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Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
Porter   advances in relationship marketing thought and practice the influence of social network theory
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Porter advances in relationship marketing thought and practice the influence of social network theory

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Porter advances in relationship marketing thought and practice the influence of social network theory

Porter advances in relationship marketing thought and practice the influence of social network theory

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  • Social computing is the use of software to support interaction and communication.
    (see Dourish 2001)
    Social media, a form of new media, is how marketers express the relevance of social computing.
    The dominant forms of social media for relationship marketing purposes:
    Social Networking Sites (e.g. MySpace, Facebook)
    Blogs (consumer-initiated and firm-sponsored)
    Virtual Communities (consumer-initiated and firm-sponsored)
    Others types of social media include:
    Podcasting
    Instant Messaging
  • Transcript

    • 1. Advances in Relationship MarketingAdvances in Relationship Marketing Thought and Practice: The InfluenceThought and Practice: The Influence of Social Network Theoryof Social Network Theory Presented at thePresented at the Networks and Complex SystemsNetworks and Complex Systems A talk series at Indiana University BloomingtonA talk series at Indiana University Bloomington September 18, 2006September 18, 2006 Constance Elise Porter, Ph.D.Constance Elise Porter, Ph.D. Assistant Professor of MarketingAssistant Professor of Marketing University of Notre DameUniversity of Notre Dame Siêu thị điện máy Việt LongSiêu thị điện máy Việt Long www.vietlongplaza.com.vnwww.vietlongplaza.com.vn
    • 2. Marketing focuses on the exchangeMarketing focuses on the exchange process, making it relational,process, making it relational, by definition.by definition. • Relationship marketing is a dominantRelationship marketing is a dominant paradigm of marketing practice.paradigm of marketing practice. (Dwyer, Schurr and Oh(Dwyer, Schurr and Oh 1987; Morgan and Hunt 1994)1987; Morgan and Hunt 1994) – It emerged in the B2B arena because the number of relationshipsIt emerged in the B2B arena because the number of relationships managed were smaller (e.g. B2B sales)managed were smaller (e.g. B2B sales) – Is is now dominant in the B2C arena via due to technology-ladenIs is now dominant in the B2C arena via due to technology-laden concepts such as “CRM and “One-to-One Marketing”concepts such as “CRM and “One-to-One Marketing” • Marketing researchers and practitioners seekMarketing researchers and practitioners seek to understand relational behavior:to understand relational behavior: – Between firms and customers/consumers (traditional)Between firms and customers/consumers (traditional) – Among customers/Among business partners (emerging work inAmong customers/Among business partners (emerging work in customer collaboration, customer/professionalcustomer collaboration, customer/professional communities/knowledge networks)communities/knowledge networks) Siêu thị điện máy Việt LongSiêu thị điện máy Việt Long www.vietlongplaza.com.vnwww.vietlongplaza.com.vn
    • 3. The fundamental premise of thisThe fundamental premise of this talk….talk…. Because marketing is relational,Because marketing is relational, social network theory (SNT) helps tosocial network theory (SNT) helps to advance marketing theory andadvance marketing theory and practice.practice. Siêu thị điện máy Việt LongSiêu thị điện máy Việt Long www.vietlongplaza.com.vnwww.vietlongplaza.com.vn
    • 4. Discussion TopicsDiscussion Topics 1.1. A Historical PerspectiveA Historical Perspective • How does the marketing perspective compare to theHow does the marketing perspective compare to the sociological perspective?sociological perspective? 1.1. How has SNT advanced relationship marketingHow has SNT advanced relationship marketing thought and practice?thought and practice? • What are the three key perspectives of SNT that haveWhat are the three key perspectives of SNT that have influence marketing theory and practice?influence marketing theory and practice? • How have researchers used these perspectives to advanceHow have researchers used these perspectives to advance marketing theory and practice?marketing theory and practice? 1.1. A Look at the FutureA Look at the Future • How do current trends reflect the importance of SNT toHow do current trends reflect the importance of SNT to marketing thought and practice?marketing thought and practice? • How could social network theory enhance my investigationHow could social network theory enhance my investigation of relationship marketing in virtual communities?of relationship marketing in virtual communities?
    • 5. A Historical PerspectiveA Historical Perspective Siêu thị điện máy Việt LongSiêu thị điện máy Việt Long www.vietlongplaza.com.vnwww.vietlongplaza.com.vn
    • 6. Marketers use basic SNT concepts, butMarketers use basic SNT concepts, but questions and methods differ.questions and methods differ. Points of Alignment:Points of Alignment: • Networks are socially connected actorsNetworks are socially connected actors (more than 2)(more than 2) • Resources (e.g. information) are transferred among actors inResources (e.g. information) are transferred among actors in a networka network • There is a flow of resources within the networkThere is a flow of resources within the network Points of Difference:Points of Difference: • SN theorist (and early marketing researchers) seek toSN theorist (and early marketing researchers) seek to describe individual actors and their relations/patterns ofdescribe individual actors and their relations/patterns of connectionsconnections – Sociometric theory….Whole Network…Software tools (e.g. UCINET and KRACKplot)Sociometric theory….Whole Network…Software tools (e.g. UCINET and KRACKplot) • Contemporary marketing researchers tend to examine specificContemporary marketing researchers tend to examine specific marketing outcomes related to influence in social networksmarketing outcomes related to influence in social networks – Psychometric theory…Sample/Ego-centered…SPSS/SAS for regression techniquesPsychometric theory…Sample/Ego-centered…SPSS/SAS for regression techniques
    • 7. Centrality also is important to both, butCentrality also is important to both, but marketers apply the concept differently.marketers apply the concept differently. Social Network TheoristsSocial Network Theorists • ““Between-ness”Between-ness” – The frequency with which anThe frequency with which an actor is intermediary to otheractor is intermediary to other nodes and controls the flownodes and controls the flow of resourcesof resources • DegreeDegree – The number of actors withThe number of actors with whom an individual has awhom an individual has a direct connectiondirect connection Marketing ApplicationsMarketing Applications • Word of MouthWord of Mouth – Actors:Actors: opinion leaders,opinion leaders, gatekeepers/market mavens andgatekeepers/market mavens and followersfollowers • Those who are likely toThose who are likely to influenceinfluence othersothers • Those who know and provide informationThose who know and provide information but have nobut have no influenceinfluence • Those who are likely to beThose who are likely to be influencedinfluenced viavia passive or active solicitation of infopassive or active solicitation of info – Profile of actorsProfile of actors • Knowledgeable, involved, confident, activeKnowledgeable, involved, confident, active – ContentContent • Valence (positive or negative)Valence (positive or negative) • Product attributes (new, important,Product attributes (new, important, distinctive, risky)distinctive, risky) • Diffusion of Innovations (borrowedDiffusion of Innovations (borrowed from Rogers) & New product adoptionfrom Rogers) & New product adoption
    • 8. Finally, marketers tend to take aFinally, marketers tend to take a relational perspective of networks.relational perspective of networks. (exception: Hopkins, Henderson and Iacobucci 1995)(exception: Hopkins, Henderson and Iacobucci 1995) Relational PerspectiveRelational Perspective • focuses on the extent to whichfocuses on the extent to which all actors are interconnectedall actors are interconnected – RelationsRelations (strands):(strands): content, direction and and strengthcontent, direction and and strength – Ties:Ties: Weak/Strong based on frequencyWeak/Strong based on frequency of social contact, importance ofof social contact, importance of relationrelation – MultiplexityMultiplexity the number of relations in a tiethe number of relations in a tie Positional PerspectivePositional Perspective • focuses on equivalence offocuses on equivalence of actors in a subgroupactors in a subgroup based on social stratabased on social strata – Does not assume socialDoes not assume social relationsrelations – Assumes structuralAssumes structural equivalenceequivalence
    • 9. How has SNT advancedHow has SNT advanced relationship marketingrelationship marketing thought and practice?thought and practice? Siêu thị điện máy Việt LongSiêu thị điện máy Việt Long www.vietlongplaza.com.vnwww.vietlongplaza.com.vn
    • 10. The Most Popular SNTThe Most Popular SNT perspectives used in Marketingperspectives used in Marketing • The Structural PerspectiveThe Structural Perspective • The Socio-Economic PerspectiveThe Socio-Economic Perspective • The Socio-Cognitive PerspectiveThe Socio-Cognitive Perspective
    • 11. The Structural Perspective:The Structural Perspective: ““The structure of relations drives marketing outcomes.”The structure of relations drives marketing outcomes.” • Typical Research Questions:Typical Research Questions: – How do relationships influence consumer choice ofHow do relationships influence consumer choice of brands, referral sources and information-seekingbrands, referral sources and information-seeking strategies?strategies? – How do social networks influence behavior andHow do social networks influence behavior and outcomes in an industrial marketing contextoutcomes in an industrial marketing context • Typical MethodsTypical Methods – Interviews and surveys (consumer marketing)Interviews and surveys (consumer marketing) – Case studies, interviews, document analysis and otherCase studies, interviews, document analysis and other qualitative methodsqualitative methods
    • 12. Typical Variables Examined within TheTypical Variables Examined within The Structural PerspectiveStructural Perspective SocialSocial StructureStructure •Interpersonal RelationsInterpersonal Relations •Strength of TieStrength of Tie •Membership in a subgroup for one goodMembership in a subgroup for one good •CentralityCentrality •Cosmopolitaness (out-network ties)Cosmopolitaness (out-network ties) OutcomesOutcomes •Brand CongruenceBrand Congruence •Brand Congruency for Multiple BrandsBrand Congruency for Multiple Brands •Flow of Communication across subgroupsFlow of Communication across subgroups •Diffusion of InnovationDiffusion of Innovation •Likelihood of Activation as a referral sourceLikelihood of Activation as a referral source •InfluenceInfluence
    • 13. Findings based on the Structural PerspectiveFindings based on the Structural Perspective • Brand congruence exists within social cliquesBrand congruence exists within social cliques – even for privately consumed productseven for privately consumed products ((Reingen et al 1984)Reingen et al 1984) • Strong tiesStrong ties andand Weak ties affect marketingWeak ties affect marketing outcomesoutcomes – Strong ties are more likely to be activate as a referral sources…Strong ties are more likely to be activate as a referral sources… – ……but consumers also actively seek information from weak ties inbut consumers also actively seek information from weak ties in situational conversationsituational conversation (Reingen and Kernan 1986; Brown and Reingen(Reingen and Kernan 1986; Brown and Reingen 1987)1987) • Individual influence in the buying systems in aIndividual influence in the buying systems in a B2B contextB2B context (Ronchetto, Hutt and Reingen 1989)(Ronchetto, Hutt and Reingen 1989)
    • 14. The Socio-Economic PerspectiveThe Socio-Economic Perspective ““Utility maximization is enhanced by social ties”Utility maximization is enhanced by social ties” • Typical Research Questions:Typical Research Questions: – Do social ties between buyers and sellers improve theDo social ties between buyers and sellers improve the likelihood of a transaction?likelihood of a transaction? – How does the value of information moderate the effectHow does the value of information moderate the effect of social structure on relationship outcomes?of social structure on relationship outcomes? • Typical MethodsTypical Methods – Surveys and simulationsSurveys and simulations
    • 15. Typical Variables Examined withinTypical Variables Examined within the Socio-Economic Perspective:the Socio-Economic Perspective: SocialSocial StructureStructure •Tie StrengthTie Strength •Relational EmbeddednessRelational Embeddedness •Knowledge RedundancyKnowledge Redundancy OutcomesOutcomes •Likelihood of PurchaseLikelihood of Purchase •Willingness to communicate w/in networkWillingness to communicate w/in network •Information & Knowledge acquisitionInformation & Knowledge acquisition •New Product/Process CreativityNew Product/Process Creativity •Speed of New Product DevelopmentSpeed of New Product Development •Degree of Indebtedness to hostessDegree of Indebtedness to hostess •Moral Hazard/Information ValueMoral Hazard/Information Value ModeratorsModerators
    • 16. Findings based on the Socio-EconomicFindings based on the Socio-Economic PerspectivePerspective • Social tie strength increases likelihood ofSocial tie strength increases likelihood of transactions between buyer and sellertransactions between buyer and seller (Frenzen(Frenzen and Davis 1990)and Davis 1990) – This effect is moderated by perceptions about potentialThis effect is moderated by perceptions about potential opportunism inopportunism in WOM information exchangesWOM information exchanges (e.g. non-(e.g. non- reciprocating behavior)reciprocating behavior) (Frenzen and Nakamoto 1990)(Frenzen and Nakamoto 1990) • Weak ties are not that strong in B2BWeak ties are not that strong in B2B – The more valuable the info, the less powerful is the weakThe more valuable the info, the less powerful is the weak tietie (Frenzen and Nakamoto 1990)(Frenzen and Nakamoto 1990) – Weak ties among horizontal partners are less powerfulWeak ties among horizontal partners are less powerful than among vertical alliance partners.than among vertical alliance partners. (Reindfleisch and Moorman(Reindfleisch and Moorman 2001)2001)
    • 17. The Socio-Cognitive Perspective:The Socio-Cognitive Perspective: “Cognition mediates the effects of social relations.”“Cognition mediates the effects of social relations.” (Bansal and Voyer 2000, Gilly et al 1991, Houston et al. 2001, Ward and Reingen 1996)(Bansal and Voyer 2000, Gilly et al 1991, Houston et al. 2001, Ward and Reingen 1996) • Typical Research Questions:Typical Research Questions: – What is the relationship between social structure andWhat is the relationship between social structure and cognitive structure?cognitive structure? – How do changes in social structure affect existingHow do changes in social structure affect existing social identity, social ties and beliefs?social identity, social ties and beliefs? • Typical MethodsTypical Methods – Interviews surveys, simulations and case studiesInterviews surveys, simulations and case studies
    • 18. The Socio-Cognitive Perspective:The Socio-Cognitive Perspective: Typical Variables ExaminedTypical Variables Examined SocialSocial StructureStructure •Tie StrengthTie Strength •PositionPosition •Physical DistancePhysical Distance •Strata (Profession)Strata (Profession) •Org RestructuringOrg Restructuring CognitionCognition OutcomesOutcomes •Group Cognitive StructureGroup Cognitive Structure •Subgroup Cognitive StructureSubgroup Cognitive Structure •Individual Cognitive StructureIndividual Cognitive Structure •Expertise (sender and receiver)Expertise (sender and receiver) •Business Unit IdentityBusiness Unit Identity •Manager BeliefsManager Beliefs •Info SeekingInfo Seeking •Purchase Decision InfluencePurchase Decision Influence •Efficient use ofEfficient use of •network resourcesnetwork resources •Inertia of Social StructureInertia of Social Structure The socio-cognitive perspective inserts cognitionThe socio-cognitive perspective inserts cognition into the structural perspective, to better explain outcomes.into the structural perspective, to better explain outcomes.
    • 19. A Look at the Future…A Look at the Future…
    • 20. Consumers and marketers areConsumers and marketers are engaged by social media.engaged by social media. • BlogsBlogs – Over 50 million people read blogsOver 50 million people read blogs (forbes.com; Lenhart and Fox 2006)(forbes.com; Lenhart and Fox 2006) – 27% of bloggers want to influence what other people think27% of bloggers want to influence what other people think – 29% of bloggers want to motivate others to take action29% of bloggers want to motivate others to take action • Social Networking SitesSocial Networking Sites – MySpaceMySpace hit #1 on web —29 billion pageviews during two weeks in Julyhit #1 on web —29 billion pageviews during two weeks in July 2006..beating Yahoo and Google (cnn.com)…2006..beating Yahoo and Google (cnn.com)… – FacebookFacebook …over half of college students use…over half of college students use • (Mark Chassman (Facebook), Carol Phillips (Brand Amplitude)—Jan 2006(Mark Chassman (Facebook), Carol Phillips (Brand Amplitude)—Jan 2006 • Virtual CommunitiesVirtual Communities – 84% of Americans visit or obtain info from VCs84% of Americans visit or obtain info from VCs ……more thanmore than participate in transactions online…participate in transactions online… (Horrigan 2001)(Horrigan 2001)……
    • 21. Young consumers dominate theYoung consumers dominate the use of social media.use of social media. (Forrester 2006)(Forrester 2006) • Younger consumers lead in cross channel useYounger consumers lead in cross channel use – 54% of Gen Yers research online and buy offline54% of Gen Yers research online and buy offline – Gen Xers also are more likely to have researched andGen Xers also are more likely to have researched and purchased a product onlinepurchased a product online – Gen Xers also dominate online shoppingGen Xers also dominate online shopping • Younger consumers are:Younger consumers are: – more likely to be influenced by “what’s hot/what’s not”more likely to be influenced by “what’s hot/what’s not” – more likely to read a blogmore likely to read a blog • Older consumers prefer face-to-face interactionsOlder consumers prefer face-to-face interactions • Older consumers are more brand loyal.Older consumers are more brand loyal.
    • 22. Marketing researchers are re-Marketing researchers are re- engaged with the sociological aspectsengaged with the sociological aspects of consumer behavior.of consumer behavior. • Using brand communities andUsing brand communities and virtual customer communitiesvirtual customer communities – Focus on fostering consumer relationships andFocus on fostering consumer relationships and achieve relationship marketing outcomesachieve relationship marketing outcomes (Balasubramanian and Mahajan 2001; Devaraj, Porter and Sun 2006; Dholakia et al 2004;(Balasubramanian and Mahajan 2001; Devaraj, Porter and Sun 2006; Dholakia et al 2004; Kozinets 2002; Muniz and O’Ginn 2001; Porter and Donthu 2004; Schouten and Koenig 2002)Kozinets 2002; Muniz and O’Ginn 2001; Porter and Donthu 2004; Schouten and Koenig 2002)
    • 23. Questions for future researchQuestions for future research integrating SNT and marketingintegrating SNT and marketing • Marketing across culturesMarketing across cultures – We know very little about the role of culture in social networks…We know very little about the role of culture in social networks… any new studies could inform us!any new studies could inform us! • Leveraging social media to drive marketingLeveraging social media to drive marketing relationshipsrelationships – Viral marketing via the InternetViral marketing via the Internet – Social Networking SitesSocial Networking Sites – BloggingBlogging – PodcastingPodcasting – Instant MessagingInstant Messaging Interdisciplinary research opportunities are plentiful!Interdisciplinary research opportunities are plentiful!
    • 24. Findings from My ResearchFindings from My Research
    • 25. My QuestionsMy Questions • Is it possible for marketers to proactively manageIs it possible for marketers to proactively manage VCs in a way that fosters trust? If so, what shouldVCs in a way that fosters trust? If so, what should they do and what type of outcomes should theythey do and what type of outcomes should they expect?expect? • Does gender matter in the trust formation processDoes gender matter in the trust formation process in marketer-sponsored VCs?in marketer-sponsored VCs? • What is the relative value of marketer-sponsoredWhat is the relative value of marketer-sponsored vs. consumer-initiated virtual communities?vs. consumer-initiated virtual communities?
    • 26. Study 1:Study 1: Relational Trust &Relational Trust & Attribution Theory in VirtualAttribution Theory in Virtual Communities…Communities… Embeddedness Content Interaction Sociability FrameworkSociability Framework Cooperation with NPD Info Sharing Loyalty Shared Values Respect Opportunism Attribution TheoryAttribution Theory Relationship Marketing FrameworkRelationship Marketing Framework Trust Perceived EffortPerceived Effort of Marketerof Marketer Relational OutcomesRelational OutcomesCognitive Response of the Community MemberCognitive Response of the Community Member
    • 27. FindingsFindings • Marketers can form trust-based relationshipsMarketers can form trust-based relationships in virtual consumer communities that theyin virtual consumer communities that they sponsor.sponsor. (Porter and Donthu 2006; Devaraj, Porter and Sun 2006)(Porter and Donthu 2006; Devaraj, Porter and Sun 2006) – Sponsor efforts related to Content andSponsor efforts related to Content and Embeddedness drive beliefs and trustEmbeddedness drive beliefs and trust – Trust leads to valuable outcomesTrust leads to valuable outcomes (info, npd, loyalty,(info, npd, loyalty, positive word-of-mouth, brand preference)positive word-of-mouth, brand preference) – Opportunism has little influence on trust formationOpportunism has little influence on trust formation
    • 28. Perceived Degree of Consumer Embeddedness Perceived Quality Of Community Content Perceived Degree Of Community Interaction Trust in a Community Sponsor Belief About A Sponsor’s Sense of Shared Values Belief About Sponsor Opportunism Belief About A Sponsor’s Sense of Respect GENDER Study 2:Study 2: Social Role Theory and Uses andSocial Role Theory and Uses and Gratifications Paradigm of Trust FormationGratifications Paradigm of Trust Formation in Virtual Communitiesin Virtual Communities
    • 29. FindingsFindings • Gender moderates the trust formation processGender moderates the trust formation process of younger consumers.of younger consumers. – Gender moderates trust influences of content,Gender moderates trust influences of content, embeddedness and interactionembeddedness and interaction • For males,For males, sponsor efforts regarding content andsponsor efforts regarding content and embeddedness are more salient trust influencersembeddedness are more salient trust influencers • For femalesFor females, sponsor efforts regarding interaction and, sponsor efforts regarding interaction and embeddedness are more salientembeddedness are more salient – No moderation by gender with direct determinantsNo moderation by gender with direct determinants of trustof trust
    • 30. Study 3:Study 3: The Value of Virtual Communities:The Value of Virtual Communities: A Test of Competing ModelsA Test of Competing Models • Both member-initiated and firm-sponsoredBoth member-initiated and firm-sponsored virtual customer communities can be valuable tovirtual customer communities can be valuable to marketers, based on relational trust in themarketers, based on relational trust in the sponsor.sponsor. (Devaraj, Porter and Sun 2006)(Devaraj, Porter and Sun 2006) – Member perceptions of information quality drive trustMember perceptions of information quality drive trust and value in member-initiated virtual communitiesand value in member-initiated virtual communities – Sponsor efforts drive trust and value in firm-sponsoredSponsor efforts drive trust and value in firm-sponsored communitiescommunities • Higher value is derived from firm-sponsoredHigher value is derived from firm-sponsored communitiescommunities
    • 31. Questions??Questions??

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