• Chapter one:
1. Introduction to the Study / Study Framework
1.2. Pilot Study
1.3. Previous Studies
1.4. Research Questions
1.5. Research Problem
1.6. Research Objectives
1.7. Research Hypotheses
1.8. Conceptual Framework
1.9. Thesis Structure
The Word maximize means to get the best of something or to make the most of, or to increase the value of, In this paper we are investigating the use of the social media marketing and its role to maximize the customer equity we are going to explore how social media marketing can make the best of the firm’s current and potential customer
Social media marketing is different than traditional methods of marketing; therefore, it requires special attention and strategy building to achieve brand equity.
Social media marketing is related to relationship marketing, where the firms need to shift from “trying to sell” to “making connections” with the consumers (Gordhamer, 2009).
Companies also need to keep away from “big campaigns” and stick with “small acts” since some small campaigns can easily reach lots of people and accomplish the objectives in a very short period of time (coon, 2010).
Social media marketing is also more sincere in its communication with the consumers, trying to show what the brand is rather than trying to control its image.
Finally, today’s customers are more powerful and busy; therefore, companies should be reachable and available in every social media communication channel such as Face book, Twitter, Blogs, Forums at any time (Gordhamer, 2009).
Thus, it can be said that social media marketing helps firms to increase brand equity through networking, conversation, and community building
In world of unstable economic situations and in fluctuated financial situations most of the organizations decrease the marketing budget and the Marketers most frequent hard decisions are related to the marketing mix (Product, price, place & promotion).
In other words how to allocate the budget the most efficient way how to trade off strategic marketing initiatives resources across all the possible ways of reaching and serving potential and existing customers.
And how to trade off spending more on new-product marketing or on brand building, investing on customer service improvements and less on sales promotion? Or should all of the above be pared down to fund more interactive-media investment? Intuitively, you know that there’s some optimal combination that would deliver the most impact.
On companies, Brands ; Organizations; the value of customers’ base is very important because it is representing the future revenues. The higher the customer equity (CE), the more future revenue in the lifetime of its customers; comparing to other companies with less customer equity
Accordingly, a company with higher customer equity is more valuable than one without it.
According to Ibrahim 2009, there has been a significant change in the attitudes of researchers and practitioners. Every job within the organization has a role in maximizing the value of the organization and the shareholders’ rights, turning attention to the level of analysis and evaluation from the level of activities and marketing efforts to the level of customer responses.
This change has led to the realization that the relationship between marketing and finance should be managed systematically. It is no longer possible to rely on traditional assumptions that positive marketing activities and efforts at both markets and products will automatically turn into the best financial results. The perspective that considers customers as assets must be developed and enhanced through marketing activities and efforts so that the financial impact of the related decisions can be measured.
The interest in the organization’s assets has become increasingly popular in recent years: Represented in the pressures related to capital markets; until the investment proposals are evaluated accurately, and internal factors, most importantly the optimal allocation of resources and determine the financial impact of investment proposals.
However, some organizations that have invested in customer-oriented programs have been frustrated by the fact that the returns from these programs were far less than the efforts made. These programs were generously spent on these programs. Customers were not willing to bear the increase in prices and demand for their products fell, To declare bankruptcy and exit completely from the market and some have abandoned those programs.
According to Rust & Lemon in 2004 Customer equity is divided into three main components: The Value Equity, the Brand Equity & the retention equity
The social media era was started around ten years ago. It began with LinkedIn, which was launched in, 2003, followed by both MySpace and Facebook in 2004, YouTube in 2005, and Twitter in 2006 (Pradiptarini 2011).
Social media term is a construct from two areas of research, communication science and sociology.
In the context of communication, social media is simply a means for interactive connections between customers and brands by sharing information and experiences via the web (Shojaee and Azman, 2013).
The ordinary social media definition was developed by Kaplan and Haenlein as a group of Internet-based applications that allow the (creation and exchange of user-generated content (UGC .Kaplan and Haenlein, 2010,).
Andzulis et al. (2012) defined social media from marketing perception as the technological module of the communication, transaction and relationship building Usage and Effectiveness
Functions of a business, which leverages the network of customers and prospects to promote value co-creation these definitions, entail the following characteristics of social media.
It is a software tool that creates user generated content and facilitates the Internet users to ,join, connect, and share ideas, content, views experiences, concepts, and information (Chan and ,Guilllet, 2011; Neiger et al., 2012; Sinclaire and Vogus 2011).
User-Generated-Content (UGC) permit Internet users to create comments in different forms, such as photos, videos, ratings, reviews, articles, and blogs (Judson and Rajdevasagayam, 2012; Jussila et al., 2014) It is also noted as user-created-content (UCC) or & consumer- generated media (CGM) (Judson Rajdevasagayam, 2012).
Social media does not seek to substitute telephones, e-mail communication, or even transactions. Instead, it seeks to complement them or enhance the value of each interaction with the customer.
Greenberg (2010) argued that all customers are nowadays “social customers” and every communication is part of a new cooperation between firm and customer: a .(vital part of CRM (customer relationship management
Akar and Topcu (2011) indicated that social media to some extent changes customers into marketers and advertisers, and customers can create positive or, negative experience for the firm and its products depending both on how the firm or brand is communicated online and on the products quality presented to the customer.
Social media tools include social network (e.g ,(Facebook, MySpace, LinkedIn), Wikis (e.g., Wikipedia ,.Podcast (e.g., Apple iTunes), content communities (e.g (YouTube), blogs and microblogs (e.g., Twitter Mohammadian and Mohammadreza, 2012).
Castronovo) and Huang (2012) stated that a firm chooses from these platforms when formulating a social media strategy.
This social media strategy is developed based on the objectives of the strategy and the usage of social media among firm’s target market In relation to social media, social media marketing concept (SMM) is defined as any form of direct, or indirect marketing that is used to build awareness ,recognition, recall, and action for a brand, business product, person, or other entity and is carried out using the tools of the social Web, such as blogging, microblogging, social networking, and content sharing (Gunelius, 2011).
Akar and Topcu (2011) described this kind of marketing as an integral part of online marketing activities that integrates with the traditional Web marketing strategies, such as email marketing, webinars, and online advertising, but not equal to online marketing because online channels are static in nature and are just one way communication of which firms used to give out information without interacting with customers.
Furthermore, Erdogmus and Cicek (2012) explained the difference between social media marketing and traditional methods of marketing as the social media marketing is related to relationship marketing, where the firms need to shift from “trying to sell” to “making connections” with the customers.
Akar and Topcu (2011) added another difference that traditional marketing applications and their contents are directed or “pushed” from the firm to the customer without a request.
On the contrary, Paquette, Holly (2013) stated that social media marketing is participatory; meaning that it consists of multi-directional communication, brands communicate with customers; customers communicate with those brands, and most importantly, customers share with each other
The Cultural Industries in Egypt are known for their lifelong history in the Arab states.
Ranging from being accounted as one of the largest producers of Film Industry in the World, and a well-established Book-Publishing Industry, a thriving Sound Recording Industry to a dynamic Software Industry, the role of Cultural Industries in the Egyptian economy is on a rising trend.
The four industries investigated represent an example of the so called “core cultural industries”. The core of the cultural industries includes book publishing, newspapers, periodicals, printing, advertising, radio and television broadcasting, sound recording, musical and audiovisual works, motion pictures and films and computer software. (Ghoniem 2002)
The Cultural Industries suffer from neglect of government. They share weak Institutional and political support. Hence, governmental policies affecting them have been either not effective or counter effective. The demand conditions related to cultural industries are highly vulnerable to the prevailing economic and political conditions. They have a high price and income elasticities.
The cross cutting themes among the Cultural Industries should
not lead us to jump to the conclusion that they are identical in everything. On the contrary, every Cultural Industry has its own specificity which makes it impossible to provide “one size fits all” solutions (for a similar argument see UNESCO, 2000).
In this research the researcher is focusing on cultural centers as it can be neighborhood community arts organizations, private facilities, government-sponsored, or activist-run and the notion of cultural industries generally includes textual, music, television, and film production and publishing, as well as crafts and design For some countries, architecture, the visual and performing arts, sport, advertising, and cultural tourism may be included as adding value to the content and generating values for individuals and societies.
They are knowledge-based and labor concentrated, creating employment and wealth.
By nurturing creativity and fostering innovation societies will maintain cultural diversity and enhance economic performance.
Since then large number of cultural centers have been founded in Egypt Cultural Centers are places where cultural industries mainly been promoted and introduced to its target audience A cultural center or cultural centre is an organization, building or complex that promotes culture and arts.
In 2003 Mohamed El Sawy former Minister of culture established El Sawy Culture Wheel , private cultural center, located on Gezira Island in the Zamalek district, central Cairo, Egypt.
It is considered one of the most important cultural venues in Egypt the center gets more than 20,000 visitors monthly and its website receives approximately 150,000 visitors/month and its facebook page is liked and followed by more than 600,000 facebook accounts.
1.2. Previous Studies:
Angella J. Kim a,1, Eunju Ko 2011 published a paper titles with Do social media marketing activities enhance customer equity?
An empirical study of luxury fashion brand and its abstract stated that In light of a rising attention in the use of social media marketing (SMM) among luxury fashion brands, this study set out to identify attributes of SMM activities and inspect the relationships among those perceived activities, value equity, relationship equity, brand equity, customer equity, and purchase intention through a structural equation model.
Five constructs of perceived SSM activities of luxury fashion brands are entertainment, interaction, trendiness, customization, and word of mouth.
Their effects on value equity, relationship equity, and brand equity are significantly positive.
For the relationship between customer equity drivers and customer equity, brand equity has significant negative effect on customer equity while value equity and relationship equity show no significant effect.
The findings of this study can enable luxury brands to forecast the future purchasing behavior of their customers more accurately and provide a guide to managing their assets and marketing activities as well
It is crucial to not only communicate with customers as a brand, but also build relationships and recur customers who will become ambassadors of the brand.
Many firms have introduced customer relationship marketing programs to optimize customer communications. Some marketing observers encourage firms to properly define and manage the value of their customers. (Zhang:2011)
The concept of customer equity can be useful in that regard. So the theory of customer equity, including customer equity’s component and calculation, is more and more significant
In their paper, they made numerous contributions to marketing theory and practice.
First, they provided new opinions about customer equity’s component from the perspective of customer behavior.
Second, they offer a set of related formulas to calculate them. But as with any new effort, there is much work yet to be done.
Hamed Karamian , Nadoushan ;Nadoushan in 2015 conducted a study to investigate the effects of Social media marketing in brand equity.
Data were collected through random questionnaires consumers.
350 questionnaires were distributed in the Hayprastar in Esfahan and 315 questionnaires were collected. To examine each hypotheses of the study, Pearson Correlation test has been employed.
The final results indicate that Social media marketing activities are significant in brand equity and also that Social media marketing activities bears on perceived quality, brand awareness and brand loyalty. Then, all research variables are approved
Companies can use social media marketing to establish relationships with loyal customers and affect their individual insight of the product, bring out their own information and also learn from and about their customers.
So using social media marketing can expand communication with customers and boost customer loyalty.
Customers, categorize social media as a more trustworthy source of Information compared to the traditional marketing communication tools that companies use.
On this basis, companies can get response from customers, according to whom they can figure out what the customers’ desire and what products are in demand, and supply them faster than their competitors.
Finally, the quality of products and services can be enhanced with the use of social media whose relation to the perceived quality has been approved in this research
Pookulangara and Koesler (2011) used the Technology Acceptance Model3 (TAM3) to look at the impact of culture on social media.
TAM3 highlights the role and actions connected to perceived usefulness and perceived ease of technology.
TAM3 suggests that the factors that verify perceived usefulness will not influence perceived ease of use and the factors that influence perceived ease of use will not influence perceived usefulness (Pookulangara and Koesler 2011).
The researchers used TAM3 to find out if an individual’s cultural background affects perceived ease and perceived usefulness in order to separate users’ behavioral intention towards social media.
More in particular, the researchers used TAM3 to determine if an individual’s cultural background influences how they will understand a message, event, or idea offered to them through a social networking site.
This was done through a conceptual framework in which the researchers created a research model using TAM3.
Based on the research model, Pookulangara and Koesler (2011) conclude that culture does in fact influence how individuals act and perceive an event on technology based applications, such as social media.
This means that an individual’s cultural or ethnic background will influence how they will understand social media and its content.
“Social networking has permitted the development of new culture where it is no longer shaped by just individual values and ideologies, but also by new rituals and communication tools in the social space of Web 2.0” (Pookulangara and Koesler ,2011)
Chu (2011) examined the link between Facebook brand related group contribution, advertising responses, and the psychological factors of self-disclosure and attitudes among members and nonmembers of Facebook groups.
The study determined that users who are members of groups on Facebook are more likely to disclose their personal data than nonmembers are.
Chu explains group contribution and engagement with online ads requires a higher level of personal information because users explicitly disclose their connections with Facebook groups and promote brands or products when they pass on ads to their friends.
“Facebook groups offer channels that customers think useful when looking for self-status in a product category, as does passing on viral content about brands to their social friends” (Chu 2011).
Chu (2011) also found that users who are Facebook group members continue a more positive attitude toward social media and advertising.
Users who have more positive attitudes toward advertising are more likely to join a brand or a retailer’s Facebook group to receive promotional messages.
Based on this result, Chu (2011) suggests that a link exists between consumers’ use of and engagement in group applications on a social media sites.
The relationship between customers’ use of and engagement with group applications influences the rate and effectiveness of advertising on social media, particularly Facebook.
Generally, as Chu(2011) notes, Facebook’s Teenage users have the most positive attitudes toward social media advertising and are the major growing demographic, which suggests that social media sites are a potentially rich platform for online advertising campaigns, especially for companies with a younger target market.
Cox (2010) also investigated the correlation between age and attitude and found that social network user attitude toward online advertising formats (i.e. blogs, video, and brand channel or page) differed to some extent across age groups.
She explains that users who fall in the 18-28 age groups had strong positive attitudes towards blogs, video, and brand channel ad formats.
This was because users’ found these ad formats to be attractive, informative, and entertaining.
The 35-54 age groups preferred ad formats on video and brand channels because they found them to be more attractive, informative, and had better placement within the online page layout.
Overall, online advertising formats with positive attributes are welcomed by users; however, ads that are disturbing or interfere with online social networking activities, such as pop-up, expandable online banners, or floating formatted ads were not accepted by network users (Cox 2010).
According to Chi (2011) users perceive advertising in a different way depending on the social network, which suggests user motivations for online social networking may play a crucial role in defining customer’s responses to social media marketing.
Harris and Dennis (2011), however, used TAM as a loose framework that combined trust and the factors associated with TAM (i.e. perceived enjoyment, ease of use, and usefulness).
Di Pietro and Pantano (2012) conducted research using the TAM to distinguish that enjoyment is the main factor that influences customers to use social networks as a platform for supporting in their buying decisions.
They found that the fun provided by Facebook, as well as the opportunity it provides users to ask for suggestions in an easy and entertaining way, motivates individuals to pay more attention to the products promoted on Facebook.
“Facebook promotes a customer to customer approach, exploited by customers to share their experiences and create a general knowledge on products and services; on the other, it provides marketers a direct communication with their customers through a business to customer approach” ( Di Pietro and Pantano 2012).
Retailers can improve their Facebook page appeal by adding games, contests, and engaging applications, which can attract more customers (Di Pietro and Pantano 2012).
However, retailers also need to be knowledgeable on customer’s attitudes when it comes to social media marketing. A deeper perceptive of how customers perceive social marketing will help ensure marketing strategies are useful.
Customer activities of spending, participation, and production are not related to just one stimulus according to Heinonen (2011), who concluded that customer activities are a mixture of a range of motivations.
Awareness of customer’s motives is significant because it provides a deeper interpretation of what encourages customers to produce content about a brand or product.
Customer generated content produces social currency for marketers because it helps define a brand.
Customer generated content describes “the sum of all ways in which people make use of social media, generally useful to explain the variety of forms of media content that are publicly available and created by customers” (Kaplan and Haenlein 2010).
An individual’s connections can potentially aid in developing brands into an essential part of customers’ social interactions via social networking.
There are six components of social currency: affiliation, conversation, utility, advocacy, information, and indemnity (Zinnbauer and Honer 2011).
Social currencies come from interactions between consumers and are usually beyond the direct control of a firm (Zinnbauer and Honer 2011).
Through their empirical study, Zinnbauer and Honer (2011) establish that although social currency consists of six different components, brands do not rely on all of them to facilitate brand loyalty among users.
Important factor that made a brand successful is being an essential part of people’s daily lives. When a brand becomes integrated into a customer’s daily life, it enables customers to connect, interact, and benefit from like-minded brand customers, and thus, the likelihood of customer generated advertising for a brand increases (Zinnbauer and Honer 2011).
Consumer Generated Advertising (CGA) is a form of social media user-generated content, which refers to specific instances where customers create the brand, focused messages with the purpose of informing, persuading, or reminding others (Campbell et al. 2011).
Muñiz and Jensen Schau (2007) and Pehlivan, Sarican, and Berthon (2011) use the term vigilante marketing to describe Consumer Generated Advertising CGA.
Vigilante marketing is defined as “voluntary advertising and marketing activities, including one to one, one to many, and many to many commercially oriented communications, undertaken by brand loyal customers on behalf of the brand” (Muñiz and Jensen Schau 2007).
Campbell et al. (2011) state that today, traditional marketing is synchronized with CGA. So Marketers need to be aware of this because CGA can certainly support traditional marketing or it can harmfully impact and damage it.
Cheong and Morrison’s (2010) research supports the previous statement by explaining how the lack of research on the credibility of both positive and negative Consumer generated content (CGC) highlights the need for marketers to be aware and study CGC to completely recognize its power.
Customers are taking part in a diverse array of activities such as consuming content, participating in discussions, and sharing knowledge with other customers, to contributing to other customers’ activities (Heinonen 2011).
1.3. The Pilot Study
Throughout this research we are exploring the role of social media marketing activities on maximizing and enhancing customer equity and how the this virtual communication increase brand awareness and engage more customers and raise awareness about the value of the product and services through the online word of mouth, reviews and ratings.
The researcher conducted several meetings and in-depth interviews with several Cultural industries Stockholders asking them a set of questions in this regard.
We conducted these meeting with two groups: cultural centers managers, artists, Theater Managers, Artists managers & Designers which we call Cultural Industries Associates & Practitioners.
In addition to asking a set of questions for university students and general cultural activities attendees which we call the Audience.
The Researcher Asked the Audience (Egyptians interested in Cultural Events):
• What are the most important Cultural Centers / Cultural Activities (Describing what it is) in Egypt?
The Answer of these questions shows that the word cultural industries is not familiar that why we used cultural centers in stead and most of the majority of the audience referred to El Sawy Cultural wheel and the other answers was scattered about other cultural centers like (Room Art Space – Bedayat – Emad EL Din Studio ..etc)
During our Discussion we expanded our scope to include the wider cultural scene to includes other centers like Cairo Opera House – Darb 1718 – Beit El Sennari in addition to other cultural activities like D-CAF (Down Town Contemporary Art Festival) and Independent (Underground) Music and Art Bands
• How do you know about it?
Most of Audience answered with friends, referrals, Facebook, Internet and few answered with Newspapers or by coincidence. Another important answer was that we know the place because of the band or the activity itself and another answered with: I love it and I searched for it (Music, Design, Gallery …etc)
• How do you receive their updates?
They answered with: we receive the updates by chance or sometimes I look for the updates and usually this is happening through the website or facebook page
• How do you know about the price/Fees?
Yes for sure prices make it easy and support my decision to go or join, few answered with that it doesn’t matter because we know that most of this places is affordable
• Do You Recommend it to friends
Sometimes we share these activities with friends to motivate me to go. Others answered with, I (tag/mention) any of my friends I know he/She are interested
The Researcher Asked Cultural Industries/Centers practitioners
o How did you build your customer base?
o Do you have social Media Accounts?
o Do you actively use these accounts?
o What is the main promotion channel that you use to promote your product/Service?
o Do you think social media marketing activities are effective marketing tools?
We attended different cultural (Theater – Book Signing – Seminars – Acting Workshops – Music) events and communicated directly and electronically with those who manage, organize, market ; perform in this events and we asked them a set of questions aiming to explore the role of social media marketing in their activities and the relationship between them and their target audience that they call them fans, members or customers
We asked Cultural Industries/Centers practitioners: How did you build your customer/Fan/Membership base?
We concluded the following Answer:
Most of them started with their friends, colleagues and friends of friends in addition to family members and relatives and their word of mouth
• Do you have social Media Accounts?
• Do you actively use these accounts?
• What is the main promotion channel that you use to promote your product/Service?
Our social Media posts ; Ads and our social ; professional networks, also we usually print out a monthly calendar and our loyal fans usually check our website from time to time
• Do you think social media marketing activities are effective marketing tools?
Social Media is very important tool especially facebook but you cannot depend only on it and the content is the most important thing.
The researcher also tracked several cultural center and cultural industries event’s organizers on socal media see Appendix (1)
1.4. Research Problem
Technological development has had its effect on marketing activities. Traditional marketing still exists but social media marketing has clearly taken its place.
The research problem is to assess the role of social media marketing activities on maximizing customer equity in cultural industries and cultural centers in Egypt.
1.5. Research Question:
o Is there a significant relationship between Social Media Marketing activities and Customer Equity?
o What is the role of Social Media Marketing Activities on Value equity
o What is the role of Social Media Marketing Activities on Brand equity
o What is the role of Social Media Marketing Activities on Relationship Equity?
1.6. Research Objective
• Evaluate the influence of perceived social media activities on customer equity
1.7. Research Hypothesis
• H. There is a significant relationship between Perceived social media marketing activities and customer equity.
• H.a. Perceived social media marketing activities have positive effect on Brand equity.
• H.b. Perceived social media marketing activities have positive effect on Value equity.
• H.c. Perceived social media marketing activities have positive effect on Relationship equity
1.8. Conceptual Framework
Research Title: Maximization of Customer Equity through Social media marketing
(Applied Study on Cultural Industries / Cultural Centers in Egypt)
Independent Variable: Social Media Marketing Activities
Dependent Variable: Customer Equity
According to the Pilot research we are planning to conduct our applied study with following tools: According to (Lemon et al., 2001Vogel et al., 2008 Kim et al., 2008).
Measuring perceived SMM activities were gathered from previous studies on brand’s social media marketing, attributes of two-way communication media, influence of mobile advertising, and characteristics of mobile shopping related researches and modified to fit for this research (Chung ; Lee, 2008; Han ; Shu, 2010; Kim, 2010; Kim ; Chung, 2009; Lee, 2007).
Measurements of value equity were developed in accordance with Berry (1995), Gagliano and Hathcote (1994), Rust et al. (2000), and Wiedmann et al. (2009). Constructs of value equity measures included price, product quality, service quality, convenience, and the tangible environment of the retailer, individual value, and social value.
Measurements of relationship equity were developed from Hennig-Thurau et al. (2002) and Ju and Chung (2002). Items assessed preferred treatment customer service, coincidence of image with brand, and overall affection.
Measurements of brand equity included brand awareness, perceived value, brand personality, brand association, and perceived uniqueness aspects. Measuring brand equity was developed from Aaker (1991) and Yun (2006).
Customers’ subjective and intangible assessment of the brand, above and beyond its objectively perceived value.
• Customer brand awareness.
• Customer brand attitudes.
• Customer perception of brand ethics.
Customers’ objective assessment of the utility of a brand based on perceptions
Customers’ tendency to stick with the brand, above and beyond objective and subjective assessments of the brand.
• Loyalty programs,
• Special recognition and treatment programs.
• Community-building programs.
• Knowledge building programs.
This thesis involved two types of research for data gathering; secondary research and primary research. Secondary research was discussed in a form of literature review and primary data was collected in a form of questionnaire and researchers observations through social media platforms.
The research for this thesis started with secondary research, more specifically with a literature review. Literature review provided a discussion and analysis concerning the existing literature about customer equity and its drivers, social media marketing and Cultural Industries. Considering the topic, the key sources for this thesis are scholarly articles in academic journals in the field of marketing. The work of Kim and Ko (2011) and many other researchers we mentioned in previous studies section.
This study used online questionnaire to conduct primary data.
Primary data was used to test hypotheses, and for this study it was quantitative in nature.
Regarding choosing the data collection method, online questionnaire was chosen because of the accessibility and time limitations.
This study examines the same relations as Kim and Ko’s (2011) previous work, so the survey is derived from their original questionnaire. Online questionnaire was produced and distributed via e-mail, posts and private messages in several platforms and networks. The questionnaire were launched February 11th, 2018 and closed March 11th, 2018. The language was English.
Customers who are interested in any cultural activity or event* in Egypt
? Customer who have a social media account specially Facebook as the main social media platform
? Our Population in Unknown
The researcher used convenience sampling, because it is inexpensive, fast and the participants were conveniently accessible. The questionnaire was distributed in electrical form through Facebook and private messages, and to other convenient participants through email links and private messages. The researcher sent this questionnaire to more than 1000 contacts.
1.9. Thesis Structure
Figure 1.2 thesis structure
Source MARTIN, L. ; MATLAY, H. (2003) MARTIN, L. ; MATLAY, H. (2003)
2. Literature Review
2.1.1. Defining Social Media ; Social Media Marketing
2.1.2. Integrated Marketing Communication
2.1.3. Social Media as a Component of IMC
2.1.4. Social Media Content
2.1.5. Virtual Brand Communities on Social Media
2.1.6. Social Networks ; Customer Equity
2.2. Customer Equity
2.2.1. Defining Customer Equity
2.2.2. The components of customer equity
126.96.36.199. Value Equity
188.8.131.52. Brand Equity
184.108.40.206. Relationship/ Retention Equity
2.2.3. customer equity’s components from the perspective of customer behavior
2.3. Cultural Industries
2.3.1. Defining Cultural Industries
2.3.2. The Unique nature of Cultural Industries
In today’s technology obsessed world, social networking sites have become an boulevard where organizations can extend their marketing campaigns to a wider range of customers.
Chi (2011) defines social media marketing as a “connection between brands and customers, offering a personal channel and currency for user centered networking and social interaction.”
The tools and approaches to communicate with customers have changed significantly with the emergence of social media; therefore, Marketers should learn how to effectively use social media and to include them in their marketing plan (Mangold and Faulds 2009).
Marketers can boost awareness of brands by being innovative when interacting communicating with customers on social media platforms. “As the number of their potential customers on social networks are increasing (e.g., Twitter, Facebook, Instegram, and LinkedIn) and rely on them for buying decisions, promotion through these media has become essential” (Shankar et al. 2011).
According to Curran et al. (2011), social media sites such as Facebook are better than other advertising channels because it stores information on all its users thus ensuring marketing communications reaches a Marketer’s target audience.
Social media sites are important opportunity for marketers to create an engaging experience with their target audience and Marketers can use information on social media sites to improve customer’s experience with their brand.
Social networking sites are being utilized to improve an organizations’ brand perception and increase their target audience because “new technologies allow for more personalized, targeted communications, as well as increased customer participation in the formation of marketing and brand related information” (Cappo 2033; Jaffe 2005 as cited in Muñiz and Jensen Schau 2007,35).
Mangold and Faulds (2009) stated that traditional marketing communication examples, which relied on the classical promotional mix to generate integrated marketing communications, should give way to a new model that includes all forms of social media as important tools in designing and implementing integrated marketing communication strategies
2.2. Social media marketing
Social media are online applications, platforms and media which aim to facilitate interactions, collaborations and the sharing of content (Richter & Koch, 2007).
They take a variety of forms, including weblogs, social blogs, micro blogging, wikis, podcasts, pictures, video, rating and social bookmarking. As their use increases exponentially, not only existing social networkers but even business firms and governmental organizations are joining and using them as communication tools.
Unlike individual social networkers, these entities actively make use of the media for advertising and marketing. While commercial messages and interactions with consumers partner with media, events, entertainment, retailers, and digital services through social media, it is possible to perform integrated marketing activities with much less effort and cost than before.
According to Kim and Ko (2010), social media can have a dramatic impact on a brand’s reputation. One-third of survey participants posted opinions about products and brands on the brand’s blog, and 36% thought more positively about companies that have blogs.
A study by DEI Worldwide (2008) provides the following statistics:
70% of consumers have visited social media sites to get information; 49% of these consumers have made a purchase decision based on the information they found through the social media sites; 60% said they were likely to use social media sites to pass along information to others online; and 45% of those who searched for information via social media sites engaged in word-of-mouth.
The report states that companies not engaging in social media as part of their online marketing strategy are missing an opportunity to reach consumers. With a significant percentage of people passing along information to others through social media, the value of one customer is worth far more than what he or she initially spends.
Thus, firms and brands now need to factor in the value of customers and also the influence of social media on them
2.2.1. Defining Social Media
To consider social media as a marketing tool a marketer must know every aspect of it.
Before defining Social media we need to define Web 2.0:
a term that describes a new way in which users use the Internet World Wide Web, a place where content is continuously updated and altered by the users in sharing and collaborative way (Kaplan and Haenlein 2010).
“It is much more to do with what people are doing with the technology than the technology itself, for rather than just retrieving information, users are now creating and consuming it, and therefore users add value to the websites that permit them to do” (Campbell et al. 2011).
Kaplan and Haenlein (2010) define social media as “a group of Internet based applications that build on the ideological and technological foundations of Web 2.0, and allow the creation and exchange of user generated content.
” Sinclaire and Vogus (2011) cite O’Reilly’s (2005) definition: “social media is a broad term that describes software tools that create user generated content that can be shared.
” However, there are some basic features necessary for a website to meet the requirements as a social network website: the site must contain user profiles, content, a method that permits users to connect with each other and post comments on each other’s pages, and join virtual groups based on common interests such as fashion or politics. (Gross ; Acquisti, 2005; Ellison, Steinfield ; Lampe, 2007; Lenhart ; Madden, 2007; Winder, 2007; Boyd ; Ellison, 2007 as cited in Cox 2010).
The phrase social networking sites’ is often used interchangeably with social media.
However, social media is different because it allows participants to unite by generating personal information profiles and inviting friends and colleagues to have access to those profiles (Kaplan and Haenlein 2010).
Thus, social media is the environment in which social networking takes place and has altered the way in which consumers gather information and make buying decisions.
Consumers’ Sentiment toward Marketing (CSM) is a factor consider by researchers to measure how well consumers will perceive social media marketing.
Consumers’ Sentiment toward Marketing CSM is defined as a concept which refers to the general feelings that consumers have for marketing and the marketplace (Lawson et al. 2001as cited by Mady 2011).
An individual’s perception of the marketplace plays a key role in whether or not they are motivated to participate in consumption activities (Mady 2011).
In order to create a successful marketing campaign via social media, a consumer must be open to the technology.
Consumer technology readiness is defined as “people’s tendency to embrace and use new technologies for accomplishing goals in home and work” (Parasuraman, 2000 as cited by Mady 2011).
Consumer technology readiness is important for marketers to remember when marketing on social networks because if their intended target market does not use social media, is not familiar with it, or perceives it negatively, then their social media marketing will be unsatisfactory.
Analyzing technology readiness can determine if marketing using interactive advertising would be a suitable fit for a Marketer’s target audience.
The Innovation Adoption Process (IAP) is another instrument that provides information on a consumer’s acceptance of new technology.
The IAP is the development through which an individual goes through the innovation-decision process (Rogers as cited in Mady 2011).
Five steps make up the process (Mady 2011):
• knowledge of the innovation
• Forming an attitude toward the innovation
• Deciding to adopt or reject the innovation
• Implementation of the innovation
• Confirmation of the decision.
Social media has developed from providing a platform for individuals to stay connected with their family, relatives, and friends to a place where customers can learn more about their favorite brands and products.
“Technology related developments such as the rise of powerful search engines, advanced mobile devices and interfaces, user-to-user communication vehicles, and online social networks have extended marketers’ ability to reach their target audience through new media” (Shankar et al. 2011).
The more people perceive shopping services on social networking sites as useful and easy to use, the more likely they are willing to shop for items on social networks (Cha 2009).
Providing shopping services on social networks can provide business growth for retailers due to the diversity of consumers who use social media sites. The wide range of consumers utilizing social networks means that most target markets canbe reached (Cha 2009).
According to Shankar et al. (2011), shopper marketing can join forces with shoppers to improve products, create clear messages, identify promoters, and serve as a connection to in-store activities, thus demonstrating the importance of social media within a retailer’s marketing plan.
Advancements within social media sites have shaped consumer communities that are defining new ways in which companies and customers can interact and share information on brand and products.
2.2.2. Integrated Marketing Communication
Acording to the AMA American Marketing Association the Integrated Marketing Communication is A planning process designed to assure that all brand contacts received by a customer or prospect for a product, service, or organization are relevant to that person and consistent over time.
The 2007 definition of marketing from the American Marketing Association is “the activity set of institutions and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large” (Groom, 2008).
With the increase of new technologies, namely the Internet, the discipline of marketing is shifting. Consumers now have the capacity to select marketing messages and content in a progressively more saturated marketplace (Groom, 2008).
Marketing activities are more and more being conceptualized as Integrated Marketing Communication (IMC), in which the influence resides with the consumers rather than marketers.
Instead of a one-way marketing approach, marketers are now tasked with collaborating and interacting with consumers to generate and share marketing content across many different platforms (Groom, 2008).
There are five elements of the IMC mix- advertising, personal selling, public relations, direct marketing, and sales promotion (Obal, Burtch, & Kunz, 2011).
These disciplines are being combined into one overarching strategy for brands and corporations.
According to Groom (2008) Integrated Marketing Communication (IMC) is defined as: strategic business process used to plan, develop, execute, and evaluate coordinated, measurable, persuasive brand communication programs over time with consumers, customers, prospects, and other targeted, relevant external and internal audiences.
Information technologies enable consumers to choose which content they will engage with online (Kitchen & Burgmann, 2010).
Further, in order to build relationships with consumers, marketers must make a dialogue with these consumers with an “outside-in” orientation (Groom, 2008).
That is, consumers now exercise greater control over the marketing environment and marketers must adjust to interacting with consumers on their terms (Mulhern, 2009).
Kitchen and Burgmann (2010) offer course of actions for a thriving Integrated Marketing Communication approach:
• The communication activities should be directed at customers in order to affect behavior.
• An outside-in approach should be utilized that is, start with the customer first when developing a communication strategy.
• An entrenched relationship between the company and the customer is essential.
• To send a message correctly all communication activities should be included with contact points integrated into the strategy.
• To create a competitive brand, coordination between the communication disciplines is needed
A key component of successful IMC is one-to-one communication with customers and they expect brands to tailor their messages and target consumers with particular content and it is crucial for marketers to establish relationships with customers and treat them as persons.
Customers want to see content that is related to their lives. This can be accomplished by going beyond demographics of the consumer base and looking instead at psychographics. (Kitchen & Burgmann, 2010)
2.2.3. Social Media as a Component of IMC
An influential way to communicate IMC messages and create a dialogue with customers is communicating with them through social media platforms.
Social media is a variety of internet websites/ platforms where information is created, shared, and exchanged by individuals online (Mangold & Faulds, 2009).
Social media websites / platforms including blogs, microblogs, email, and social networking websites provide numerous benefits for both customers and marketing professionals.
Social media has enabled Integrated Marketing Communication to be possible with much less time and effort than traditional media (Kim & Ko, 2012).
Marketers frequently connect with customers and provide a great depth of information on Facebook “fan” pages of a brand or company (Weinberg & Pehlivan, 2011).
C0mpared with traditional media and direct marketing, social media enables immediate feedback for all relevant parties. (Obal, Burch, & Kunz, 2011).
Social media is strong tool because it facilitates listening, information gathering and engagement by both the customer and marketers
Marketers can use social media to communicate information about brands, products, and customers as well can post reviews of the products and their experience with the brand in addition to questions they may have concerning about the product as well (Obal, Burtch, & Kunz, 2011).
From an organizational standpoint, forming and maintaining direct relationships with customers is very important and social media is a great tool for marketers to use in this regard, and should be incorporated into the marketing mix (Kitchen & Burgmann, 2010).
To accomplish successful IMC, brands must coordinate all elements of the promotional strategy.
Mangold and Faulds (2009) recommend that social media be included as a key component of the IMC strategy in order for brands to communicate with their consumers.
As an element of brand communication, social media should integrate the brand’s values and publicize relevant and appealing content.
However, brands must keep in mind that as branding becomes more open source, customers are selecting which brands to communicate with and shaping the brand standards themselves (Fournier ; Avery, 2011).
Different than traditional marketing channels where brands send communication directly to customer, customers are seeking out brands and companies on social media and choosing whether or not they will connect with them (Fournier ; Avery, 2011).
Customers want the facility to engage with brands, and they look forward to brands and organizations to listen to them and respond accordingly (Habibi, Richard, ; Laroche, 2013).
Yan (2011) suggests goals for social media use by a brand: building a sense of membership with the organization, communicate brand values, encourage the audience to engage in a dialogue.
In turn, this dialogue helps the organization to maintain a competitive advantage, inform the brand’s vision, assess whether the brand is being communicated properly, and to build positive brand associations and brand awareness (Yan, 2011).
The social media marketer must keep consumers engaged in conversation and ultimately create brand advocated and supporters through this conversation (Weinberg and Pehlivan, 2011).
Social media use in marketing, however, is not only limited to communication between brands and consumers. According to Mangold and Faulds (2009), the second role of social media is to enable word-of-mouth communication from consumer to consumer.
This is crucial for brands, as this word of mouth is much faster and more far-reaching than traditional word ofmouth (Mangold & Faulds, 2009). Word-of-mouth is a critical component of social media marketing and IMC strategy (Obal, Burch, & Kunz, 2011).
2.2.4. Social Media Content
A useful frame for understanding social media and its content is Uses and Gratifications Theory.
Uses and Gratifications Theory (Palmgreen, Wenner, & Rosengren, 1985) asserts people are active users of media and seek out media in order to satisfy needs.
In order to promote engagement and interaction from consumers, brands need to disseminate valuable content.
Zaglia (2013) explored consumer motivations for engaging with a brand online. Reasons for connecting with a brand on the web are passion for the brand, willingness to learn and improve skills, social relation to others, reception of information tailored to specific members’ needs, entertainment, and enhancement of one’s social position.
Consumers are looking for customized content from the brands they care about brands online. Another study by Hennig-Thurau, Gwinner, Walsh, and Gremner (2004) find four main reasons why consumers engage in word-of mouth online: social interaction, care for other consumers, strive for self-worth enhancement or as a response economic incentives (e.g. giveaways, deals).
These findings suggest that brands should tailor their communication to individual segments and users, provide entertaining content, and open discussion among all consumers.
In their study of brand post popularity, de Vries, Gensler, and Leeflang (2012) considered brand post characteristics content of the brand post (e.g., information, entertainment), valence of comments (positive or negative) and position of the post on the social media site.
Brand post content was characterized as informative, entertaining, or neutral.
Brand posts were considered informative when they contained information about the company, brand, and/or products.
Entertaining brand posts included content that is unrelated to the brand, but has an entertainment value (e.g. humor).
Neutral posts were categorized as non-informative and non-entertaining, such as a question about color preference. de Vries et al. 8 (2012) suggested consumers engage with brand fan pages for entertainment and information, and found entertaining and informative brand posts to be the most popular.
De Vries et al., 2012 also examined brand post characteristics of interactivity and vividness. Interactivity is characterized by two-way communication between companies and customers, in addition to customer to customer. Vividness is “the extent to which a brand post stimulates the different senses For example, a video is more vivid than a picture because the former stimulates not only sight, but also hearing”.
They found highly interactive and vivid posts to be more popular than those low in interaction and vividness.
In order to be successful in social media marketing, marketers need to have an understanding of what kind of content is most popular on the brand’s social media outlets.
One aspect of brand post popularity unexamined by de Vries, Gensler, and Leeflang is Facebook “shares.
” In their study of Facebook fan engagement, Malhotra, and See (2013) assert that audience engagement is most directly measured through the Facebook share, when consumers repost a post by a brand. The Twitter equivalent of the share is the retweet.
The researchers examined over 1,000 posts by 98 brands and found that content
most likely to be shared (retweeted) are those that are topical, educational, and related to deals and promotions.
The authors go on to argue that when a consumer shares a brand post, they are acting as a brand ambassador as the post is shared on their own wall and also their newsfeed for their friends to see (Malhotra, et al., 2013).
2.2.5. Virtual Brand Community
As of 2011, more than half of consumers followed brands on Facebook (de Vries,Gensler, ; Leeflang, 2012). Social media brand communities fulfill consumers’ desire to feel 9 accepted and create a social identity through the brands with which they interact (Fournier & Avery, 2011).
Consumers can find brand communities on social media and build relationships with the brand and similar individuals who also like the brand and Social media promotes open source branding, in which consumers participate and collaborate with the brand and other consumers to create and share the brand’s content (Fournier ; Avery, 2011).
Brand communities on social media enable brand marketers to access the brand’s current consumers and supporters, as well as reach potential consumers across the globe (Habibi, Richard, & Laroche, 2013).
Brands can share photos, videos, and product information with fans on Facebook and followers on Twitter, and in turn these fans can share the information with their friends and followers (de Vries, Gensler, & Leeflang, 2012).
Although marketing is not limited to the web, social media makes it easier to access customers and interact with them more quickly than ever before (Gensler, Völckner, Liu-Thompkins, & Wiertz, 2013).
Creating brand fan pages has many benefits for brands. First, it has been shown that those who are involved in brand communities are more emotionally invested in the brand, more committed to the brand, and have more loyalty to the brand (Christodoulides, Jevons, & Bonhomme, 2012).
Brand loyalty leads to stronger purchase intention, and brand fan pages facilitate the consumer-brand relationship (Gensler et al., 2013).
Genseler et al. (2013) found that Twitter and Facebook were the most ideal channels for brands to converse with consumers.
They suggest that firms should provide relevant and interesting content for consumers and respond to consumer-generated content (Gensler et al., 2013).
Is has been shown that consumers feel more engaged with organizations when they are able to submit feedback, and social media provides an outlet for this feedback (Mangold & Faulds, 2009).
A main topic being studied involving social media as a marketing tool is Virtual Brand Communities (VBC).
“VBC can be described as aggregations of consumers that occur on the internet because of their interest in some brand or product” (Muniz and O’Guinn as cited in Georgi and Mink 2012, 3).
Specifically, a brand community is a group of people who share the same interest in a particular brand or product (Casaló, Favián and Guinalíu 2008).
Overall,VBC’s are “the sites of complex brand meaning creation and consumption efforts” (Muñiz and Jensen Schau, 2007).
Casaló, Favián and Guinalíu (2008) found when a member is trusting of the VBC that they are part of, it increases their amount of participation, and consumers who have a positive participation experience are more loyal to the brand. Trust is a central aspect to guarantee the VBC’s survival.
Cha (2009) concludes that security is a key factor affecting a customer’s opinions toward social networking sites and can ultimately impact trust. Since VBCs depend on individual users’ participation, both group unity and awareness can strengthen users’ satisfaction with a VBC (Casaló, Favián and Guinalíu 2008).
The study done by Casaló, Favián and Guinalíu (2008) demonstrates the powerful way VBC and an online interaction between consumers can have on their buying behavior.
There are many new forms of social interactions and communication are taking place through virtusal brands communities such as Electronic Consumer to Consumer Interaction (eCCI), which are communications between customers on social media (Georgi and Mink 2012).
The chance to mingle with other people is a fundamental part of the consumer experience and social networking sites have become a way in which consumers can interact with one another and sellers (Georgi and Mink 2012).
Because of eCCI, consumers are playing an additional leading role in influencing each other with their buying decisions.
Georgi and Mink (2012) came up with the concept of electronic consumer to consumer interaction quality (eCCIq).
They found that seven factors contribute to the success of eCCIq. These factors are 1-content 2-security3-hedonic (meaning the emotional aspects of consumers’ interactions with products), 4-quality, 5-atmosphere, 6-convenience, and 7-social.
An example of eCCI (which is any communications between customers or users of e-services) is when a consumer/user posts a question about the fit/ size or color or requesting any information about the features of a product displayed online and another consumer/user voluntarily answers the question.
This eCCI event would apparently be of high quality if the question is answered by another consumer/user rapidly, properly, and in a friendly way.
This example of an interaction between consumers/users involves some of the factors connected with eCCIq such as social and convenience, thus making it an eCCIq occurrence and Consumers sense more engaged with products and the brand when they have the option to post feedback (Mangold and Faulds 2009).
Accordingly, it is important for marketers to be aware of the quality of their social media existence even if the customers are the creators of their marketing because it is ever more influencing how customers shop.
Marketers should be aware of the of factors that may affect their social media presence such as a customer’s social identity online and some Virtual Brand Communities researches focused on the concept of social identity and group norms as an aspect that strongly influences online groups’ buying behavior.
The nature and culture of social media groups affect the ways members of such groups understand, perceive and attach meaning to brands and products (Muñiz and Jensen Schau, 2007).
Group norms represent the set of shared goals, beliefs, and values that the group members follow.
Social identity refers to the values and beliefs that influence group related behavior (Zeng, Huang, and Dou 2009).
Community members within a strong social group were more likely to have group intentions to accept advertising in online communities (Zeng, Huang, and Dou 2009).
For instance, if a Facebook group is centered on luxury brands, then ads pertaining to high-end products are more relevant to members of the VBC.
Some members consume ads more easily by accepting the meanings in which they contain, while others interpret the ads by attaching meaning to the brand represented based on their own experiences (Muñiz and O’Guinn as cited in Muñiz and Jensen Schau, 2007).
Moreover, VBC members value ads that are relevant to the theme of their community.
Muñiz and Jensen Schau (2007) found advertising and branding produce discouragement of the intended meaning of the ad in order to serve the meaning of the distinct group, in this circumstance the brand community.
2.2.6. Social Networks and Customer Equity
Despite the a range of theoretical disputes of Social network equity in the economics, sociology, psychology, and business management fields regard society as the most important concept for consumer-oriented customer equity.
However, social phenomena appearing in various social sectors are hard to define and quantify. Therefore, defining society is of priority. Networks are collections of individuals and nodes linking them. In terms of social, informational, technological, and biological factors, recent studies define social networks as groups of people with similar contacts or interactions (Newman, 2003).
People establish social networks to create connections for exchanging and sharing information, which then generates information networks (Dwyer, 2007).
Social networks have the power to dominate motivations and strongly affect the comparison between brand-related WOM word-of-mouth and what the brand say about itself in other words self-branding (Halvorsen, Hoffmann, Coste-Manière, & Stankeviciute, 2013; Lee, 2012).
Word-of-mouth has growing value for the influence on individuals through online social network communications and interactions (Lam, Ahearne, Hu, & Schillewaert, 2010).
In other words, consumers identify brands with themselves to connect to social groups, and they identify themselves with social groups to connect with brands (Park & Kang, 2013). Marketing activities, particularly the concept of the 4Ps (price, product, promotion, place), have long played important roles in marketing strategies and have been regarded as important variables influencing corporate equity value.
Until now, most corporate activities have been conducted within the scope of 4Ps strategies (Ataman, Van Heerde, & Mela, 2010), which help determine how to localize or standardize marketing mix factors if a global company expands into a new market (Lages, Abrantes, & Lages, 2008).
Consumers’ behavioral intentions and behaviors are functionally related with service providers’ overall perceptions.
In particular, customers renew their intention to use certain service providers based on their belief in brands, evaluation of experience with the service, and convictions based on norms and motivations (Bagozzi, Baumgartner, & Yi, 1992).
2.3. Customer Equity
The value a customer brings to an organization is not limited to the pro?t from each transaction but is the total pro?t the customer may provide over the duration of the relationship with the organization (Kumar & George, 2007).
Thus, customers are seen as the intangible assets an organization should wisely acquire, maintain, and maximize just like other ?nancial assets.
This asset needs to be measured, managed and maximized in order to optimize firm performance (Blattberg et al., 2001).
Customer equity refers to the total of the discounted lifetime values of all the firm’s customers (Rust, Moorman, ; Bhalla, 2010), and considers time in determining current value direct marketing uses the concept of customer lifetime value (CLV) as basic to maximizing profits.
The value a customer brings to the firm is not limited to the profit from each transaction, but is the total profit s/he may provide over the duration of his/her relationship with the firm. Thus, customers are intangible assets; however, it is rather difficult to establish a precise value for this asset. (Gupta and Lehmann 2003).
The concept has recently attracted increased attention because of advancements in marketing technology (Kim, Park, Kim, Aiello, ; Donvito, 2012).
Customer equity, usually de?ned as the dis-counted sum of customer lifetime values, has been considered the most determinant of the long-term values of the ?rm (Jeon, 2010; Lemon et al., 2001).
The customer asset takes on different values that can be enhanced by addressing the needs and preferences of customers at different stages of the relationship.
The firm’s tangible assets like plant and equipment, and intangible assets such as brands, are some of the means by which the value of a firm’s customer assets can be enhanced (Hogan et al. 2002).
By viewing customers as assets, firms can manage the firm–customer relationship more profitably through customer-specific marketing actions.
What is the best way to measure the value of the customer asset? Assessing the value of a financial asset involves calculating the associated cash flow and then applying a discount factor to arrive at the present value of the asset.
The value of the customer asset can be computed in a similar manner.
Customers produce positive/negative cash flows for the firm over the period of their relationship with the firm. Firms typically adopt one of two approaches in assessing the value of their customers.
A firm can either calculate the total worth of its customer base from aggregate financial measures or compute the value of each customer individually based on buying characteristics and purchase history.
The total asset value of the firm’s customers thus computed is called customer equity.
Customer equity is “a combination of a firm’s current customer assets and the value of the firm’s potential customer assets” (Hogan et al. 2002).
Customer equity is defined as the total of the discounted lifetime values summed over all of firm’s current and potential customers (Rust et al. 2004).
Under one approach for measuring customer equity, firms use segment or firm-level data to compute the average lifetime value of a customer (or average CLV), which is then multiplied by the number of customers to arrive at the customer equity.
Individual lifetime value is not available for all customers under this top–down approach, which is called aggregate-level approach.
Under the second approach, each customer’s value to the firm (or the lifetime value) is computed individually for all existing customers. Customer equity is then calculated by summing up the lifetime values of all the customers.
This approach is, therefore, a bottom–up approach, where customer equity is derived from individual-level customer lifetime values, and is referred to as a disaggregate-level approach.
2.3.3. Components of customer equity
Many researchers have done deeply research in the area of customer valuation and have proposed various aggregate and disaggregate-level frameworks. However, these approaches differ from each other, and there is a fair amount of confusion in the field about the specific contribution of various methods.
Lemon et al. (2001) de?nes three types of equity:
Value, brand, and relationship as key drivers of overall customer equity.
Value equity; consumers evaluate products for their credibility, quality, and marketability.
Value equity reflects relatively objective customer opinions about products or services and is regarded as unilateral equity based on a company’s product or service competence (Rust et al., 2004).
“Value equity” is the customer’s objective evaluation of the usefulness of a brand, based on perceptions of what is given up for what is received (Vogel et al., 2008).
Consumers recognize value by comparing the rewards they get with the efforts they expend in acquiring products or services.
Accordingly, companies can improve value by providing value beyond consumer expectations or by reducing consumer-provided rewards (Winters & Ha, 2012).
Brand equity is a customer’s subjective and intangible assessment of the brand over and above its value (Kim et al., 2008; Lemon et al., 2001). Brands are the best at building images that make customers identify that specialty from among others (Keller, 1998).
The key actionable levers of brand equity are brand awareness, attitude toward the brand, and corporate ethics (Lemon et al., 2001)
What is necessary is to build strong customer relationship through special treatment or recognition, and community programs can be an ef?cient way to boost relationship equity.
Relationship equity expresses the trend of customers to continue their relationship with a brand, going further than objective and subjective assessments of it.
Generally, loyalty programs under a ?rm’s control may enhance relationship equity; however, loyalty toward a certain brand grows weaker than yesterday as a variety of alternatives are offered to customers.
220.127.116.11. Value equity
Value equity is defined as the customer’s objective assessment of the utility of a brand, based on perceptions of what is given up for what is received.
Three key levers influence value equity: quality, price, and convenience.
Quality can be thought about the objective physical and nonphysical aspects of the product and service offering under the firm’s control.
The New e-world entrants that enable customers to find the best price have revolutionized the power of executive briefing.
Value Equity matters to most of the customers most of the time, but it will be most important under specific circumstances.
when there are differences between competing products, a firm can grow value equity by influencing customer perceptions of value. Consider IBM’s ThinkPad brand of notebook computers is long recognized for innovation and advanced design, IBM has been able to build an advantage in the area of value equity by building faster, thinner, lighter computers with advanced capabilities.
When it is the central for purchases with complex decision processes; customers carefully weigh their decisions and often examine the trade-offs of costs and benefits associated with various alternatives. Therefore, any company that either increases the customer benefits or reduces costs for its customers will be able to increase its value equity.
In Case of Industrial marketing- business to-business purchases. decisions are complex, B2B purchases often involve a long-term commitment or partnership between the two parties (and large sums of money). Therefore, customers in these purchase situations often consider their decisions more carefully than individual consumers do.
When a firm has the opportunity to grow its value equity by offering an innovative products and services.
When considering the purchase of a “really new” product or service, customers must carefully examine the components of the product because the key attributes often may be difficult to discern.
In many cases, consumers make one-to one comparisons across products, trying to decide whether the new product offers sufficient benefits to risk the purchase.
New MP3-type devices that provide consumers with online access to music are examples of such innovative products and services. Consumers will seek out substantial information (e.g., from the Web, friends, and advertisements) to determine the costs and benefits of new products.
Firms that can signal quality and low risk can grow value equity in such new markets.
Value equity will be the key for firms attempting to revive mature products. In the maturity stage of the product life cycle, most customers observe product parity, sales level off, and, to avoid commoditization, firms often focus on the role of the brand. But value equity also may grow customer equity.
Also By introducing new benefits for a current product or service or by adding new features to the current offering, marketers can recycle their products and services and grow value equity in the process.
The importance of value equity will depend on the industry, the maturity of the firm, and the customer decision-making process.
18.104.22.168. Brand Equity
The term “brand” refers to a combination of names, signs, symbols, and designs through which customers can identify the offerings of a specific company and distinguish these offerings from those of competitors (American Marketing Association, 1960).
A brand can be considered as a cluster of functional and emotional values which are unique and can provide customers with favorable experience (De Chernatony et al., 2006).
A successful brand is valuable, since it can enable marketers to gain competitive advantages by facilitating potential brand extensions, developing resilience against competitors’ promotional pressures, and creating entry barriers to competitors (Kim et al., 2008a; Rangaswamy et al., 1993; Rowley, 2009).
Brand equity is generally defined as the marketing effects, or the value added to the product, specifically attributable to the brand (Keller, 1993; Rangaswamy et al., 1993).
In other words, brand equity is the difference between the utility of the substantial attributes of a focal branded product and the total utility of the brand (Yoo et al., 2000).
Brand equity can be considered a mix of both customer-based brand strength (equity) and financial brand equity (Barwise, 1993).
Financial brand equity refers mostly to the value of a brand for accounting purposes, while customer-based brand equity refers to the customers’ familiarity and unique associations with the brand in memory (Keller, 1993).
Brand equity factor Definition Reference Brand loyalty A deeply held long-term commitment to consistently repurchase a product/service of the same brand, free from the effects of situational factors and marketing efforts that have the potential to result in switching behaviors (Aaker, 1991, 1996; Bakeret al., 2010; Kim et al., 2008; Oliver, 1999; Yoo et al.,2000 )
Brand associations Anything, including attributes of a product/service, reputation of a company, and characteristics of product /service users, which linked in consumer memory to a brand Aaker, 1991, 1996; Baker et al., 2010;Keller, 1998; Yoo et al., 2000
Brand awareness The strength of the trace of a brand in consumer memory, as reflected by the consumers’ ability to identify the brand under different conditions Aaker, 1991, 1996; Bakeret al.,2010; Keller, 1993; Kim et al., 2008; Yoo et al., 2000 )
Where value equity is driven by perceptions of objective aspects of a firm’s offerings, brand equity is built almost through subjective aspects; through image and meaning.
Brand equity refers to consumers’ evaluations of and personal preferences for brand images, which then grant value to products or services (Aaker, 1991).
Along with corporate value equity, brand equity is an intangible monetary equity involving consumer recognition and brand expansion in the modern market economy (Rust et al., 2004).
Brand awareness, encompasses the tools under the firm’s control that can influence and enhance brand awareness, particularly marketing communications.
The new focus on media advertising by pharmaceutical companies (e.g., Zyban, Viagra, Claritin) is designed to build brand awareness and encourage patients to ask for these drugs by name.
The attitude toward the brand encompasses the extent to which the firm is able to create close connections or emotional ties with the customer. This is most often influenced through the specific nature of the media campaigns and may be more directly influenced by direct marketing.
Brand equity is regarded as a very important concept in business practice as well as in academic research because marketers can gain competitive advantage through successful brands.
The competitive advantage of firms that have brands with high equity includes the opportunity for successful extensions, resilience against competitors’ promotional pressures, and creation of barriers to competitive entry (Farquhar, 1989).
An indication of the importance of well-known brands is the premium asset valuation that they obtain. For example, 90% of the total price of $220 million paid by Cadbury-Schweppes for the “Hires” and “Crush” product lines of Procter & Gamble is attributed to brand assets (Kamakura and Russell, 1991; Schlossberg, 1990).
In conceptualizing how customers evaluate brand equity, it is viewed as consisting of two components – brand strength and brand value (Srivastava and Shocker, 1991).
Basically, brand equity stems from the greater confidence that consumers place in a brand than they do in its competitors.
This confidence translates into consumers’ loyalty and their willingness to pay a premium price for the brand. As an example, a study by McKinsey ; Co. and Intelliquest Inc. found that consumers tend to buy brands with low brand equity like Packard Bell only at a price discount when compared to brands such as Compaq and IBM that can command a price premium (Pope, 1993)
The role of brand equity will depend on the level of customer involvement, the nature of the customer experience, and the Relationship equity evaluates consumer perceptions of value in their relationships with the company regarding corporate provision of products or services (Rust et al., 2004).
Consumers primarily evaluate the quality of face-to-face encounters to assess the benefits of company offerings in relationships and special treatments.
Companies should regard consumers as valued business partners and should tailor their services to incite emotional attachment through relationship marketing, which forms, maintains, and enhances relationships with consumers (Berry, 1995).
In addition, relationship marketing is defined as marketing activities that establish, develop, and maintain the successful exchange of relationships (Dwyer, 1997).
22.214.171.124 Relationship Equity
Consider a firm with a great brand and a great product. The company may be able to attract new customers to its product with its strong brand and keep customers by meeting their expectations consistently. But is this enough? Given the significant shifts in the new economy—from goods to services, from transactions to relationships—the answer is no.
Great brand equity and value equity may not be enough to hold the customer. What’s needed is a way to glue the customers to the firm, enhancing the stickiness of the relationship.
Relationship equity represents this glue. Specifically, relationship equity is defined as the tendency of the customer to stick with the brand, above and beyond the customer’s objective and subjective assessments of the brand. The key levers, under the firm’s control, that may enhance relationship equity are loyalty programs, special recognition and treatment, affinity programs, community building programs, and knowledge-building programs.
Loyalty programs include actions that reward customers for specific behaviors with tangible benefits. From airlines to liquor stores, from Citigroup to Diet Coke, the loyalty program has become a staple of many firms’ marketing strategy.
Special recognition and treatment refers to actions that recognize customers for specific behavior with intangible benefits. For example, US Airways’ “Chairman Preferred” status customers receive complimentary membership in the US Airways’ Club.
Affinity programs seek to create strong emotional connections with customers, linking the customer’s relationship with the firm to other important aspects of the customer’s life. Consider the wide array of affinity Visa and MasterCard choices offered by First USA to encourage increased use and higher retention.
Community-building programs seek to cement the customer-firm relationship by linking the customer to a larger community of like customers.
In the United Kingdom, for example, soft drink manufacturer Tango has created a Web site that has built a virtual community with its key segment, the nation’s youth.
Knowledge-building programs increase relationship equity by creating structural bonds between the customer and the firm, making the customer less willing to recreate a relationship with an alternative provider.
The most often cited example of this is amazon.com, but learning relationships are not limited to cyberspace.
Firms such as British Airways have developed programs to track customer food and drink preferences, thereby creating bonds with the customer while simultaneously reducing costs.
Determining the Key Drivers Think back to the set of questions posed earlier. How should a marketing executive decide where to focus his or her efforts: Building the brand? Improving the product or service? Deepening the relationships with current customers? Determining what the most important driver of customer equity is will often depend on characteristics of the industry and the market, such as market maturity or consumer decision processes.
But determining the critical driver for your firm is the first step in building the truly customer-focused marketing organization.
Relationship equity will be critical when the benefits the customer associates with the firm’s loyalty program are significantly greater than the actual “cash value” of the benefits received. This “aspirational value” of a loyalty program presents a solid opportunity for firms to strengthen relationship equity by creating a strong incentive for the customer to return to the firm for future purchases.
The success of the world’s frequent flyer programs lies, to some extent, in the difference between the “true” value of a frequent flyer mile (about three cents) and the aspirational value—the customer’s perception of the value of a frequent flyer mile (“I’m that much closer to my free trip to Hawaii!”).
Second, relationship equity will be key when the community associated with the product or service is as important as the product or service itself.
Certain products and services have the added benefit of building a strong community of enthusiasts. Customers will often continue to purchase from the firm to maintain “membership” in the community.
Just ask an active member of a HOG (Harley-Davidson Owners Group) to switch to a Honda Gold Wing; or ask a committed health club member to switch to an alternate health club. Individuals who have become committed to brand communities tend to be fiercely loyal.
Third, relationship equity will be vital when firms have the opportunity to create learning relationships with customers. Often, the relationship created between the firm and the customer, in which the firm comes to appreciate the customer’s preferences and buying habits, can become as important to the customer as the provision of the product or service.
2.3.3. The theory of customer equity’s components from the perspective of customer behavior
Zhang Juntao, Ge Songlin proposed the new theory of customer equity’s components from the perspective of the customer behavior. this perspective because we think customer behavior is the source of customer equity.
Zhang Juntao, Ge Songlin found that only customer’s purchase behaviors and communication behaviors could create value for organizations. THEY explored the components of customer equity from these two types of behaviors.
According to Bolton, Lemon and Verhoef (2004), customer’s purchase behaviors have three dimensions: length, depth, and breadth.
First, the length of a purchase behavior corresponds to a customer continues (or ends) the relationship with the organization, defined as the duration a customer buys something. If a purchase behavior is longer, this behavior could create more value for the organization. Zhang Juntao, Ge Songlin named the value as Repeat Buying Value (RBV). Second, the depth of a purchase behavior is reflected in the quantity of a customer purchases something over time. If a customer buys more products in a unit time than before, this part could bring new value for the organization. Zhang Juntao, Ge Songlin name the value as More Buying Value (MBV).
It is also reflected in customers’ decisions to upgrade and purchase premium (higher margin) products instead of low-cost variants. (Loyal customers are sometimes assumed to be willing to pay higher prices cf. Reichheld 1996a, 1996b) In this situation, the organization could gain another value. the value as Higher Margin Buying Value (HBV). Third, the breadth of a purchase behavior is reflected in cross- buying or “add-on” buying; that is, the number of additional (different) products purchased from company overtime (Blattberg et al. 2001).
For example, a customer might enter a relationship with a financial service provider by opening a checking account—and subsequently purchase a certificate of deposit. In this situation, the organization could sell more products at lower cost and obtain more value. We name the value as Cross Buying Value (CBV).
In addition to purchase behavior, customer equity is influenced by non-purchase behaviors that are more difficult to observe and predict, such as word-of-mouth behavior and the provision of new product ideas (Bettencourt 1997).
In fact, these non-purchase behaviors are the part of communication behaviors. There has been little attention paid to communication behaviors. these behaviors could be sorted into two types: behaviors of communicating to other customers and behaviors of communicating to organizations.
The first type behavior is defined as a customer tells some information about a product to a latent customer. This is word-of-mouth behavior. It could bring Word-of-Mouth Value (WMV) to the organization.
The second type behavior is defined as a customer tells his (her) needs and wants or some suggestions about a product and so on to the organization.
This behavior could reduce the cost of communication and create Information Value (IV).
For acquiring customer equity, the organization must pay some costs. These costs include Direct Costs, Acquisition Costs, Retention Costs and so forth. As there has been recent and extensive discussion of these costs (Blattberg and Deighton 1996; Blattberg, Getz, and Thomas 2001;Bauer, Hammerschmidt and Braehler 2003; Gupta, Hanssens, Hardie, Kahn, Kumar, Lin, Ravishanker, Sriram 2006)
2.4. Cultural Industries
Cultural and creative industries are among the fastest growing industries in the world and have proven to be a sustainable development option based on a unique and renewed resource of human creativity. Creativity refers to the ability of man to develop new and innovative solutions and ideas stemming from imagination or from the skill of innovation.
The possibilities offered by these industries were at the heart of the 2005 Convention on the Protection and Promotion of the Diversity of Cultural Expressions. The aim of this legally binding international treaty is to enable artists, practitioners and practitioners of culture and other citizens to create, produce, disseminate and enjoy a wide range of cultural goods, services and activities, especially when it comes to their cultural expressions.
The Convention supports mechanisms that promote innovation and foster the development of vibrant cultural and creative industries for overall economic and social development, including mechanisms to promote domestic production, develop local markets and facilitate the use of platforms for distribution and exchange around the world
According to international organizations such as UNESCO and the General Agreement on Tariffs and Trade (GATT),cultural industries (sometimes also known as “creative industries”) combine the creation, production, and distribution of goods and services that are cultural in nature and usually protected by intellectual property rights.
UNESCO defines cultural and creative industries as “sectors of organized activity whose principal purpose is the production or reproduction, promotion, distribution and/or commercialization of goods, services and activities of a cultural, artistic or heritage-related nature.
” This approach emphasizes more than just the industrially made products of human creativity; it makes relevant the entire productive chain, as well as the specific functions of each sector involved in bringing these creations to the public.
Thus, the definition also encompasses related activities, such as publicity and graphic design, which are decisive factors in this process.
Due to wide gaps between cultural industries in the developed and developing countries, the challenge lies in strengthening local capacity, improving access to global markets through new partnerships, obtaining support from experts, and combating piracy and defending intellectual property rights.
2.4.1. Defining Cultural Industries
Adorno and Horkheimer originally coined the term cultural industry to make the distinction between the traditional artisans based creative arts and industrially produced cultural forms (Dialectic of Enlightenment 1947).
The term ‘cultural industries’ which developed from this – referring to the ‘classic’ cultural industries of film, recorded music, broadcasting and publishing – was deployed to incorporate these forms of commercial entertainment, mass produced by industrial methods, as an object of government cultural policy.
This was the sense in which the cultural industries became a subject of interest to the French government, and to UNESCO in the late 1970s and 1980s (Garnham 1990 ; Towse 2005, Flew 2002).
The cultural industries are those activities which deal primarily in symbolic goods – goods whose primary economic value is derived from their cultural value.
We shall look at how this definition affects the practices and dynamics of this sector in a moment.
This definition then includes what have been called the ‘classical’ cultural industries – broadcast media, film, publishing, recorded music, design, architecture, new media – and the ‘traditional arts’ – visual art, crafts, theatre, music theatre, concerts and performance, literature, museums and galleries – all those activities which have been eligible for public funding as ‘art’.
There are certainly divisions between these two categories – but a line between ‘art’ and ‘commerce’ is ideological and not analytical. There is no way in which the classical music world, though in receipt of enormous public subsidy, cannot be considered deeply commercial.
It merely responds to commerce in a particular way. Similarly, though aiming to ‘make it’ at some point, calling struggling pop musicians ‘commercial’ is to misunderstand a lot of what they do.
The distribution of funds in these two areas is different – one relies on ‘the market’, the other on a bureaucratic system of attributing value, and thus money.
But the difference is not as fundamental as has been claimed. Both deal in symbolic value whose ultimate test is within a circuit of cultural value which, whether mediated by market or bureaucracy, relies on a wider sense of it as meaningful, pleasurable, beautiful etc.
Those involved in contemporary cultural production increasingly move between these systems, though for many, they receive money from neither, relying on ‘investment’ from social welfare or second jobs.
The key point is that we cannot start from the notion that these are two separate sectors divided by ‘cultural value’ versus ‘commercial value’.
We need to remember those two key points noted above – the commercial sector provides wealth and employment (as do the arts), but it is also a prime site of cultural consumption for the vast majority of the population.
New forms of production, new understandings of ‘culture’, new forms of consumption and distribution have over-run the separations of ‘art’ and (mass or ‘folk/ethnic’) culture set up by the European state funding systems.
The definition of cultural industries is by necessity fairly fluid – as products and activities increasingly take on aesthetic and symbolic meaning (look at gardening!) – which causes problems for quantitative studies.
It may include advertising and even marketing – the question is not counting job numbers but understanding how these firms may fit within a local cultural dynamic.
In some cities only a very few marketing firms could be usefully placed within the cultural sector – as actively responsive to changing and dynamic circuits of symbolic flow.
In some cases a marketing or advertising firm can galvanize a section of the cultural economy.
Similarly, new media obviously has cutting edge, culturally innovative sections, but separating these from general software development – from the wider information economy – can be difficult.
Design too is difficult – the inclusion of industrial design really bumps up the figures but it is not clear at all how many of these are dealing with cultural meanings.
That is, to what extent they deal in fitness for purpose in a functional sense, or a design awareness in an aesthetic sense (and how do we draw the line?).
Similarly, there are very strong arguments for including cafes, bars, restaurants, innovative retail in this sector – but to include all such would provide inflated figures for the sector but no real understanding or local policy purchase.
Indeed, the notion that we can include manufacture or related artisan/ craft skills within the sector also relies on a qualitative judgments that has to be made at a local/ regional level.
Thus it seems wrong to include electronics en masse within the figures in Britain when there is no evidence whatsoever of local connection or flows of information.
O’Connor defines the cultural industries as ‘those activities which deal primarily in symbolic goods – goods whose primary economic value is derived from their cultural value’ (O’Connor 1990).
This definition, then, includes what O’Connor calls the ‘classical’ cultural industries – broadcast media, film, publishing, recorded music, design, architecture, new media – and the ‘traditional arts’ – visual art, crafts, theatre, music theatre, concerts and performance, literature, museums and galleries – all those activities which have been eligible for public funding as ‘art’ (O’Connor 1990).
Bilton and Leary (What can managers do) and Martin (Defining Culture), agreeing on the importance of symbolic meaning, differ from O’Connor by considering a fourth concept, that of ‘use value’ to be the defining characteristic.
2.4.2. The Unique Nature of Cultural Industries
The uniqueness in culture and life, in addition to endow town with character and life, when introducing design into local field to observe, plan and design, the diversification and feature of local culture will be the key point of local brand development and integrating design strategy.
In the development of local tourism, and the arousal of sense of natives caused by globalization, the people, culture, geography, property and scenery with local feature will be a key factor of developing local economy, while culture and creativity could create business opportunity through the added value and service of digital technology, providing real estate with different strategic thinking. Thus, based on culture and economy, this study tries to explore the local property development and strategic approach of brand management.
The cultural industries came into the spotlight as an emerging industry in the 1990s.
After 1997, the UK, Australia, Singapore, South Korea and Japan all adjusted their own industrial strategies for the next century, pushing the cultural industries the fore, and leveraging the emerging force of the cultural industries to increase employment in their respective countries as well as to drive rapid economic growth.
In China, creative and cultural strategy as national strategy began in 1998, the indicator being the establishment in this year of the Cultural Industries Division by the Ministry of Culture, a unit whose specific duties were to take responsibility for cultural industries policy and guidance.
The aim of a ‘cultural nation’ strategy is to ensure the enduring existence of a nation through merit, culture and effort, to become the very tallest tree in the global forest of nations.
Cultural national strategy is a logical choice for any developed nation after a period of rapid economic development. Japan’s national strategy since the dawn of the modern era has been divided into three stages: military national strategy (from the Meiji Restoration to WWII), economic national strategy (from the end of WWII to the 1980s) and cultural national strategy (since the 1990s).
In1995, Japan established a strategy for the ‘cultural nation’ of the Twenty-First Century – ‘The Twenty-First Century Cultural Nation Program’ – that actively promoted the international dissemination of Japanese culture and the expansion of Japan’s cultural industries.
From the cherry trees on the lawn of the White House in Washington to the animation series and music that have fl ooded the globe, the cultural image that Japan has successfully shaped following the end of their economic rise has won praise all over the world.
In 1998 South Korea, clearly delineated their ‘cultural nation principles’ and ‘South Korea Content Vision 21’, with the aim of building South Korea into a major cultural and informatics nations of the Twenty- First Century by providing a powerful boost to the quality of South Korean cultural products across the board, including through governmental and institutional adjustment, national and social awareness, the development of the creativity of content and the cultivation of specialist personnel.
As a result, South Korean music, cinema, TV content and online games have swept the world’s markets.
The ‘Action Plan on Cultural Policies for Development’ agreed upon at the UNESCO World Conference on Cultural Policies for Development in Stockholm in1998 clearly stated that: developments can ultimately defi ne the concept of culture, and cultural prosperity is the highest goal of development.
It was contemporary German philosophical anthropologist Michael Landmann who said, “Culture is like circulatory system, the blood of which is comprised of subjectivity”.
China becoming a cultural power should not be the wishful thinking of an elite few, but the common pursuit of all citizens.
And just like a circulatory system, cultural national strategy should circulate culture to permeate every part of society, from a national level down to a regional, business and individual level. It should not just be implemented by the central government ministries and local government units commissioned to do so, but rather the implementation of national cultural strategy should be the responsibility of each and every citizen.
Service Experience Creating New Value of Brand In the era of emphasizing experience economy, the products and service sold by enterprise have to produce unique value through experience design, and the introduction of service design is made by integrated service design system plan to consider using what kind of ways to create a service experience more perfectly and provide consumers with an innovative experience.
Pine and Gilmore (1998) thought the difference between “Experience Economy” and traditional economy (agricultural economy, industrial economy) is that Experience Economy pursues the shaping of sensibility and experience to build and provide activities for consumers to recollect, besides, also pay attention to the interaction between consumers and commodity.
However, service design refers to the people who has contacted and accepted service, brand, product, environment and connection between each other (Evenson 2006).
Schmitt (1999) classifies experience into 5 kinds, namely sense, emotion, thinking, action and relation, these can be seen as a strategic experience module, by cooperating with its purpose and appeal, to choose one of them to apply independently or integrate them into a whole experience.
Generally speaking, both service design and experience economy pays attention to a kind of consumer experience context and interaction.
Service design pays attention to explain the function and shape from consumer’s point of view, helping industry to provide innovative service or improve existing service, making customer side product and service establish more useful, available and desired traits, as well as taking the feasibility, service efficiency of the application of service provider and enterprise side (Yang and Huang 2011; Moritz 2005).
Compared to general traditional design, service design is a kind of more macro design activity plan and procedure.
If service provides customers with a kind of experience, service design should pay more attention to provide customers with a series of desired unique experience design (Ho and Sung 2014).
The main idea of service design is to make the boundary between service providers (designers) and service receivers (consumers) fuzzy and become the participants in the process of co-creating experience, producing the concept of Co-creation (Yang and Huang 2011; Brown 2009).
The thinking of observation and user-centered can be applied in different issues and field to create different opinion and thinking direction.
However, when performing service design, the integrity of content, all-dimensional consideration planning, including communication, environment and behavior, etc. must be taken into consideration, no matter in what kind of ways to express, consistency, easy-to-use and strategic combination must be presented (Hollins and Hollins 1991), so as to provide suitable service solution based on field domain, connecting local, tourism, service and experience to create innovative content of creative tourism.
3. Research Methodology
3.2. Research Method
3.3. Population & Sampling
3.4. Data Collection
3.5. Questionnaire Design
The research methods should be suitable to the destinations of the examination. This examination was completed by means of exploratory research which enables the researcher to be acclimated with the issue or the idea to be considered, followed by descriptive research to figure out which variable may be causing certain behavior.
The last stage will be a conclusive examination to give data that is valuable in achieving conclusions or decision-making and a reliable or representative figure of the population through the use of a valid research tool.
The researcher in this thesis involved two types of research for data gathering; secondary research and primary research.
Secondary research was discussed in a form of literature review and primary data was collected in a form of questionnaire and researchers observations through social media platforms
3.2. Research Method:
The research process involves a decision on the methodology that needs to be selected by the researcher.
Mainly, there are two types of research methods; first; the qualitative method; used in exploratory research design and its major aim is to gain preliminary insights into research problems and opportunities.
Unfortunately, the results of this method are characterized by a lack of generalizability, reliability and validity.
The second research method is the quantitative research method which is used in descriptive, causal research design and it aims to provide specific facts which can help decision makers to make an informed decision; furthermore, it provides insights relating to relationships between phenomena.
In addition, this method has the advantage of generalizability, reliability and validity. But, this method suffers from some disadvantages for example; it’s considered time consuming (Malhotra, 2007; Shukla, 2008).
The present research adopts the quantitative research method as this research is considered descriptive in nature and the researcher wants to get the benefits of applying the quantitative research method.
The research for this thesis started with secondary research, more specifically with a literature review.
Literature review provided a discussion and analysis concerning the existing literature about customer equity and its drivers, social media marketing and Cultural Industries.
Considering the topic, the key sources for this thesis are scholarly articles in academic journals in the field of marketing.
The work of Kim and Ko (2011) and many other researchers we mentioned in previous studies section.
This study used online questionnaire to conduct primary data.
Primary research was used to test hypotheses, and for this study it was quantitative in nature.
Regarding choosing the data collection method, online questionnaire was chosen because of the accessibility and time limitations.
Online questionnaire was produced and distributed via e-mail, posts and private messages in several platforms and networks.
The questionnaire were launched February 11th, 2018 and closed March 11th, 2018. The language was English.
Research Title: Maximization of Customer Equity through Social media marketing
(Applied Study on Cultural Industries / Cultural Centers in Egypt)
Independent Variable: Social Media Marketing Activities
Dependent Variable: Customer Equity
3.3. Research Populations and Sample
Customers who are interested in any cultural activity or event* in Egypt
? Customer who have a social media account specially Facebook as the main social media platform
? Our Population is Unknown
Sample and Sampling procedures:
The sample in the scientific research is a selected part of the population. This sample represents the community and contains the basic characteristics of the society.
The selection of the research sample is an important and necessary subject especially in the case of research in which it is not possible to obtain information from all members of the community for the large number.
If we say for example that there is a search for a topic related to students, the community, in this case, is all students in all schools and stages and thus impossible to obtain information to search from a community of such a large size.
Selecting a research sample makes it easier for the researcher to select a group of individuals that can collect information from them, saving time and effort.
In case the sample is properly selected and representative of the society in all its layers, the result/results reached by the researcher can be generalized in a study.
Of course, it is worth mentioning that all the size of the sample was all that was often believed.
Choosing the right research sample
In order for the selected sample to be representative of society, a number of factors must be taken into account:
Reflection of qualities and characteristics: The sample must reflect the basic characteristics and characteristics of the research community.
Equal opportunity among all members of society: The choice must be fair so that any member of the community has the opportunity to be from the sample.
Bias: The choice must be impartial without any bias or group of individuals for any reason.
For example, publishing a questionnaire to obtain information from staff on the Internet only causes bias in the study because there is bias because the information obtained is from individuals who have a computer and an Internet connection, and this may not apply to all members of the community.
The number of members of the sample corresponds to the number of members of the community: This depends on the research and the research method and the nature of the problem studied.
To choose a search sample, there are some recommended steps to get an appropriate sample for your study or research:
Determining the unit used: Are the sample units individuals or companies For example, the study may be designed to study differences between individuals, while in another study; the goal may be to study a group of companies.
Identification of the original community: What is the original community of the study and the researcher seeks to obtain a representative sample.
For example: if the study or research aims to study all the major companies in a country, the research community, in this case, are all major companies in this country.
Therefore, the researcher to prepare a list of accurate and modern names of these companies so that he can obtain a representative sample of the whole community with the need to be a comprehensive list of all units of the community to facilitate the selection of the sample later.
Determining the sample size: Determining the sample size depends on some considerations: The degree of homogeneity or variation between the units of society.
If the units of society are homogeneous, a small sample can be chosen to represent the community, whereas if the units of society are different, a larger sample must be chosen to reduce the amount of error.
Resources and time available for the researcher to gather data: If the time available is not sufficient, it is difficult to select a large sample and collect data from it.
Determining the method of selection of the sample: There is a number of methods that can be followed to obtain a representative sample of the society correctly and the researcher to choose one of these methods to obtain a representative
Sampling Techniques or Approaches
These are some of the methods that can be followed to obtain a representative sample of the study community.
Random Sampling: The sample is chosen by one of the probability methods or by using the numbers by giving each unit of the community a number and then randomly selecting the numbers.
There is some research showing that the selection by numbers may be incorrect or inaccurate and may be biased.
Therefore, it is recommended to use a computer program to randomly select the selected community units that are selected by the computer in the sample.
Stratified Sampling: In this case, the sample is divided by dividing the research community into groups called Strata.
This grouping is based on the characteristics and characteristics of the study. For example, the research community can be divided in case the study of universities to private universities and public universities.
After that, the sample is randomly selected from each group.
Cluster Sampling: Similar to the class sample, in this way the research community is divided into groups called Clusters, either by the geographical distribution of the research community or in similar ways.
These groups are divided into additional groups. After this division, the researcher selects randomly selected groups, so that all members of the selected group are taken to be part of the sample and the information is collected from the members of these selected groups.
Determine Sample Size
Statistical Sampling Concepts
Sample-size determination ultimately is a reflection of the value of the information sought.
Scientific journals require that reported results must fall in the 95 to 99 percent confidence levels. When the risk involved in the decision alternatives is high, and then the 95 to 99 percent confidence levels will be required. The 95 percent confidence level is suggested for most researches.
Using the assumptions of the Central Limit Theorem (that means of samples drawn will be normally distributed around the population means, etc.), we select a standard normal deviate from the following table:
Table (3.1): Level of Confidence
Level of Confidence Z Value
Since the population is unknown, the sample size can be derived by computing the minimum sample size required for accuracy in estimating proportions by considering the standard normal deviation set at 95% confidence level (1.96), percentage picking a choice or response (50% = 0.5) and the confidence interval (0.05 = ±5).
The sample size required to give 95 percent level of confidence that the sample proportion is within ± 5 percent of the population proportion is 384.
3.4. Data Collection
According to the large size of population of this study, so to obtain a representative sample for the study, the researcher used the following formula to calculate convenient sample size.
This calculation takes a sampling error of (+/- 5%), 95% confidence level and a maximum variation in the population (i.e. 50%).
The results from the mentioned computation have resulted a sample size of 384. The researcher increased the sample size to 1000 due to the failure in some responses and due to the nature of the online surveys.
In addition, the sampling technique adopted was probability; simple random sample (SRS) as it is a subset of individuals (a sample) chosen from a larger set (a population).
Each individual is chosen randomly and entirely by chance. It requires a complete sampling frame, which may not be available or feasible to construct for large populations.
Even if a complete frame is available, more efficient approaches may be possible if other useful information is available about the units in the population.
The questionnaire was conducted by researcher and the steps will be illustrated in the upcoming part (3.5), Questionnaire was electronically conducted through Google drive. Invitation distributed using e-mails and published in the form of an URL link on Google drive and some distributed manually.
The researcher used convenience sampling, because it is inexpensive, fast and the participants were conveniently accessible.
The questionnaire was distributed in electrical form through Facebook and private messages, and to other convenient participants through email links and private messages.
The researcher sent this questionnaire to more than 1000 contacts.
3.5 Questionnaire Design:
Designing any questionnaire has been always an issue of debate in marketing research.
As, some researchers view it as an art which is based on the experience of the researcher, while others consider it as a science based on some established rules of logic, objectivity and systematic procedures (Hague,2006).
The researcher adapted the second point of view which considers designing the questionnaire as a science. Therefore, the researcher followed certain steps in order to develop the questionnaire:
1. Specify the information needed.
2. Determine the questions’ composition.
3. Determine the individual question content.
4. Develop the questions order, form and layout.
The good construction of a questionnaire is important to the accomplishment of a survey. The exploration destinations and edge of reference was characterized beforehand.
A non-comparative Likert scaling techniques was utilized. The level of estimation of a variable in arithmetic and measurements is a grouping that was proposed keeping in mind the end goal to portray the idea of data contained inside numbers allocated to objects and, along these lines, inside the variable.
The questionnaire is divided into 4 sections:
1. Measuring perceived SMM activities were gathered from previous studies on brand’s social media marketing, attributes of two-way communication media, influence of mobile advertising, and characteristics of mobile shopping related researches and modified to fit for this research (Chung ; Lee, 2008; Han ; Shu, 2010; Kim, 2010; Kim ; Chung, 2009; Lee, 2007).
2. Measurements of value equity were developed in accordance with Berry (1995), Gagliano and Hathcote (1994), Rust et al. (2000), and Wiedmann et al. (2009). Constructs of value equity measures included price, product quality, service quality, convenience, and the tangible environment of the retailer, individual value, and social value.
3. Measurements of relationship equity were developed from Hennig-Thurau et al. (2002) and Ju and Chung (2002). Items assessed preferred treatment customer service, coincidence of image with brand, and overall affection.
4. Measurements of brand equity included brand awareness, perceived value, brand personality, brand association, and perceived uniqueness aspects. Measuring brand equity was developed from Aaker (1991) and Yun (2006).
4.1. Hypotheses and Testing Data Analysis
The questionnaire was meant to be sent through internet to the ones who are are interested in any cultural activity or event in Egypt and who have a social media account specially Facebook as the main social media platform
Variables that are measured only nominally are also named categorical variables. A representative test item in a Likert scale is a statement. The respondent is asked to indicate the degree of agreement
The format of a typical five-level Likert item, for example, could be:
1. Strongly disagree
3. Neither agree nor disagree
5. Strongly agree
Test-Retest Reliability Checks
A pre-test is done where the questionnaire is tested on a statistically 30 samples of respondents before a full-scale study in order to identify any unforeseen problems such as unclear wording, flow of the questions or the questionnaire taking too long to be completed.
Reliability is the degree to which a measure will produce reliable fallouts. Test-retest reliability checks how related the results are if the examination is repeated under similar conditions.
In 1979 Carmines ; Zeller defined reliability on the scale of accuracy as the ability of the instrument to give the same results if the same measurement is repeated several times in the same circumstances.
Stability in most cases is a correlation coefficient, which is the extent to which readings of repeated measurement results are correlated.
In many studies where a measuring instrument is used for the first time, it is tested on certain persons and then re-tested on the same people again, and then a coefficient of correlation between the measurement results is calculated the first time with the next time.
It is obvious that if the instrument is highly credible, the results of the following times will be identical or applicable with the results of the first measurement. In addition, constancy depends on internal consistency, which means that questions are all addressed in a general purpose to be measured.
There are a number of statistical methods to measure stability and the most common way to measure stability is the method (Cronbach’s alpha).
Cronbach’s ? (alpha)
Cronbach’s ? (alpha) is a measure of internal consistency and it has a significant use as a measure of the reliability of the mechanism.
It specifies the degree to which a set of test items can be treated as evaluating a single latent variable.
Cronbach Alpha relies on internal consistency and gives an idea of the consistency of questions with each other and with all questions in general. There is also a split half method.
The Cronbach method is most commonly used when compared to two halves because the Cronbach method is based on fragmentation more than one fraction and frequently measuring the faults between those parts instead of measuring the correlation between only two halves.
In general, the judgment of stability depends on the amount of correlation coefficient obtained from the statistical analysis.
In the case of re-application of the tool (the questionnaire) in similar circumstances we will get the same results or conclusions (not intended to match 100% complete).
Cronbach Alpha is also referred to as a measure of consistency (internal consistency)
Thus, the value of the Cronbach Alpha represents the minimum stability of the questionnaire (test) in the sense that Cronbach Alpha is a conservative measure of stability.
Cronbach’s ? is defined as:
Where N is the number of components, 2X? is the variance of the observed total test scores, and 2iY?is the variance of component i for person y.
Using the SPSS software, the reliability value of the 30 pre-test samples was calculated and the Cronbach’s Alpha result is as below:
Table (3.2): Reliability Statistics
Cronbach’s Alpha No of Items
According to the output, the overall value of Cronbach’s Alpha is 0.862 which is greater than 0.7. Since the reliability coefficient of .70 or higher is considered “acceptable” in Social Science, thus, the reliability statistics is good considering that .70 is the cutoff value for being acceptable.
Here we can determine that the questionnaire is reliable and the survey shall be continued.
The researcher used the simple correlation and simple linear regression for this research. Below, the researcher explains the used method for this research.
If the purpose of the analysis is to determine the type and strength of the relationship between two variables, correlation analysis is used.
If the purpose is to study and analyze the effect of one of the variables on the other, regression analysis is used.
If the relationship between the variables is assumed to take the linear form, the status of quantitative data and metadata is measured by an ordinal standard.
The purpose of the simple linear correlation:
The purpose of the simple linear correlation analysis is to determine the type and strength of the relationship between two variables, which in case of community is denoted by the symbol and in case of the sample we use the symbol .
Since the researcher deals with the sample data drawn from the community, and from the previous definition of the purpose of the correlation coefficient, we find that it focuses on two points:
• Relationship type: It appears in three forms based on correlation coefficient signal as follows:
1. If the correlation coefficient is negative (r 0) there is a positive relationship between the two variables, meaning that the increase of one of the variables is accompanied by an increase in the second variable and vice versa.
3. If the correlation coefficient is zero (r = 0), this indicates the lack of correlation between the two variables.
• The strength of the relationship: The strength of the relationship can be measured based on the degree of dimension or proximity from , where the correlation coefficient value falls within the range (-1