who
sacrificed her precious time giving me the opportunity to conduct interview and
provide me a valuable richness of information. Moreover, it is a pleasure to thank all
my friends and those who took part and completed the survey. Without this kind
cooperation and support, this project could not have been conducted successfully.
Lastly and most importantly, I would like to thank my father and my mother for their
faith in me, allowing me to be as ambitious as I wanted and always encouraging me
with their best wishes.
III
6. TABLE OF CONTENTS
1) INTRODUCTION .................................................................................................. 1
1.1) Background ................................................................................................... 1
1.2) Research Objectives...................................................................................... 2
1.3) Research Justifications .................................................................................. 4
1.4) Dissertation Structure .................................................................................... 4
2) LITERATURE REVIEW ........................................................................................ 7
2.1) Customer Relationship Management ............................................................ 8
2.2) Customer Loyalty : Behaviour or Attitude ?................................................. 13
2.3) The Loyalty Ladder ..................................................................................... 18
2.4) Facebook and Customer Relationship Management .................................. 21
2.5) Summary .................................................................................................... 26
3) RESEARCH METHODOLOGY .......................................................................... 28
3.1) Research Philosophy .................................................................................. 28
3.2) Research Approach .................................................................................... 30
3.3) Time Horizons ............................................................................................. 32
3.4) Data Collection ........................................................................................... 32
3.4.1) Primary Data ................................................................................... 34
3.4.2) Secondary Data ............................................................................... 39
3.5) Samplings ................................................................................................... 39
IV
7. 3.6) Limitations and Constraints......................................................................... 41
3.7) Summary .................................................................................................... 42
4) ANALYSIS AND FINDINGS ............................................................................... 43
4.1) The Role of Facebook in Cosmetic Industry ............................................... 44
4.2) Is ‗Like‘ the Beginning of Brand Loyalty ? ................................................... 49
4.3) Could Facebook help turning ‗Like‘ to ‗Love‘ ? ............................................ 53
4.4) What are the Key Elements to Ensure Success ? ...................................... 63
4.5) Summary .................................................................................................... 68
5) CONCLUSION .................................................................................................... 70
6) RECOMMENDATIONS....................................................................................... 73
7) BIBLIOGRAPHY ................................................................................................ 78
8) APPENDICES ..................................................................................................... 88
Appendix 1 - Survey questionnaire (Section 1) ................................................... 88
Appendix 2 - Survey questionnaire (Section 2) ................................................... 89
Appendix 3 - Survey questionnaire (Section 3) ................................................... 90
Appendix 4 - Motivations for ‗Liking‘ a brand on Facebook ................................. 94
Appendix 5 - The Net Promoter Score (NPS) Measurement............................... 95
Appendix 6 - Behaviour of customers after following a brand ............................. 96
Appendix 7 - Frequency of Facebook log-ons by users ...................................... 97
Appendix 8 - Frequency of fan page visits by fans .............................................. 98
V
8. LIST OF FIGURES
Figure 1.0 The evolution of social customer relationship management ................. 12
Figure 2.0 The loyalty ladder ................................................................................. 19
Figure 3.0 Social networking users by generation ................................................. 22
Figure 4.0 MAC Cosmetics Facebook fan page .................................................... 45
Figure 5.0 Example of different cosmetic brands‘ fan page on Facebook ............. 46
Figure 6.0 Number of brands that people follow on Facebook .............................. 50
Figure 7.0 Motivations for ‗Liking‘ a brand‘s fan page on Facebook ...................... 51
Figure 8.0 The influence of online experience on purchasing behaviour ............... 54
Figure 9.0 A likely change of customer behaviour after having
a satisfactory online experience (using the NPS measurement) .......... 56
Figure 10.0 People‘s attitudes towards cosmetic brands‘ Facebook marketing ...... 60
Figure 11.0 Popularity of each activity on cosmetic brands‘ fan page ..................... 64
Figure 12.0 Example of a cosmetic brand‘s fan page advertisement ...................... 66
VI
10. 1) INTRODUCTION
This chapter will give a brief introduction, outline the main research objectives and
states the purpose of the study as well as how the paper will be structured.
1.1) Background
Facebook is a social networking website. It allows users to create profiles, connect
with friends, send messages, share photos/contents, play games, etc. Organizations
as well as individuals can have a presence in Facebook by creating pages. A profile
and a page are designed to meet different Facebook needs. Facebook page have
been optimised for a business‘ need to share information, interact with their fans, and
capture new audiences (Facebook Help Center, 2011).
To better comprehend the research topic and analysis, it is crucial for readers to
understand the following terms. The author has listed the most important terms
below.
‘Like’ or the ‘Like’ button [ ] - is a way for Facebook users to give positive
feedback and connect with things they care about.
Facebook page, or so called ‘fan page’ - is a public profile that enables
companies/brands to share their business and products with Facebook users.
1
11. Over the past few years, the phenomenal growth in such a social network site has
attracted the attention of companies to tap into these potential benefits. Many
businesses have created their fan pages and added Facebook ‗Like‘ widget to both
on their Facebook pages and other websites outside of Facebook in hope to make
connections with enthusiasts on this social media platform and that the companies
have the ability to publish updates to the users. Additionally, the ‗Like‘ button not only
enables users to connect to a fan page but also share content back to their friends as
a link of the fan page or website will appear in the user‘s friend‘s news feed and it
shows that their friends have already ‗liked‘ it (Trusov et al., 2009).
With the prominent features of Facebook are to stay in touch and share experiences
with people you know, it is quickly becoming the new marketing tool for digital
marketers for the purpose of developing a closer relationship with their customers.
For this reason, the author has come up with a question to challenge the idea of how
effective the strategic use of Facebook can establish deeper customer relationships.
1.2) Research Objectives
Following the discussion in the previous section, the central research question for
this dissertation has been formed below;
Can and how might Facebook be used to nurture brand loyalty?
The aim of the research presented in this dissertation is to investigate and evaluate
the effectiveness of the world‘s most-visited social networking portal ‗Facebook‘,
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12. serving as another supportive relationship building tool to create a brand loyalty
among target audiences. This paper will limit its focus on cosmetic industry and look
at how likely it is that Facebook can be used to optimize the stated marketing
purpose.
So as to direct the author to tackle the main research question posed above, the
following set of issues has been automatically addressed below;
What does ‘Like’ mean to business?
To acknowledge the business implications of ‘Like‘ marketing for companies in
the focused industry.
Is ‘Like’ the beginning of brand loyalty?
To find out real motivations behind the ‗Like‘ activity so as to determine a level
of accomplishment.
What are customers’ attitudes towards Facebook marketing campaigns?
To discover how customers feel and think about current marketing campaigns
on a brand‘s fan page.
How does Facebook experience affect customer behaviour?
To observe a likely change of customer behaviour after experiencing and
participating with marketing activities on Facebook.
By carrying out this research, the main research question will be answered and
various key points will be highlighted throughout the research.
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13. 1.3) Research Justifications
This paper aims to provide practical guidance which could be beneficial for
companies regardless of the sizes and sectors; either are using, or will use Facebook
as a medium to communicate with their target customers. Constructive
recommendations will be proposed on what companies should do in order to get the
maximum benefit out of this social media channel.
1.4) Dissertation Structure
In order to facilitate the readers‘ comprehension, this paper will be structured by its
logical flows of arguments. This dissertation is, therefore, divided into 6 chapters as
follows;
Chapter 1 : Introduction
This chapter gives an introduction to the research, identifies research
objectives and research questions as well as the dissertation structure.
Chapter 2 : Literature Review
This chapter draws an overall picture of what the research is all about
and gives an insight into the subject of studies. Firstly, it looks at a
background and an evolution of customer relationship management.
Moreover, major theoretical explanations of the notion of loyalty and
analytical framework; the Loyalty Ladder, are explored. Lastly, various
studies carried out by previous researchers on the subject of Facebook
and its opportunity for marketing is examined.
4
14. Chapter 3 : Research Methodology
This chapter shows how the research was planned and constructed
relating to different research philosophies and research approaches.
The methods employed to obtain both relevant quantitative and
qualitative data are explained. Also, the major limitations and
constraints during the investigation are addressed.
Chapter 4 : Analysis and Findings
This chapter describes all findings and in-depth analyses with an
attempt to answer the prime research question. Various past and
current Facebook marketing campaigns from major beauty brands are
explained here in order to have an overview of the social media
marketing environment in the cosmetic industry. The results of the
survey (quantitative) and the interview (qualitative) are analyzed and
applied to a theoretical framework; the Loyalty Ladder. Additionally, the
comparison is made to present the feasibility and the derivations of
what have been found in the previous studies on the subject of the
performance of Facebook as a relationship building tool. Finally, an
outline of possible implications for companies in light of utilizing this
social networking portal is demonstrated.
Chapter 5 : Conclusion
This chapter provides a brief summary of what have been achieved
from this research. The summary will look back at the beginning of the
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15. research and highlight various important aspects as well as assessing
briefly whether the project aims and objectives have been met.
Chapter 6 : Recommendations
This chapter addresses the possible opportunities for beauty companies
to implement their marketing strategies within this social media
platform. Various key success factors are proposed based on the
undertaken research and findings; including what could motivate and
de-motivate ongoing customer engagement. Also, other interesting
areas that deserve further investigation are highlighted.
6
17. 2) LITERATURE REVIEW
The literature review is a crucial aspect of a research study. It enables the researcher
to look into past studies and get an insight into what has already been done and
allows researchers to build on previous findings and studies. To ensure and facilitate
the reader‘s comprehension about the dissertation topic, this chapter will cover the
following aspects;
● The background and the development of customer relationship
management - Why this strategy has increasingly become one of the most
important elements in modern marketing and how companies implement this
strategy in the digital age.
● The major theoretical explanations of loyalty – To gain an insight into
different types of studies on the concept of loyalty and to find out whether it is
an attitude or a behaviour.
● The Loyalty Ladder – An analytical framework which guides companies to
determine and develop a deeper relationship with customers step-by-step.
● The role of Facebook for customer relationship management – To
examine how Facebook fits itself nicely with customer relationship building
opportunity and identify the problems that marketers are likely to face when
company´s marketing is interfering with the community‘s environment.
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18. 2.1) Customer Relationship Management
Over the past decade or so, it became increasingly difficult to differentiate from
competitors by only serving general product needs (Doole et al, 2005). Some believe
that the growth of internet has made information completely transparent and that has
put customer firmly back in control (Seybold, 2001). Now customers expect individual
attention and companies have shifted their focus to customer orientation (Sharma
and Sheth, 2004).
In this customer-centric environment, all companies are adjusting to a new era of
deeper customer engagement and seeking the new way to provide long-term value
to customers rather than focusing on a day-to-day transaction. Research has proven
that retention with the current customer base delivers highly desirable results; both
by improved turnover and reduced costs, as clearly acquisition costs are usually far
higher than maintenance costs (Chaffey et al, 2009).
In recent years, the main focus has been moved away from customer acquisition to
customer retention and the need to build up loyalty among these existing customers
(Goodwin and Ball, 2003). To retain current customers, the idea of relationship
marketing should be taken into account. Harker (1999) proposed a definition of
relationship marketing as follows ―An organization engaged in proactively creating,
developing and maintaining committed, interactive and profitable exchanges with
selected customers (partners) overtime.‖ So to speak, relationship marketing is a
strategy designed to foster customer loyalty, interaction and long-term engagement
(Harridge-March and Quinton, 2009). However, to be able to do this, companies
8
19. need to know who its important customers are and what their needs are. This is
where the technique of customer relationship management fits in.
Kotler and Armstrong (2010) believe that customer relationship management is
perhaps the most important element of modern marketing. As defined by Srivastava
et al (1999), ―Customer relationship management (CRM) is a core organizational
process that focuses on establishing, maintaining, and enhancing long-term
associations with customers.‖ To simplify this, Fitzgibbon and White (2004) described
that the fundamental purpose of CRM, however, is to understand customers better
and to effectively build relationship with them.
Essentially, the ultimate goal of an overall process is to increase customer loyalty
(Kincaid, 2003). Mentioned by Chaffey et al (2009) that the benefit of loyal customers
is that they are less price-sensitive (they are satisfied with the value they receive).
From the business point of view, it means that less incentives are required to
maintain customers, which, in turn, directly leads to the positive bottom-line profits.
Moreover, loyal customers tend to recommend the company to others (referrals).
In this digital era, companies are engaging with their customers in more meaningful
ways. With the help of new technology and the advent of internet, it provides a
relationship building opportunities for marketers by incorporating more interactive
approaches that help build two-way communication rather than relying on the
traditional one-way media messages. New tools for socializing include everything
from e-mail, blogs, websites to online communities and social networks (Kotler and
Armstrong, 2010).
9
20. Over the past two years, that evolution has only accelerated. More and more
consumers are spending more time on their PC and smartphones screens rather
than TV screen; using digital video recorders to fast-forward through TV commercials
and consuming video content on Web sites such as YouTube and on mobile devices.
Billboards alongside train lines and bus routes struggle to capture the attention of
people. Shih (2009) suggested that marketers should be aware of where customers
are and choose to communicate with them through their preferred channels. This,
therefore, includes actively taking part in the newly popular social networking avenue
‗Facebook‘; a focused medium of communication for this dissertation.
There is no doubt that social media and social networking have changed the way
people connect and communicate. As these technologies are being adopted by
people of all ages, all over the world, whole new audiences can now easily connect
with anyone through internet access and e-mail address regardless of geographical
boundaries. For business especially, social networking has forever changed the way
they communicate with their customers (Shih, 2009).
The impact of an explosive growth of social networking portals has transferred the
control over customer/company relationship to a firm grip of customer. Through social
networking channels, consumers can openly discuss about and gain more
information from their friends or other participants who had experience with the
brand. More importantly, they find this information more trustworthy than the
company marketing messages (Greenberg, 2009). This transformation in social
communication has sparked the need for a new breed of CRM which is called ‗Social
Customer Relationship Management (SCRM)‘.
10
21. Greenberg (2009) defines Social CRM as ―a philosophy & a business strategy,
supported by a technology platform, business rules, workflow, processes & social
characteristics, designed to engage the customer in a collaborative conversation in
order to provide mutually beneficial value in a trusted & transparent business
environment. It‘s the company‘s programmatic response to the customer‘s ownership
of the conversation.”
Another theoretical definition also comes from Michael Fauschette: ―Social CRM is
the tools and processes that encourage better, more effective customer interaction
and leverage the collective intelligence of the broader customer community with the
intended result of increasing intimacy between an organization and its prospects and
customers. The goal is to make the relationship with the customer more intimate and
tied to the company by building a public ecosystem to better understand what they
want and how they interact with the various company touch points like sales,
customer service etc.‖ (Cited from Ogneva, 2010).
11
22. Figure 1.0 The evolution of social customer relationship management
Source : Wibbels (2010)
To simplify this concept, social CRM is all focused on the idea that customers have
changed and the company has to tackle these changes in customers (See Figure
1.0). The expectations of that customer are different, the way they consume
information is different, whom they trust is different, how they communicate is
different and what constitutes success with that customer is different. In social CRM,
the customer is actually the focal point of how an organization operates. Instead of
marketing or pushing advertising messages to customers, brands now communicate
and collaborate with customers to solve business problems, empower customers to
shape their own experience and build customer relationships, which will hopefully
turn them into customer advocates (Greenberg, 2009).
12
23. However, it is very important to bear in mind that social CRM is not a new thing that
is going to replace CRM, it is simply an extension of what CRM has always been.
―Although it has a dramatic change in what it adds to the features, functions, and
characteristics of CRM but it is still based on the prime principle that a business
needs loyal customers‖ said Greenberg (2009).
To successfully develop such a strategy, it is useful to acknowledge the concept of
loyalty. The following section will further examine the synthesis of the notion of loyalty
and explore its major theoretical explanations in order to offer readers a
comprehensive understanding of customer loyalty.
2.2) Customer Loyalty : Behaviour or Attitude ?
Historically, in the marketing literature, numbers of researches have been attempting
to clarify the concept of loyalty (Cunningham, 1961). Since the acknowledgement of
positive effects of loyalty on a company‘s success, it has been a pivotal reason for
the sustained interest and popularity (Bennett and Rundle-Thiele, 2005; Davis-
Sramek et al, 2009; Dowling and Uncles, 1997).
Nowadays, there are still some misconceptions and partial truths about what defines
customer loyalty. Javalgi and Moberg (1997) proposed that it appears to be two main
strands of thought on the essence of loyalty; behavioural and attitudinal. To define
customer loyalty, people might have approached it from one of two different
directions. Although each of these directions is valid, they have different implications
and lead to very different prescriptions for businesses.
13
24. Behavioural terms - This measure is usually based on observable,
factual behaviours such as quantity purchased, the frequency of such
purchases and any brand switching.
Attitudinal terms - This measure are concerned with consumers‟
preferences and disposition towards brands and their purchase
intentions.
To further clarify, the behavioural definition of loyalty is solely concerned with a
customer's actual conduct (repurchase activity), regardless of any favourable
attitudes or internally held preferences that underlie that conduct. By this definition, a
customer is considered "loyal" to a company, if they buy from it and then continue to
buy from it (Sheth, 1968).
Since the behaviourist approach of loyalty emphasizes on measurable and
observable customer behaviours, particularly in customer relationship database,
these are the fundamental basis of sales figures and profits. For business, this
aspect of loyalty is probably viewed as the most important element (Lichtlé and
Plichon, 2008). A company wanting to increase customer loyalty, in this sense, will
focus on whatever tactics that will in fact increase the amount of repurchase
behaviour. This might include a loyalty scheme where various incentives are offered
to generate repeat purchase or to sell more products (Fitzgibbon and White, 2004).
However, without realising the motivations behind such behaviour, this behavioural
measurement is becoming increasingly technical and cannot always be a precise
14
25. predictor of future behaviours (Lichtlé and Plichon, 2008). Some researchers argued
that there could be many other reasons for repeat patronage other than loyalty; for
example, lack of other alternatives, habit, low income, convenience, etc. (Hart, et al,
1999). This repeated purchase without emotional attachment to the brand is referred
as spurious loyalty (Dick and Basu, 1994) or inertia loyalty (Bloemer and Kasper,
1995; Schiffman and Kanuk, 2010). Thus, it can be implied that simple repeat
patronage alone is not enough to guarantee loyalty.
Additionally, some of behavioural researchers believe that brand loyalty results from
an initial product trial that is reinforced through satisfaction, leading to repeat
purchase (Schiffman and Kanuk, 2010). Many people might equate customer
satisfaction with loyalty. However, customers who may have a high degree of
satisfaction, are not necessarily loyal. Reichheld (1996) measured and showed the
relationship between customer satisfaction and loyalty are independent factors. A
customer can be very satisfied and still be indifferent as to which products he buys;
for instance, shopping only for the best deal (Kincaid, 2003). Satisfaction, therefore,
is necessary but still not a sufficient condition for customer loyalty (Griffin, 1995).
As explained earlier, the behaviourist approach still has several limitations due to the
lack of concern on situational variables and personal motivation. Hence, the
attitudinal approach has been proposed to offset the drawbacks of behavioural
theory. In particular, it highlights customer motivation.
The attitudinal definition of loyalty, on the other hand, implies that loyalty is a state of
mind. By this definition, a customer is considered "loyal" to a brand or a company if
15
26. they have a positive, preferential attitude towards it. They like the company, its
products or its brands, and they therefore prefer to buy from it, rather than from the
company's competitors (Siemieniako et al, 2010).
Cognitive researchers emphasize the role of mental processes in building brand
loyalty. They believe that consumers engage in extensive problem-solving behaviour
involving brand and attribute comparisons, leading to a strong brand preference and
repeat purchase behaviour (Schiffman and Kanuk, 2010). From this perspective,
loyalty is the end result of a psychological evaluation and decision making process
with clear cognitive and emotional undertones (Jacoby and Kyner, 1973).
Some research shows that attitudinal loyalty also contributes to a greater tolerance of
negative experiences and lower price sensitivity (Yoo et al, 2000). This infers the
reduced need for incentives to generate repeat patronage, which leads to more
profitable customers. Besides, customers who have a positive emotional attachment
with a brand are more likely to generate word-of-mouth advertising than those who
are loyal only on a behavioural basis. This offers added benefits from a customer
acquisition perspective (Chaudhuri and Holbrook, 2001).
Despite all the advantages of attitudinal perspective, it is also likely that a customer
with favourable attitudes towards a company or brand may not express their
preference in behaviour; so to speak, no purchase but strong attachment and
predisposition towards the brand. Dick and Basu (1994) referred to this positive
attitude without purchasing activity as latent loyalty or covetous loyalty (Schiffman
and Kanuk, 2010).
16
27. Therefore, in order to accurately measure and manage brand loyalty, Day (1969)
proposed a two-dimensional vision of loyalty (mixed or composite approach). To
simplify this concept, it can be described that a loyal consumer is the one who will
keep repeatedly purchase the brand and that behaviour must be accompanied by
deeply held positive feelings.
After having investigated several explanatory theories for loyalty, the author believes
that rather than relying on the use of only one theory or another, it is better to take
both behavioural and attitudinal approach into account when looking at particular
context. Therefore, the author agrees with Day (1969) that the two-dimensional
perspective is the most comprehensive approach to define the word loyalty for this
dissertation.
In order to cultivate a long-lasting relationship with customers, companies should
recognize the needs of different customers and know how to communicate with them.
One analytical framework that could help recognise and identify different levels of
relationship between companies and customers is called ‗The loyalty Ladder‘. The
following section will focus on how this model works and why it can be useful for
companies.
17
28. 2.3) The Loyalty Ladder
If customer relationship management is all about engaging in collaborative activities
with customers to create mutual advantage which leads to a formation of loyalty, it is
important to know who your customers are and what their needs are so as to provide
them useful information (Doole et al, 2005).
However, among those target customers, there is possibly a mix of varied types of
customers. Thus, in order to build a long-lasting customer relationship, it is important
to look at how to retain or cultivate customers at different stages (Griffin, 1995).
Mcdonald and Christopher (2003) outlined the ‗Loyalty Ladder‘ in order to categorize
consumers according to their level of behavioural loyalty. Generally speaking, the
higher the customers move up the ladder, the higher the level of loyalty they display
through their behaviour towards an organization.
Based on the preceding discussion on the essence loyalty, the author recognizes
that every behavioural activity is underpinned by attitudinal influence. As both
behaviour and attitude are interconnected, the author, therefore, assumes that
focusing on behavioural loyalty will automatically include preferential attitude and
these will drive brand recommendation and increase consumer retention.
18
29. Figure 2.0 The loyalty ladder
Source : Mcdonald and Christopher (2003)
Figure 2.0 shows the main steps in the process of attracting and retaining customers.
If long-term customer relationships are to deliver increasing value to both parties, the
aim is to keep profitable customers and move them up the loyalty ladder (Doole et al,
2005). Starting from the bottom rung of the ladder;
Target : After segmenting the market, target is a group of individuals whom
marketers believe would benefit from offered products.
Prospect : Having shaped the marketing mix to target this set of customers,
individuals who respond positively, indicating they want to talk more with the
company/brand, these are called prospects.
19
30. Buyer : After engaging in dialogue with the prospects, Those who decide to
buy the products become buyer. However, buyer will only have performed one
transaction with the company.
After sending out marketing message to get a set of customers interested in the
company‘s products and work hard to convert them to a buyer, this process is known
as „customer catching‟. But as this ladder shows a long way to go above simply being
a buyer, the company, if it sees this relationship being profitable, it will certainly want
to help buyers ascend towards the top of the loyalty ladder in order to gain their
loyalty. Thus, from this point upward, it is all about enhancing and developing a
closer relationship; known as „customer keeping‟ process.
Customer : If all marketing efforts work and a buyer makes a repeat
purchase, he/she is considered to be a customer.
Client : The customers, who stay loyal and are likely to buy a greater and
broader range of goods if their need have been met or exceeded, become
clients.
Supporter : Ex-users or interested and knowledgeable party who may have
influence over others without necessarily being a current customer, called
supporter.
Advocate : The very satisfied client who will actively support and openly
promote the organization becomes an advocate.
20
31. Obviously, an advocate is the company‘s ultimate goal. To have customers raving
about and telling everyone about the company is a great place to be. What can be
done to move people up the ladder is to actively communicating with customers in
order to find out what they actually want. If their need have been satisfied, it is likely
that a strong ongoing relationship has been formed and that makes them immune to
the pull of competition (Griffin, 1995).
The succeeding section will examine the role of Facebook as a customer relationship
building tool for today‘s businesses. Also, the author will investigate how relationship
via the world‘s most popular social network platform is developed and how it
influences customer behaviour as well as how companies can capitalize from this
phenomenon.
2.4) Facebook and Customer Relationship Management
In recent years, social networking sites have experienced explosive growth over the
internet and revolutionized the way people communicate and share information with
one another in today‘s society. Figure 3.0 shows that across all generations, more
people than ever are now using social network; especially those between 18-33 year-
old (Millennials), representing the fastest growing rate of all age segments
(Williamson, 2011). According to the Nielsen Company (2010), the world‘s most-
visited social networking destination was Facebook, with over 500 million active
users and 67% of global social networkers accessed to the site during each month.
21
32. Figure 3.0 Social networking users by generation
Source : Williamson (2011)
Apart from its typical purpose of keeping in touch and connecting with long lost
friends, lovers and family, currently various companies see this great market potential
and are tapping into this growing social network site to reach more customers
(Trusov et al., 2009). One of the main reasons is simply the behaviour of the users as
well as its size. When logging on Facebook, people usually look through everything
posted on their news feed and this is considered a great opportunity for companies to
have their marketing information exposed to their target audiences. Additionally,
Facebook users tend to enjoy content sharing and this has usually been done
through the relationship network of users. This means Facebook‘s fast content
22
33. distribution feature allows companies to get their messages transmitted to other
potential customers by using their current customers as a medium of communication.
Besides making personal connections, Facebook is a place where buying decisions
are influenced through group interactions (Lee, 2010).
So far, it appears that the popularity of Facebook gives the companies a good
opportunity to address their information to more precise target groups due to the high
amount of information customers are publishing about themselves on their profile
pages (Usha, 2009). Also, online social networks help connect like-minded people
which make it easier for companies to target and to tailor their market offerings and
communications to the special preferences and behaviours of target segments. This
could eventually lead to a form of stronger customer relationship (Philips et al.,
2010).
Szmigin et al. (2005) mentioned that the advent of this popular social network
platform allows companies to enhance their performance of relationship marketing in
two ways. Firstly, it offers an opportunity for interaction with potential prospects and
secondly companies can observe and gain deeper understanding with the nature and
content of community through such interactions. Companies, thus, can better extract
wants and needs and the potential uses of the product so that they eventually create
marketing offers expected to meet the needs of those members accordingly.
Moreover, it is believed that brand communities not only provide marketers with
insights about consumers but also contribute to new customer acquisition, loyalty
reinforcement and increase demand for products (Muniz and Schau, 2007).
23
34. What strengthens online brand communities in social networking sites like Facebook
is its interactive communication; either between like-minded people, guest experts
and beginners, or buyers and brand‘s managers. Apart from building relationship,
interactive communication also gives members access to abundance of exclusive
and free contents. These combinations are what keep and draw consumers back to
the site on a frequent and regular basis (McWilliam, 2000). The intentions of
members to revisit a certain brand‘s fan page could, thereby, be expressed as a form
of loyalty (Shen et al, 2010).
The recent study pointed out that customers think more positively about companies,
where social media tool is in use as it provides another platform for the customers to
express their opinions and feedbacks (Universal Mccann International, 2008). As one
of its prominent features is a platform for people to share their views, preferences,
and experiences, companies are not only able to gain feedbacks and ideas via such
customer interaction but this platform also provides an advantage of ‗word-of-mouth
(WOM)‘ marketing (Trusov et al., 2009).
Word of mouth has always been the most effective form of marketing as people tend
to trust their friends‘ opinions (Kozinets et al, 2010). The study of Harrison-Walker
(2001) has proven the fact that customers prefer to be guided by information from
friends and other personal contacts rather than a company‘s formal promotion mix.
Accordingly, the nature of Facebook offers itself nicely in line with that WOM
marketing purpose by catering a convenient way for suggesting other members and
sharing information. Recent research shows that social networking people are more
24
35. likely to ask for their friend‘s or other‘s opinion than ordinary internet users (Lee,
2010).
Via a peer-to-peer interaction, it creates interpersonal ties which, in turn, influence
members to commit to an organization (Kim et al, 2008). As conceived by Berry and
Parasuraman (1991) and Morgan and Hunt (1994), ―Commitment is a necessary
condition for developing ongoing long-term relationships‖. The relationships,
developed among those within social networks, results in social and emotional bonds
being formed and that create a sense loyalty. Sheth and Parvatiyar (2002) suggested
that strong social bonds are difficult to be replicated by competitors. This
relationship creates an entry barrier and potentially leads to sustainable competitive
advantage.
However, effectiveness of this new social media marketing option also depends on
level and frequency of how the companies interact with customers. Despite all the
advantages, using social networking sites can be a double-edged sword. Expert
warned that it could backfire if the companies overused this communication channel.
Arun Sundararajan, a professor of information, operations and management
sciences at New York University once mentioned ―There is a fine line between giving
people a steady stream of useful information and bombarding them. If you do the
latter you are in danger of turning customers off‖ (Prentice, 2009).
25
36. 2.5) Summary
To briefly summarize, in today‘s fiercely competitive business environment,
companies are adjusting their marketing strategies to be more focused on building a
long-term partnership and loyalty as proven by many studies that loyal customers
produce more profitable bottom-line profits. The marketing technique that is
employed so as to deliver this ultimate result is called customer relationship
management (CRM).
With the advent of new digital technology and the internet, the channel of
communication between companies and customers has been drastically changed.
More and more customers seek for more information about the products of their
interest through internet. Marketers, therefore, need to approach their targets through
this preferred channel. Over the last few years, one of the promising medium that has
become a centre of attention is Facebook; where a large and growing portion of
some of the most valuable demographics are spending more of their time on .
Facebook‘s simple feature of connecting and sharing with friends present a great
opportunity for companies to develop promotional strategies that are more of a
personal conversation with customers.
Therefore, it is believed that strong customer relationships, in this case loyalty, can
be established through the strategic use of this media channel. The notion of loyalty
can be broadly defined into two terms; behavioural and attitudinal. Behavioural
perspective only determines loyal consumer by his/her repurchasing activity while
attitudinal approach emphasizes more on a psychological influence behind such
26
37. actions. This research will focus on both theoretical explanations by describing that a
loyal customer is the one who keeps repeatedly buying products from a brand and
such behaviour must be underpinned by preferential attitude. To assist the analysis,
an analytical framework; called The Loyalty Ladder, will be in use.
By attempting to resolve the research question, it is important to have a defined
research plan and appropriate methods to obtain relevant data as well as being fully
aware of potential obstacles that might occur. Those aforementioned issues will be
looked at in the following chapter.
27
39. 3) RESEARCH METHODOLOGY
This research is aimed to investigate, analyze and develop an evaluation of the
performance of social networking site ‗Facebook‘; serving as an effective marketing
option to instill a sense of brand loyalty among targeted audience in cosmetic
industry.
The purpose of this chapter is to explain how the research is designed and the
methods employed to collect relevant data as well as mentioning the limitations and
constraints that either hindered or intervened with the result of data collection.
3.1) Research Philosophy
This research began with a simple question: Can and how might Facebook be used
to nurture brand loyalty among consumers in cosmetics industry? When undertaking
a research, it is important to consider different research paradigms and matters of
ontology and epistemology. Since these parameters describe perceptions, beliefs,
assumptions and the nature of reality and truth (knowledge of that reality), they can
influence the way in which the research is undertaken, from design through to
conclusions.
A research philosophy is a belief about the way in which data related with a
phenomenon should be gathered, analysed and used. Three major research
philosophies have been identified according to Saunders et al (2009), namely
positivism, interpretivism and critical realism.
28
40. Beginning with positivism, positivist relates to the philosophical stance of natural
scientist. This entails working with an observable social reality and the end product
can be law-like generalizations (Saunders et al, 2009). Although it allows researchers
to use an existing theory in order to develop a hypothesis which then will be tested
through various quantifiable methods, it does not discover the meanings people
attach to social phenomena and understand social interactions. Positivists believe
that knowledge can be described by the traditional scientific approach and consists of
verified hypotheses that can be regarded as facts or laws. In this paper, the author
aims to investigate a current phenomenon of Facebook marketing and people‘s
attitude towards it. Thus this approach is considered inappropriate for this
dissertation. Unlike the object, human behaviour is constantly changing over time,
the end result could not deliver generalised conclusions as expected by positivistic
approach.
On the other hand, interpretivism argues that the social reality is far too complex to
lend itself to theorising by definite laws in the same way as physical science.
Interpretivists believe that knowledge does not only rely on observable phenomena,
but also on subjective beliefs, values, reasons and understanding. It emphasizes the
difference between conducting research among people rather than objects
(Saunders et al, 2009). This approach allows researchers to explore an insight
through various qualitative methods which the author finds it, somehow, works on
certain aspects of this dissertation, especially to find out how and why Facebook
marketing has become increasingly popular and people‘s feeling/opinion towards this
current phenomenon. However, the author was aware that the truth is the conclusion
of mind and prejudice of individuals. To be able to make this dissertation more
29
41. convincing and credible, the need of firm statistical and other quantifiable data are
still a major subject of concern.
To be able provide a comprehensive knowledge to the research question, the author
sought for an approach which gives way both quantitative and qualitative methods.
The last standpoint, critical realism, believes that it is impossible for humans to truly
perceive reality with their imperfect sensory and mental capacity and researchers can
identify what we do not see through practical and theoretical processes. Also it is
quite similar to positivism in that it assumes a scientific approach the development of
knowledge (Saunders et al, 2009). Therefore, the philosophy that the author viewed
as the most appropriate for this dissertation is critical realism because it involves the
need for and possibility of critically evaluating existing theories. At the same time, this
perspective acknowledges the human perception towards social reality.
3.2) Research Approach
The research question posed above influences on choices of research approach as it
will serve as a plan of how the paper will be carried out to answer the proposed
research question. According to Saunders et al (2009), there are two broad methods
of reasoning - inductive and deductive.
An inductive approach works from specific observations to broader generalizations
and theories. In this approach, the researcher would begin with specific observations
and measure in order to detect patterns and regularities, formulate some tentative
hypotheses that could be explored, and finally end up developing some general
30
42. conclusions or theories (Saunders et al, 2009). Generally speaking, an inductive
approach is aiming at theory building.
However, the purpose of this dissertation is not building theories but more on testing
theories. Hence, an inductive approach cannot be applied to the conduct of this
dissertation. In contrast, a deductive approach works the other way, moving from the
more general to the more specific. In this approach, the researcher would create a
hypothesis based on theories and then develop a research strategy which would
allow for the testing of hypothesis. Conclusion, thus, follows logically from premises
(available facts) (Saunders et al, 2009). So to speak, a deductive approach is aiming
at theory testing.
Therefore, the methodological approach used in this dissertation will be deductive.
The research began with the literature review, which consisted of academic articles,
journals and theories to have an overview of what studies had been conducted and
what the outcomes of those studies were. This therefore allowed the author to
generate some research questions. Once the research questions had been decided
upon, the following step was to decide on what the approach and the method would
be when tackling the data. Finally, the author attempted to answer the research
question by employing various data collection techniques to allow for better results
obtained.
31
43. 3.3) Time Horizons
When planning a research project, there are two types of time horizons to choose
either between cross-sectional studies or longitudinal studies. The first horizon is
often referred as a ―snapshot‖ because the research is made at a particular point of
time. This method is commonly used for research projects that have a time limit. The
longitudinal time horizon is also known as the ―diary‖ perspective which observes
people or events over time (Saunders et al, 2009).
This dissertation follows the first horizon; cross-sectional studies, mainly because of
the time limits that does not allow for a study over a period of time. Hence, the author
would like to describe this research work as a ―snapshot‖.
3.4) Data Collection
The research topic will determine what types of data are necessary for the study.
Broadly speaking, there are two types of data; quantitative and qualitative (Saunders
et al, 2009). To simplify these two terms, brief explanations are shown as follows;
32
44. Quantitative (Establishing statistical reliability)
This process utilizes detailed questionnaires often distributed to large
numbers of people. Quantitative research collects a huge amount of
data, which can often be generalized to a larger population and allow
for direct comparisons between two or more groups. It also provides
statisticians with a great deal of flexibility in analyzing the results.
Qualitative (Gathering insights)
This is typically a one-on-one process in which a researcher poses
questions directly to an individual. The questions often ask not only
for information and opinions but also allow the interviewer to probe
the richness of emotions and motivations related to the topic.
In order to solve the research question, the multiple methods will be in use. The
quantitative data will be collected by a self-completion online survey, which will
emphasize on the consumer´s perception about companies using Facebook as a
new medium of communication, whereas, the qualitative data will be gathered
through in-depth interviews with some marketers and managers in leading cosmetic
companies. The interviews will mainly focus on how effective Facebook is to enhance
customer relationship. By combining the two approaches, it will allow for some of the
quantitative answers to be backed up by the qualitative answers, which in turn will
give the researcher a better understanding of the research topic. Additionally,
extensive use of internet and online database will further provide supporting information
33
45. to this research. To further clarify the details of how all data will be collected for this
dissertation, it can be categorized by the sources of information as follows;
3.4.1) Primary Data
The primary data will mainly be collected through semi-structured interviews
(qualitative) and a self-completion online questionnaire (quantitative).
1) Interview
Interviews can be classified as followings; structured, semi-structured and
unstructured. Structured interviews use a standardised set of questions in every
interview conducted. This type of interview is more suitable for quantifiable data
hence it is also called quantitative research interviews (Saunders et al, 2009). For
this dissertation, the author aims for a qualitative outcome, thus structured interview
is considered unsuitable.
By comparison, semi-structured and unstructured interviews are less attached to the
set of questions and often referred to as qualitative research interview. In a semi-
structured interview, usually the interviewer would have a list of topics that should be
covered. This type enables more flexibility and interaction between interviewer and
interviewee, while unstructured interview is informal and allows interviewer to explore
a more in-depth in an area of interest with no predetermined list of questions
(Saunders et al, 2009).
The problem with an unstructured interview is that there are no prepared questions.
The author was unsure that the interviewee would be able to give a precise answer
34
46. to the research question or to what the author were looking for. Hence, the semi-
structured interview seems to be the most appropriate method. A list of questions to
be covered is prepared beforehand as a guideline for the interview although
additional questions may be required and these may vary from interview to interview.
Managers and marketers from major cosmetic companies will be contacted and
interviewed. The focus of the interviews will be on their past experience and attitude
towards Facebook as a marketing tool for their relationship marketing campaign and
to what extent this marketing technique delivers any satisfied outcomes and provides
extended opportunities for their businesses.
2) Survey
According to Saunders et al (2009), the survey technique is usually associated with
the deductive approach and is most commonly used to answer who, what, where,
how much and how many questions.
To further analyse the research hypothesis, a self-completion online questionnaire
will be sent out to the author‘s network community in Facebook and those who join
online beauty communities. The content of the survey will mainly emphasize on the
consumer‘s perception towards a company‘s new way of communication and to what
extent their attitude and behaviour has been influenced by an experience through
such virtual interactions. The questionnaire will be created and the data will be
analysed through online survey software; surveymonkey.com.
35
47. The survey was developed by looking at the literature review and relevant findings
then channelling all the thoughts into what the research questions were to be. Once
these were decided upon, they were broken down into different headings, allowing
for certain questions to be grouped together in order to get a consistent flow
throughout the survey.
The survey was divided into 3 sections as follows; (For further information, see
Appendix 1-3)
Section 1 : Personal Data
This section is where the demographical details of respondents are collected.
These include gender and age. The chosen age range (18-33) presented in
this section is based on the proven facts by Williamson (2011) in literature
review that it is the fastest-growing group of all age segments. This section
aims to define gender and age groups related with the research which allows
for comparison and reference.
Section 2 : Facebook usage
This section looks at the frequency and purpose of respondents when using
Facebook. The questions asked in this section were based on the followings;
o Frequency of logins
o Time spending
o Activities that users are likely to do when logging on
36
48. By asking questions along the lines of the above, it would be a way of getting
to know exactly what users tend to use Facebook for and whether any of the
above reasons stand out for a particular group of individuals.
Section 3 : Consumers’ awareness, motivation and attitude towards
Facebook marketing
This is the final section of the survey and will give participants the ability to
address their views and perceptions on various aspects as follows;
o Awareness of cosmetic brands‘ fan page on Facebook
o Motivations for ‗Liking‘ any cosmetic brands‘ fan page on Facebook
List of answers is mostly based on the previous survey (Appendix 4)
conducted by Williamson (2011). Thus this question allows for
testing if the results would come out similarly to the original one.
Participants who respond to this question also can be identified at
which the level of the loyalty ladder they are.
o Elements/activities of a fan page that interest fans (Ranking scale)
Some of the answers are based on Williamson and Maul (2011)‘s
suggestions about what would drive more engagement between fans
and brands while the rest of the choices test subjective norm. All
participants were obliged to scale from 1st (the most interesting) to 7th
(the least interesting). Each number is allowed for only one answer.
37
49. This question is expected to find out which of the activities that would
effectively engage customers the most. The outcomes can be used
to support and prove whether the suggestions are accurate as well
as to propose the future recommendations.
o The likely changes of consumer‘s behaviour (Rating Scale)
This question aims to identify how likely it is that consumer‘s
behaviour would change after engaging with the brand on Facebook.
Respondents were asked to rate their agreement with the statements
using likert scale from 0 (not at all likely) to 10 (extremely likely). The
levels of involvement are categorized accordingly to the loyalty
ladder (Mcdonald and Christopher, 2003).
This allows the author to test if any interactions between brands and
customers occur, it would get them move up to the higher level of the
loyalty ladder, linking to Williamson and Maul (2011) who suggested
that more engagement will drive a personal attachment between fans
and brands.
To compare the overall rating, the author adopted the measurement
called ‗Net Promoter Score (NPS)‘, developed by Reichheld (2003),
in order to gauge the loyalty of a firm‘s customer relationships (See
Appendix 5).
o Overall attitudes towards Facebook marketing.
38
50. By answering all sections of this survey correctly, it is expected to generate a lot of
interesting findings which can be quantified into charts and others to get a full grasp
of to what extent Facebook can help cultivate a sense of brand loyalty between fans
and brands.
3.4.2) Secondary Data
To find secondary data, the author will use the internet extensively. Google.co.uk will
be used as the main search engine to filter and find relevant websites on the internet.
However, the author is well aware of the authenticity and validity problem of the data
found on the internet and will therefore only use websites that the author deem
credible.
Furthermore, the author will use online databases such as Datamonitor and Emerald
as well as online journal databases to find supporting information for this dissertation.
3.5) Samplings
By undertaking a questionnaire survey, it is important to employ appropriate
techniques to collect relevant data. With limited time and budget constraints, it was
impracticable to collect data from the entire population. Therefore, a small, but
carefully chosen sample can be used to represent the population. The sample
reflects the characteristics of the population from which it is drawn. Sampling
methods are classified as either probability or non-probability.
39
51. With probability sampling, the chance, or probability, of each case being selected
from the populations is known and is usually equal for all cases (Saunders et al,
2009). In this dissertation, the author was not able to know the total population, thus
a probability sampling seems not to be most appropriate technique. On the other
hand, non-probability sampling allows researcher to select a case from the total
population which is not known and members are selected from the population in a
non-random manner (Saunders et al, 2009).
Non-probability method includes various types of sampling. Ones that the author
employed to conduct this dissertation are shown as follows;
Purposive sampling : enables researcher to select the sample based on
judgment (Saunders et al, 2009). The author chose cases that are considered
best to answer the research question by manually selecting and sending out
the survey to people in her Facebook network.
Convenience sampling : involves selecting those cases that are easiest to
obtain for samples (Saunders et al, 2009). To get a gross estimate of the
results, the author also picked ones that appeared to have the ease of filling
out the survey. Once the questionnaire was distributed to all chosen cases,
the sample selecting process is continued until the required sample size was
reached.
Snowball sampling : relies on referrals from initial subjects to generate
additional subjects (Saunders et al, 2009). The sense of sharing on Facebook
enables members to easily share contents with one another and so does this
40
52. survey. The author found that some of the primary respondents also passed
the questionnaire along to friends in his/her Facebook network.
3.6) Limitations and Constraints
The author has mostly faced several limitations and constraints during the process of
primary data extraction. As the majority of respondents are expected to be Thai, the
obvious limitation could possibly be the fact of language barrier. When completing
the online survey, respondents might either be short in time or do not fully
understand all questions. Thus they might not fill in the survey properly or might
leave the survey without entirely completing it. This could affect the validity of
information obtained by this internet survey. However, the author was well aware of
this potential problem and in order to avoid it, the author has put the Thai translation
in brackets next to all questions and answer options. Also, time constraint was
considered a main obstacle. Due to a time limitation, the author was only able to find
a limited number of responses which would be a threat to reliability.
Another potential problem was the distance interview with experts. As, the author had
no personal relationship with any of interviewees, it was expected that they were not
likely to share any negative aspects of using this marketing tool or would say what
they thought their superior wanted them to say, described by Saunders et al (2009)
as the ‗good news syndrome‘. This political bias could influence the credibility and
reliability of the outcomes.
41
53. Moreover, ethical issues are also needed to be taken into account, especially when
conducting a research related to personal ego. The author realised that some of the
questions might be intrusive as they could identify a social class of respondents or
level of income. For example, the question that asked respondents to choose the
current cosmetic brands they use. Some respondents might not have chosen or
answered the real brand that they currently use, instead they distorted the facts by
selecting a mid-high label brands listed in available alternatives so as to reflect their
high social status and luxurious personal taste. To minimize this limitation, the author
provided additional comment field where respondents could put their own answers.
Another example could be when participants responded to the question that asked
for their motivations for ‗liking‘ a certain brand. Some might hesitate to admit that they
became a fan of the brand, only for discounts or freebies, but opted for other choices
that sounded less economically-driven. These ethical issues might affect the quality
of outcomes.
3.7) Summary
In this chapter, the author has stated how the research is approached. This includes
looking at different research philosophies, research approaches and time horizons.
Both quantitative and qualitative data are obtained in order to provide a firm support
for further analysis. The means of data collection employed in this dissertation
involve a survey questionnaire and semi-structured interviews with experts. Also,
possible limitations and constraints are highlighted. The effectiveness and outcomes
of methods applied will be shown in the next chapter.
42
55. 4) ANALYSIS AND FINDINGS
The purpose of chapter is to investigate and evaluate the effectiveness of Facebook
as a relationship building tool. The results obtained from the author‘s own research
and relevant findings will be used to critically analyze and ultimately answer the
research question:
“Can and how might Facebook be used to nurture brand loyalty?”
This chapter will be divided into 4 sections;
The role of Facebook in cosmetic industry – To review how different major
cosmetic companies utilize this social networking platform for their marketing
purposes and how this online channel helps businesses to achieve their
objectives.
Is ‘Like’ the beginning of brand loyalty? – To investigate the hidden
motivations why people ‗Like‘ a brand‘s fan page and what the possible
business implications are behind this ‗Like‘ activity.
Could Facebook help turning ‘Like’ to ‘Love’? – To examine whether
Facebook has a likely opportunity to deepen a relationship between fans and
brands and to what extent the current Facebook marketing activities help
companies reach the ultimate goal.
What are the key elements to ensure success? – To explore the mind of
consumers so as to discover what customers actually want out of this media
channel and eventually offer practical solutions.
43
56. 4.1) The Role of Facebook in Cosmetic Industry
Nowadays, businesses still continue to utilize the world‘s most popular social media
site; Facebook, as a part of their advertising campaigns. In fact, they are likely to
designate more time, effort and even funds towards developing strong social media
presence (Philips et al., 2010).
Those businesses include leading beauty brands as well. Although it is very typical
for cosmetic brands to hugely invest in traditional media and their own website -
flipping through any women‘s magazines, it is inevitable not to bump into tons of
beauty advertisements and free samples - Facebook has increasingly played a major
role in their marketing, e-commerce and customer service strategies (Indvik, 2011).
According to a recent report from Brand Keys; a world leader in customer loyalty and
engagement metrics, showed that almost 75% of the top 50 loyalty leader came from
three categories, which one of them is cosmetics (O‘Leary, 2010). As mentioned
earlier, cosmetic and beauty consumers tend to be very brand loyal, as equally when
it comes to online communities, site should have loyal followers and fans as well.
Since 2008, major cosmetic brands have started to set up their fan page on
Facebook. One of the marketing managers was interviewed about its expansion into
Facebook, she said ―Our expanding Facebook community provides us with an
engaged consumer group that understands our products and wants to learn about
the future of our brands.‖ (Dey, 2010).
44
57. Figure 4.0 MAC Cosmetics Facebook fan page
Source : MAC Cosmetics Facebook (2011)
One of the early leaders that has been voted as no. 1 cosmetic brand on Facebook is
MAC Cosmetics (Dey, 2010). MAC global marketing manager said ―At present,
Facebook is a platform for engagement and a community building, not sales‖.
Currently, MAC is running at almost 2.2 million fans. The company frequently
launches news alerts and articles about their new collections as well as interacts with
their supporters to cultivate a sense of community on its fan page (MAC Cosmetics
Facebook, 2011). (See Figure 4.0)
45
58. Also there are some other leading cosmetic brands, which already created its
presence on Facebook. Here are a few examples as follows (See Figure 5.0);
Figure 5.0 Example of different cosmetic brands‘ fan page on Facebook
Source : Benefit Cosmetics Facebook (2011)
Smashbox Cosmetics Facebook (2011)
Bobbi Brown Cosmetics Facebook (2011)
Benefit Cosmetics : Currently having almost 250,000 fans, Benefits often
holds contest for its fans as well as receives rave or rant on any of their
products (Benefit Cosmetics Facebook, 2011).
46
59. Bobbi Brown : Bobbi Brown sporadically invites beauty bloggers for
makeovers, workshops and product launches. Visitors can learn tips and tricks
plus how to apply makeup in the Bobbi Brown way and participate in real-time
live chat. (Bobbi Brown Cosmetics Facebook, 2011).
NARS : New products and upcoming events are frequently updated and
posted in its fan page. Also the site offers online makeup tutorials and tips on
how to replicate celebrities‘ looks (NARS Cosmetics Facebook, 2011).
Smashbox Cosmetics : Get trend alerts, how-to techniques, product launch
info, free gifts and samples by visiting their Facebook page and signing up on
their main website (Smashbox Cosmetics Facebook, 2011).
For customers to interact with the brand and get access to all those exclusive
contents, they only have to click the Facebook‘s ‗Like‘ button on a fan page. This
‗Like‘ widget represents a big opportunity. Apart from earning media exposure, it
drives traffic, and earns consumer validation for the brand. When users click on the
‗Like‘ button, a few things happen beyond affinity being established. Their pages are
added to their interests section of their Facebook profile, the page is shared out to
the news feeds where it is visible to all of the user‘s friends, and now brands gain the
ability to send updates to the user via their news feed. Social media marketers in
general are fond of garnering more ‗Likes‘ for their Facebook fan pages, in hopes of
either providing social proof through sheer number of fans or amassing subscribers
to be fed announcements, promotions, offers, and contests.
Nunthawan Laosinchai, brand general manager at The Estee Lauder Companies
(Thailand), (Laosinchai, 2011), gave an example of the brand, Clinique, and
47
60. explained how Facebook strategy works for her company. Clinique launched one of
its bestsellers; the 3-step skincare, program via its fan page on Facebook. By clicking
‗Like‘ on the brand‘s fan page, registered fans were appointed to pick up their free
samples at specific retail counters. In turn, they were also asked to fill out the follow-
up survey with full contact details in order for the brand to keep individual records for
its future customer base. Laosinchai (2011) said ―Sampling is not a new technique,
but implementing it through Facebook, it provides the brand an ability to hear what
people really think.‖ Also it helps bridging the gap between online and offline
channels by turning those who participated online to join offline activities.
And of course, it helps generate buzz marketing. After fans register, they can invite
friends to do so as well. ―We experience a massive number of our online fans
queuing up over our retail counter. This creates a strong spill-over effect on our
potential customers and passers-by. By the end of that day, our total sales were
boosted by 40%.‖ said (Laosinchai, 2011).
However, quantity does not mean quality. So far, there are no clear evidences
claiming the effectiveness of the ‗Like‘ tactics, in terms of both transactional and
relational. When it comes to CRM, marketers should be aware of what it means when
people ‗Like‘ their Facebook fan pages. Does it mean that they really like the page?
The brand? The product? Or they are just being curious? The following section will
look at what actually drives ‗Like‘ behaviour and to what extent is ‗Like‘ a sign of
accomplishment?
48
61. 4.2) Is ‘Like’ the Beginning of Brand Loyalty ?
After investigating how different beauty companies utilize Facebook for their
marketing purposes, it seems that this new marketing tool is very well-received
measuring by an increasing number of fans. However, to become a fan is just simply
clicking ‗Like‘ button, but does ‗Like‘ reflect what fans think or feel about the brand?
By looking at the previous section, most of beauty brands employ similar marketing
tactics to engage with target audiences. Although a continuous rise in number of fans
is basically a good sign, it does not necessarily mean that these people are loyal
customers. Without recognising the real motivations behind such behaviour, it is
impossible to realise what actually triggers this phenomena and thus follower counts
alone are a poor benchmark for determining whether a social media campaign is
really influential.
The recent study by Williamson (2011) found that there were other factors that mainly
motivated customers to ‗Like‘ a brand apart from an emotional attachment or loyalty.
Two out of the top three motivations are driven by discounts and other price
incentives (See appendix 4). What can be assumed from this finding is that the
majority of fans could easily be swayed by more competitive deals in price. This type
of ‗Like‘ is purely based on a transaction, not a relationship. This behaviour,
therefore, can be best described as spurious loyalty (Dick and Basu, 1994) or inertia
loyalty (Bloemer and Kasper, 1995; Schiffman and Kanuk, 2010).
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62. Figure 6.0 Number of brands that people follow on Facebook
Source : Wibbels (2011)
Mentioned by Chaffey et al (2009) at the beginning of literature review that in order to
be successful in this information-rich business environment companies should no
longer base on features like price and quality alone. Today it is more the perceived
experience a customer makes in various interactions with a company (i.e. how fast,
easy, efficient and reliable the process is). Moreover, the different study shows that
most of respondents do not particularly ‗Like‘ only one brand but approximately they
follow at least 2-5 brands on Facebook (See Figure 6.0).
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63. Figure 7.0 Motivations for ‗Liking‘ a brand‘s fan page on Facebook
Source : Self-conducted survey (2011)
Figure 7.0 represents the outcomes of a self-conducted survey. The results came out
quite similar to what had been done by Williamson (2011). Discounts and price
incentives still play a major role, still, it comes behind the fact that most of the
participants ‗Like‘ a fan page because they want to stay informed about the future
products and activities of the brand. Another common response found in this survey
is that many consumers will follow a brand if they are current customers.
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64. What can be drawn from this survey is that the ‗Like‘ activity is basically a way to
express interests in a brand no matter what the underlying motivations are.
Participants who ‗Like‘ a fan page, therefore, can be categorized as targets according
to the loyalty ladder by Mcdonald and Christopher (2003). Also, the author believes
that it is very likely that some of these targets might want to obtain more information
from the brand. Hence, they are becoming prospects. For those who described
themselves as current customers; either first-time or ex-customers, the author would
like to identify them as buyers.
Having looked back at the literature review, those three aforementioned rungs of the
loyalty ladder are listed under ‘customer catching‘ stage. This has proven that ‗Like‘
is now highly effective at a level of customer acquisition. So far, there is no guarantee
that this ‗Like‘ effect will last in the long-run. As a result of this analysis, the author
comes to the conclusion that the ‗Like‘ activity on Facebook is only the very
beginning of brand relationship.
To support the analysis, Laosinchai (2011), ELCA‘s brand general manager said that
―Facebook can serve as another good relationship building tool as it has a lot of
features that fits in with CRM. However, from my experience with this social media
tool, I would say that it is still at an infant stage and currently works best at acquiring
customers. To claim that it helps instill a sense of brand loyalty is just too early.‖
To briefly conclude, the amount of fans does not determine success. What tells us
about people who ‗Like‘ a fan page is that they implicitly signify their interest and
willingness to engage with future brand‘s communications. Nevertheless, to ensure
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65. that this relationship will last, it all depends on how effective companies utilize this
media channel. The subsequent section will further explore whether there is an
opportunity for brands to use Facebook as a medium to foster a deeper customer
relationship.
4.3) Could Facebook help turning ‘Like’ to ‘Love’ ?
If ‗Like‘ is the beginning of brand relationship, what should companies do to ensure
that this relationship will be long-lasting? This section will find out whether Facebook
experience could help increase customer loyalty. Referring to the notion of loyalty,
the author will base all assumptions on the two-dimensional approach, proposed by
Day (1969), that a loyal consumer is the one who will keep repeatedly purchase the
brand and that behaviour must be accompanied by deeply held positive feelings.
The recent study pointed out that customers think more positively about companies,
where social media tool is in use (Universal Mccann International, 2008). However, it
is still a subject of concern whether that positive attitude would affect consumer
purchasing behaviour. Figure 8.0 demonstrates that approximately 97% of people
who have experienced with a certain brand online are likely to make a purchase with
that brand. A recent survey from Wibbels (2011) on ‗What happens when people
follow a brand?‘ confirms that online brand engagement has strongly influenced
people‘s buying decision. Over 40% said that they usually consider the brand when
in the market for product or even buy products from the brand. Besides, an increase
in sales, it also drives recommendations. About 40% of fans said that they usually
recommend the brand to others (See Appendix 6).
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66. Figure 8.0 The influence of online experience on purchasing behaviour
Source : Wibbels (2011)
To test the above hypothesis, the author used self-conducted survey, aiming to
examine how likely it is that consumer‘s behaviour would change after engaging with
the brand on Facebook. Consequently, all participants were asked to respond to a
0-to-10 point rating scale on the question shown as follows;
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67. Assuming that you have participated with a certain brand’s activity on a
Facebook fan page (e.g. ask questions, provide feedbacks/comments,
play games/quizzes, etc.) and you have a satisfactory experience. How
likely is it that you would do the following statements?
A) Would you decide to make a purchase with the brand?
B) Would you repurchase or buy more of the same product, if the need
arose?
C) Would you consider the same brand for future needs in different
product categories?
D) Would you recommend the brand to a friend?
To analyze a set of collected data, the author will mainly base an analysis on the
loyalty ladder model and partly incorporate with the customer loyalty metric ‗Net
Promoter Score (NPS)‘, developed by Reichheld (2003). The logic behind the NPS
calculation is that when customers respond to a 0-to-10 point rating scale, where (0)
is ‗not at all likely and (10) is ‗extremely likely‘, customers are categorized into one of
three groups; Detractors (0–6 rating), Passives (7–8 rating), and Promoters (9–10
rating). The meanings of these rating scores are shown below;
Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer
others, fuelling growth.
Passives (score 7-8) are satisfied but unenthusiastic customers who are
vulnerable to competitive offerings.
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68. Detractors (score 0-6) are unhappy customers who can damage your brand
and impede growth through negative word-of-mouth.
After calculating the data, the overall result turned out quite positive. The average
rating of four answer options levels at around 7 (See Figure 9.0). The detailed
explanations of each answer option will be demonstrated as follows;
Figure 9.0 A likely change of customer behaviour after having a satisfactory online experience
on Facebook (using the NPS measurement)
Source : Self-conducted survey (2011)
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69. A) Would you decide to make a purchase with the brand?
(Average rating = 6.7)
The final result for this answer option came at 6.7. The value, between 6 to
7, based on the scale of NPS measurement, can be in both detractors and
passives categories. However, the result of 6.7 is much closer to 7, this
makes the author believe that it can potentially fall into a passives
category. What the average rating score of 6.7 points out is that if
companies put an effort to create a satisfactory online experience, this can
eventually turn people who ‗Like‘ a brand to make an actual purchase.
Regarding to the loyalty ladder, if people who ‗Like‘ a brand, referred in a
previous section as targets and prospects, make their first purchase, they
are now becoming buyers. Therefore, this outcome has proven that
satisfactory online engagement could move consumers up to the higher
rung of the loyalty ladder.
B) Would you repurchase or buy more of the same product, if the
need arose? (Average rating = 7.0)
The final score ended at 7.0. This once again falls into a passive category.
The author, thus, is reassured that online brand engagement can affect
repurchase decision.
Respondents who once decided to make their first purchase with the
brand, again, are likely to make a repeat purchase if they are still happy
with their experience on fan page. Consequently, online experience can
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70. potentially move the same group of people up to another higher step of the
loyalty ladder and buyers are now turning into customers.
C) Would you consider the same brand for future needs in different
product category? (Average rating = 7.0)
The same mathematical result as the answer option B) occurred with this
alternative. What can be drawn from this positive figure is that if a brand
still can provide a fulfilling Facebook experience to customers at the level
where their need have been met or exceeded, they are likely to consider
the brand for future needs and even try a broader range of products.
Customers who consider buying greater lines of products, they are literally
taking another step closer to the top rung of the loyalty ladder and this
group of customers are now called clients.
D) Would you recommend the brand to a friend?
(Average rating = 7.2)
The last answer option ended up with the highest average rating score at
7.2. This result indicates a likely chance that satisfactory online brand
engagement will trigger recommendations; a brand‘s ultimate goal in
accordance with the loyalty ladder.
At this point, the same satisfied clients who start to make a referral, are
now stepping towards the top of the loyalty ladder and becoming
advocates; people who keep consistently buying and trying products from
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71. the brand as well as talking positively about it. However, without
necessarily being current customers, ex-users or those with preferential
attitude and knowledgeable party who openly promote the brand are also
considered loyal. The latter are called supporters.
After looking into the overall responses, the tested results proved that fulfilling
experience on fan page can help customers ascend towards the top of the loyalty
ladder or, generally speaking, flip their followers into loyal users. Therefore, it can be
predicted that elements of a brand‘s fan page on Facebook has a potential
performance to deepen relationship between fans and brands and eventually turn
‗Like‘ to ‗Love‘.
However, the situation mentioned above will never happen unless brands can deliver
what their customers actually want. In reality, things rarely go like how ones want it to
be. Another question was conducted in order to gauge an attitude towards current
marketing activities of beauty brands on their fan pages and it clearly shows that only
35.9% said that they found the current contents useful and interesting, while the rest
have neutral feeling and even worse, they don‘t bother looking at it (See Figure 10.0).
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72. Figure 10.0 People‘s attitudes towards cosmetic brands‘ Facebook marketing
Source : Self-conducted survey (2011)
Most of respondents who answered ‗Don‘t bother looking‘ found that Facebook
marketing is just another form of commercial advertisement, while some said it lacks
of engagement and contains bad contents. Moreover, about 80% of total
respondents said that they log on Facebook multiple times a day, of which over 40%
visit a fan page only once a month or less (See Appendix 7 & 8).
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73. This statistical data reveals that current Facebook marketing campaigns fed to
customers do not have wow factors as it fails to keep fans coming back to a fan page
more often. There are several reasons that could contribute to this rather
disappointing result. The author believes that one of the main reasons stems from the
brands themselves that they cannot provide relevant contents to their audiences.
Due to the Facebook bandwagon effects and its simplicity, marketers might rush to
enter Facebook without having clear objectives and might oversimplify this extensive
network. Being lured by massive number of potential customers, marketers might
overlook some essential steps such as to clearly specify their targets and hence they
cannot tailor the offers that suit their needs. So to speak, the brands do not know
their community thus they cannot approach them in the right way. Without any
appealing contents, fans are now playing the role of passive consumers who once
clicked ‗Like‘, just to stay informed and hope that one day there might be some
interesting contents popping up in their news feed.
ELCA brand general manager, Laosinchai (2011), responded to these unpleasant
figures ―I have to admit that it is not good news. However, it is too costly if we don‘t
jump on this bandwagon. Like what I have mentioned earlier, Facebook marketing is
still at its infancy and there are still a lot of lessons to learn. The best that we can do
now is trying to understand what customers want out of this media channel and
create marketing offers in accordance with the changing needs‖
In order to successfully turn ‗Like‘ to ‗Love‘ or cultivate a sense of loyalty, Williamson
and Maul (2011) suggested that company should use ‗Like‘ wisely by aiming to drive
more engagement, not just collecting fans. Instead of ―pushing‖ information to fans
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74. and hope that they might like it, companies should be ―pulling‖ information and what
is expected from them. By serving what accommodates consumer preference, this
will keep fans coming back to a fan page more often and that will eventually convert
passive fans into active fans who will contribute more of their time mingling with the
brand. Through continuous interactions, a sense of community will be ultimately
established. The author believes that the element which is important to ensure a
successful presence on Facebook is that brands and fans form a like-minded
community where all benefit from each other.
What can be drawn from this section is that Facebook can potentially help nurture a
brand loyalty among consumers in cosmetic industry. Still, what brands are currently
doing with their Facebook marketing do not deliver the desirable results. So as to
improve the situation, the author believes that companies should strive to understand
consumer preference. The last section will discover the mind of consumers and
various elements which could probably make a brand‘s fan page more appealing.
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75. 4.4) What are the Key Elements to Ensure Success ?
Without understanding the mind of consumers, companies will not only waste time,
but also money doing what is not right. In the previous section, the survey shows that
the majority of fans are not fascinated with their experience on fan page. This brings
up another key question: what should marketers do to encourage ongoing
involvement once a consumer has ‗Liked‘ a brand?
Williamson and Maul (2011) suggested that the company should always be
responsive and available to cater customers round-the-clock (e.g. ensure that all
questions/requests have been answered or responded). Exclusive price deals still
cannot be ignored. Rather than giving away high-value offers, although it encourages
initial ‗Like‘, companies should try to lower their offers as smaller discounts promote
loyalty among current fans. Additionally, providing a fan with a sense of exclusivity is
also recommended.
Moreover, asking simple questions that generate participation to get customers
thinking about the brand is a good start. It is also advised that a mix in the use of
other media channels helps engage. Video testimonials are particularly useful in
making content personal and building trust (Indvik, 2011).
In order to find out the hidden needs, participants were questioned in the survey so
as to explore what customers actually want to see on fan page. As shown in Figure
11.0, what actually interests fans the most turned out to be product reviews and
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76. rating. Unsurprisingly, discounts and price deals came second and followed closely
by exclusive contents.
Figure 11.0 Popularity of each activity on cosmetic brands‘ fan page
Source : Self-conducted survey (2011)
To a certain extent, Williamson and Maul (2011) were right. Freebies and discounts
will still be one of the primary drivers boosting traffic and sales. Still, the impact of
friends and fans should not be overlooked. Research published by Harvard Business
School professors, Gupta et al, (2009) proved that friends influence purchasing
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