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CRM through Social Media and its effect on Brand Loyalty

Written by Pontus Boström, Oskar Svensson

Paper category

Bachelor Thesis

Subject

Business Administration>Marketing & Sales

Year

2013

Abstract

Bachelor Thesis: Consumer relationship management Relationship marketing is basically the connection between the company and the customer, while CRM, as described in the first paragraph of the background, is an extension of relationship marketing, focusing on other business activities involving customer relationships. All customer-related business activities in each department of the organization are related to traditional CRM in some way. Marketing, support, R&D, sales, information technology, production, finance, and human resources are all directly or indirectly dealing with customers. CRM can improve the interaction in all these activities and help build effective relationships in a company environment. Improving all activities within each department helps develop and maintain customer relationships. (Askool & Nakata, 2010) 2.3 Brand community The term “brand community” originated from relationship marketing based on one-to-one customer relationships. It may become inefficient and difficult to manage every customer. This is why the brand community is introduced to solve the problem of inefficiency. A brand community is a specific community that is not geographically restricted, in which some people appreciate a specific brand and build relationships with each other and the brand. (Laroche, Habibi, Richard & Sankaranarayanan, 2012) The purpose of the brand community is to perform different tasks on behalf of the brand. Examples of these tasks include supporting the sharing of information, providing necessary assistance to customers with questions and problems, and perpetuating the company's history and culture. Brand communities can also help increase and maintain customer loyalty. A special reason to join the brand community is to make yourself identify with a certain brand, which will meet social needs and self-identification. (Laroche et al., 2012) Brand researchers agree that the focus of brand communities in establishing and improving relationships with customers is brand loyalty. (Laroche et al., 2012) Improvements in value, brand trust, brand loyalty, and customer communities can create positive results for companies using brand communities. (Laroche et al., 2012) Researchers found evidence that customers participating in brand communities are less sensitive to unsatisfactory service quality and product quality degradation. Even if other brands have proven to be better, the likelihood of switching brands is low. That's because the customer has invested emotions in the brand and wants to help the company succeed. It is often seen that loyal customers are investing in their loyal company. (McAlexander, Schouten & Koenig, 2002) 2.4 Brand loyalty Over the years, the concept of loyalty has been thoroughly studied. There is still no uniform measurement standard in the marketing field (Bennett & Rundle-Thiele, 2002). 2.6 Social media The concept of social media can easily be confused with the closely related concepts of Web 2.0 and user-generated content. Web 2.0 is not a technological invention or upgrade, it describes changes in the use of the Internet. It symbolizes the creation of collaborative content that is constantly modified by everyone. (Kaplan & Haenlein, 2010) As the Internet is integrated into daily life, user-generated content is also increasing. For content that is considered to be created by users, it must meet certain requirements: the public must be accessible via the Internet, the content must require creative efforts, and be created by private individuals without professional conventions and practices. (OECD, 2007) Kaplan and Haenlein (2010, p. 61) believe that social media is closely related to these two concepts. Allows creation and exchange of user-generated content. "The definition includes a wide range of social media channels, such as blogs, social networks, content communities, and virtual social worlds. By examining social presence/media richness and self-expression/self-disclosure, different types of social media can be divided into several groups. (Kaplan and Haenlein, 2010) Don’t confuse social media with social networks. Social media sites such as Facebook are part of social media, but there are other types. Examples of this include YouTube, Wikipedia, and Second Life, to name a few. Social The web is defined as an application that includes your personal information in your profile. This personal information can be shared with friends you invite, and all the content in photos, videos, and blogs can be viewed by others. You are The information that users share with friends is called user-generated content (UGC). (Kaplan & Haenlein, 2010) Companies are using social networks more and more frequently. Building strong relationships with customers has become an important part of many companies, such as Facebook and other social networks. The Internet enables companies to do this. If organizations need to reach their customers, it is a perfect tool. Coca-Cola is one of many companies that use social networks in advertising and marketing. They use MySpace so users can download videos for free And establish contact with other Coca-Cola fans. (Askool & Nakata, 2010) Compared with the old communication channels, due to technological improvements (ie social media), information and communication with end customers are faster and cheaper. (Kaplan & Haenlein, 2010) In response to the decline in returns from traditional media channels, companies are turning to social media. The Internet allows real-time communication (real-time chat) without geographical restrictions, which promotes criticism and expands its reach. Read Less