Online Brand Communities Used As Part of Relationship Marketing: A Case Study of Blizzard BA-Thesis - Morten Hedegaard Nielsen

Transcription

1 Abstract Purpose During the last few decades competition in consumer markets has increase dramatically and fragmented the markets. Consequently, the discipline of marketing has changed radically from transactional marketing into relational marketing. Today, the entertainment industry is one of the most rapidly growing industries, where competition intensifies year by year and hence the focus on building relationships with customers has become a central element for survival. The thesis has its focus on one of the most successful companies in this industry, Blizzard Entertainment. More specifically it will explore how they utilise their online brand community Battle.net in order to build relationships with its customers. Based on a theoretical discussion of relationship marketing and online brand communities, together with an investigation of Blizzard Entertainment s online brand community Battle.net, this thesis will explore: How and to what degree does Blizzard Entertainment s online brand community Battle.net contribute to build successful relationships with its customers in a fragmented market? In order to answer the problem statement the thesis is divided into three parts; a contextual description, a theoretical discussion, and a case study of Blizzard s online brand community Battle.net. The contextual description and the theoretical discussion create a fundament for the case study. Method The thesis takes a hermeneutical/humanistic view point to approach the research area. The thesis therefore does not seek to explain, as with the positivistic approach, but instead to understand and interpret. In order to explore the research area, this thesis employs a qualitative research method in the form of an observational study. This study observes the textual interaction between Blizzard and its customers on the Battle.net forums and from this creates an understanding of how and to what extent Blizzard s online brand community has an effect on relationship building (customer loyalty). 1

2 Literature The thesis includes two focus areas, relationship marketing and online brand communities. To discover the concept of relationship marketing the thesis draws mainly on literature by Morgan and Hunt, and Grönroos. These authors are chosen as they are well recognised and cited throughout relationship marketing literature. Furthermore, their theories are found appropriate in an online brand community setting. The main source employed to explore the concept of online brand communities is the award-winning article Brand communities by Muniz and O Guinn (2001). Findings In the theoretical exploration it was found that relationship marketing centres on building close long-term relationships with a company s customers in order to increase customer loyalty or customer commitment. On top of this, it was indicated that good relationship marketing includes building trust, satisfaction and interaction with customers. The exploration of online brand communities revealed that these can provide information, allow dialogue and facilitate communication amongst its members. Consequently, online brand communities can be an effective tool to develop relationships and increase loyalty with customers. In the case study it was found that the Battle.net forums to some extent developed closer relationships between Blizzard and their customers since it contributed to increase trust, satisfaction, and interaction, and thus customer loyalty. However, it was concluded that Blizzard was not taking full advantage of the online brand community s ability to foster customer loyalty. From the research it was concluded that it would be a good strategic decision for Blizzard to interact more with its customers in their forums, and involve customers more in product development. Limitations The online brand community investigated in this thesis deserves further research. This is because the data analysed was collected only from parts of the community, so the remaining parts should be studied as well, before general conclusions can be drawn. Moreover, the thesis will not come to any definitive conclusion, but will present an understanding of Blizzard s use of Battle.net and the effect that this may have on the supplier-customer relationship. Keywords: relationship marketing, customer loyalty, online brand community 2

3 Online Brand Communities Used As Part of Relationship Marketing: A Case Study of Blizzard Entertainment Bachelor Thesis BA-MMC: 6. Semester By Morten Hedegaard Nielsen Supervisor: Sara Alwan

4 Table of Contents 1 Introduction Problem Statement Scientific Method Theoretical Framework Structure Delimitations The Evolution Towards a Fragmented Market Relationship Marketing Definition of Relationship Marketing Customer Loyalty Critical Success Factors for Relationship Marketing Trust Satisfaction Interaction Customer Loyalty Model Possibilities and Challenges of Relationship Marketing Part Conclusion Online Brand Communities Online Brand Communities Online Brand Communities: Possibilities and Challenges Part Conclusion Online Brand Communities as Part of Relationship Marketing Trust

5 5.2 Satisfaction Interaction Part Conclusion Case Study Blizzard Entertainment and Battle.net Blizzard Entertainment and Battle.net (setting) Analysis and Discussion Member Registration Process Suggestions Technical Support Battle.net Status Fan Fiction: Clan Hall Off-topic Part conclusion Trust Satisfaction Interaction Conclusion Résumé Limitations Implications Bibliography Appendices Total number of characters: 54,294 2

6 1 Introduction The rise of virtual communities in on-line networks has set in motion an unprecedented shift in power from vendors of goods and services to the customers who buy them. Vendors who understand this transfer of power and choose to capitalize on it by organizing virtual communities will be richly rewarded with both peerless customer loyalty and impressive economic returns (Hagel & Armstrong, 1997, p. 2). In addition to Hagel and Armstrong s statement of a power shift, the discipline of marketing has changed radically over the last few decades, from being considerably product oriented into being relationship and customer oriented. This is partly due to the globalisation which has greatly intensified competition among businesses and fragmented the market. The internet, and other digital media, has played a big role in this regard, as it has eliminated the time and distance barrier, and enabled businesses to trade and communicate with customers all over the world (Gummesson, 2002). As a result, consumers have become more demanding as they have got a much wider selection of products and services, hence the power shift as stated by Hagel and Armstrong above. The school of relationship marketing, which centres on building closer long-term relationships with customers, has become more and more recognised in business to consumer markets (Morgan & Hunt, 1994). In recent years, more and more companies in the entertainment industry have acknowledged the paradigm shift and developed new marketing initiatives and strategies to build long-term relationships with their customers (Webtrends, 2009). One of these initiatives is online brand communities, which have proved to hold many advantages that can contribute to relationship marketing. Not only can these communities serve as an additional communication channel, but also be very useful in establishing relationships with dedicated customers (Andersen, 2005). Today, the entertainment industry is one of the most rapidly growing industries, where competition intensifies year by year, therefore the focus on building relationships with customers has become a central aspect for survival. But while they invest huge amounts of money each year on their web sites, they often see little formal evidence of a return on their investment (Webtrends, 2009). One of the most successful companies in this industry is Blizzard Entertainment who is known for its high quality PC games. Blizzard Entertainment s online brand community Battle.net is one of the initiatives developed to build closer relationship with their customers. Blizzard s way of building 3

7 relationships with customers through their online brand communities will be the focus of a case study in the thesis. 1.1 Problem Statement As the previous paragraph indicates, the market evolution has affected the consumers behaviour, and hence changed the focus of marketing from a transaction orientation towards a relationship orientation. Online brand communities are seen as a tool to which companies can establish and nurture relationships with customers. Based on a theoretical discussion of relationship marketing and online brand communities, together with an investigation of Blizzard Entertainment s online brand community Battle.net, this thesis will explore: How and to what degree does Blizzard Entertainment s online brand community Battle.net contribute to build successful relationships with its customers in a fragmented market? The problem statement reasonably suggests dividing the thesis into three parts; a contextual description, a theoretical discussion, and a case study of Blizzard s online brand community Battle.net. The purpose of the contextual description is to provide fundamental knowledge of the contextual factors which have affected the theoretical field of this paper. The theoretical discussion will present relevant aspects of the two primary fields; relationship marketing and online brand communities. Based on an exploration and discussion of the most central notions within the two areas the necessary understanding is reached, from which the foundation of the case study is created. The aim of the case study is to gather the parts and explore how and to which extent Battle.net effects Blizzard s relationships with its customers, and hence answer the problem statement. 1.2 Scientific Method It is perceived by the author of this thesis that the research field, relationships, is a phenomenon which cannot be generalised or measured objectively. Thus it is not quite compatible with a positivistic approach, that assumes the world can be measured and that there is one true meaning (Sherratt, 2005). For this reason the thesis will lean towards a hermeneutical/humanistic view point 4

8 to approach the research area. The thesis does therefore not seek to explain, as with the positivistic approach, but instead to understand and interpret. Moreover, the thesis will not come to any definitive conclusion, but the thesis will present an understanding of Blizzard s use of Battle.net and the relationships developed between Blizzard and its customers through this. In order to explore the research area, this thesis will employ a qualitative research approach in form of an online observational study (primary research). This study will observe the textual interaction between Blizzard and its customers on the Battle.net forums and from this create an understanding of how and to what extent Blizzard s online brand community has an influence on relationship building. One of the advantages of making observations of online forums is that the study can be conducted in an unobtrusive way. This is because it is using observations of consumers in a context that is not fabricated by the researcher and thereby does not affect the subjects behaviour. This may provide more valid findings (Kozinets, 2002). 1.3 Theoretical Framework This thesis includes two focus areas; relationship marketing and online brand communities. To understand the concept of relationship marketing the thesis will draw mainly on Morgan and Hunt's (1994) work The Commitment-Trust Theory of Relationship Marketing, as this theory is found highly relevant to explain relationships in a marketing context. Also Christian Grönroos approach to relationship marketing will have a central role in the exploration of relationship marketing. Furthermore, these authors are well recognized and cited throughout relationship marketing literature. The main source employed to explore the concept of online brand communities is the work by Szmigin, Canning, and Reppel (2005) which provides an understanding of the concept of online communities. Also, Hagel and Armstrong s (1997) work Net Gain: expanding markets through virtual communities will be drawn upon. This work presents how online communities can be useful for a company. Moreover, this work is widely acknowledged and referenced by many scholars, however, the authors do not belong to an academic school. Together the exploration of the two focus areas will develop a theoretical framework for the analysis. 5

9 1.4 Structure To ease the reading process this section will briefly clarify for the structure in the paper. Below is a visual overview of the chapters to follow: To guide the exploration, two main research questions are proposed: RQ 1: What is good relationship marketing? RQ 2: How are online brand communities able to integrate the principles of relationship marketing in the set-up? RQ 1: To examine what constitutes good relationship marketing the thesis will, first of all, examine the fundamentals of the concept including how and why it has emerged. Furthermore, contemporary definitions of relationship marketing will be discussed to give the reader a basic understanding of the concept, and how this is related to marketing. Once the broad overview has been introduced, the most recognised principles that constitute successful relationship marketing will be touched upon. To sum up the theoretical findings what constitutes successful relationship marketing, a model is 6

10 provided. Lastly in this section the thesis explores some of the possibilities and challenges which may result from applying relationship marketing. RQ 2: To answer the second research question the thesis will, firstly, clarify the concept of online brand communities. Secondly, through a theoretical discussion of online brand communities it will be examined how these online communities can integrate the principles of good relationship marketing in the set-up. When the two research questions have been clarified the thesis is prepared to explore the problem statement in form of a case study. Finally, the conclusion will summarise the part conclusions made throughout the thesis to give the reader a broad overview of the findings. Also it will include an evaluation the analysis process and present implications. 1.5 Delimitations The paper will take a relationship marketing approach which means the focus is restricted to the establishment and maintenance of relationships through online brand communities as the communicative tool. Hence, the thesis will not examine how these communities can have an effect brand perception or any other topic related to branding. Relationship marketing normally involves both internal and external stakeholders. However, this thesis will only focus on a company s relationships with customers (supplier-customer relationship). The focus will be on the strategic use and application of online brand communities as a relationship marketing tool. However, the author is fully aware that relationship marketing needs to be integrated with the traditional marketing mix in order to be successful. The advantages and challenges of using relationship marketing and online brand communities will be examined from a company perspective and not a customer perspective. 7

11 2 The Evolution Towards a Fragmented Market Before looking at the definition of relationship marketing, the historical development of marketing will be explored, to give the reader a better understanding of the underlying factors that has changed the school of marketing and led to the emergence of relationship marketing. Marketing is no longer simply about developing, selling and delivering products. It is progressively more concerned with development and maintenance of mutually satisfying long-term relationships with customers. (Buttle, 1996, p. 1). The 1950s were dominated by mass marketing, where there was an excessive demand in the markets, so successful companies were product oriented and focused mainly on selling products. In the 1970s the demand decreased and companies turned their focus towards the market, and employed a market segmentation approach, which focused on grouping large numbers of customers with similar needs together and providing them with a generic product (Bruhn, 2004). Today, the markets have been fragmented and therefore more and more marketing researchers have proposed that marketing should change its focus. Instead of a focus on immediate transactions with customers, marketing should centre on initiation, establishment and maintenance of long-term relationships with customers (Morgan & Hunt, 1994). The change is caused by several factors, for example; product quality is generally high, which has required companies to pursue competitive advantage in different ways than through the core product; consumers have become more demanding expecting individual attention; and competition has increased greatly and is often global (Buttle, 1996). In this regard, Gummesson (2002) states that IT, especially the internet, has had a considerable influence on competition and the market fragmentation, as the web has enabled consumers to easily compare prices and trade with companies from all over the world. In addition, it was found that creating long lasting relationship with customers was a competitive advantage which could not be copied by competitors, and therefore would provide a unique competitive advantage (Buttle, 1996). Furthermore it has been confirmed that it is more profitable to retain an existing customer than to acquire a new one (Reichheld & Sasser, 1990). Consequently, successful companies have shifted their focus towards customers and employed a relationship marketing approach, where the aim is to meet the specific needs of a single customer instead of a whole market segment (Robert, 1992) and to develop and maintain long-term-relationships with customers (Grönroos, From Marketing Mix to Relationship Marketing: Towards a Paradigm Shift in 8

12 Marketing, 1994). Dell Inc. is an example of a company that has successfully managed to customise their offerings to suit individual customers. The school of relationship marketing originates from service and industrial marketing, which takes a network and interaction approach. Common amongst these two schools is that marketing is more of a management matter than a function, and that managing marketing in general must be built upon relationships, not transactions alone (Grönroos, 1999). To sum up, the marketing paradigm has changed from transaction marketing, where companies focused on the immediate transaction, into relationship marketing, where the basic aim is to retain relationships with their customers and meet their specific needs. This development was caused by increased competition and globalisation, which gave customers more product choices and hence fragmented the market. 3 Relationship Marketing The concept of relationship marketing became a buzz-word during the 1990s, but originates from the school of service marketing. Among scholars as well as advocates of the relationship perspective of marketing it is acknowledged that the concept is hard to define. The reason for this is partly because it is regarded as an overriding concept with numerous underlying relational variations instead of a total concept with clearly defined goals and strategies. In addition, the range and nature of relationships within B2B and B2C can be very different, for which it is problematic to identify a definition which accommodates all forms of relationships. On top of this, the relationship marketing concept becomes even harder to define since it has been used synonymously to describe similar concepts such as; customer relationship management, one-to-one marketing, direct marketing, and database marketing (Egan, 2003). Relationship marketing made ground for many of these concepts which represent the same basic idea. However, relationship marketing is seen as the overriding concept, whereas concepts such as one-to-one marketing and customer relationship management take a more narrow focus (Gummesson, 2002). 3.1 Definition of Relationship Marketing The term relationship marketing was first introduced in service marketing literature by Leonard Berry in However, many researchers within the field of marketing have contributed to the development of the concept (Grönroos, 2000a). Nevertheless, a commonly accepted definition does 9

13 not exist. According to Grönroos (2000b) relationship marketing is based on the notion that on top of the core value of the products and/or services that are exchanged, a strong relationship between two parties creates additional value for the customer and also for the company. Grönroos defines of relationship marketing is as follows; Marketing is to establish, maintain, and enhance relationships with customers and other partners, at a profit, so that the objectives of the parties involved are met. This is achieved by mutual exchange and fulfillment of promises. (Grönroos, 1994, p. 9). So relationship marketing is more than just to get customers and create transactions, it is also to maintain and enhance relationships with existing customers. Morgan and Hunt (1994, p. 22) propose a slightly different definition; Relationship marketing refers to all marketing activities directed toward establishing, developing, and maintaining successful relational exchanges. And Gummesson (2002, p. 3) suggests; Relationship marketing is marketing based on interaction within networks of relationships. Many other scholars have contributed different definitions of relationship marketing, but going into details with these is beyond the scope of this thesis. However, common among these definitions is the suggestion that relationship marketing centres on building close long-term relationships with a company s customers. Moreover, they seem to agree that the outcome of close long-term relationships with customers is customer loyalty Customer Loyalty Before looking into some of the key aspects of successful relationship marketing, a definition of customer loyalty will be given. Oliver (1999, p. 34), a well cited scholar in relationship marketing literature, defines customer loyalty as; a deeply held commitment to re-buy or re-patronise a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set 10

14 purchasing, despite situational influence and marketing efforts having the potential to cause switching behavior. So, customer loyalty can be seen as a buyer s overall attachment or commitment to a product, service, brand, or organization. Moreover, it is suggested that there are two types of loyalty, behavioural loyalty and emotional loyalty. Behavioural loyalty is characterised by a customer who makes repeat purchases and responds to a company s marketing campaigns. Emotional loyalty demonstrates that a customer who is emotionally loyal feels attached to a company and is likely to recommend it to others (Chaffey, Ellis-Chadwick, Mayer, & Johnston, 2009). Though, it could be argued that customer loyalty should be divided into several levels or degrees of loyalty. A customer, for instance, can be making repeat purchase of a certain product without being overly committed to the supplier. The customer loyalty concept is similar in meaning to relationship commitment, which Morgan and Hunt (1994, p. 23) describes as; An exchange partner believing that an ongoing relationship with another is so important as to warrant maximum efforts at maintaining it The meaning of this is that the committed party has an enduring desire to preserve the relationship indefinitely. This entails that both parties of a relationship should be willing to put effort into the relationship to make it mutually satisfying and beneficial (Morgan & Hunt, 1994). However, this thesis will stick to use the term customer loyalty. 3.2 Critical Success Factors for Relationship Marketing The concept of relationship marketing becomes even more complex as several scholars and practitioners suggest numerous underpinnings or variables for building close relationships to increase customer loyalty. Many of these variables seem to be very similar and interlinked with each other. Clarifying all of the variables discussed in relationship marketing literature will be too comprehensive considering the ambit of this thesis. Hence, this thesis will focus on the most discussed themes in relationship marketing literature, as these may be perceived as the most valid. Many researchers seem to agree that the most important aspects of relationship marketing are; trust, satisfaction, and interaction. 11

15 3.2.1 Trust Gummesson (2002) emphasises the importance of trust in closer collaboration between customer and supplier. Morgan and Hunt (1994, p. 23) reinforce this and posit trust to be a requirement of any successful relationships. They define trust as existing when one party has confidence in an exchange partner s reliability and integrity. The essence of this, in a relationship marketing setting, is to reduce uncertainty between the supplier and the customer, e.g. by being honest, consistent, fair, responsible and helpful, because a customer is more likely to engage with a supplier he or she finds trustworthy. Also, a customer is more likely to commit or exhibit loyal behaviour towards a company he or she trusts, as commitment in a relationship involves vulnerability and risk (Morgan & Hunt, 1994). For example, when trading online, customers are very vulnerable as they may not have perfect knowledge about the product or service and therefore often make the decision in the light of limited information. Therefore trust is an essential part of the decision making process and hence should be a central concern for companies (Gummesson, 2002). Grönroos (2000b, p. 5) argues that an on-going relationship may, for example, offer the customer security and a sense of trust and minimised purchasing risk. So if a customer and a supplier, for instance, have a long history of successful exchanges/transactions, the customer will develop trust in the company and over time commit more and more to the company. According to Ndubisi (2007), trust can also be achieved by demonstrating concern for the security of transactions, or through giving and keeping promises to customers. For example, if a company promises a two day delivery and manages to live up to this, then trust will develop. Furthermore, they claim that if a company betrays this trust it may lead to customer defection. Morgan and Hunt (1994) also indicate that it is easier for members of an organization to understand each other s beliefs and expectations, and hence develop trust, when they have a similar sense of cultural values. In addition, they propose that when a company and a customer share the same values, they are apt to be kind to each other and this can lead to trust. Further, they claim that ongoing trust leads to mutual understanding between parties Satisfaction A number of researchers have suggested that satisfaction can have a positive effect on customer loyalty, in the sense that a satisfied customer is more willing to commit to a company or exhibit loyal behaviour. Although, it is claimed that the correlation between customer satisfaction and customer loyalty is not a linear one and that irregularities may occur in practice. For instance, there 12

16 may be customers expressing a high degree of satisfaction in a survey who do not exhibit behavioural loyalty, and likewise, there may be loyal customers who are at risk of defection if they are not satisfied (Chaffey, Ellis-Chadwick, Mayer, & Johnston, 2009). Oliver (1980) developed the confirmation/disconfirmation theory, which proposes that customer satisfaction is reached when expectations of a product or service are met (confirmed), that customer satisfaction is further enhanced if a product or service exceeds expectations (positive disconfirmation), and that if a product or service fails to meet expectations (negative disconfirmation) the consumer is likely to be dissatisfied. Mowday, Porter, and Steers (1982) claims that individuals who believe that they receive high value from a relationship (or are satisfied with a relationship) are highly committed to that particular relationship. Therefore, when consumers believe they receive more benefit (or are more satisfied) from one supplier relationship than from other alternatives, they will commit more to that relationship (Morgan & Hunt, 1994). For that reason, highly committed (or satisfied) customers should be willing to make an effort to preserve the relationship with the company. So, if a company manages to add value to a customer relationship (e.g. satisfying or exceeding a customer s expectations) the customer should be willing to maintain it. In a study by Ndubisi and Chan (2005) they found that companies that accommodated customer needs, customised products and services to meet the individual customer s requirements and generally being flexible in their relationship with customers would lead to customer satisfaction and thereby higher customer loyalty. Further, it was concluded that customer satisfaction can be obtained by showing trustworthy behaviour, exhibiting true dedication to service, communicating information to customers efficiently and accurately, delivering services competently, and handling potential and actual conflicts skilfully Interaction Another important aspect of relationship marketing is interaction. If a company interact effectively with its customers, this could help develop relationships and increase customer loyalty. So it is important that a company not only addresses customers through one-way communication. It entails a two-way interaction, where both parties of the relationship should communicate with each other, ultimately in a dialogue. If a company manages to create dialogue with its customers, this may, for example offer customer security and a sense of trust and thereby minimised purchasing risks. In order to achieve this both a company and its customers have to share information with each other about their requirements and intents. For example, the customers must inform the company about 13

17 their needs and the company has to provide information about the solutions they can offer to fulfil these needs. Also the company should inform customers of how they handle service activities such as complaints, deliveries, invoicing etc. (Grönroos, 2000b). A company also needs to listen to what customers have to say. An example could be listening to customer complaints or suggestions for product or service development (Duncan & Moriarty, 1998). If complaints are treated appropriately this could lead to customer satisfaction and hence loyalty (Ndubisi & Chan, 2005). Morgan and Hunt (1994) support the idea that interaction is a major precursor for building trust with customers. They stress that trust can be built if a company stays in dialogue with customers and provide timely and trustworthy information. For instance, a company can nurture trust by informing dissatisfied customers of what the company is doing to solve their existing problems or to prevent potential ones. Overall it is therefore seen that interaction can affect trust and satisfaction, and hence, is an important element in achieving customer loyalty Customer Loyalty Model As suggested, all the presented underpinnings can be seen as interlinked and holistic. For example, trust is important since it is essential that the customer finds the company trustworthy before he or she commits to the company. In order to build trust it is important that the company interacts and establishes dialogue with the customers and communicates timely and openly. Through interaction the company can gain knowledge about the customers individual needs. With this knowledge the company can better customise its offerings to suit these needs, and thereby increase customer satisfaction. To sum up customer loyalty will be increased if the company is; trustworthy, interacting with customers, and meeting or exceeding customers expectations. 14

18 This thesis will perceive these elements as interlinked and which, if handled successfully, will produce customer loyalty. This notion has been assembled in a model (see below). Many more variables are discussed in relationship marketing literature to affect customer loyalty. However, this thesis will limit its focus to the underpinnings presented above. Trust Customer Loyalty Interaction Satisfaction 3.3 Possibilities and Challenges of Relationship Marketing If relationship marketing is implemented successfully, it can lead to a number of benefits for a company. Findings of Reichheld and Sasser (1990) regarding economic value of loyal customers revealed that a five percent improvement in customer retention can cause an increase in profitability of between 25 percent and 85 percent depending upon the industry. In other words, it is more profitable to ensure larger proportion of few customers lifetime spending rather than pursuing many single transactions. For instance, if a car manufacturer manages to sell eight cars to a specific customer throughout a lifetime this customer will generate more profit to a company than a company selling eight cars to eight different customers. Among other things, this is due to the lower marketing costs involved with retaining a single customer than acquiring eight new customers. In this regard, it has been claimed that it is between five and ten times as expensive to acquire a new customer as it is to retain an existing customer (Rosenberg & John, 1984). In relationship marketing literature it is generally acknowledged that customer loyalty is more than just repeat purchase. It also leads to a number of less tangible benefits in the long run. If a company manages to retain customers it will make it more difficult for competitors to enter a market or increase their share (Buchanan & Gilles, 1990). Furthermore, a loyal customer may be less price 15

19 sensitive and hence willing to pay a price premium (Buchanan & Gilles, 1990). Diller (2000) suggests that loyal customers are usually more committed and hence tend to give feedback and participate in surveys (behavioural loyalty). Hermann Diller also claims that a loyal customer is; less likely to consider competitors activities; has a higher tolerance towards mistakes made by the supplier; and is more likely to recommend the company he or she feels attached to, thus possibly reducing the marketing cost necessary to attract new customers (emotional loyalty). On the other hand, customer loyalty may also hold challenges for a company. An important thing which should be considered is customers psychological flaws, which affect consumer behaviour. For example, consumers need for variety, is a factor constraining loyalty, as consumers tend to be curious to try new products. Therefore, it is suggested that companies should strive to offer product variations and differentiation to prevent customers from changing brand. Conversely, customers also like the certainty of knowing what they get for their money (Diller, 2000). 3.4 Part Conclusion To sum up this section, relationship marketing is a complex concept with many underpinnings and perspectives presented by numerous scholars. However, this thesis concurs with the notion that relationship marketing centres on building closer long-term relationships with a company s customers to increase customer loyalty. Most researchers seem to agree that in order to build longterm relationships, and hence customer loyalty, the most important aspects of relationship marketing are trust, satisfaction, and interaction. The three variables can also be seen to answer the first research question What is good relationship marketing? (cf. section 1.4). However, one could question the validity of the presented underpinnings of relationship marketing, as these seem to be very generic and ignore the social context. For instance, relationships may be built differently and have diverse meanings in various cultural settings. Also social demographics, especially age, could play a central role in how customer relationships are built. For example, children generally have less consumer experience and therefore may be less critical towards bad service, as they have limited points of reference. Furthermore, it was proposed that customer loyalty includes a number of possibilities and challenges. For example, customer loyalty may lead to more profits as it can be much more cost efficient to retain existing customers than to acquire new customers. Moreover, loyalty can lead to several benefits which indirectly may influence the bottom line. For instance, a loyal customer is 16

20 more willing to engage in positive word of mouth recommendation. Overall it would be reasonable to conclude that relationship marketing is a lot more than just a buzz-word. 4 Online Brand Communities In the previous section, the concept of relationship marketing was explored. This section will look into the concept of online brand communities and what possibilities and challenges these hold in regards to relationship marketing. This together with the findings in the previous section will create a platform for the later investigation of how and to what degree Blizzard uses their online brand community to foster customer loyalty. 4.1 Online Brand Communities Before exploring the concept of online brand communities, the overriding term online community will be explored. A basic definition of an online community suggests A meeting place for people on the Internet, designed to facilitate interaction and collaboration among people who share common interests and needs. Online communities can be open to all or by membership only and may or may not offer moderator tools. (E-Learning Glossary, ). Online communities can be related to the traditional social marketplaces where people with same interests come together and share their passion and knowledge with each other. There have been a growing interest in socialising within these virtual communities, this is, for example, because the internet has made it easier for people to socialise in such groups as these communities can eliminate the space and time barriers of interaction that exist in traditional communities (Chaffey, Ellis- Chadwick, Mayer, & Johnston, 2009). Muñiz and O Guinn (2001) claim that a key components of online communities is consciousness of kind which refers to the feeling or the glue that binds together the individual to the other members in the community and the community brand (e.g. the passion for cars or cooking). Sharing brand stories is an important process as it strengthens consciousness of kind between community members. Furthermore, sharing these stories will make the members feel more secure in his or her understanding that there are many like-minded in the community. It is suggested that different types of communities exists. Virtual communities can be categorised, for example, into the purpose of the internet service in which they are established, the subjects and 17

21 tasks they deal with, or the role they play in the lives of their members, see figure below (SAP Design Guild - Characterizing the Virtual Community, ). Source: It could be argued that all these different types of communities can be of relevance when it comes to relationship marketing. Whether a community is hosted by the company itself or a third-party community, the information shared can help a company get a better idea of who their customers are and what needs they have. Nevertheless, this thesis will focus upon the Commercial Oriented, Business-to-Consumer communities also referred to as online brand communities which offer the potential to foster not only business to consumer interaction, but also consumer to business interaction and consumer to consumer interaction, thereby developing dialogue among all stakeholders within the communities. According to Szmigin, Canning, and Reppel (2005) online brand communities are organised and managed to provide information, allow dialogue and facilitate communication amongst its members. 4.2 Online Brand Communities: Possibilities and Challenges One of the most striking opportunities with online brand communities is that communication within these are not constrained by time and space, so they enable companies to reach customers located all around the world much faster and in a more personal way, than without such a community. Also they allow two way communication between between a company and its customers (Chaffey, Ellis- Chadwick, Mayer, & Johnston, 2009). Hagel and Armstrong (1997) claim that online brand communities show positive feedback loops as users of an online brand community often share the same interest; the content generated is often focused and detailed; this attracts new members who then add new content and contribute to the information pool within the community. 18

22 As well as pursuing the benefits of online brand communities a company should also acknowledge the risks and challenges. For example, when they facilitate an open environment where users are free to generate content on their own. This allows free flow of positive but also negative dialogue within the community, which can have negative consequences. However, according to Szmigin, Canning, and Reppel (2005) these negative or hostile dialogues are not something a marketer should try to suppress, on the contrary, this information can be valuable for the corporation, as it may reveal possible flaws or errors e.g. with a product or service. Another problem with online brand communities could be that it may not be able to get sufficient members to join a company hosted community. This is a problem as a community is only a community if there is traffic (Chaffey, Ellis-Chadwick, Mayer, & Johnston, 2009). 4.3 Part Conclusion In this part it was found that online brand communities can provide information, allow dialogue and facilitate communication amongst its members. One of the main advantages of online brand communities is that they are not constrained by time and space, so can enable companies to communicate and reach customers located all around the world much faster and in a more personal way, than without such a community. 5 Online Brand Communities as Part of Relationship Marketing This section will explore how a company can utilize online brand communities to meet the three principles of successful relationship marketing presented in section Trust As Morgan and Hunt (1994) indicate it is easier for members of an organization to understand each other s beliefs and expectations, and hence foster trust (cf. section 3.2.1), one could argue that the operators of an online brand community can use the community to build trust to the users because members see the operators as partners having the same values, or share the same passion. A study conducted by Wu and Tsang (2008) confirms that the more trust members have in an online brand community, the more they will visit that community and the more willing they will be to share their information and expertise with other community members. Also, trustful members are found to be attracted to participate in online communities and therefore they build loyalty towards the community. 19

23 5.2 Satisfaction In order to enhance customer satisfaction the importance of learning about customers was stressed. In this regard, online brand communities can be a very useful tool. This is due to the information generated and interaction fostered in forums and chat-rooms, which enable a company to better understand the individual customers needs and hence can customize offers to meet these needs. This can also enhance a company s ability to tailor and add value to existing products and services (Hagel & Armstrong, 1997). Consequently, this can have a positive influence on customer satisfaction and loyalty (cf. section 3.2.2). 5.3 Interaction It was found in relationship marketing literature that in order to build successful relationships, a company should communicate and interact with customers in a timely and reliable manner (cf. section 3.2.3). Since communication in online brand communities is not constraint by time and space, companies can communicate much faster and easier with its customers then this can enhance interaction (cf. section 4.1). Hagel and Armstrong (1997) claim online brand communities can serve as a helpful tool in order to establish a relationship with customers, by giving customers the ability to interact with each other as well as with the company itself. This can be obtained by establishing a two-way dialogue with customers through web based communication platforms such as forums and chat rooms (Chaffey, Ellis-Chadwick, Mayer, & Johnston, 2009). 5.4 Part Conclusion Here in this section it has been seen in that online brand communities can contribute to successful relationship marketing by fulfilling the three principles for successful relationship marketing (trust, satisfaction, and interaction) as presented in section 3.2. Therefore this answers the second research question How are online brand communities able to integrate the principles of relationship marketing in the set-up? (cf. section 1.4) 20

24 6 Case Study Blizzard Entertainment and Battle.net Today, the entertainment industry is one of the most rapidly growing industries, where competition intensifies year by year. As the entertainment industry continues to growth, increased competition for consumers attention is making it difficult for companies to attract and retain customers (Webtrends, 2009). 6.1 Blizzard Entertainment and Battle.net (setting) Blizzard Entertainment (referred to as Blizzard from here on) is one of the world s most recognized developers of PC games. With popular titles such as Starcraft, Diablo and Warcraft, including World of Warcraft - currently one of the most popular games throughout the world, Blizzard is known for its high quality products. In order to establish closer relationship with their customers Blizzard provides an online community, Battle.net, which will be the focus in this case study. Battle.net allows millions of users to make purchases at the online Blizzard Store, participate in various contests, read newsletters, access online forums which help bring the virtual community of players closer together, and much more (Blizzard Entertainment: Company Profile, ). 6.2 Analysis and Discussion Battle.net is separated into two parts (see screenshot 1). One part is a community site where Blizzard keeps users updated with information about upcoming events, new developments, and more. This site primarily facilitates one-way communication. The other part of Battle.net contains community forums which for example allow users to chat, exchange ideas, submit feedback, and receive technical support. With this Blizzard provides a communication platform for its members to engage in two-way communication with Blizzard and/or other community members. The online brand community has both a social and a commercial orientation (cf. section xx). However, due to the scope of this thesis the case study will only focus on the community forums. Screenshot 1: 21

25 In addition to the general forums (see screenshot 2), the community forums also include product specific forums which include Starcraft, Diablo, and Warcraft, however, only the general forums will be included in the case study. Screenshot 2: The analysis is divided into seven sections. Each section represents individual elements on the Battle.net forums, of this the six general forums and also the member registration process will be analysed. Due to the ambit of this thesis and the comprehensive textual material available on these forums, the chosen forums have been observed systematically and analysed over a period of 15 days. In the analysis relevant examples, which illustrate connections to the theoretical framework, will be presented and analysed. Further, it will be discussed to what extent these elements contribute to meet the goals of relationship marketing Member Registration Process Using the Battle.net community forums require customers to sign up for a Battle.net account. In this registration process the user must provide various personal details, including contact details (Appendix 1). This information acquired from the registration process, enables Blizzard to specify their marketing effort. This can plausibly lead to customer satisfaction (cf. section 3.2.2). This registration process enables Blizzard to store all the personal member information in a database, which then makes it possible for Blizzard to address and interact with customers via on an individual basis. When signing up customers must also agree with Blizzard s online privacy policy. 22

26 Within this, Blizzard state that the information provided by customers will be used to better suit the needs of the customers but also used for security reasons (Blizzard Entertainment: Privacy Policy, ). This can increase trust as Blizzard is ensuring a secure community where customers can interact without being at risk of hackers or other such threats (cf. section xx, trust). It should be questioned though whether this actually generates trust as it could be assumed that very few read through privacy policies. However, having to agree to this makes customers aware that one exists Suggestions The suggestions forum enables users to post suggestions and feedback related to any of Blizzard s games or to Battle.net itself (Battle.net - English Forums - Suggestions, ). All the suggestions and feedback generated by the customers can be seen to help Blizzard learn more about them, and how they can satisfy their needs. These suggestions and feedback are typically generated on the members own request. However, Blizzard also uses this forum to ask customers for their opinion towards particular topics and hereby engage in direct dialogue with the members. An example of this is found in the thread Diablo II 1.13 Tell Us Your #1 Patch Note in which Blizzard asks its community to come up with ideas to improve the game Diablo II (Appendix 2): Bashhiok, a Blizzard moderator (post 0); We re in the process of working on Diablo II content patch 1.13, and we want to try to include the Diablo community s most important changes in our production schedule. To achieve this we re asking for your input on what you d like to see in this patch. [ ]Our goal is to get an overall sense of the single most important request from every member of the community. We want as many posts as we can get for the largest cross section, so if you have friends who used to play Diablo II or just don t frequent the forums as much as you do, let them know this is here so we can get their #1 patch note too [ ] This thread is a good example of how Blizzard fosters interaction with their customers and hence builds closer relationships. By creating this dialogue with customers, Blizzard may likely increase customer loyalty, as suggested in section Moreover, it seems clear that with this post Blizzard aims to learn more about how they should customize their product (Diablo II) to best suit the customers needs and thereby increase satisfaction (cf. section 3.2.2). What is more is that they 23