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Theoretical Framework
The theoretical framework consists of fundamental marketing- and more detailed theories linked to social media and Facebook marketing. Our intention with this is to give the reader a more comprehended overview of our theoretical framework. We will start with traditional marketing theories, continue with information about social media and Facebook marketing. The last part will be dedicated to webtraffic measurements, trust and risks.
Marketing Strategy
Marketing strategy is a process that can allow an organization to concentrate its limited re-sources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage (Baker, 2008). Most marketing strategies are developed as long term plans over many years, with tactical plans that specify goals that retailers strive to achieve during the recent year. The time horizons for marketing strategy becomes shorter as the environment the retailer operates in changes, something eCommerce retailers have to struggle with as they operate in a very dynamic environment (Aaker 2007). Historically strategies have been divided into two different forms. The two forms are differenced by Lynch (2000) as pre-scriptive and emergent models. Prescriptive models regard strategic planning as a prede-termined process where all parts of the strategy are carefully composed in a preset order from analysis to development and implementation. Emergent models on the other hand are less strict and more chaotic. The different planning stages are overlapping each other creating a more dynamic strategic planning. The latter appear to be more appropriate for e-commerce retailers‘ rapidly changing environment. Already before the internet era criticism against traditional strategy planning was not uncommon. Mintzberg (1994) argued that there were no strong correlation between the degree of planning and the profitability. Bicknell (2000) also claims that the business environment is changing so rapidly that plan-ning has to be revised so regularly that it is not worth spending so much time on strategic planning. Venkatram also supports Bicknell and think strategy models need to stop being calendar-driven as the environment is less predictable. He also embraces more experimen-tal business models since the future is no longer obvious as it was in the industrial age (Harris & Dennis, 2002). Chaston (2001) claims that despite many internet entrepreneurs unwillingness to spend time on strategic marketing planning, there are possible benefits. Chaston states that it:
– Forces an evaluation of the external environment and the organization‘s internal competencies.
– Quantifies the expected performance goals for the new venture.
– Identifies the scale of the required resources and the degree to which these will have to be met through attraction of external funds.
– It creates a ―road map‖ that can be used to monitor actual performance against ex-pectations at the launch of the venture.
Chaston also notes that the planning model can be entered at any point and does not have to be followed as a sequential process. A strategy must not be set in stone and it can be valuable even in e-Commerce retailers‘ dynamic environment.
Relationship marketing
Relationship marketing (RM) was first defined as a form of marketing developed from di-rect response marketing campaigns that put emphasis on customer retention and satisfac-tion instead of sales. RM recognizes the long term value of having loyal customers. Morgan and Hunt (1994) define RM as ―establishing, developing and maintaining successful rela-tional exchanges‖. The whole concept has its origins in profitability. It cost much more to attract a new customer than to retain existing customers. Ban and Co. found that a 5 per-centage increase in the number of retained customers lead to an increased profitability of 25-80 percent (Payne, 1995). Loyal customers also become more profitable over time as the relationship with the company develops. Payne developed a ―customer loyalty ladder‖ that demonstrate the different stages of customer loyalty from prospect customer to the top of the ladder, partner. (See Figure 4).
Figure 4. Payne‘s ladder of customer loyalty.
By focusing on high quality service to the customer, the companies chance of establishing good customer relationships increases. If the customer is subsequently treated in an indi-vidual way in consistency with what the company know about his or hers preference, then the customer start to move up the ladder (Harris & Dennis, 2002). If customers are pleased with the service the company provide, the chance that they recommend it to others in-creases. As word-of-mouth increases the marketing costs will decrease (Harris & Dennis, 2002). From a customer‘s perspective the perceived risk associated with changing products or services will decrease as they stay loyal to the company. Still it is not reasonable to be-lieve that a company can develop strong relationships with all customers. The key to suc-cess is to focus on the most profitable customers. The pareto principle states that 20 per-cent of the customers may account for up to 80 percent of a companies‘ profits (Harris & Dennis, 2002).
In Reedy et al.‘s book, Electronic Marketing: Integrating Electronic Resources into the Marketing Process (2000), relationship marketing can embrace 4 opportunities of customer interaction for eCommerce retailers stated by the Gartner Group.
– Customer acquisition. An informative and innovative web presence may help to ac-quire new customers.
– Customer Retention. Reorders from satisfied customers are the best way of mea-suring service performance and an efficient way of making profit. Excellent cus-tomer service will help the company to keep the customers for as long as possible.
– Customer extension. Introducing new services and products to existing customers is cost efficient. Strong customer relationships will increase the possibility of cross-selling or selling complementary products. This will increase both loyalty and prof-itability of the customer.
– Customer Selection. As mentioned before 20% of the customers stand for 80% of the profit. RM will help identify the most profitable customers through database management. By identifying this segment, special promotions can be directed to-wards these customers. Many marketers develop programs for frequent buyers that are awarded points that can be accumulated and used for price reductions.
Integrated Marketing Communication
Integrated Marketing Communication (IMC) developed during the late twentieth century and has been an important part of marketing since then (Grove et al. 2002). The information society and the multiplication of media has left markers in an challenging and competi-tive environment, where satisfying customer needs, wants and developing long-term rela-tionships is hard with all different communication channels that exists. IMC can help mar-keters to create coordinated and consistent messages across all the marketing channels. It can be described as convey the same message on all channels simultaneously. The message must be monolithic in all marketing channels that the retailer is using. IMC is an important part of a retailer‘s strategy of new communications, such as direct marketing, internet mar-keting (McGrath, 2005). The concept also put great effort on the importance of customer loyalty, which can only be created through strategic relationship building (Jin, 2003).
Most organizations needs to communicate with more than one target audience or stake-holder group, and therefore needs to take into consideration both the product brand and the corporate brand when creating the marketing message (Gylling, Lindberg-Repo, 2006). Still all promotional-mix need to blend together as they have a greater impact combined with each other. A retailer needs to wage in both the corporate and the product brand when considering creating their IMC-program. Companies that actively use integrated mar-keting communication will avoid discrepancy to their target group, i.e. that the company send out one message but do not act after what they have said. By avoiding this, the con-sumers will trust more in what the company communicate (McGrath, 2005). IMC is a cost efficient communication and increases the ROI of retailers marketing campaigns (Holm, 2006). Online- and Facebook marketing are important activities in an eCommerce retailer IMC program.
Web 2.0, the Social Web
The term Web 2.0 refers to an evolution of Internet to a more interactive medium where communication and interaction is in focus. Stefan Hübinette (2008), describe that the most fundamental and revolution change is that internet users now have the power of the con-tent on the web. The users can actively use Internet and share content with others, some-thing that was not possible before Web 2.0. Further Hübinette claims that Internet has be-come an arena for creation, dialogue, collaboration, organizing for research and for learn-ing. He also claims that Internet has become a growing marketplace, a new economic plat-form. Before Web 2.0 the content was often published by a single producer, but Web 2.0 has contributed to a more democratic web where an individual can reach out to a broad mass, often without having to invest economic.
Even though the term suggests a new version of the Web, it does not refer to an update of the technical specifications. It is difficult to define the exact boundaries of what structures that belong to Web 2.0. There seems to be an agreement that services and technologies like blogs, wikis, podcasts, RSS feeds (and other forms of many-to-many publishing), social software, social networking sites, video sharing sites, web standards and online web servic-es are all part of Web 2.0 (Breslin et al. 2009).
Tim O‘Reilly (2007) who mentioned the term during the O‘Reilly Media Web 2.0 confe-rence in 2004, states that a website need to fulfill 3 conditions in order to be seen as a part of web 2.0.
– The user shall be able contribute to the sites content by her/himself.
– The user shall have control over her/his information.
– The websites design shall be interactive and useful.
A common property of web 2.0 technologies is that they ease collaboration and sharing be-tween users with low technical barriers. Web 2.0 enables participation through the simplifi-cation of user contribution on blogs, forums and social networks etc. This has lead to pow-er of community based knowledge acquisition as Wikipedia. One outcome of such website is that it can create more valuable knowledge collectively rather than created by separated individuals. Wikipedia has demonstrated the power of the crowds, which is an important aspect of the emergence of Web 2.0. It can be seen as a collective intelligence at web-scale level (Breslin et al. 2009). Businesses use similar techniques such as intranet, where em-ployees can easily share information and communicate effectively.
Social media is an important part of the web 2.0 concept. It is media for social interaction which allows the creation and exchange of user-generated-content. Social media can be blogs, microblogs, communities, internet forums, wikis, podcasts and more. It can be de-fined as ―Internet- and mobile-based tool for sharing and discussing information among human beings. The term most often refers to activities that integrate technology, telecom-munications and social interaction, and the construction of words, pictures, videos and au-dio‖.
1 Introduction
1.1 Problem background
1.2 Purpose
1.3 Research questions
2 Method
2.1 Choice of research method
2.2 Methodology
2.3 Research strategies
2.4 Research approach
2.5 Data collection
2.6 Selection of the respondents
2.7 The interview process
2.8 Trustworthiness: Validity and Reliability
3 Theoretical Framework
3.1 Marketing Strategy
3.2 Relationship marketing
3.3 Integrated Marketing Communication
3.4 Web 2.0, the Social Web
3.5 Social networks
3.6 Facebook Marketing
3.7 Web traffic measurements
3.8 Homophily
3.9 Trust on Internet
3.10 Risks with social media
3.11 Summary of Theoretical Framework
4 Results
4.1 Introduction
4.2 Purpose of Facebook usage
4.3 Marketing
4.4 Publishing approach
4.5 Budget
4.6 Measurement
4.7 Objectives
4.8 Experience
5 Analysis
6 Conclusions
7 Further research
8 List of references
Facebook as a marketing channel A study of eCommerce retailers’ Facebook page ambitions
