Developing Relationships; consumers as a source for sustainable competitive advantage

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The world is changing thus business units should also be changing. The influences of social media and internet can no longer be neglected, case in point “Nestlé’s epic social media #fail”1. These changes are giving consumers more and more power in their relationship with business units. Furthermore the enormous amount of products available give consumers more and more possibilities to choose from. For example, at supermarkets in the USA you’ll find in the average week about 110 cereal brands in stock (Shum, 2004). The availability of that amount of different products/product-ranges within an industry raises the question to how business units can create competitive advantage within this enormous amount of competition, especially when the consumer is gaining power?

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Developing Relationships; consumers as a source for sustainable competitive advantage

  1. 1. Developing relationships!Consumers as a source for sustainable competitive advantage.Author: Kevin Rommen (S4072294)Course: MOR005 - Project Designing ResearchContact information: info@kevinrommen.nl / 00 31 (0)6 4390 5126
  2. 2. 2 Developing relationships! Consumers as a source for sustainable competitive advantage.Introduction The world is changing thus business units should also be changing. The influences of socialmedia and internet can no longer be neglected, case in point “Nestlé’s epic social media #fail”1.These changes are giving consumers more and more power in their relationship with businessunits. Furthermore the enormous amount of products available give consumers more and morepossibilities to choose from. For example, at supermarkets in the USA you’ll find in the averageweek about 110 cereal brands in stock (Shum, 2004). The availability of that amount of differentproducts/product-ranges within an industry raises the question to how business units can createcompetitive advantage within this enormous amount of competition, especially when the consumeris gaining power? As you can see see in the example of Nestlé business units are having trouble adjusting to thesenew digital natives from generation Y, in other words the power of these consumers is a danger forthem. On the other hand there are also innovators like Zappos who are adapting to these newrules of the game. Zappos is the biggest online shoe store with a revenue of 1 billion dollar in2008 (Belleghem, 2010), and have a unique point of view regarding their business. Theirphilosophy is creating and having exceptional customer service! It’s remarkable to see that creatingcompetitive advantage is no priority at all, instead they strive to create as much added value fortheir customers as possible; hereby using the power of the consumer, which shows because mostof their exposure comes from satisfied customers advocating the Zappos (Belleghem, 2010). Sousing the power of the consumer to their advantage has led to a sustainable competitiveadvantage. In this research the author wants to examine how the power of this consumer can beexplained, and how this influences business units & strategy, i.e. the path to (sustainablecompetitive advantage). Within the current literature on strategy, brands and management there is still an assumptionthat the environment and business unit are two different entities which don’t overlap each other.Furthermore customers, and in this case also consumers, are often viewed as an uncertainty andliability. This study not only removes these assumptions but even more advocates the other end ofthe line. The author assumes that the borders of business units are fading and as Veloutsou (2009,P.81) perfectly states “Brands do not belong, in a mental sense of ownership, to any one or anyfirm”. Which leads to the conclusion that consumers and customers are extremely important forbusiness units, and thus have to play a key role. The perception of a business unit is quite differentbetween managers and consumers. Where managers perceive products and/or services consumersperceive results and process quality (Heskett, Sasser & Schlesinger, 2003). This research redefinesthese different understandings in order to better align those two opposite worlds and is aimed at1 http://futuremediachange.com/2010/03/nestle-in-epic-social-media-fail/
  3. 3. 3 Developing relationships! Consumers as a source for sustainable competitive advantage.creating a sustainable competitive advantage from that alignment. In managerial terms this canalso be explained as bringing marketing and strategy more closely together around an experiencepoint of view. Or as Heskett et al. (2003) put it start treating your customers as employees! The Research Objective This research investigates subsequently (1) how consumers in this day and age can influencestrategic business units, (2) if the consumer can be a source for sustainable competitive advantageand (3) what strategical and organizational implications the former brings forth. In order to reachthese goals the research will investigate the (inter)active relationship between consumers andstrategic business units, the value creation within this relationship and the implications this valuecreation has on an organization due to the fading line between organization and environment. Research Question To what extent is a strategic business unit internally influenced in order for the customer of aB2C brand to become a source for sustainable competitive advantage? This research proposal continuous with a study of the literature where the author will bereviewing business units, brands and their relationship towards business units, consumers andhow these influence each other with inspiration from The Value Profit Chain (Heskett et al., 2003)and Experience Economy (Pine & Gilmore, 2005). After a clear overview of the current literaturethe author will describe the theoretical model & hypotheses which subsequently translates into thechapter on methodology. After that the author investigates the data analysis methods, limitationsand the proposal will end with an estimation of the time and timespan needed to administer theresearch.Literature Review The three major ingredients, i.e. the most important concepts, within this research are brands,strategic business units, and consumers. Three concepts which need some clarification in order toavoid confusion. As mentioned in the introduction managers and consumers have a different viewon strategic business units, or at least on the overlap between and influence of brands andstrategic business units. Walvis (2008, p. 180) provides a solid definition of brands which we fitsextremely well within this research; he defines “a brand as a network of associations with a(brand) name within the brain of a person”. This means that every piece of information like icons,names, symbols, experiences, emotions, images, symbol, intentions and beliefs combined for thetotal brand experience. Consumers see the inanimate brand object as a “living” and vibrant entityinstead of a product of complexity which sells products and/or services (Fournier, 1998), which ismainly a managers view towards strategic business units. Consumers don’t see strategic business
  4. 4. 4 Developing relationships! Consumers as a source for sustainable competitive advantage.units as a collection of departments but as a whole and don’t acknowledge the difference betweena strategic business unit and a brand, these concepts are in their mind one and the same.Consumers furthermore have no problems assigning personal qualities to brands (Fournier, 1998).This is further explored by Aaker (1997) who describes brand personality as “the set of humancharacteristics associated with a brand”. As the introduction made clear this research isemphasizing the relationship between consumers and strategic business unit which directlyimplies a clear delineation of the goals and purpose of a strategic business unit. In this researchthe goal of a strategic business unit is to effectively pursue a strategic mission / portfolio strategy(Gupta & Govindarajan, 1984) in order to create sustainable competitive advantage. In a diversifiedfirm other goals, for example creating synergies between inter-firm strategic business units, couldbe important. A strategic business unit consist of a set product, product lines and/or services (Gupta& Govindarajan, 1984) which combine in such a way that consumers can view the the strategicbusiness unit as a brand. Because consumers assign personal qualities to a brand, and don’t definethe difference between strategic business units and brands (Fournier, 1998) it’s important thatthese two concepts are closely tied together and collaborate in such a way that they not onlyblend together but also strengthen each other. Hereafter the author will use the term strategicbusiness unit as well as the term brand; reasoning that this research aims at the emotional andexperiential aspect, which aligns with brands, as well as the instrumental aspect, which alignswith strategic business units. Another important ingredient within this research are consumers, which in regard to thisresearch should be emphasized that they aren’t the same as customers. There’s an distinctivedifference between the two which is whether or not a product, service or product line of thestrategic business unit has been purchased. Thus customers can be defined as people who havepurchased a product, service or product line and thus have transformed from consumer tocustomer. Consumers theoretically can be defined as everyone else, i.e. people who didn’tpurchase a product, service or product line of the strategic business unit. However, this group canbe delineated towards the task-environment. The author defines consumers as people who are (1)brand admirers, (2) potential customers, (3) former customers, (4) target population influencers, and(5) other people who aren’t affiliated towards the brand while still engaging in the discussion. Thepower of this consumer which isn’t a customer, and perhaps won’t become a customer shouldn’tbe underestimated. Consumers who admire a particular brand, often interact with groups aroundthat brand and identify with that brand. They do this because people want to belong to something,a natural and universal impulse (Veloutsou, 2009). A person can identify with a brand, interactaround this brand and even advocate this brand without ever having purchased a single product orservice. Examples of such brand can be easily found within the luxury goods, think of cars likeBugatti, Ferrari, etc.
  5. 5. 5 Developing relationships! Consumers as a source for sustainable competitive advantage. The feeling of identification as mentioned earlier (Veloutsou, 2010) implies an active emotionallevel towards brands. This is acknowledged by the research of Fournier (1998) from which can beconcluded that consumer do indeed develop different emotions towards brands. It can beconcluded that the link between consumers and brands is not merely instrumental, but containsvalue on an emotional level. Walvis (2010) describes five different reasons why people wouldwant to interact with brands within this emotional brand-consumer relationship. These reasonsare divided along a continuum from introvert to extravert and are respectively (1) controlling thesituation, (2) validating status and identity, (3) having fun (for example, games), (4) contactingpeers and (5) contributing. This relationship can emerge in different forms, with differentcharacteristics, ranging from causal friends to best friendships and arranged marriages to secretaffairs (Fournier, 1998). In the end people may develop a relationship where the personal identityis similar to the brand identity (Veloutsou, 2010), which in other words is defined by Heskett et al.(2003, P.55) into the following hierarchy where satisfaction (getting some more than expected) ismerely the beginning; it’s followed by loyalty (devoting a “share of wallet” to repeat purchases),commitment (demonstrating loyalty by telling others of your satisfaction), apostle-like behavior(high degree of loyalty and convincing others to purchase) & finally ownership (takingresponsibility for the continuing success of the offering). When your customer-base has a highdegree of loyalty it’s likely that this will result in repeat purchases, furthermore the customer-costswill drop. In other words the stronger the relationship between the brand and the customer themore net financial value per customer will be generated. Thus business units can developrelationships with customers and achieve a profit from that relationship. With the vast amount of products available gaining a consumers attention seems to be the mostimportant part. However retaining that attention and building that relationship can be possiblyeven more daunting, and important because retaining in the long run means return on investment(i.e. profits wit the costs for grabbing and retaining his attention for that customer alreadydeducted) (Voss, Roth & Chase, 2008), especially when you create an experience which willengage consumers on an emotional level. This is important experience will change consumers intofans who will not only come back but will also proactively advocate that experience (Pine &Gilmore, 2005) resulting in better performance and repeat purchases. A strong definition ofexperience is that from Pullman and Gross (2004) who say that “an experience occurs when acustomer has any sensation or knowledge acquisition resulting from some level of interaction withdifferent elements of a context created by a service provider, in this case a strategic business unit.Successful experiences are those that the customer finds unique, memorable and sustainable overtime, would want to repeat and build upon, and enthusiastically promotes via word ofmouth” (2004, P.553). A likewise definition is used Voss et al. (2008) in their research. However, incontrast to Voss et al. (2008) the author believes that any product, service or brand can applyexperiences and that these experiences lead to significantly better financial results as seen in
  6. 6. 6 Developing relationships! Consumers as a source for sustainable competitive advantage.Figure 1 (Pine, 2005). While talking on experiences it’s important to mention that usingexperiences isn’t completely new, for example think of extreme examples like vacations resorts &theme parks. However, what is fairly new is the matter of the fact that traditional service providersare using experiences to improve their products and services from a strategical point of view (Vosset al., 2008). Figure 1: Consumer price per economic product (Pine & Gilmore, 2005, P. 253) * Commodity, products, different kinds of offers, services, experiences, transformationsPrahalad and Krishnan (2008) combine these experiences with products and consumers in orderelaborate on a complete business shift. They state that “the retail business shifts from a transactionbase (selling a tire) to an ongoing relationship (continuous and ongoing measurements of usageand ability to provide feedback on better usage specific to a user) with the consumer” (Prahalad &Krishnan, 2008, P.15). Hereby expanding the core business of a strategic business unit to acomplete new level where both the experiences and relationship have an important position. Thisimplies that the Prahalad et al. (2008) state that strategic business units should develop intensiverelationships with consumers through experiences, leading to a more positive effect on thefinancial value generated. This effect of experience on financial value is also emphasized inresearch from Pine & Gilmore (2005) about the differences between economic products like sellingcommodities, products, services, experiences and even transformations. Prahalad et al. (2008) callthis concept co-creating personalized experiences with customers which is made possibly through
  7. 7. 7 Developing relationships! Consumers as a source for sustainable competitive advantage.“the new house of innovation” (Prahalad et al., 2008, p. 6, Figure 1.1). This new way of innovationimplies the changes in consumer behavior and accounts for them by creating a strong foundationwithin the strategic business unit consisting of technical architecture, personalized co-createdexperiences (N=1), global access to resources and talents (R=G), dynamic business processesanalytics & social architecture (Prahalad et al., 2008). So on the one hand it’s possible to create value through experiences (Pine & Gilmore, 2005;Heskett et al., 2003; Voss et al., 2008), but having a relationship with the consumer in itself canalso be a source for value creation (Fournier, 1998; Veloutsou, 2010, Prahalad et al. 2008)depending on the dimension of that relationship (Fournier, 1998). Combining both a tightrelationship between between the consumer and the brand and also striving to offer experiencesinstead of products and services will provide the most powerful base to work with for a strategicbusiness unit. This reduces the uncertainty generated by customers which is an important issue forstrategic business units. Both of these factors can be traced back to one important aspect which isvalue creation, the subject addressed by Heskett et al. (2003) in the Value Profit Chain. They define“value as, what one receives for what one pays, which is second nature to customers. However, itis so often forgotten by those serving them that it holds the key to successful competitiveopportunities designed to differentiate products an services” (Heskett et al., 2003, P.167, exceptitalic text). Thus an important viewpoint is that creating the experience isn’t a goal, but a meantowards an end being value creation for the consumer; and from a Value Profit Chain point of viewalso the employee and shareholder (Heskett et al., 2003). The Value Profit Chain (Heskett et al.,2003) is designed as a reinforcing cycle where not only employees create value for customers, butcustomers also create value for shareholders. Last but not least those shareholders create valuetowards the employees (i.e. the strategic business unit). This cycle explains the link betweencreating financial value for the shareholders and the importance of customers to realize that value. In other words from this point of view customers are an important ingredient in the success of astrategic business unit. The value of a customer will also change over time which can result indifferent kind of relationships with the customer. As mentioned before the by Heskett et al. (2003)defined hierarchy of satisfaction, loyalty, commitment, apostle-like behavior and ownership. This isthe underlying rationale for customer lifetime patterns which are that customer acquisition costmay require more than one year to break-even, loyal customers are willing to pay more for theproduct, loyal customers will easier adopt to new products or services, loyal customers are morelikely to recommend those products and services, referrals become an important part of the valueof the relationship and the value of suggestions from customers improves when they move towardsa more extensive hierarchical relationship (Heskett et al., 2003).
  8. 8. 8 Developing relationships! Consumers as a source for sustainable competitive advantage. Figure 2: The Value Profit Chain (Heskett et al., 2003, P.XVIII) Important assumptions within the this value paradigm are that “customer loyalty andcommitment are the primary drivers of growth and profitability”, “customer loyalty and commitmentemanate from customer satisfaction compared to competition” and “customer satisfaction resultsfrom the realization of high levels of value compared to competitors” (Heskett et al., 2003, P.19).Veloutsou (2010) describes two directions in which brands add value to the relationship with theirconsumers. (1) The direct brand-consumer relationship where the brand converses with theconsumers and (2) the consumer-consumer relationship where the brand facilitates communicationbetween brand peers in the form of communities and tribes; a concept explained by Seth Godin(Godin, 2008). Furthermore these relationships are reciprocal. For example, according to themanagement of eBay the community, i.e. the users, often spot problems before eBay itself does.This community moves faster than the company and eBay cannot keep up with them (Heskett etal., 2003), and even better they don’t have to. Within this example the community is a form ofknowledge system and market analysis at the same time which provides the strategic businessunit added value in the form of knowledge. Why keep up with the community if you can learn fromthem and put them to use.
  9. 9. 9 Developing relationships! Consumers as a source for sustainable competitive advantage. So strategic business units should be managing for value exchange, instead of product/serviceexchange, and it appears logical to create an organization which is built around managing thatvalue exchange. However, managing of strategic business units isn’t build around this valueexchange, a concept further explored in Voss et al. (2008). They approach service operationsstrategy and design from an experience paradigm viewpoint through two dimensions, “(1) thedepth of use of experience as a source for value creation, ranging through brand experience to theservices as a destination business model and (2) the degree of integration of experience integral tothe firm” (Voss et al., 2008, P.247). Through case research within these dimensions five importantpropositions emerged which have strategical implications on performance (Voss et al., 2008).These are (1) “cue and offering refreshment increase repeat visitation, (2) extending theexperiential service offerings has a positive performance impact, (3) services that offer multipleexperiences that cater broadly to different market segments, in contrast to those that are narrowlyfocus, have a positive influence on financial performance, (4) building experience into traditionalservices had a positive performance impact, (5) firms with aligned depth of experience and thedegree of cross-functional integration will have better performance relative to those that aremisaligned (Voss et al., 2008, P.253-255). Voss et al. (2008) mainly aim their research towardsvalue creation through experiential operation management in order to employ service as adestination. While this paper clearly shows the power of experience from a operational point ofview the author wants to broaden the area of research and explore other areas of strategicbusiness units where the consumer(s) and the consumer experience can lead to value creation andpossibly sustainable competitive advantage with an emphasis on how this influences the strategicbusiness unit and its strategy. Bluntly said from the ‘managers point of view’ the research arrived at the point where theexternal(brand) and internal (strategic business unit) really have to fuse with each other in order tocreate a unique advantage. Marketeers have understood for years that it’s not the product that yousell, but the added value that you deliver (Heskett et al., 2003), and a great example of this istravel-size package of a product. Which gives you less quantity often at higher prices. However, before strategic business units can create value they have to have certain virtues likeleverage, focus, fit, trust, adaptability and differentiation which in turn can be achieved throughdifferent value levers like information technology, employee/customer relationship management,operating strategy, knowledge management, etc. (Heskett et al., 2003). These value drivers need tobe perfect in alignment with your brand, because when interactions with a brand suffer fromincoherency financial value will decrease due to the fact that other brands will be preferred(Walvis, 2008 & 2010). This clearly shows the relationship between the strength of the brand andcompetitive advantage created by a strategic business unit and is the basis of the theoretical modelleading towards the hypotheses.
  10. 10. 10 Developing relationships! Consumers as a source for sustainable competitive advantage.Theoretical Model & Hypotheses Important theoretical bases for this research can be found within the Value Profit Chain (Heskettet al., 2003), where the customer (consumer) is an important stakeholder next to the employeesand shareholders. Value profit chain is, while mentioned before important to keep repeating, aself-reinforcing cycle (Heskett et al., 2003). “Employee value leads to satisfaction, loyalty andproductivity that produces customer value, satisfaction, loyalty and commitment. Satisfied, loyal,trusting and committed customers are the primary driver of company growth and profitability,important determinants of investor value. Finally, the fruits of growth and profitability arereinvested in value for partners, employees, customers, and investors” (Heskett et al., 2003, P.XVI).However, not to forget the fact that the Value Profit Chain can also work backwards, i.e. thatcustomer value can lead to employee value. The Value Profit Chain is based upon different valueequations for each stakeholder within the chain. These value equations can be found in Figure 2(Heskett et al., 2003). Because this research defines the consumer as a stakeholder, which isshown in the literature review, the Value Profit Chain (Heskett et al., 2003) is a solid framework tobuild upon. The author will take this as a central approach in the research where in the theoreticalmodel the strategic value vision of this approach will be important to transform the researchtowards strategic business unit concepts. Heskett et al. (2003) furthermore state that technology, like information, leaks. In fact, it’s in theinterest of purveyors of technology to make it as widely available as possible. For these reasonsalone it is a poor basis for sustainable competitive advantage. This statement, while definitelyentitled to partial truth, is becoming more debatable due to recent world developments. Especiallythe changes in social networks and better communication possibilities through the internet shakesthe foundation of that statement or at least shakes what the statement implies. While the authoragrees that information or technology that can be copied is a poor base for sustainable competitiveadvantage this statement also implies a form of control and closeness of a strategic business unit.Consumers are gaining power through voice and recent public relation disasters are just aminuscule example of that change. Thus knowledge, information, technology are becoming moretransparent and widely available. Pushing this transparency away by using control can probablybe even more disastrous than accepting transparency and opening up towards your consumers.Logically when these persons can be a threat for your sustainable competitive advantage there isalso an opportunity present. Within my research the statement of Heskett et al. (2003) will bedisregarded and the opposite is assumed. Tranparancy and sharing is important to cater and bindconsumers to your strategic business unit. The author sees potential in this point of view, andthinks that consumers are a powerful resource. The Value Profit Chain (Heskett et al.) has beenpublished 8 years ago. Right about the time these different social networking sites emerged whichpreluded a new era for the internet, and a new era of consumers. Brands as Facebook & Hyves
  11. 11. 11 Developing relationships! Consumers as a source for sustainable competitive advantage.were founded in 2004, LinkedIn in 2003 and Twitter in 2006. These websites have had anenormous impact on consumers and within this research the author assumes that, due to thetechnological innovations, consumers have gained more power in regards to shareholders andemployees and that the theoretical model has to correct for this. In other words strategic businessunits have to acknowledge the power of the consumer and use it in their advantage. Theimbalance which occurs could be of significant danger, therefore alignment towards these changesis important which can be done by building strong relationships as a product in itself. Especiallybecause consumers who are strongly identified with the strategic business unit have less negativeviews on that specific strategic business unit even in the face of moderate bad publicity (Einwiller,Fedorikhin, Johnson & Kamins, 2006). Figure 3: Factors in Value Profit Chain success (Heskett et al., 2003, P.XVII) Though before value creation is possible the Value Profit Chain (Heskett et al., 2003) starts withgiving attention to what they call the performance trinity (Figure 3, the circle on the left) consistingof leadership & management, culture & values and vision & strategy which overlap each other.Heskett et al. (2003) describe this performance trinity as the way to create the value drivers,leverage, focus, fit, trust, adaptability and differentiation, as described at the end of the literaturereview. Culture & Value will result in trust and adaptability, the others mainly arise from vision andstrategy which respectively means goals and ways of reaching that goal (Heskett et al., 2003). InFigure 3 value drivers have the goal of fueling the self-reinforcing cycle of the Value Profit Chainthrough value. However Figure 3 also describes another important aspect to accomplish thatfueling namely different value levers being: operating strategy, information technology, knowledgemanagement, value exchange, customer relationship management, employee relationshipmanagement and economic value added. These are the specific strategic business units conceptwhich we want to investigate in this research.
  12. 12. 12 Developing relationships! Consumers as a source for sustainable competitive advantage. Within this research the performance trinity (the circle on the left in Figure 3.) is an importantconcept which consists of the ingredients which together extend to the brand of a strategicbusiness unit. In other words the author his view is that the performance trinity is the base for abrand thereby unmistakably linking those two entities together. This assumption makes it possibleto extent this performance trinity with the three laws of branding being distinctive relevance,coherence and participation as described by Walvis in both his paper and book (2008, 2010).These laws, inferred from principles of neuroscience and neuroeconomics, encompass thefollowing: (law 1) “The higher the distinctive relevance of branding efforts, the more likely thebrand will be chosen” (Walvis, 2008, P.186). (law 2) “The higher the coherence of branding effortsacross time and space, the more likely the brand will be chosen” (Walvis, 2008, P.187). (law 3)“The more engaging the branding environment that is created, the more likely the brand will bechosen” (Walvis, 2008, P.188). The fact that these laws are inferred from a neuroscience andneuroeconomics perspective are important because the experience and emotion within thisresearch go beyond our conscious thinking. It involves mainly subconscious processes, andimportant to signify is that while a great amount of decisions are made subconscious that doesn’tmean that these decisions are made irrational (Walvis 2008, 2010) . Walvis (2008, 2010) calls thisunconscious rationality, hereby extending bounded rationality as defined by Simon (1957). As seenin the previous paragraph this performance trinity is an important base for building a foundationfor value drivers. By extending the performance trinity with the branding laws the first phasetowards a new theoretical model is accomplished, because the branding laws now are also fuelingthe different value drivers. This extension is important because relationships with consumers, orcustomers, have the brand as their value driver. However for the research to move towards implications for a strategic business unit theconnection between value drivers and value levers has to be examined. Only then is it possible toexamine how consumer relationships, which flow through branding, implicate strategic businessunits and if that could be a source for sustainable competitive advantage. Heskett et al. (2003) statethat the foundation of the value drivers comes from the performance trinity. However in order toachieve the virtues of the value drivers, which eventually and hopefully leads to value creation, thevalue levers are of uttermost importance and the foremost source for achieving the virtues (Heskettet al., 2003). The nuance is that strong value levers are essential in achieving the virtues of valuedrivers and the performance trinity is essential in creating the value drivers themselves. There isthus an important connection between both the performance trinity (extended with branding laws)and the value levers. From this we can conclude that, because of that strong connection, influenceson either one or the other affects either one or the other. The stronger the value levers areexecuted the more value will be generated through the value drivers. This completes ourtheoretical model as it now explains the relationship between strategic business unit concepts andconsumer relationships.
  13. 13. 13 Developing relationships! Consumers as a source for sustainable competitive advantage. Interesting is that these factors of success within the Value Profit Chain are achieved through astrategic value vision. This is a framework based upon several important assumptions whichinfluence strongly the perspective and view of a strategic business unit. These assumptions are (1)consumers buy results and process quality instead of product/services, (2) in order to know thatthese results and process quality is the target audience has to be delineated, (3) leveraging resultsand process quality over cost efficiency through a focused and internally consistent operatingstrategy, (4) this focused and internally consistent operating strategy is supported by informationknowledge systems, locations and technology, (5) value results from both market and operatingfocus; through this focus both low cost and superior result for customers can be achieved, (6) thisvision is applicable to all constituents of the strategic business unit, not only employees andcustomers. It’s interesting to see the important role of customers in this strategic value vision. Theyplay an important role which implicates that the extensions of Figure 3, i.e. the theoretical model,with more confidence can be applied. This theoretical framework has led us to the following hypotheses with regards to the researchquestion. These hypotheses will give direction in the research in order to best answer the researchquestion. These hypotheses are: (1) the growing influence of consumers is leading to unbalancedtrinity between the stakeholders of the Value Profit Chain which can be resolved by developingrelationships with consumers, (2) the development of strong relationships with consumers, andcustomers will result in the emerging of a new value driver, (3) the changes in value driversinstantly affect and implicate current value levers (strategic business unit concepts) and (4) thechanges in value drivers results in a new value lever which aims at bonding the value of therelationship within the other value levers and bonding the relationship value driver within thestrategic business unit.Methodology & Data Analysis Within this cross-sectional research each sample will be approached from different angles inorder to assure the highest reliability possible. There will be situations where case-interview, focusgroups or other qualitative data is collected and if possible this will be combined with quantitativedata. For each case general background information like annual reports, press releases and otherimportant newsworthy information will be collected. From that information the author willconstruct a timeline which gives an overview of important events. This timeline can also be used tomake sure that some event other than the events researched has influenced the strategic businessunit at a specific time. In order to get a clear view of the external brand the author will be interviewing bothconsumers and customers of the brand through existing data collection structures created by Keller
  14. 14. 14 Developing relationships! Consumers as a source for sustainable competitive advantage.(1993) and Sweeney & Soutar (2001). The information on brand equity and consumer perceivedvalue will be collected, and is important in order to find a correlation between the strategicbusiness unit and the brand. So measuring on the one hand the strength of the experience and onthe other hand strength of the brand is key to the research. The author will create a survey basedupon this dualism which will be spread amongst both customers and consumers of the brand. Thegoal is to have a sample that is evenly spread within both groups, and an aim at a total group ofabout 30 people per strategic business unit. In total the author wants to acquire three strategicbusiness units (see chapter on limitations) which are active in the same industry so comparisonscan be made between the results of these strategic business units. After completing the survey 4people (two consumers, two customers) will be randomly chosen and the survey and its contentwill be evaluated in order to on the one hand re-test and on the other hand check the validity. Thedataset arising from that survey needs to be translated into different scales, which after that willbe placed in different groups according to the hypotheses. The dimensions (brand equity &customer perceived value) will be analyzed both separately and together. Next to an external view the employees play an even more important part in the research. Aclear and objective look into the strategic business unit its value drivers, value levers, performancetrinity, internal brand and employee satisfaction. This will be administered with the help of theValue Profit Chain Audit (Heskett et al., 2003, P.318-337). Administering this audit in the form of asurvey ensures the collecting of as many samples as possible from within the strategic businessunit. While naturally surveys can easily be misunderstood these will be administered on locationwith a researcher present who can explain, or even make extra notes to ensure a better validity.The aim of the author is to interview employees within multiple layers of the organization and atleast a sample of 25 people with different job descriptions. Regarding the internal datasetpercentages will be assigned to parts of the audit: the performance trinity (and each of its parts),the value drivers (and each of its parts) and value levers (and each of its parts),. This provides uswith an insight into the distribution of the concepts and the distribution of the content of theconcepts, in other words an insight in the current status quo. Both the internal and external dataset combined provides enough information to answer theresearch question. These dataset together can tell us whether there might be a correlationbetween the different concept described in the research, and after that what implications arepresent for strategic business units in order to make consumers a source for sustainablecompetitive advantage. This research will use existing data collection methods which have been used by multipleresearchers before. These methods are accepted within the field of academic research and thusimprove the reliability of this research. Furthermore then this research can be related to other
  15. 15. 15 Developing relationships! Consumers as a source for sustainable competitive advantage.research with these methods in order to improve the reliability of the dataset collected by the datacollection method. No substantive conclusion about that comparison can be made, however thisdoes grant the possibility to check the findings against data from the past if that’s available.Concerning validity, because existing data data collection methods are used the validity of theresearch could be compromised. However, a part of this research is qualitative and within thatqualitative part adjustments can be made if necessary to keep the necessary validity. As mentionedin the limitations as well the validity our research could also be compromised due to the selectionof wrong samples which don’t fit the theoretical framework on which the research is based. Toprevent this, as much as possible, from happening each strategic business unit will have an intakeover the telephone.Limitations Research towards branding balances on the edge of consciousness and unconsciousness.Current models like AIDA are solely conscious measurement (Walvis, 2008), and the research intounconscious measurements hasn’t matured yet. This limitation is very important because this areaisn’t fully researched yet, furthermore within the current business environment the subconsciousisn’t a status quo. This could significantly effect the data. Another limitation is that this research only has a timespan of three months, which possibly canbe extended if necessary towards five months. While some stages of the research can walk parallelthis inevitably influences the size of the samples and depth of the research. In order to protect theresearch from growing out of proportions the size and depth are delimited while knowing thisnegatively influences both the reliability and validity. The fact that the author will only beresearching three strategic business units within one industry obstructs us from generalizing theconclusions. This can be solved by doing future research with bigger samples of strategic businessunits into multiple industries, as such this research is best seen as explorative. Selecting and acquiring strategic business units that fit the research can prove to be a difficulttask and perhaps even a limitation. First, the personal network of the author is limited in acquiringexamples aligned to the research. Second, from an outside perspective recognizing the strategicbusiness units which fit in this research can be problematic because there is no insight into theorganization. Furthermore this potential problem is strengthened by the time restraints on theresearch.
  16. 16. 16 Developing relationships! Consumers as a source for sustainable competitive advantage.Time & Timespan This research will be subdivided into multiple stages making it possible to iteratively improvethe operationalization. The author starts with examining one case optimizing the different parts ofthe research using the pre-test method. Week 0 While the research proposal is in consideration a preliminary search for strategic business unitswill be made. This results in a shortlist of possible strategic business units, and one (less important)strategic business unit will be contacted for the pre-test of the operationalization. Week 1 to 3 In these weeks the author will be be operationalizing the research and translating all the partsinto an efficient research process. While operationalizing the shortlist of strategic business unitswill be extended and improved. All the strategic business units will contacted in order to ensure asmooth transition between the pre-test and actual fieldwork. Next to that in these first three weeksthe pre-test strategic business unit will undergo the research so if necessary the validity can beimproved. Week 4 to 8 Within this timespan the author shall collect the data from the different strategic business units,and try to collect as many data as possible in the first weeks, however due to uncertainty it’simportant to be cautious in planning this data collection. That is the main reason there are fourweeks reserved for this. Week 5 to 9 As mentioned before this research is will be approached mainly as an iterative process andinspiration is taken from the agile-development method as used in ICT-sector. Therefore thisprocess won’t be sequential organized around stages of the research but organized around thedifferent strategic business units interviewed. Immediately after research within a specific strategicbusiness unit is done this is transcribed, coded and prepared for analysis. By doing thisimmediately the least information will get lost, which improves the quality of the research.According to the planning of interviews, when time is available, strategic business unit specificanalyses are made which in the next stage can be combined with the other strategic business unitanalyses. Week 8 to 10 While the dataset is growing the author can work more and more towards the completeanalysis that needs to be done. When all the data is collected and transcribed the next step
  17. 17. 17 Developing relationships! Consumers as a source for sustainable competitive advantage.towards the final analysis can be made in the last week of the research. The final analysis willprobably be done together with draft versions of the conclusions. At the end of the research a finalreview will be made. Week 11 This week will be reserved for multiple purposes. First, the week is reserved in order to give theproject the possibility to exceed the deadline, while clearly stating that this is not an intention.Second, this week is also reserved to evaluate all stages of the research in order to improve futureresearch. Last, but not least, this week is open for a final review of the conclusions. This is donebecause ignoring the research for a week before looking at it again can shed a light on completedifferent perspectives. Different parts of the timeline cross each other int the planning. This is done because their areexternal contingencies which create uncertainty. For example, making appointments with thestrategic business units could turnout to be difficult because of availability of the subjects.Therefore a flexible approach instead of an approach according to the waterfall methodology isdesirable.
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