EUROPEAN BUSINESS SCHOOL LONDON  A Critical Analysis of Facebookas an Effective Loyalty-Building Tool   (A study in Cosmet...
ABSTRACTIncreasing customer loyalty, to the company, should be the primary objective intoday‘s increasingly competitive bu...
that what companies currently offer to their targets is irrelevant to their preference,thus they fail to keep ongoing enga...
ACKNOWLEDGEMENTSThis dissertation would not have been possible without the guidance and the help ofseveral individuals who...
TABLE OF CONTENTS1) INTRODUCTION ............................................................................................
3.6) Limitations and Constraints......................................................................... 41    3.7) Summa...
LIST OF FIGURESFigure 1.0    The evolution of social customer relationship management ................. 12Figure 2.0    Th...
Chapter 1INTRODUCTION
1) INTRODUCTIONThis chapter will give a brief introduction, outline the main research objectives andstates the purpose of ...
Over the past few years, the phenomenal growth in such a social network site hasattracted the attention of companies to ta...
serving as another supportive relationship building tool to create a brand loyaltyamong target audiences. This paper will ...
1.3) Research JustificationsThis paper aims to provide practical guidance which could be beneficial forcompanies regardles...
Chapter 3 : Research Methodology           This chapter shows how the research was planned and constructed           relat...
research and highlight various important aspects as well as assessing          briefly whether the project aims and object...
Chapter 2LITERATURE    REVIEW
2) LITERATURE REVIEWThe literature review is a crucial aspect of a research study. It enables the researcherto look into p...
2.1) Customer Relationship ManagementOver the past decade or so, it became increasingly difficult to differentiate fromcom...
need to know who its important customers are and what their needs are. This iswhere the technique of customer relationship...
Over the past two years, that evolution has only accelerated. More and moreconsumers are spending more time on their PC an...
Greenberg (2009) defines Social CRM as ―a philosophy & a business strategy,supported by a technology platform, business ru...
Figure 1.0 The evolution of social customer relationship managementSource : Wibbels (2010)To simplify this concept, social...
However, it is very important to bear in mind that social CRM is not a new thing thatis going to replace CRM, it is simply...
Behavioural terms - This measure is usually based on observable,        factual behaviours such as quantity purchased, the...
predictor of future behaviours (Lichtlé and Plichon, 2008). Some researchers arguedthat there could be many other reasons ...
they have a positive, preferential attitude towards it. They like the company, itsproducts or its brands, and they therefo...
Therefore, in order to accurately measure and manage brand loyalty, Day (1969)proposed a two-dimensional vision of loyalty...
2.3) The Loyalty LadderIf customer relationship management is all about engaging in collaborative activitieswith customers...
Figure 2.0 The loyalty ladderSource : Mcdonald and Christopher (2003)Figure 2.0 shows the main steps in the process of att...
   Buyer : After engaging in dialogue with the prospects, Those who decide to       buy the products become buyer. Howeve...
Obviously, an advocate is the company‘s ultimate goal. To have customers ravingabout and telling everyone about the compan...
Figure 3.0 Social networking users by generation             Source : Williamson (2011)Apart from its typical purpose of k...
distribution feature allows companies to get their messages transmitted to otherpotential customers by using their current...
What strengthens online brand communities in social networking sites like Facebookis its interactive communication; either...
likely to ask for their friend‘s or other‘s opinion than ordinary internet users (Lee,2010).Via a peer-to-peer interaction...
2.5) SummaryTo briefly summarize, in today‘s fiercely competitive business environment,companies are adjusting their marke...
actions. This research will focus on both theoretical explanations by describing that aloyal customer is the one who keeps...
Chapter 3   RESEARCHMETHODOLOGY
3) RESEARCH METHODOLOGYThis research is aimed to investigate, analyze and develop an evaluation of theperformance of socia...
Beginning with positivism, positivist relates to the philosophical stance of naturalscientist. This entails working with a...
convincing and credible, the need of firm statistical and other quantifiable data arestill a major subject of concern.To b...
conclusions or theories (Saunders et al, 2009). Generally speaking, an inductiveapproach is aiming at theory building.Howe...
3.3) Time HorizonsWhen planning a research project, there are two types of time horizons to chooseeither between cross-sec...
Quantitative (Establishing statistical reliability)        This process utilizes detailed questionnaires often distributed...
to this research. To further clarify the details of how all data will be collected for thisdissertation, it can be categor...
to the research question or to what the author were looking for. Hence, the semi-structured interview seems to be the most...
The survey was developed by looking at the literature review and relevant findingsthen channelling all the thoughts into w...
By asking questions along the lines of the above, it would be a way of getting    to know exactly what users tend to use F...
This question is expected to find out which of the activities that would     effectively engage customers the most. The ou...
By answering all sections of this survey correctly, it is expected to generate a lot ofinteresting findings which can be q...
With probability sampling, the chance, or probability, of each case being selectedfrom the populations is known and is usu...
survey. The author found that some of the primary respondents also passed       the questionnaire along to friends in his/...
Moreover, ethical issues are also needed to be taken into account, especially whenconducting a research related to persona...
Chapter 4ANALYSIS AND    FINDINGS
4) ANALYSIS AND FINDINGSThe purpose of chapter is to investigate and evaluate the effectiveness of Facebookas a relationsh...
4.1) The Role of Facebook in Cosmetic IndustryNowadays, businesses still continue to utilize the world‘s most popular soci...
Figure 4.0 MAC Cosmetics Facebook fan page  Source : MAC Cosmetics Facebook (2011)One of the early leaders that has been v...
Also there are some other leading cosmetic brands, which already created itspresence on Facebook. Here are a few examples ...
   Bobbi Brown : Bobbi Brown sporadically invites beauty bloggers for       makeovers, workshops and product launches. Vi...
explained how Facebook strategy works for her company. Clinique launched one ofits bestsellers; the 3-step skincare, progr...
4.2) Is ‘Like’ the Beginning of Brand Loyalty ?After investigating how different beauty companies utilize Facebook for the...
Figure 6.0 Number of brands that people follow on FacebookSource : Wibbels (2011)Mentioned by Chaffey et al (2009) at the ...
Figure 7.0 Motivations for ‗Liking‘ a brand‘s fan page on FacebookSource : Self-conducted survey (2011)Figure 7.0 represen...
What can be drawn from this survey is that the ‗Like‘ activity is basically a way toexpress interests in a brand no matter...
that this relationship will last, it all depends on how effective companies utilize thismedia channel. The subsequent sect...
Figure 8.0 The influence of online experience on purchasing behaviour         Source : Wibbels (2011)To test the above hyp...
Assuming that you have participated with a certain brand’s activity on a    Facebook fan page (e.g. ask questions, provide...
   Detractors (score 0-6) are unhappy customers who can damage your brand       and impede growth through negative word-o...
A) Would you decide to make a purchase with the brand?   (Average rating = 6.7)The final result for this answer option cam...
potentially move the same group of people up to another higher step of theloyalty ladder and buyers are now turning into c...
the brand as well as talking positively about it. However, without      necessarily being current customers, ex-users or t...
Figure 10.0 People‘s attitudes towards cosmetic brands‘ Facebook marketing      Source : Self-conducted survey (2011)Most ...
This statistical data reveals that current Facebook marketing campaigns fed tocustomers do not have wow factors as it fail...
and hope that they might like it, companies should be ―pulling‖ information and whatis expected from them. By serving what...
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)
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Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)

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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’, 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.

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?”

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Dissertation : A Critical Analysis of Facebook as an Effective Loyalty-Building Tool (A study in Cosmetic Industry)

  1. 1. EUROPEAN BUSINESS SCHOOL LONDON A Critical Analysis of Facebookas 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
  2. 2. ABSTRACTIncreasing customer loyalty, to the company, should be the primary objective intoday‘s increasingly competitive business environment. Every company relies mainlyon its fixed customers and endeavours to increase the number of such clients asmany researches confirm that loyal customers will generate lucrative returns. Withthe help of advanced technology and the internet, customer relationshipmanagement 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 effectiverelationship strengthening tool to create brand loyalty among target audiences incosmetic industry. Like other businesses, beauty brands have started to create theonline presence on Facebook with the purpose of reaching out for amassingnumbers of potential customers and tightening a relationship with their fan base. Toprovide answers to the prime research question, the research is carefully plannedand 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 bothsimplicity and flexibility to connect and communicate with their audiences and canobviously be another good relationship building tool, yet companies are not able tomanage to reach their ultimate goal; the loyalty. One key problem highlighted here is I
  3. 3. 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 objectivebefore implementing any marketing campaigns on Facebook so as to ensure thecontent relevance for their target audiences. Continuous interaction between fansand brands is vital but it is important not to bombard fans with unnecessaryinformation. II
  4. 4. ACKNOWLEDGEMENTSThis dissertation would not have been possible without the guidance and the help ofseveral individuals who in one way or another contributed and extended theirvaluable 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 thefinal level enabled me to develop an understanding of the subject and to successfullycarry out this project.Also, I am truly indebted and thankful for Khun Nunthawan Laosinchai, whosacrificed her precious time giving me the opportunity to conduct interview andprovide me a valuable richness of information. Moreover, it is a pleasure to thank allmy friends and those who took part and completed the survey. Without this kindcooperation 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 theirfaith in me, allowing me to be as ambitious as I wanted and always encouraging mewith their best wishes. III
  5. 5. TABLE OF CONTENTS1) INTRODUCTION .................................................................................................. 1 1.1) Background ................................................................................................... 1 1.2) Research Objectives...................................................................................... 2 1.3) Research Justifications .................................................................................. 4 1.4) Dissertation Structure .................................................................................... 42) 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 .................................................................................................... 263) 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
  6. 6. 3.6) Limitations and Constraints......................................................................... 41 3.7) Summary .................................................................................................... 424) 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 .................................................................................................... 685) CONCLUSION .................................................................................................... 706) RECOMMENDATIONS....................................................................................... 737) BIBLIOGRAPHY ................................................................................................ 788) 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
  7. 7. LIST OF FIGURESFigure 1.0 The evolution of social customer relationship management ................. 12Figure 2.0 The loyalty ladder ................................................................................. 19Figure 3.0 Social networking users by generation ................................................. 22Figure 4.0 MAC Cosmetics Facebook fan page .................................................... 45Figure 5.0 Example of different cosmetic brands‘ fan page on Facebook ............. 46Figure 6.0 Number of brands that people follow on Facebook .............................. 50Figure 7.0 Motivations for ‗Liking‘ a brand‘s fan page on Facebook ...................... 51Figure 8.0 The influence of online experience on purchasing behaviour ............... 54Figure 9.0 A likely change of customer behaviour after having a satisfactory online experience (using the NPS measurement) .......... 56Figure 10.0 People‘s attitudes towards cosmetic brands‘ Facebook marketing ...... 60Figure 11.0 Popularity of each activity on cosmetic brands‘ fan page ..................... 64Figure 12.0 Example of a cosmetic brand‘s fan page advertisement ...................... 66 VI
  8. 8. Chapter 1INTRODUCTION
  9. 9. 1) INTRODUCTIONThis chapter will give a brief introduction, outline the main research objectives andstates the purpose of the study as well as how the paper will be structured. 1.1) BackgroundFacebook is a social networking website. It allows users to create profiles, connectwith friends, send messages, share photos/contents, play games, etc. Organizationsas well as individuals can have a presence in Facebook by creating pages. A profileand a page are designed to meet different Facebook needs. Facebook page havebeen optimised for a business‘ need to share information, interact with their fans, andcapture new audiences (Facebook Help Center, 2011).To better comprehend the research topic and analysis, it is crucial for readers tounderstand the following terms. The author has listed the most important termsbelow.  ‘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
  10. 10. Over the past few years, the phenomenal growth in such a social network site hasattracted the attention of companies to tap into these potential benefits. Manybusinesses have created their fan pages and added Facebook ‗Like‘ widget to bothon their Facebook pages and other websites outside of Facebook in hope to makeconnections with enthusiasts on this social media platform and that the companieshave the ability to publish updates to the users. Additionally, the ‗Like‘ button not onlyenables users to connect to a fan page but also share content back to their friends asa link of the fan page or website will appear in the user‘s friend‘s news feed and itshows that their friends have already ‗liked‘ it (Trusov et al., 2009).With the prominent features of Facebook are to stay in touch and share experienceswith people you know, it is quickly becoming the new marketing tool for digitalmarketers 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 howeffective the strategic use of Facebook can establish deeper customer relationships. 1.2) Research ObjectivesFollowing the discussion in the previous section, the central research question forthis 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 evaluatethe effectiveness of the world‘s most-visited social networking portal ‗Facebook‘, 2
  11. 11. serving as another supportive relationship building tool to create a brand loyaltyamong target audiences. This paper will limit its focus on cosmetic industry and lookat how likely it is that Facebook can be used to optimize the stated marketingpurpose.So as to direct the author to tackle the main research question posed above, thefollowing 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 andvarious key points will be highlighted throughout the research. 3
  12. 12. 1.3) Research JustificationsThis paper aims to provide practical guidance which could be beneficial forcompanies regardless of the sizes and sectors; either are using, or will use Facebookas a medium to communicate with their target customers. Constructiverecommendations will be proposed on what companies should do in order to get themaximum benefit out of this social media channel. 1.4) Dissertation StructureIn order to facilitate the readers‘ comprehension, this paper will be structured by itslogical flows of arguments. This dissertation is, therefore, divided into 6 chapters asfollows;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
  13. 13. 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 5
  14. 14. 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
  15. 15. Chapter 2LITERATURE REVIEW
  16. 16. 2) LITERATURE REVIEWThe literature review is a crucial aspect of a research study. It enables the researcherto look into past studies and get an insight into what has already been done andallows researchers to build on previous findings and studies. To ensure and facilitatethe reader‘s comprehension about the dissertation topic, this chapter will cover thefollowing 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. 7
  17. 17. 2.1) Customer Relationship ManagementOver the past decade or so, it became increasingly difficult to differentiate fromcompetitors by only serving general product needs (Doole et al, 2005). Some believethat the growth of internet has made information completely transparent and that hasput customer firmly back in control (Seybold, 2001). Now customers expect individualattention and companies have shifted their focus to customer orientation (Sharmaand Sheth, 2004).In this customer-centric environment, all companies are adjusting to a new era ofdeeper customer engagement and seeking the new way to provide long-term valueto customers rather than focusing on a day-to-day transaction. Research has proventhat retention with the current customer base delivers highly desirable results; bothby improved turnover and reduced costs, as clearly acquisition costs are usually farhigher than maintenance costs (Chaffey et al, 2009).In recent years, the main focus has been moved away from customer acquisition tocustomer retention and the need to build up loyalty among these existing customers(Goodwin and Ball, 2003). To retain current customers, the idea of relationshipmarketing should be taken into account. Harker (1999) proposed a definition ofrelationship marketing as follows ―An organization engaged in proactively creating,developing and maintaining committed, interactive and profitable exchanges withselected customers (partners) overtime.‖ So to speak, relationship marketing is astrategy designed to foster customer loyalty, interaction and long-term engagement(Harridge-March and Quinton, 2009). However, to be able to do this, companies 8
  18. 18. need to know who its important customers are and what their needs are. This iswhere the technique of customer relationship management fits in.Kotler and Armstrong (2010) believe that customer relationship management isperhaps the most important element of modern marketing. As defined by Srivastavaet al (1999), ―Customer relationship management (CRM) is a core organizationalprocess that focuses on establishing, maintaining, and enhancing long-termassociations with customers.‖ To simplify this, Fitzgibbon and White (2004) describedthat the fundamental purpose of CRM, however, is to understand customers betterand 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 customersis 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 tomaintain 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 meaningfulways. With the help of new technology and the advent of internet, it provides arelationship building opportunities for marketers by incorporating more interactiveapproaches that help build two-way communication rather than relying on thetraditional one-way media messages. New tools for socializing include everythingfrom e-mail, blogs, websites to online communities and social networks (Kotler andArmstrong, 2010). 9
  19. 19. Over the past two years, that evolution has only accelerated. More and moreconsumers are spending more time on their PC and smartphones screens ratherthan TV screen; using digital video recorders to fast-forward through TV commercialsand 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 ofpeople. Shih (2009) suggested that marketers should be aware of where customersare 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 waypeople connect and communicate. As these technologies are being adopted bypeople of all ages, all over the world, whole new audiences can now easily connectwith anyone through internet access and e-mail address regardless of geographicalboundaries. For business especially, social networking has forever changed the waythey communicate with their customers (Shih, 2009).The impact of an explosive growth of social networking portals has transferred thecontrol over customer/company relationship to a firm grip of customer. Through socialnetworking channels, consumers can openly discuss about and gain moreinformation from their friends or other participants who had experience with thebrand. More importantly, they find this information more trustworthy than thecompany marketing messages (Greenberg, 2009). This transformation in socialcommunication has sparked the need for a new breed of CRM which is called ‗SocialCustomer Relationship Management (SCRM)‘. 10
  20. 20. Greenberg (2009) defines Social CRM as ―a philosophy & a business strategy,supported by a technology platform, business rules, workflow, processes & socialcharacteristics, designed to engage the customer in a collaborative conversation inorder to provide mutually beneficial value in a trusted & transparent businessenvironment. It‘s the company‘s programmatic response to the customer‘s ownershipof the conversation.”Another theoretical definition also comes from Michael Fauschette: ―Social CRM isthe tools and processes that encourage better, more effective customer interactionand leverage the collective intelligence of the broader customer community with theintended result of increasing intimacy between an organization and its prospects andcustomers. The goal is to make the relationship with the customer more intimate andtied to the company by building a public ecosystem to better understand what theywant and how they interact with the various company touch points like sales,customer service etc.‖ (Cited from Ogneva, 2010). 11
  21. 21. Figure 1.0 The evolution of social customer relationship managementSource : Wibbels (2010)To simplify this concept, social CRM is all focused on the idea that customers havechanged and the company has to tackle these changes in customers (See Figure1.0). The expectations of that customer are different, the way they consumeinformation is different, whom they trust is different, how they communicate isdifferent 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 ofmarketing or pushing advertising messages to customers, brands now communicateand collaborate with customers to solve business problems, empower customers toshape their own experience and build customer relationships, which will hopefullyturn them into customer advocates (Greenberg, 2009). 12
  22. 22. However, it is very important to bear in mind that social CRM is not a new thing thatis 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, andcharacteristics of CRM but it is still based on the prime principle that a businessneeds loyal customers‖ said Greenberg (2009).To successfully develop such a strategy, it is useful to acknowledge the concept ofloyalty. The following section will further examine the synthesis of the notion of loyaltyand explore its major theoretical explanations in order to offer readers acomprehensive understanding of customer loyalty. 2.2) Customer Loyalty : Behaviour or Attitude ?Historically, in the marketing literature, numbers of researches have been attemptingto clarify the concept of loyalty (Cunningham, 1961). Since the acknowledgement ofpositive effects of loyalty on a company‘s success, it has been a pivotal reason forthe 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 definescustomer loyalty. Javalgi and Moberg (1997) proposed that it appears to be two mainstrands of thought on the essence of loyalty; behavioural and attitudinal. To definecustomer loyalty, people might have approached it from one of two differentdirections. Although each of these directions is valid, they have different implicationsand lead to very different prescriptions for businesses. 13
  23. 23. 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 acustomers actual conduct (repurchase activity), regardless of any favourableattitudes or internally held preferences that underlie that conduct. By this definition, acustomer is considered "loyal" to a company, if they buy from it and then continue tobuy from it (Sheth, 1968).Since the behaviourist approach of loyalty emphasizes on measurable andobservable customer behaviours, particularly in customer relationship database,these are the fundamental basis of sales figures and profits. For business, thisaspect of loyalty is probably viewed as the most important element (Lichtlé andPlichon, 2008). A company wanting to increase customer loyalty, in this sense, willfocus on whatever tactics that will in fact increase the amount of repurchasebehaviour. This might include a loyalty scheme where various incentives are offeredto generate repeat purchase or to sell more products (Fitzgibbon and White, 2004).However, without realising the motivations behind such behaviour, this behaviouralmeasurement is becoming increasingly technical and cannot always be a precise 14
  24. 24. predictor of future behaviours (Lichtlé and Plichon, 2008). Some researchers arguedthat there could be many other reasons for repeat patronage other than loyalty; forexample, lack of other alternatives, habit, low income, convenience, etc. (Hart, et al,1999). This repeated purchase without emotional attachment to the brand is referredas spurious loyalty (Dick and Basu, 1994) or inertia loyalty (Bloemer and Kasper,1995; Schiffman and Kanuk, 2010). Thus, it can be implied that simple repeatpatronage alone is not enough to guarantee loyalty.Additionally, some of behavioural researchers believe that brand loyalty results froman initial product trial that is reinforced through satisfaction, leading to repeatpurchase (Schiffman and Kanuk, 2010). Many people might equate customersatisfaction with loyalty. However, customers who may have a high degree ofsatisfaction, are not necessarily loyal. Reichheld (1996) measured and showed therelationship between customer satisfaction and loyalty are independent factors. Acustomer 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 thelack of concern on situational variables and personal motivation. Hence, theattitudinal approach has been proposed to offset the drawbacks of behaviouraltheory. In particular, it highlights customer motivation.The attitudinal definition of loyalty, on the other hand, implies that loyalty is a state ofmind. By this definition, a customer is considered "loyal" to a brand or a company if 15
  25. 25. they have a positive, preferential attitude towards it. They like the company, itsproducts or its brands, and they therefore prefer to buy from it, rather than from thecompanys competitors (Siemieniako et al, 2010).Cognitive researchers emphasize the role of mental processes in building brandloyalty. They believe that consumers engage in extensive problem-solving behaviourinvolving brand and attribute comparisons, leading to a strong brand preference andrepeat purchase behaviour (Schiffman and Kanuk, 2010). From this perspective,loyalty is the end result of a psychological evaluation and decision making processwith clear cognitive and emotional undertones (Jacoby and Kyner, 1973).Some research shows that attitudinal loyalty also contributes to a greater tolerance ofnegative experiences and lower price sensitivity (Yoo et al, 2000). This infers thereduced need for incentives to generate repeat patronage, which leads to moreprofitable customers. Besides, customers who have a positive emotional attachmentwith a brand are more likely to generate word-of-mouth advertising than those whoare loyal only on a behavioural basis. This offers added benefits from a customeracquisition perspective (Chaudhuri and Holbrook, 2001).Despite all the advantages of attitudinal perspective, it is also likely that a customerwith favourable attitudes towards a company or brand may not express theirpreference in behaviour; so to speak, no purchase but strong attachment andpredisposition towards the brand. Dick and Basu (1994) referred to this positiveattitude without purchasing activity as latent loyalty or covetous loyalty (Schiffmanand Kanuk, 2010). 16
  26. 26. Therefore, in order to accurately measure and manage brand loyalty, Day (1969)proposed a two-dimensional vision of loyalty (mixed or composite approach). Tosimplify this concept, it can be described that a loyal consumer is the one who willkeep repeatedly purchase the brand and that behaviour must be accompanied bydeeply held positive feelings.After having investigated several explanatory theories for loyalty, the author believesthat rather than relying on the use of only one theory or another, it is better to takeboth behavioural and attitudinal approach into account when looking at particularcontext. Therefore, the author agrees with Day (1969) that the two-dimensionalperspective is the most comprehensive approach to define the word loyalty for thisdissertation.In order to cultivate a long-lasting relationship with customers, companies shouldrecognize the needs of different customers and know how to communicate with them.One analytical framework that could help recognise and identify different levels ofrelationship between companies and customers is called ‗The loyalty Ladder‘. Thefollowing section will focus on how this model works and why it can be useful forcompanies. 17
  27. 27. 2.3) The Loyalty LadderIf customer relationship management is all about engaging in collaborative activitieswith customers to create mutual advantage which leads to a formation of loyalty, it isimportant to know who your customers are and what their needs are so as to providethem useful information (Doole et al, 2005).However, among those target customers, there is possibly a mix of varied types ofcustomers. Thus, in order to build a long-lasting customer relationship, it is importantto look at how to retain or cultivate customers at different stages (Griffin, 1995).Mcdonald and Christopher (2003) outlined the ‗Loyalty Ladder‘ in order to categorizeconsumers according to their level of behavioural loyalty. Generally speaking, thehigher the customers move up the ladder, the higher the level of loyalty they displaythrough their behaviour towards an organization.Based on the preceding discussion on the essence loyalty, the author recognizesthat every behavioural activity is underpinned by attitudinal influence. As bothbehaviour and attitude are interconnected, the author, therefore, assumes thatfocusing on behavioural loyalty will automatically include preferential attitude andthese will drive brand recommendation and increase consumer retention. 18
  28. 28. Figure 2.0 The loyalty ladderSource : 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, theaim 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
  29. 29.  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 thecompany‘s products and work hard to convert them to a buyer, this process is knownas „customer catching‟. But as this ladder shows a long way to go above simply beinga buyer, the company, if it sees this relationship being profitable, it will certainly wantto help buyers ascend towards the top of the loyalty ladder in order to gain theirloyalty. Thus, from this point upward, it is all about enhancing and developing acloser 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
  30. 30. Obviously, an advocate is the company‘s ultimate goal. To have customers ravingabout and telling everyone about the company is a great place to be. What can bedone to move people up the ladder is to actively communicating with customers inorder to find out what they actually want. If their need have been satisfied, it is likelythat a strong ongoing relationship has been formed and that makes them immune tothe pull of competition (Griffin, 1995).The succeeding section will examine the role of Facebook as a customer relationshipbuilding tool for today‘s businesses. Also, the author will investigate how relationshipvia the world‘s most popular social network platform is developed and how itinfluences customer behaviour as well as how companies can capitalize from thisphenomenon. 2.4) Facebook and Customer Relationship ManagementIn recent years, social networking sites have experienced explosive growth over theinternet and revolutionized the way people communicate and share information withone another in today‘s society. Figure 3.0 shows that across all generations, morepeople 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 activeusers and 67% of global social networkers accessed to the site during each month. 21
  31. 31. Figure 3.0 Social networking users by generation Source : Williamson (2011)Apart from its typical purpose of keeping in touch and connecting with long lostfriends, lovers and family, currently various companies see this great market potentialand 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 aswell as its size. When logging on Facebook, people usually look through everythingposted on their news feed and this is considered a great opportunity for companies tohave their marketing information exposed to their target audiences. Additionally,Facebook users tend to enjoy content sharing and this has usually been donethrough the relationship network of users. This means Facebook‘s fast content 22
  32. 32. distribution feature allows companies to get their messages transmitted to otherpotential customers by using their current customers as a medium of communication.Besides making personal connections, Facebook is a place where buying decisionsare influenced through group interactions (Lee, 2010).So far, it appears that the popularity of Facebook gives the companies a goodopportunity to address their information to more precise target groups due to the highamount of information customers are publishing about themselves on their profilepages (Usha, 2009). Also, online social networks help connect like-minded peoplewhich make it easier for companies to target and to tailor their market offerings andcommunications to the special preferences and behaviours of target segments. Thiscould 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 networkplatform allows companies to enhance their performance of relationship marketing intwo ways. Firstly, it offers an opportunity for interaction with potential prospects andsecondly companies can observe and gain deeper understanding with the nature andcontent of community through such interactions. Companies, thus, can better extractwants and needs and the potential uses of the product so that they eventually createmarketing offers expected to meet the needs of those members accordingly.Moreover, it is believed that brand communities not only provide marketers withinsights about consumers but also contribute to new customer acquisition, loyaltyreinforcement and increase demand for products (Muniz and Schau, 2007). 23
  33. 33. What strengthens online brand communities in social networking sites like Facebookis its interactive communication; either between like-minded people, guest expertsand beginners, or buyers and brand‘s managers. Apart from building relationship,interactive communication also gives members access to abundance of exclusiveand free contents. These combinations are what keep and draw consumers back tothe site on a frequent and regular basis (McWilliam, 2000). The intentions ofmembers to revisit a certain brand‘s fan page could, thereby, be expressed as a formof 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 toexpress their opinions and feedbacks (Universal Mccann International, 2008). As oneof 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 suchcustomer 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 tendto 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 fromfriends and other personal contacts rather than a company‘s formal promotion mix.Accordingly, the nature of Facebook offers itself nicely in line with that WOMmarketing purpose by catering a convenient way for suggesting other members andsharing information. Recent research shows that social networking people are more 24
  34. 34. 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, influencemembers to commit to an organization (Kim et al, 2008). As conceived by Berry andParasuraman (1991) and Morgan and Hunt (1994), ―Commitment is a necessarycondition for developing ongoing long-term relationships‖. The relationships,developed among those within social networks, results in social and emotional bondsbeing formed and that create a sense loyalty. Sheth and Parvatiyar (2002) suggestedthat strong social bonds are difficult to be replicated by competitors. Thisrelationship creates an entry barrier and potentially leads to sustainable competitiveadvantage.However, effectiveness of this new social media marketing option also depends onlevel and frequency of how the companies interact with customers. Despite all theadvantages, using social networking sites can be a double-edged sword. Expertwarned that it could backfire if the companies overused this communication channel.Arun Sundararajan, a professor of information, operations and managementsciences at New York University once mentioned ―There is a fine line between givingpeople a steady stream of useful information and bombarding them. If you do thelatter you are in danger of turning customers off‖ (Prentice, 2009). 25
  35. 35. 2.5) SummaryTo briefly summarize, in today‘s fiercely competitive business environment,companies are adjusting their marketing strategies to be more focused on building along-term partnership and loyalty as proven by many studies that loyal customersproduce more profitable bottom-line profits. The marketing technique that isemployed so as to deliver this ultimate result is called customer relationshipmanagement (CRM).With the advent of new digital technology and the internet, the channel ofcommunication between companies and customers has been drastically changed.More and more customers seek for more information about the products of theirinterest through internet. Marketers, therefore, need to approach their targets throughthis preferred channel. Over the last few years, one of the promising medium that hasbecome a centre of attention is Facebook; where a large and growing portion ofsome of the most valuable demographics are spending more of their time on .Facebook‘s simple feature of connecting and sharing with friends present a greatopportunity for companies to develop promotional strategies that are more of apersonal conversation with customers.Therefore, it is believed that strong customer relationships, in this case loyalty, canbe established through the strategic use of this media channel. The notion of loyaltycan be broadly defined into two terms; behavioural and attitudinal. Behaviouralperspective only determines loyal consumer by his/her repurchasing activity whileattitudinal approach emphasizes more on a psychological influence behind such 26
  36. 36. actions. This research will focus on both theoretical explanations by describing that aloyal customer is the one who keeps repeatedly buying products from a brand andsuch 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 definedresearch plan and appropriate methods to obtain relevant data as well as being fullyaware of potential obstacles that might occur. Those aforementioned issues will belooked at in the following chapter. 27
  37. 37. Chapter 3 RESEARCHMETHODOLOGY
  38. 38. 3) RESEARCH METHODOLOGYThis research is aimed to investigate, analyze and develop an evaluation of theperformance of social networking site ‗Facebook‘; serving as an effective marketingoption to instill a sense of brand loyalty among targeted audience in cosmeticindustry.The purpose of this chapter is to explain how the research is designed and themethods employed to collect relevant data as well as mentioning the limitations andconstraints that either hindered or intervened with the result of data collection. 3.1) Research PhilosophyThis research began with a simple question: Can and how might Facebook be usedto nurture brand loyalty among consumers in cosmetics industry? When undertakinga research, it is important to consider different research paradigms and matters ofontology and epistemology. Since these parameters describe perceptions, beliefs,assumptions and the nature of reality and truth (knowledge of that reality), they caninfluence the way in which the research is undertaken, from design through toconclusions.A research philosophy is a belief about the way in which data related with aphenomenon should be gathered, analysed and used. Three major researchphilosophies have been identified according to Saunders et al (2009), namelypositivism, interpretivism and critical realism. 28
  39. 39. Beginning with positivism, positivist relates to the philosophical stance of naturalscientist. This entails working with an observable social reality and the end productcan be law-like generalizations (Saunders et al, 2009). Although it allows researchersto use an existing theory in order to develop a hypothesis which then will be testedthrough various quantifiable methods, it does not discover the meanings peopleattach to social phenomena and understand social interactions. Positivists believethat knowledge can be described by the traditional scientific approach and consists ofverified hypotheses that can be regarded as facts or laws. In this paper, the authoraims to investigate a current phenomenon of Facebook marketing and people‘sattitude towards it. Thus this approach is considered inappropriate for thisdissertation. Unlike the object, human behaviour is constantly changing over time,the end result could not deliver generalised conclusions as expected by positivisticapproach.On the other hand, interpretivism argues that the social reality is far too complex tolend 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 thedifference between conducting research among people rather than objects(Saunders et al, 2009). This approach allows researchers to explore an insightthrough various qualitative methods which the author finds it, somehow, works oncertain aspects of this dissertation, especially to find out how and why Facebookmarketing has become increasingly popular and people‘s feeling/opinion towards thiscurrent phenomenon. However, the author was aware that the truth is the conclusionof mind and prejudice of individuals. To be able to make this dissertation more 29
  40. 40. convincing and credible, the need of firm statistical and other quantifiable data arestill a major subject of concern.To be able provide a comprehensive knowledge to the research question, the authorsought for an approach which gives way both quantitative and qualitative methods.The last standpoint, critical realism, believes that it is impossible for humans to trulyperceive reality with their imperfect sensory and mental capacity and researchers canidentify what we do not see through practical and theoretical processes. Also it isquite similar to positivism in that it assumes a scientific approach the development ofknowledge (Saunders et al, 2009). Therefore, the philosophy that the author viewedas the most appropriate for this dissertation is critical realism because it involves theneed for and possibility of critically evaluating existing theories. At the same time, thisperspective acknowledges the human perception towards social reality. 3.2) Research ApproachThe research question posed above influences on choices of research approach as itwill serve as a plan of how the paper will be carried out to answer the proposedresearch question. According to Saunders et al (2009), there are two broad methodsof reasoning - inductive and deductive.An inductive approach works from specific observations to broader generalizationsand theories. In this approach, the researcher would begin with specific observationsand measure in order to detect patterns and regularities, formulate some tentativehypotheses that could be explored, and finally end up developing some general 30
  41. 41. conclusions or theories (Saunders et al, 2009). Generally speaking, an inductiveapproach is aiming at theory building.However, the purpose of this dissertation is not building theories but more on testingtheories. Hence, an inductive approach cannot be applied to the conduct of thisdissertation. In contrast, a deductive approach works the other way, moving from themore general to the more specific. In this approach, the researcher would create ahypothesis based on theories and then develop a research strategy which wouldallow for the testing of hypothesis. Conclusion, thus, follows logically from premises(available facts) (Saunders et al, 2009). So to speak, a deductive approach is aimingat 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 andwhat the outcomes of those studies were. This therefore allowed the author togenerate some research questions. Once the research questions had been decidedupon, the following step was to decide on what the approach and the method wouldbe when tackling the data. Finally, the author attempted to answer the researchquestion by employing various data collection techniques to allow for better resultsobtained. 31
  42. 42. 3.3) Time HorizonsWhen planning a research project, there are two types of time horizons to chooseeither between cross-sectional studies or longitudinal studies. The first horizon isoften referred as a ―snapshot‖ because the research is made at a particular point oftime. This method is commonly used for research projects that have a time limit. Thelongitudinal time horizon is also known as the ―diary‖ perspective which observespeople or events over time (Saunders et al, 2009).This dissertation follows the first horizon; cross-sectional studies, mainly because ofthe time limits that does not allow for a study over a period of time. Hence, the authorwould like to describe this research work as a ―snapshot‖. 3.4) Data CollectionThe research topic will determine what types of data are necessary for the study.Broadly speaking, there are two types of data; quantitative and qualitative (Saunderset al, 2009). To simplify these two terms, brief explanations are shown as follows; 32
  43. 43. 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. Thequantitative data will be collected by a self-completion online survey, which willemphasize on the consumer´s perception about companies using Facebook as anew medium of communication, whereas, the qualitative data will be gatheredthrough in-depth interviews with some marketers and managers in leading cosmeticcompanies. The interviews will mainly focus on how effective Facebook is to enhancecustomer relationship. By combining the two approaches, it will allow for some of thequantitative answers to be backed up by the qualitative answers, which in turn willgive the researcher a better understanding of the research topic. Additionally,extensive use of internet and online database will further provide supporting information 33
  44. 44. to this research. To further clarify the details of how all data will be collected for thisdissertation, it can be categorized by the sources of information as follows;3.4.1) Primary DataThe primary data will mainly be collected through semi-structured interviews(qualitative) and a self-completion online questionnaire (quantitative).1) InterviewInterviews can be classified as followings; structured, semi-structured andunstructured. Structured interviews use a standardised set of questions in everyinterview conducted. This type of interview is more suitable for quantifiable datahence it is also called quantitative research interviews (Saunders et al, 2009). Forthis dissertation, the author aims for a qualitative outcome, thus structured interviewis considered unsuitable.By comparison, semi-structured and unstructured interviews are less attached to theset 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 becovered. This type enables more flexibility and interaction between interviewer andinterviewee, while unstructured interview is informal and allows interviewer to explorea 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
  45. 45. 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 tobe covered is prepared beforehand as a guideline for the interview althoughadditional questions may be required and these may vary from interview to interview.Managers and marketers from major cosmetic companies will be contacted andinterviewed. The focus of the interviews will be on their past experience and attitudetowards Facebook as a marketing tool for their relationship marketing campaign andto what extent this marketing technique delivers any satisfied outcomes and providesextended opportunities for their businesses.2) SurveyAccording to Saunders et al (2009), the survey technique is usually associated withthe 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 questionnairewill be sent out to the author‘s network community in Facebook and those who joinonline beauty communities. The content of the survey will mainly emphasize on theconsumer‘s perception towards a company‘s new way of communication and to whatextent their attitude and behaviour has been influenced by an experience throughsuch virtual interactions. The questionnaire will be created and the data will beanalysed through online survey software; surveymonkey.com. 35
  46. 46. The survey was developed by looking at the literature review and relevant findingsthen channelling all the thoughts into what the research questions were to be. Oncethese were decided upon, they were broken down into different headings, allowingfor certain questions to be grouped together in order to get a consistent flowthroughout the survey.The survey was divided into 3 sections as follows; (For further information, seeAppendix 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
  47. 47. 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
  48. 48. 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
  49. 49. By answering all sections of this survey correctly, it is expected to generate a lot ofinteresting findings which can be quantified into charts and others to get a full graspof to what extent Facebook can help cultivate a sense of brand loyalty between fansand brands.3.4.2) Secondary DataTo find secondary data, the author will use the internet extensively. Google.co.uk willbe 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 datafound on the internet and will therefore only use websites that the author deemcredible.Furthermore, the author will use online databases such as Datamonitor and Emeraldas well as online journal databases to find supporting information for this dissertation. 3.5) SamplingsBy undertaking a questionnaire survey, it is important to employ appropriatetechniques to collect relevant data. With limited time and budget constraints, it wasimpracticable to collect data from the entire population. Therefore, a small, butcarefully chosen sample can be used to represent the population. The samplereflects the characteristics of the population from which it is drawn. Samplingmethods are classified as either probability or non-probability. 39
  50. 50. With probability sampling, the chance, or probability, of each case being selectedfrom 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, thusa probability sampling seems not to be most appropriate technique. On the otherhand, non-probability sampling allows researcher to select a case from the totalpopulation which is not known and members are selected from the population in anon-random manner (Saunders et al, 2009).Non-probability method includes various types of sampling. Ones that the authoremployed 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
  51. 51. 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 ConstraintsThe author has mostly faced several limitations and constraints during the process ofprimary data extraction. As the majority of respondents are expected to be Thai, theobvious limitation could possibly be the fact of language barrier. When completingthe online survey, respondents might either be short in time or do not fullyunderstand all questions. Thus they might not fill in the survey properly or mightleave the survey without entirely completing it. This could affect the validity ofinformation obtained by this internet survey. However, the author was well aware ofthis potential problem and in order to avoid it, the author has put the Thai translationin brackets next to all questions and answer options. Also, time constraint wasconsidered a main obstacle. Due to a time limitation, the author was only able to finda limited number of responses which would be a threat to reliability.Another potential problem was the distance interview with experts. As, the author hadno personal relationship with any of interviewees, it was expected that they were notlikely to share any negative aspects of using this marketing tool or would say whatthey 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 andreliability of the outcomes. 41
  52. 52. Moreover, ethical issues are also needed to be taken into account, especially whenconducting a research related to personal ego. The author realised that some of thequestions might be intrusive as they could identify a social class of respondents orlevel of income. For example, the question that asked respondents to choose thecurrent cosmetic brands they use. Some respondents might not have chosen oranswered the real brand that they currently use, instead they distorted the facts byselecting a mid-high label brands listed in available alternatives so as to reflect theirhigh social status and luxurious personal taste. To minimize this limitation, the authorprovided additional comment field where respondents could put their own answers.Another example could be when participants responded to the question that askedfor their motivations for ‗liking‘ a certain brand. Some might hesitate to admit that theybecame a fan of the brand, only for discounts or freebies, but opted for other choicesthat sounded less economically-driven. These ethical issues might affect the qualityof outcomes. 3.7) SummaryIn this chapter, the author has stated how the research is approached. This includeslooking at different research philosophies, research approaches and time horizons.Both quantitative and qualitative data are obtained in order to provide a firm supportfor further analysis. The means of data collection employed in this dissertationinvolve a survey questionnaire and semi-structured interviews with experts. Also,possible limitations and constraints are highlighted. The effectiveness and outcomesof methods applied will be shown in the next chapter. 42
  53. 53. Chapter 4ANALYSIS AND FINDINGS
  54. 54. 4) ANALYSIS AND FINDINGSThe purpose of chapter is to investigate and evaluate the effectiveness of Facebookas a relationship building tool. The results obtained from the author‘s own researchand relevant findings will be used to critically analyze and ultimately answer theresearch 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
  55. 55. 4.1) The Role of Facebook in Cosmetic IndustryNowadays, businesses still continue to utilize the world‘s most popular social mediasite; Facebook, as a part of their advertising campaigns. In fact, they are likely todesignate more time, effort and even funds towards developing strong social mediapresence (Philips et al., 2010).Those businesses include leading beauty brands as well. Although it is very typicalfor 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 ofbeauty advertisements and free samples - Facebook has increasingly played a majorrole 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 andengagement metrics, showed that almost 75% of the top 50 loyalty leader came fromthree categories, which one of them is cosmetics (O‘Leary, 2010). As mentionedearlier, cosmetic and beauty consumers tend to be very brand loyal, as equally whenit 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 onFacebook. One of the marketing managers was interviewed about its expansion intoFacebook, she said ―Our expanding Facebook community provides us with anengaged consumer group that understands our products and wants to learn aboutthe future of our brands.‖ (Dey, 2010). 44
  56. 56. 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 isMAC 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 frequentlylaunches news alerts and articles about their new collections as well as interacts withtheir supporters to cultivate a sense of community on its fan page (MAC CosmeticsFacebook, 2011). (See Figure 4.0) 45
  57. 57. Also there are some other leading cosmetic brands, which already created itspresence on Facebook. Here are a few examples as follows (See Figure 5.0);Figure 5.0 Example of different cosmetic brands‘ fan page on FacebookSource : 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
  58. 58.  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 exclusivecontents, 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, itdrives 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 areadded to their interests section of their Facebook profile, the page is shared out tothe news feeds where it is visible to all of the user‘s friends, and now brands gain theability to send updates to the user via their news feed. Social media marketers ingeneral are fond of garnering more ‗Likes‘ for their Facebook fan pages, in hopes ofeither providing social proof through sheer number of fans or amassing subscribersto 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
  59. 59. explained how Facebook strategy works for her company. Clinique launched one ofits 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 freesamples 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 forits 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 whatpeople really think.‖ Also it helps bridging the gap between online and offlinechannels by turning those who participated online to join offline activities.And of course, it helps generate buzz marketing. After fans register, they can invitefriends to do so as well. ―We experience a massive number of our online fansqueuing up over our retail counter. This creates a strong spill-over effect on ourpotential customers and passers-by. By the end of that day, our total sales wereboosted by 40%.‖ said (Laosinchai, 2011).However, quantity does not mean quality. So far, there are no clear evidencesclaiming the effectiveness of the ‗Like‘ tactics, in terms of both transactional andrelational. When it comes to CRM, marketers should be aware of what it means whenpeople ‗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 willlook at what actually drives ‗Like‘ behaviour and to what extent is ‗Like‘ a sign ofaccomplishment? 48
  60. 60. 4.2) Is ‘Like’ the Beginning of Brand Loyalty ?After investigating how different beauty companies utilize Facebook for theirmarketing purposes, it seems that this new marketing tool is very well-receivedmeasuring by an increasing number of fans. However, to become a fan is just simplyclicking ‗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 marketingtactics to engage with target audiences. Although a continuous rise in number of fansis basically a good sign, it does not necessarily mean that these people are loyalcustomers. Without recognising the real motivations behind such behaviour, it isimpossible to realise what actually triggers this phenomena and thus follower countsalone are a poor benchmark for determining whether a social media campaign isreally influential.The recent study by Williamson (2011) found that there were other factors that mainlymotivated 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 priceincentives (See appendix 4). What can be assumed from this finding is that themajority of fans could easily be swayed by more competitive deals in price. This typeof ‗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 inertialoyalty (Bloemer and Kasper, 1995; Schiffman and Kanuk, 2010). 49
  61. 61. Figure 6.0 Number of brands that people follow on FacebookSource : Wibbels (2011)Mentioned by Chaffey et al (2009) at the beginning of literature review that in order tobe successful in this information-rich business environment companies should nolonger base on features like price and quality alone. Today it is more the perceivedexperience 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 thatmost of respondents do not particularly ‗Like‘ only one brand but approximately theyfollow at least 2-5 brands on Facebook (See Figure 6.0). 50
  62. 62. Figure 7.0 Motivations for ‗Liking‘ a brand‘s fan page on FacebookSource : Self-conducted survey (2011)Figure 7.0 represents the outcomes of a self-conducted survey. The results came outquite similar to what had been done by Williamson (2011). Discounts and priceincentives still play a major role, still, it comes behind the fact that most of theparticipants ‗Like‘ a fan page because they want to stay informed about the futureproducts and activities of the brand. Another common response found in this surveyis that many consumers will follow a brand if they are current customers. 51
  63. 63. What can be drawn from this survey is that the ‗Like‘ activity is basically a way toexpress interests in a brand no matter what the underlying motivations are.Participants who ‗Like‘ a fan page, therefore, can be categorized as targets accordingto the loyalty ladder by Mcdonald and Christopher (2003). Also, the author believesthat it is very likely that some of these targets might want to obtain more informationfrom the brand. Hence, they are becoming prospects. For those who describedthemselves as current customers; either first-time or ex-customers, the author wouldlike to identify them as buyers.Having looked back at the literature review, those three aforementioned rungs of theloyalty 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 guaranteethat this ‗Like‘ effect will last in the long-run. As a result of this analysis, the authorcomes to the conclusion that the ‗Like‘ activity on Facebook is only the verybeginning 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 offeatures that fits in with CRM. However, from my experience with this social mediatool, I would say that it is still at an infant stage and currently works best at acquiringcustomers. 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 usabout people who ‗Like‘ a fan page is that they implicitly signify their interest andwillingness to engage with future brand‘s communications. Nevertheless, to ensure 52
  64. 64. that this relationship will last, it all depends on how effective companies utilize thismedia channel. The subsequent section will further explore whether there is anopportunity for brands to use Facebook as a medium to foster a deeper customerrelationship. 4.3) Could Facebook help turning ‘Like’ to ‘Love’ ?If ‗Like‘ is the beginning of brand relationship, what should companies do to ensurethat this relationship will be long-lasting? This section will find out whether Facebookexperience could help increase customer loyalty. Referring to the notion of loyalty,the author will base all assumptions on the two-dimensional approach, proposed byDay (1969), that a loyal consumer is the one who will keep repeatedly purchase thebrand 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, itis still a subject of concern whether that positive attitude would affect consumerpurchasing behaviour. Figure 8.0 demonstrates that approximately 97% of peoplewho have experienced with a certain brand online are likely to make a purchase withthat brand. A recent survey from Wibbels (2011) on ‗What happens when peoplefollow a brand?‘ confirms that online brand engagement has strongly influencedpeople‘s buying decision. Over 40% said that they usually consider the brand whenin the market for product or even buy products from the brand. Besides, an increasein sales, it also drives recommendations. About 40% of fans said that they usuallyrecommend the brand to others (See Appendix 6). 53
  65. 65. 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 toexamine how likely it is that consumer‘s behaviour would change after engaging withthe brand on Facebook. Consequently, all participants were asked to respond to a0-to-10 point rating scale on the question shown as follows; 54
  66. 66. 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 theloyalty ladder model and partly incorporate with the customer loyalty metric ‗NetPromoter Score (NPS)‘, developed by Reichheld (2003). The logic behind the NPScalculation 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 ofthree groups; Detractors (0–6 rating), Passives (7–8 rating), and Promoters (9–10rating). 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. 55
  67. 67.  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 averagerating of four answer options levels at around 7 (See Figure 9.0). The detailedexplanations 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) 56
  68. 68. 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 to7, based on the scale of NPS measurement, can be in both detractors andpassives categories. However, the result of 6.7 is much closer to 7, thismakes the author believe that it can potentially fall into a passivescategory. What the average rating score of 6.7 points out is that ifcompanies put an effort to create a satisfactory online experience, this caneventually turn people who ‗Like‘ a brand to make an actual purchase.Regarding to the loyalty ladder, if people who ‗Like‘ a brand, referred in aprevious section as targets and prospects, make their first purchase, theyare now becoming buyers. Therefore, this outcome has proven thatsatisfactory online engagement could move consumers up to the higherrung 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 affectrepurchase decision.Respondents who once decided to make their first purchase with thebrand, again, are likely to make a repeat purchase if they are still happywith their experience on fan page. Consequently, online experience can 57
  69. 69. potentially move the same group of people up to another higher step of theloyalty 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 thisalternative. What can be drawn from this positive figure is that if a brandstill can provide a fulfilling Facebook experience to customers at the levelwhere their need have been met or exceeded, they are likely to considerthe brand for future needs and even try a broader range of products.Customers who consider buying greater lines of products, they are literallytaking another step closer to the top rung of the loyalty ladder and thisgroup 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 at7.2. This result indicates a likely chance that satisfactory online brandengagement will trigger recommendations; a brand‘s ultimate goal inaccordance with the loyalty ladder.At this point, the same satisfied clients who start to make a referral, arenow stepping towards the top of the loyalty ladder and becomingadvocates; people who keep consistently buying and trying products from 58
  70. 70. 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 fulfillingexperience on fan page can help customers ascend towards the top of the loyaltyladder or, generally speaking, flip their followers into loyal users. Therefore, it can bepredicted that elements of a brand‘s fan page on Facebook has a potentialperformance to deepen relationship between fans and brands and eventually turn‗Like‘ to ‗Love‘.However, the situation mentioned above will never happen unless brands can deliverwhat their customers actually want. In reality, things rarely go like how ones want it tobe. Another question was conducted in order to gauge an attitude towards currentmarketing activities of beauty brands on their fan pages and it clearly shows that only35.9% said that they found the current contents useful and interesting, while the resthave neutral feeling and even worse, they don‘t bother looking at it (See Figure 10.0). 59
  71. 71. 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 Facebookmarketing is just another form of commercial advertisement, while some said it lacksof engagement and contains bad contents. Moreover, about 80% of totalrespondents 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). 60
  72. 72. This statistical data reveals that current Facebook marketing campaigns fed tocustomers do not have wow factors as it fails to keep fans coming back to a fan pagemore often. There are several reasons that could contribute to this ratherdisappointing result. The author believes that one of the main reasons stems from thebrands themselves that they cannot provide relevant contents to their audiences.Due to the Facebook bandwagon effects and its simplicity, marketers might rush toenter Facebook without having clear objectives and might oversimplify this extensivenetwork. Being lured by massive number of potential customers, marketers mightoverlook some essential steps such as to clearly specify their targets and hence theycannot tailor the offers that suit their needs. So to speak, the brands do not knowtheir community thus they cannot approach them in the right way. Without anyappealing contents, fans are now playing the role of passive consumers who onceclicked ‗Like‘, just to stay informed and hope that one day there might be someinteresting contents popping up in their news feed.ELCA brand general manager, Laosinchai (2011), responded to these unpleasantfigures ―I have to admit that it is not good news. However, it is too costly if we don‘tjump on this bandwagon. Like what I have mentioned earlier, Facebook marketing isstill at its infancy and there are still a lot of lessons to learn. The best that we can donow is trying to understand what customers want out of this media channel andcreate marketing offers in accordance with the changing needs‖In order to successfully turn ‗Like‘ to ‗Love‘ or cultivate a sense of loyalty, Williamsonand Maul (2011) suggested that company should use ‗Like‘ wisely by aiming to drivemore engagement, not just collecting fans. Instead of ―pushing‖ information to fans 61
  73. 73. and hope that they might like it, companies should be ―pulling‖ information and whatis expected from them. By serving what accommodates consumer preference, thiswill keep fans coming back to a fan page more often and that will eventually convertpassive fans into active fans who will contribute more of their time mingling with thebrand. Through continuous interactions, a sense of community will be ultimatelyestablished. The author believes that the element which is important to ensure asuccessful presence on Facebook is that brands and fans form a like-mindedcommunity where all benefit from each other.What can be drawn from this section is that Facebook can potentially help nurture abrand loyalty among consumers in cosmetic industry. Still, what brands are currentlydoing with their Facebook marketing do not deliver the desirable results. So as toimprove the situation, the author believes that companies should strive to understandconsumer preference. The last section will discover the mind of consumers andvarious elements which could probably make a brand‘s fan page more appealing. 62

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