Final Thesis

Master of Arts in Marketing Dissertation

Middlesex University Business School

Academic Year: 2010-2011

MANZIL MADHWANI

M00291693

Social Media CRM/ CRM 2.0 for Brand Loyalty?

A case of UK Smartphone Market and Middlesex

University Students.

Supervisor: Dr Fawaz Baddar

January 2011

Project submitted in part fulfilment of the Degree of Master of Arts in

Marketing Management.

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EXECUTIVE SUMMARY:

The research began with an aim to study brand loyalty concept in the social

media age. In the social media age, a customer is a social customer and

traditional rules of brand loyalty are not applicable and they keep on changing

with technology. Social CRM / CRM2.0 emerged as a new concept in social

media and CRM sectors in 2010 and as name suggests it is a combination of

both social media and CRM and was conceptual till 2009. It is identified to be

most closely linked concept with brand loyalty, in the current time frame and

as it is very a fresh concept, there is hardly any research done on Social CRM

and its probable effects on brand loyalty.

This report makes an attempt to establish the effect of introduction of Social

CRM system on the brand loyalty. The UK Smartphone market is selected as

its current brand loyalty dynamics make it very much relevant to have

predictions about brand loyalty in that market. For setting a reference of

research, Facebook is considered as the social media on which Social CRM

is proposed to be introduced in form of a Facebook Applicaiton.

The e-loyalty framework was adapted and a new model that had Social CRM

system/ Facebook CRM Application as a part of it was formed for research

purpose. The effects of introduction of Facebook CRM Application on the

components of e-loyalty model were explored to determine the effect of Social

CRM on brand loyalty.

Online and self administered survey methods were used to collect data from a

sample that was representative of all Middlesex University students and 413

responses were collected. The questions were aimed precisely to find out

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answers to the research objectives. Descriptive, correlation and multiple

regression techniques of data analysis were used.

It was found that introduction of Social CRM had a positive effect on most of

the constructs of e-loyalty framework like perceived usefulness of the service

delivered by the brand, brand image and satisfaction. So introducing a Social

CRM system contributes positively towards brand loyalty and

recommendations were made to the Smartphone brands in UK that they

should look forward to invest in developing Social CRM systems as they

could prove vital in 2011 by increasing a chance of making customers loyal to

their brand.

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ACKNOWLEDGEMENTS:

I would like to thank my supervisor Dr Fawaz Baddar, whose critical

feedbacks always gave me a reason to do get better and improve the quality

of work during the course of dissertation. He has a significant contribution

towards my learned research skills, and ability of critical thinking the outcome

of which is high quality and standards of the academic research. Further I am

thankful to all the 413 respondents who spent time online and in campus for

participating in the survey and made it possible to have a big sample size

within just 3 days. Also thanks to my part time employers for their co-

operation as they gave me required days off from work so that I could

concentrate on writing the project. It would not have been possible without

either of them.

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TABLE OF CONTENTS:

EXECUTIVE SUMMARY i

ACKNOWLEDGEMENTS Iii

TABLE OF CONTENTS Iv

LIST OF FIGURES vii

LIST OF TABLES Viii

CHAPTER 1: INTRODUCTION TO THE RESEARCH PROBLEM 1

1.1 Introduction

1.2 Investigation Sector

1.3 The Research Problem

1.4 Importance and Relevance of the Study in current times

1.5 Structure of Dissertation

1.6 Summary of Chapter 1

1

2

13

17

19

20

CHAPTER 2: LITERATURE REVIEW 21

2.1 Introduction

2.2 Brand Equity and Brand Loyalty.

2.3 CRM Systems for Relationship building and Brand Loyalty.

2.4 Web 2.0 and Social Media.

2.5 Brand Loyalty in Digital age/ e-loyalty framework and its

components.

2.6 Social Media CRM.

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22

27

28

34

37

v

2.7 Modified Model of e-loyalty/ Model of Social CRM and Brand

Loyalty.


42

44

CHAPTER 3: RESEARCH METHODOLOGY 45

3.1 Introduction

3.2 Research Philosophy

3.3 Research Design

3.4 Research Method

3.5 Target Population

3.6 Sample Size

3.7 Sampling Method

3.8 Data collection equipment- Questionnaire Design.

3.9Ethical Issues


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46

47

49

49

49

50

51

52

CHAPTER 4: RESEARCH RESULTS AND ANALYSIS 53

4.1 Introduction

4.2 Reliability Analysis

4.3 Profile of Respondents

4.4 Descriptive Analysis

4.5 Correlation Analysis

4.6 Multiple Regression Analysis


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53

55

56

61

62

64

vi

CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS 65

5.1 Introduction

5.2 Conclusion to Descriptive, Correlation and Hypotheses testing

5.3 Conclusion to Study Aim

5.4 Implications

5.5 Limitations

5.6 Directions for future Research


65

65

70

70

71

71

72

APPENDIX 1 73

REFERENCES 76

vii

LIST OF TABLES:

Table 1.1 Handset Manufacturing Brands (international) and models 2010 3

Table 1.2 Facebook Statistics 8

Table 1.3 Website used for social marketing Dec09/Jan2010 10

Table 1.4 How Facebook is used for social marketing Dec09/Jan2010 11

Table 3.1 Research philosophy and approaches 45

Table 4.1 Reliability Analysis – Level of activity 54

Table 4.2 Reliability Analysis – Attitude and effect scales 54

Table 4.3 Profile of respondents 55

Table 4.4 Brand Experience- Problems and Service website visits. 58

Table 4.5 Descriptive Statistics of other variables 59

Table 4.6 Pearson correlation factors 61

Table 4.7 Pearson correlation factors 62

Table 4.8 Regression analysis for hypotheses 1-3 63

Table 4.9 Regression analysis for hypotheses 4-5 63

Table 5.1 Conclusions to correlation tests 68

Table 5.2 Conclusions to hypothesis testing 69

viii

LIST OF FIGURES:

Figure 2.1 Brand equity and its components 23

Figure 2.2 Levels of Brand Loyalty 26

Figure 2.3 Model of e-loyalty Framework 34

Figure 2.4 The collaborative platform for Social Media CRM 39

Figure 2.5 Social Media CRM System 40

Figure 2.6 Model of Social CRM and Brand Loyalty 43

Figure 4.1 Range of number of Facebook Profile Friends and Likes 57

Figure 4.2 Interaction with friends and brands 57

Figure 4.3 Attitude towards socialising with the brand 59

Figure 4.4 Switching probability 59

Chapter 1: Introduction to the Research Problem

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1.1 Introduction to topic:

Brand loyalty has been considered as a central construct for obtaining

sustainable advantages for brands and businesses in branding literature.

Previous research on brand loyalty focuses on the components of brand

loyalty and explores the relationship with the driving constructs like

satisfaction, trust and loyalty. With introduction of web technologies in

customer relationship management (CRM) and online services and support

delivery led to research in e-CRM and how it can drive brand loyalty.

Facebook within 5 years of formation reached its 500 million user mark in

2010 and is the highest visited website of 2010, which gives the marketers a

platform to reach a huge target market on the social media.1 Further, social

media stormed the world of internet and web 2.0 shifted the paradigm in

internet marketing and has its own implications for marketers in reaching the

interactive customer. Technology for computer mediated communications and

social media upgrades at a rapid pace and the marketing constructs need to

be revised with technology. Latest developments in e-CRM and social media,

is an application formed by combining both technologies and is called Social

Media CRM or CRM 2.0.

An attempt has been made to explore how the Social Media CRM/ CRM 2.0

systems will affect the overall brand equity. Also research attempts to the

effect of Social Media CRM on the formation of brand loyalty in the mobile

phone market of young UK customers. Facebook is considered as a sample

1 Facebook (2010) „Statistics | Facebook‟ (online) Available from: http://www.facebook.com/press/info.php?statistics

(Accessed on 14-12-2010).

CHAPTER 1: INTRODUCTION TO THE RESEARCH PROBLEM

http://www.facebook.com/press/info.php?statistics


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social media. Similar research can be applied in parallel to other markets and

other social media platforms as an expansion of the study.

1.2 Investigation Sector:

1.2.1 UK Smartphone Market:

Globally the sales of mobile phones in 2010 increased by 43% and reached

417 million GBP at the end of September 2010 and the demand for

smartphones is very high.2 There are 72.1 million mobile phones in UK which

is 10 million more than the population. The mobile phones industry in the UK

has grown rapidly in recent years. This market now accounts for

approximately 40.3% of the revenue accrued by the entire

telecommunications market and the proportion of voice minutes on cellular

networks is now a third of the telecommunications total. (Keynote, 2010).

Smartphones represent 73.5% of the contract market in UK according to the

monthly data recorded in June 2010.3 The report of Nielsen Wire also affirms

by declaring that the highest numbers of smartphone users in Europe are

from Britain.4 Market size of UK mobile phones determined from the Ofcom

UK (2010) report says that the total retail sales of mobile phones was 16.9

billion GBP in 2009 and is projected to be 19 billion in 2013. Mobile phone

operators revenues recorded in 2009 are, 11.6 billion GBP for voice calls, 2.9

billion GBP for texting and 0.9 billion GBP for data usage (Keynote, 2010).

2 The Telegraph (2010) „Mobile phone sale soar to 43 pc to 417m‟ (online). 11

th Nov, Available from:

http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/electronics/8124008/Mobile-phone-

sales-soar-43pc-to-417m.html (Accessed on 14-12-2010).

3 Gfk Retail and Technology (2010) „Android Phones go from Strength to Strength in UK Contract Market‟ 26

th July,

Available from: http://www.gfkrt.com/news_events/market_news/single_sites/006252/index.en.html (Accessed on 14-

12-2010).

4 Neilsen Wire (2009) „Brits increasingly wise to use smartphones as 10m+ browse mobile web‟ (online). 16

th Nov,

Available from: http://blog.nielsen.com/nielsenwire/global/brits-increasingly-wise-to-smartphones-as-10-million-

browse-the-mobile-web/ (Accessed on 14-12-2010).

http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/electronics/8124008/Mobile-phone-sales-soar-43pc-to-417m.html


http://www.gfkrt.com/news_events/market_news/single_sites/006252/index.en.html

http://blog.nielsen.com/nielsenwire/global/brits-increasingly-wise-to-smartphones-as-10-million-browse-the-mobile-web/



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Classification: of mobile phone brands can be done by the Operating System

as follows (Ofcom, 2010):

Some mobile operating platforms are closed source like the one of

Apple‟s iOS and the other is Blackberry‟s RIM OS.

The open source platform is used by Google for form its Android OS

that is used by large handset manufacturers like Sony Ericsson,

Samsung and small manufacturers like HTC, ZTE.

Nokia uses its own OS called Symbian and Palm mobiles too own the

Palm OS.

Market share by operators: 27% for O2, 27% for Vodafone, 22% for Orange

and 17% for T mobile (Keynote, 2010).

Market share by handset manufacturers:

The largest handset makers — all with global operations and strong UK

positions are listed in Table 1.1 (Keynote, 2010).

Market shares are not included in the report deliberately for two reasons:

“Volume shares are usually quoted as the easiest market

measurement, but these belie the shift in the market towards higher-

value handsets such as the iPhone and market shares, having been

fairly steady in earlier years, were fluctuating dramatically in late 2009

and early 2010 due to the launch of more smartphones and Android

phones” (Ofcom, 2010).

Table 1.1: Handset Manufacturing Brands (international) and models 2010

Brand Models

Apple iPhone 3GS, iPhone4

HTC Magic, Hero, Touch, Diamond2


4

LG Cookie, Chocolate, Arena, Viewty Smart

Motorola Dext, Aura

Nokia N900, Xpress Music, E7, C7, E6

Palm Pre

RIM Blackberry Bolt, Pearl, Curve, Torch

Samsung Tocco, Genio, Jet, Omnia, Pixon

Sony Ericsson W Series, Anio, Satio, Xperia Series

Source: Keynote (2010) „Mobile Phone Market Report, 2010‟

If present growth sustained, Samsung and Nokia a market share of more than

60% of UK handsets in volume share. Motorola a former top there brand is

under 10%. Sony Ericsson lost market share in 2009, and was overtaken in

volume terms by LG a brand aimed at younger consumers (Keynote, 2010).

Nokia already began its smartphone comeback with their new smartphone

models, the success is very uncertain.5

Apple iPhone, holds less than 10% of volume sales, has a very high value

share of both handset sales and total expenditure on mobile and usage

(Keynote, 2010).

GfK Retail and Technology in its report said that Android's share of the UK

mobile contract market has grown from 3% in Q1 2010 to reach 13.2% in Q2

2010 with a staggering growth of 350%.6

1.2.2 Brand loyalty dynamics in the UK smartphone market:

The news from intriguingnews.com7, realwire.com8, techreviews.com9 has

referred to a report from WDS Global10 saying “Mobile phone brand loyalty is

5 Fildes, J. (2010) „Nokia begins smartphone comeback with new handsets‟ BBC News (online). Sep 12

th, Available

from: http://www.bbc.co.uk/news/technology-11294363 (Accessed on 12-12-2010)

6 Gfk Retail and Technology (2010) „Android Phones go from Strength to Strength in UK Contract Market‟ 26

th July,

Available from: http://www.gfkrt.com/news_events/market_news/single_sites/006252/index.en.html (Accessed on 14-

12-2010).

7http://intriguingnews.com/wdsglobal-research-finds-mobile-phone-brand-loyalty-is-weak/

8 http://blogit.realwire.com/?ReleaseID=18817

http://www.bbc.co.uk/news/technology-11294363


http://intriguingnews.com/wdsglobal-research-finds-mobile-phone-brand-loyalty-is-weak/

http://blogit.realwire.com/?ReleaseID=18817


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very weak” (Smith, 2010). The report details that 49% people said that price is

a very important factor for purchase decision, 34% said that the applications

and data systems in smartphones are very important to them, 24% have a

problem on setting up emails, 17% face problems in setting up internet, 10%

select on basis of design, 8% customers give up on a service without trying to

find a resolution and 29% think the provided services support is ineffective

(Smith, 2010). The key in the improvement of brand loyalty is that OEM‟s

need to focus on all the point of contacts that influence the users brand

experience, like retail experience, setup and accessibility of services and post

sale support (Smith, 2010).

The news from WAC.com11, moneyforyourphone.com12, itportal.com13 and

many other mobile phone review websites of UK published an article about

the brand loyalty in smartphone market and all referred to the research

outcome of a research of leading firm GfK NOP.14 GfK NOP has published a

„Mobile Ecosystems - UK report for 2011‟ (Garner, 2010). All manufacturers

face a huge potential to capture market share primarily because of two

reasons.

“37% of mobile phone owners in key global markets are looking to

upgrade to smartphones on their next upgrade cycle. The majority of

smartphone users (56% globally) are keeping their options open on

9http://techviews.5idd.com/2010/11/

10 http://www.wds.co/

11http://www.warc.com/News/TopNews.asp?ID=27569

12http://www.moneyforyourphone.com/News/index.php/2010/12/smartphone-market-subject-to-low-brand-loyalty/

13 http://www.itproportal.com/2010/11/29/little-brand-loyalty-smartphone-market-survey-shows/

14 http://www.gfknop.com/pressinfo/releases/singlearticles/006951/index.en.html

http://techviews.5idd.com/2010/11/

http://www.wds.co/

http://www.warc.com/News/TopNews.asp?ID=27569

http://www.moneyforyourphone.com/News/index.php/2010/12/smartphone-market-subject-to-low-brand-loyalty/

http://www.itproportal.com/2010/11/29/little-brand-loyalty-smartphone-market-survey-shows/

http://www.gfknop.com/pressinfo/releases/singlearticles/006951/index.en.html


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their next upgrade with very few people declaring loyalty to their current

smartphone ecosystem” (Garner, 2010).

Following is the list of on OS brands in high to low order of consideration of

purchase. It shows the % of people who will consider the brand during next

purchase.15

Apple (53%)

Android (51%)

Blackberry (33%)

Windows Mobile (29%)

Symbian (24%)

Clearly Apple and Android are at advantage but things are rapidly changing at

end of 2010 and the market share and brand loyalty is predicted to settle in

2011 with balance in mobile ecosystem.

1.2.3 Facebook:

Facebook.com originated in 2004 to facilitate social interaction exclusively

among college students. The site now includes more than 500 million users

and is available for use by anyone with a valid email address.16 Facebook

operates by allowing users to select one or more “networks” to which they will

belong, such as a specific high school or university, a geographical area or

city, or a company (Pemptek et al., 2009). In marketing context, features that

15

Garner, (2010). „The smartphone market is there to be won‟ (online). Available from:

http://www.gfktechtalk.com/2010/11/30/the-smartphone-market-is-there-to-be-won-in-2011-the-mobile-ecosystem-

will-be-critical-to-driving-loyalty/ (Accessed on 14-12-2010).

16(Facebook, 2010). „Statistics‟ (online). Available from: http://www.facebook.com/press/info.php?statistics


http://www.gfktechtalk.com/2010/11/30/the-smartphone-market-is-there-to-be-won-in-2011-the-mobile-ecosystem-will-be-critical-to-driving-loyalty/




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Facebook brings on the user side and on the brand side is described in the

following paragraphs.

User Side:

There may be thousands of members on the networks which people join, like

a university, school, urban area and people within a professional organisation.

Every user has to maintain a “profile,” which is a webpage that contains all

the basic information like the graduation year of the person, home town, as

well as personal information, like name and relationship status (single,

married, committed) (Pemptek et al., 2009). A “current status” message

appears on the top of a profile and users may use this feature to inform others

about what they are doing at that time. Users can designate their own

“friends” and the person who is invited to become a member‟s Facebook

“friend” may accept or reject the request and in this way the user can have a

control over his/her contacts on Facebook. It is suggested for security

reasons by Facebook that it is very necessary that a user knows the person

individually before he/she friends them on Facebook. The user has a control

over what and how much information to post and visibility of that information

by editable privacy settings. Limited access can be granted to specific people

or networks by editing the privacy settings (Pemptek et al., 2009).

Members of Facebook can upload pictures into a digital photo album and

other users can be “tagged” (labelled by their name) in the photos. If the

picture is not found relevant then the person can also “untagg” it and remove

their names. It is also possible to do the same with videos by posting links of

the videos (Pamptek et al., 2009). The members who can see the posts of

pictures and video‟s can post comments below them. There are other options


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too for communication with other members like private messages which are

similar to emails. The public message boards on the profile are called as

“wall” and the friends can post public messages on them. Facebook members

can create and join to groups that are formed on various topics (e.g., MA

Marketing Management, Jan 2010). Events can be created on Facebook for

inviting people to offline real interactions like meetings, parties, social

gatherings etc. Users can also post “notes” about anything on their profile

pages (Pemptek et al., 2009).

Every user gets “news feed”, which appears on the user's homepage upon

log-in, provides a list of actions that friends have recently undertaken, such as

posting on walls or changing their relationship status. Also each user's list of

actions on Facebook appears in his/her profile. Users may restrict the types

of stories broadcast about them by these applications (Pemptek et al., 2009).

Every user has an option to express his connection with a brand and can give

“Like” to “pages” of brands and companies and join them on Facebook which

is covered in following section. Table 1.2 show‟s some vital statistics of

Facebook adapted from the latest statistics provided on the website in 2011.

Table 1.2: Facebook Statistics

People on FB

More than 500 million active users

50% of active users log in everyday

700 billion minutes per month

Activity on FB

>900 million objects like pages, groups, events and community pages

Average users connected with 80 pages, groups and events

Average users creates 90 pieces of content each month

Total more than 30 billion pieces of content share each month.

Global Reach

More than 70 translations available on FB.


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About 70 % of FB users outside US

>300,000 users helped the translation of site thorough translate application.

Platform

2.5 million developers from 190 countries build platform

20 million applications installed every day.

External website diversion of 250 million people every month

After launch of social plugins 10,000 new websites integrate with FB/day.

>2million websites integrated with FB, which includes 80 from Comsocre's US Top 100 websites and 50 from comScore's Global Top 100 websites

Source: Facebook (2010) „Statistics‟17

Brand Side:

A Facebook “Page” is a public Profile that enables brands to share their

business and products with Facebook users. When a user gives “Like” to a

page, he/she is connected with the brand and will get “news feeds” about the

brand‟s activity on Facebook just as they get information about their other

connected friends. When the brand‟s fans interact with their Facebook

“Page”, stories linking to brand‟s “Page” can go to their friends via “News

Feed”. When these friends interact with the “Page”, “News Feed” keeps

driving word-of-mouth to a wider circle of friends.18

17

(Facebook, 2010). „Statistics‟ (online). Available from: http://www.facebook.com/press/info.php?statistics


18 (Facebook, 2010). „Facebook Pages‟ (online). Available from: http://www.facebook.com/advertising/?pages



http://www.facebook.com/advertising/?pages


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Brands can use the advertisement feature of Facebook. “Adverts” can also be

used to spread word of mouth. Brands have to choose their graphic, text and

target audience. Information about their friend‟s interaction with the advertised

brand‟s page can also be made available to the targeted user.19

Facebook fans can be turned into customers and vice versa and the following

examples given by Facebook will make it clear how it is possible. If there is a

restaurant or bar wanting to communicate through Facebook, detailed info

like address and opening hours will help. A band or a film, adding songs and

videos is a key. A brand or product, photos of your offering and hyperlinks

independent reviews and diverting traffic on their own website will make an

impact.20 Brands can upload an unlimited number of photos and detailed

information. The Brand‟s Profile picture can be seen by Facebook users (as a

thumbnail which can also be a brand logo) in “News Feed” when their friends

interact with the brand. Table 1.3 shows the favourability of various social

media websites that can be used for marketing and Facebook naturally being

at the top of the chart.

Table 1.3: Websites used for Social Marketing Dec 2009/Jan2010

Company% Agency%

Facebook 85 94

Twitter 77 90

LinkedIn 58 71

YouTube 49 62

Digg 14 10

Wikipedia 13 9

Delicious 12 12

19

Facebook, (2010). „Ads on facebook.com‟ (online). Available at: http://www.facebook.com/advertising/ (Accessed

on 14-12-2010).

20 (Facebook, 2010). „Facebook Pages‟ (online). Available from: http://www.facebook.com/advertising/?pages


http://www.facebook.com/advertising/



11

MySpace 9 17

StumbleUpon 9 11

Yahoo! Answers 4 2

Other 16 13

Base: 199 companies and 126 agencies

Source: Keynote (2010) „Social Media Marketing 2010‟21

The “Page” can be customised to a good extent by adding tabs for info,

photos, applications, discussion boards, outside developer‟s applications,

videos. The more rich and engaging design of the “Page”, the more the

possibility of connection with the customer. Following examples will make it

further clear. The restaurant can add Table Reservations application and a

film can add Movie Tickets application and make more sense of their

presence on Facebook.22 Facebook “Applications” are the most interactive

form of engaging with fans and customers. Building an “application” on

Facebook gives the brands an opportunity to deeply integrate into the core

Facebook experience.23 By leveraging Facebook's integration points brands

can make their application feel native to the Facebook site; creating a

seamless experience as users browse Facebook. A brand‟s application can

integrate with all aspects of the Facebook user experience, from the profile

page to bookmarks and the news feed. When a user interacts with a brand‟s

application, the application can access the details of users from Facebook to

create unique and customised experience of the user. Brand‟s application can

be integrated into Facebook by just following simple guidelines set by

21

Keynote (2010) „Social Media Marketing, 2010‟ (online). Available from: https://www.keynote.co.uk/market-

intelligence/view/product/2387/social-media-marketing?utm_source=kn.reports.browse. (Accessed on 14-12-2010).

22 Facebook, (2010). „Facebook Pages‟ (online). Available from: http://www.facebook.com/advertising/?pages


23 Facebook, (2010). „Facebook Applications‟ (online). Available from:

http://developers.facebook.com/docs/guides/canvas/ (Accessed on 14-12-2010).

https://www.keynote.co.uk/market-intelligence/view/product/2387/social-media-marketing?utm_source=kn.reports.browse



http://developers.facebook.com/docs/guides/canvas/


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Facebook in different ways like streamline publishing, Like Button, Requests

and Profile Tabs.24

The brands have their websites and most of them host the campaigns on their

own website along with Facebook. The websites of brands are syndicated to

Facebook. Syndication means they can deploy one or a combination of more

“social plugins” of Facebook. The “social plugin” can be any of a Like Button,

Activity Feed, Recommendations, Like Box, Login Button, Facepile,

Comments or Live Stream.25 As already shown in Table 1.2, the traffic

diversion to external websites is very high (250 million people per month).

These diversions are mostly generated by the “Social Plugins” of Facebook

and also a Facebook Page, Facebook Share, Facebook Connect and

Facebook Advertisement give other options for diversion of syndication. From

diversion and syndication, the latest technical efforts direct towards

Integration if other websites in Facebook and specially the integration of CRM

software of brands into “Applications”. Table 1.4 shows an example, for

which activities do companies use Facebook.

How Facebook is used for Social marketing Dec 2009/Jan2010

Company% Agency %

Improving brand awareness and report 55 53

Marketing Channel 47 58

To publicise new content 46 51

Brand Monitoring 37 40

Gathering customer feedback 32 36

Reacting to customer service issues 25 27

Sales channel 16 18

Marketing Intelligence 16 20

24

Ibidem.

25 Facebook (2010) „Facebook Developers Social Plugins‟ (online). Available from:

http://developers.facebook.com/docs/reference/plugins/ (Accessed on 14-12-2010)

http://developers.facebook.com/docs/reference/plugins/


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HR 9 11

None of above 18 7

Other 4 2

Base: 199 companies and 124 agencies

Source: Keynote (2010) „Social Media Marketing 2010‟26

For setting a platform of research, Facebook will be considered as a case of

social media where the brand marketing campaigns of selected Smartphone

brands are deployed.

1.3 The Research problem:

There is a huge reserve of literature on brand equity and brand loyalty in

various market segments since beginning of marketing science. The research

of brand loyalty has been carried out at various time scales and on different

market segments and each has its own implication. There is also recent

literature on social media that converted web space into web2.0 and that

internet is a very new environment where the marketers have to be present to

reach the target market. Initial literature of social media concentrates on the

issues about how social media increases the exposure of a brand. There are

many strategic literatures for brands and companies showing them the ways

how to have a successful social media presence and how to deploy social

media campaigns. The concepts mainly cover brand building on web2.0.

Brand loyalty is a novel concept in branding and organisations look to have a

sustainable strategy for maintaining continuous growth. There is academic

literature that shows the effects of social media on brand equity and also

academic literature that investigates the models of e-loyalty. There is

significant coverage of brand loyalty formation and enhancement in the field of

26

Keynote (2010) „Social Media Marketing, 2010‟ (online). Available from: https://www.keynote.co.uk/market-

intelligence/view/product/2387/social-media-marketing?utm_source=kn.reports.browse. (Accessed on 14-12-2010).




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CRM. The latest technical development in both areas is Social Media CRM. It

is a very contemporary area of research with very few insights for companies

and brands at present. Further statistical data are made available from

legitimate research agencies for mobile phone market in UK and projected

trends and motivating factors within customers for making a purchase

decision in favour of a particular brand. There is no investigation into what role

a Social Media CRM system can play in a low loyalty mobile phone market of

UK. The research here will be carried out in young UK consumer market

(Middlesex University Students) who interact through Facebook „Pages‟ and

„Applications‟, to predict how the introduction of a Social Media CRM

(Facebook CRM) by smartphone manufacturers will affect brand loyalty.

1.3.1 The Aim of Study and Research Questions:

The aim of this study is to find out the extent to which the introduction of a

Facebook CRM Application will affect the brand loyalty. By the same results,

mobile manufacturing companies serving the UK customers can decide

whether or not, to invest in a Social Media CRM / CRM2.0 system for

establishing and maintaining brand loyalty.

Objective 1: To evaluate the level of activity in the social media

considered in this study (i.e. Facebook.com) and attitude towards

participation in virtual community for their smartphone brand. (The

motivation behind the participation could be for any of post evaluation

of purchased brand or sense of belonging or for getting further

information. An obvious possibility is that higher the activity on

Facebook, greater the possibility of affecting the users by engaging

them).


15

Objective 2: To know the brand experience and CRM experience of

their smartphone brand. (Because brand experience is directly linked to

brand loyalty)

Objective 3: To determine the perceived usefulness of the brand

service delivered through Facebook CRM application.

Objective 4: To determine the effect of Facebook CRM Application on

brand image of their smartphone brand.

Objective 5: To determine the effect of introduction of Facebook CRM

Application on the perceived social presence.

Objective 6: To determine the effect of introduction of Facebook CRM

system on Satisfaction and Trust in the smartphone market for

youngsters.

Following is the set of questions relating to each of the 6

objectives.

Questions for objective 1:

What is the range of personal and brand contacts of Middlesex

University students on Facebook? (Determined by the number of

„friends‟ and „likes‟ respectively)

What is the level of interaction with friends and brands? (Determined

by the frequency of communication)

What is their attitude towards subscribing to the brand „Page‟ of their

smartphone brand on Facebook?



16

Which brand‟s smartphone does respondent own?

What is the level of satisfaction with their smartphone brand?

What is the frequency of problems faced after purchase of the

smartphone, if any did occur?

How many times did they visit the service website of the brand for any

reason/problem/ dispute/ service, if they did visit?

Question for objective 3:

How useful will they consider it when a brand‟s service website is

delivered to them on Facebook Application?

Question for objective 4:

What will be the impression of their smartphone brand if it delivers

service through Facebook CRM Application?


How does the respondent like the ability of the application that allows

them to share your transactions with their brand and straight away

discuss with friends? Does it make them feel more connected?


Will the service delivered through Facebook CRM Application increase

their satisfaction with their smartphone brand?

Will the service delivered through Facebook CRM Application increase

their trust on their smartphone brand?


17

1.4 Importance and relevance of study in current times:

HubSpot (2010) reports the online marketing platforms on which the

conversations occur for 33 different sectors of industry. The answer is split

into 3 options. Search engine, Blog and Social Media. Each sector from the

listed 33 sectors has a different ratio of activities split into these 3 online

platforms. We will consider the investigation sector of cellphones, 35% activity

is on social media, 50% is on search engines and 15% activity is on Blogs

(HubSpot, 2010). Further the split-up of 40% Social Media activity is made

for each sector into Facebook, Twitter, LinkedIn and YouTube. The relative

activity on social media for cell phone sector is 22% on Twitter, 20% on

YouTube, 48% on Facebook and 8% on LinkedIn. The “fans” on Facebook of

10 most relevant pages are 3,188,505 with millions of keywords that can be

found (HubSpot, 2010). This indicates that Facebook as a combination of

interactive advertisement hosting services, social media and virtual

communities, should not be neglected by the companies to engage with

customers at the various levels of brand loyalty ladder of the smart phone

market. The demographics of facebook.com show that out of 28,663,900 UK

users, 17,958,420 belong to the age group of 18-34, and the figure is total of

75% for young population of UK27. The Nielsen Company (2010) in its report

of „Mobile phones and youth around the world‟ says that 80% of UK

population in the age group of 18-24 selects their own mobile phone and the

rest have it from work, parents or friends.

These data validate the research being carried out in Middlesex University

(sample population) where the age group is similar and it has nearly direct 27

(Facebook, 2010). “AdsMarketing” (online). Available at:

http://www.facebook.com/adsmarketing/index.php?sk=targeting_filters. (Accessed on 14-12-2010).

http://www.facebook.com/adsmarketing/index.php?sk=targeting_filters


18

implications for the other population within the same age group. A sustainable

brand strategy in competitive environment, will be the one in which the brands

aim to achieve the core of brand loyalty. Effect on brand loyalty by

introduction of Social Media CRM (Facebook CRM here), will be under a

scrutiny in this research. So as the smartphone market is taken as a

reference market, this research will also have some partial implications for the

smartphone manufacturing companies about using social media for targeting

brand loyalty, but the research is preliminarily about exploring the effect of

introduction of Social Media CRM on the brand loyalty.


19

1.5 Structure of Dissertation:

1. Introduction to the Research Problem

Introduction

Investigation Sector

The Research Problem

Importance and Relevance of the Study in current times

Structure of Dissertation

Summary of Chapter 1

2. Literature Review

Introduction

Brand Equity and Brand Loyalty.

CRM Systems for Relationship building and Brand Loyalty.

Web 2.0 and Social Media.

Brand Loyalty in Digital age/ e-loyalty framework and its

components.

Social Media CRM.

Modified Model of e-loyalty/ Model of Social CRM and Brand

Loyalty.


3. Research Methodology

Introduction

Research Philosophy

Research Design

Research Method

Target Population

Sample Size

Sampling Method

Data collection equipment- Questionnaire Design.

Ethical Issues


4. Research Results and Analysis

Introduction

Reliability Analysis

Profile of Respondents

Descriptive Analysis

Correlation Analysis

Multiple Regression Analysis


5. Conclusions and Recommendations

Introduction

Conclusion to Descriptive, Correlation and Hypotheses testing.

Conclusion to Study Aim

Implications

Limitations

Directions for future Research



20

1.6 Summary:

This chapter first explains the platforms of discussion of this project in the

industrial sector section. It gives a detailed insight into the UK smartphone

market, the brand loyalty dynamics of the market and the social media

Facebook with all important numbers. It then explains how the research

problem emerges and the corresponding aims and objectives of this research

and details the research objectives with sub questions. Further it explains how

the study is important and relevant in current times. Finally it shows how the

dissertation is structured.

Chapter 2: Literature Review

21

2.1 Introduction:

The aim of this chapter is to present a review of literature that is relevant to

the aim of this study. To show the connections and discontinuity in the

changing themes of brand loyalty, the initial construct and the changing

constructs with introduction of new technologies (e.g. CRM Systems, Social

media, Social CRM) have to be considered. Based on the discussions

associated of brand loyalty in the social media age, following theories are

identified to be the building blocks in constructing the research gap/ gap in

literature.

Brand Equity and Brand Loyalty.

CRM Systems for Relationship building and Brand Loyalty.

Web 2.0 and Social Media.

Brand Loyalty in Digital age/ e-loyalty framework and its components.

Social Media CRM.

Modified Model of e-loyalty/ Model of Social CRM and Brand Loyalty.

These sub sections are the joining links to the overall aims and objectives of

this study as mentioned in Chapter 1. The study aims to determine the effect

of Social CRM on brand loyalty by exploring the effects of introduction of

Social CRM on the e-loyalty components. Further, the results will have direct

implications for brands in the UK smartphone market, whether or not to invest

in Social CRM systems with an aim to achieve and maintain brand loyalty.

The literature review starts with the original classical concept of brand loyalty

CHAPTER 2: LITERATURE REVIEW


22

showing its close link with brand equity. It proceeds to a time frame where

CRM systems were introduced with an aim for retaining customers and hence

maintaining brand loyalty. It then takes the focus on to Web 2.0 and the

Social Media and this section defines the social customer/ customer 2.0

concept, e- word-of-mouth and integrative interactive platforms. Then it

discusses the framework of e-loyalty with its components and a model of e-

loyalty. Literature review then introduces to us the fresh construct of 2010 in

social media, Social CRM that is mainly introduced for establishing and

maintaining brand loyalty within the new/ social customer.

It established a clear need of studying the effects of introduction of Social

CRM on brand loyalty as once more it is the time for reconstructing the brand

loyalty model with introduction of new technology. There are nearly not

insights for brands whether to invest in creating the integrated services or not.

So finally this literature review presents a modified model of e-loyalty/ ‗Model

of Social CRM and Brand Loyalty‘ with research hypothesis.

2.2 Brand Equity & Brand Loyalty:

‗A brand is a set of mental associations, held by the consumer, which add to

the perceived value of a product or a service‘ (Keller, 1998, cited in Kapferer,

2004, p.10). Strong brands have intense emotional component added to

these mental associations. A brand could be said as an attitude of non-

indifference knitted into consumer‘s hearts. This attitude goes from emotional

resonance to liking, belonging to evoked set, preference, attachment,

advocacy, to fanaticism (Kapferer, 2004).

Following the simplifying approach of, Franzen (1999) Feldwick (cited in

Wood, 2001), brand equity can be defined and classified as:


23

Financial brand equity: The total value of a brand as a separable asset –

when it is sold, or included on a balance sheet, is expressed as level of

distribution, sales, market share, price premium and profits.

Consumer brand equity:

Mental brand equity: a measure of the strength of consumers‘

attachment to a brand; inclusion in evoked set, conscious and active

preference for a brand based on consumer‘s perceptions and feelings

about the brand.

Behavioural brand equity: a description of customers associations and

about the brand; habitual or deliberately loyal purchasing of a brand by

consumers in order to meet an important part of their category needs.

Figure 2.1 shows the brand equity model that gives us a view of the various

Figure 2.1: Brand Equity and its components.

Source: Aaker, D. (1991) ―Managing Brand Equity – Capitalizing on the value of a brand name‖. New York,

USA: Free Press.


24

components of brand equity (Aaker, D., 1991). All of the five components of

brand equity are discussed below:

1. Brand Loyalty – is the extent to which people are loyal to the brand.

It implies a reduced cost of marketing activities as charming new potential

customers is costlier. It gives trade leverage as loyal customers from a stable

revenue source for distributive trade. It will help attracting new customers as

current customers do help boosting name and awareness. It gives more time

to respond to new competitive threats as switching brands takes more time

when customers are loyal.

2. Brand Awareness – the extent to which a brand is known in the public.

It can be an anchor to which brand associations can be attached and that in

turn can eventually influence the brand awareness. Customers with a positive

attitude towards a brand will spread brand awareness by talking more about

it. It can be measured by determining whether or not the brand belongs to the

evoked set at the time of purchase.

3. Perceived Quality – the extent to which a brand is considered to be

providing good quality products.

The quality of the brand/product becomes a reason of purchase selection.

The level of differentiation in comparison with competing brands indicates the

perceived quality. Price gets started to be taken as an indicator of quality.

Wide availability through different channels gives a perception on higher

quality. The brand extensions can indicate the customers about the quality

guarantee of a brand being on a wide scale.

4. Brand Associations - is anything ―linked‖ about the brand in the memory of

customer and it has a level of strength. It is a set of associations that gives


25

the brand an image. Higher the brand associations greater the brand equity

as it creates positive feelings and attitude.

5. Other proprietary assets – Patents, intellectual property rights, trade

partner relationships are some examples and these things increase the

competitive advantage of the brands in those specific fields.

When Brand equity increases as brand loyalty increases, brand awareness

increases, perceived quality improves, positive brand association increase

and the number of proprietary assets increase. It has to be noted that brand

loyalty is both, one of the dimensions of brand equity and is affected by brand

equity and the potential influence on loyalty from other components is so

significant, that it is considered as one or the ways that brand equity provides

value to a brand (Aaker, 1991).

Brand Loyalty:

Brand loyalty, long a central construct in marketing, is a measure of the

attachment that a customer has to a brand and as brand loyalty increases,

the vulnerability of the customer base to competitive action is reduced (Aaker,

2004). Consumer brand loyalty is often the core of brand‘s equity (Aaker,

1991).

Looking into the extensively discussed literature of brand loyalty, the main

emphasis is identified on two different dimensions of the concept: behavioural

and attitudinal loyalty. A conceptual framework of brand loyalty that includes

the full spectrum of brand loyalty based on a hierarchy of effects model with

cognitive, affective, conative (behavioural intent), and action (repeat purchase

behaviour) dimensions is given by Oliver (1997).


26

Oliver (1999) using the multi-dimentional construct defines brand loyalty as:

"a deeply held commitment to re-buy or repatronize a preferred

product/service consistently in the future, thereby causing repetitive same-

brand or same brand-set purchasing, despite situational influences and

marketing efforts having the potential to cause switching behaviour." Also

Oliver (1999) states that loyal customers are typically satisfied but that does

not imply that all the satisfied customers are loyal or satisfaction guarantees

loyalty. This brings in the role of overall brand equity playing important role in

creating a halo effect under which consumers would make future and repeat

purchase decisions.

The level of brand loyalty can be determined by the loyalty pyramid proposed

by Aaker (1991).

A low loyalty customer is termed as switcher who can change brand very

easily, habitual buyer has no reason to change which implies a good user

experience, a satisfied buyer keeps with the brand if the price is within

comparative limits, a liker will consider a brand more than price and

committed customer never switches the brand despite other factors like price

Source: Aaker, D. (1991) ―Managing Brand Equity – Capitalizing on the value of a brand name‖. New York, USA: Free Press.

Figure 2.2: Levels of Brand Loyalty


27

and alternative brands. Aaker (1991) also states, creating and maintaining

brand loyalty requires treating the customer right, staying close to customer,

management of customer satisfaction, creating switching costs and providing

extras.

2.3 CRM Systems for Relationship Building & Brand Loyalty:

Woodcock and Gamble (1999), cited in Tapp (2008). CRM (Customer

Relationship Management) is an enterprise wide commitment to identify your

named individual customers and create a relationship between your company

and these customers as long as this relationship is mutually beneficial. CRM

was initiated by the need of a system that would apply some computer

intelligence to customer acquisition, customer satisfaction and customer

retention. The aim was to merge all the information about the customer and to

provide that data to the customer service representative on the computer

screen (Sterne, 2000).

The CRM literature suggests that marketers could enhance customer loyalty

by being active and in regular contact with their customers. (Hansotia, 2002).

The literatures also suggest about regular contacts with customers helping

marketers to enhance the customer loyalty. The use of e-mail marketing in

CRM strategy follows a simple law that greater the frequency of a customer

buying or responding to messages and more recent the purchase, greater the

chance of enhancing customer loyalty (Raulas and Merisavo, 2004). Kapferer

(1998) and Aaker (2000) in their branding literature, indicate that the level of

brand loyalty can be switched higher by providing depth to consumer brand

relationships. Raulas and Merisavo (2004) state that how regular

communication can enhance customer loyalty can be implied from the fact


28

that how communication from a brand or the interaction with the brand affect

brand attitudes. Regularity in communication improves the value perception

by provision of relevant information as it reduces their searching efforts.

CRM systems allow convenient two-way dialogue to build and allow tailored

services at time of communication of point of service. The direct marketing

systems of any marketing department are a subset of CRM and both direct

marketing and CRM are tools and processes that support the ethos of a

relationship marketing driven firm weather its b2b or b2c (Tapp, 2008). CRM

in practical use is driven by complex IT systems and applications and these

systems are created by firms like Siebel Systems and Oracle and large firms

create the demand for these systems (Tapp, 2008). The CRM system when

set up on the company‘s website, is called e-CRM. All the mobile phone

companies have a special website for customer service and carry on CRM

activities through the website. The literature of CRM initially detailed the

failure rate of these systems and it was highly debatable whether an

organisation should invest in or manage relationships traditionally. But there

were some success stories as well. The systems became more meaningful

when recession hit the market as the core aim of a company then was to

retain the customers (Greenberg, 2010b). Bois et al., (2007), in the customer

management market sizing report gave an example of AMR Research giving

an estimates about revenues for CRM software being 14 billion USD in 2007

which was 12% higher than previous year and the projection for 2012 was 22

billion USD. The estimates of other research agencies also showed similar

figures which makes the numbers acceptable (Greenberg, 2010a).

2.4 Web 2.0 and Social Media.


29

Web 2.0 is a term used for every online thing that is new, cutting-edge,

upgraded, improved and is presently gaining momentum. The term web 2.0

was coined by Tim O‘Reilly a founder and CEO of computer book publishing

company O‟Reilly Media together with John Battelle, founder of The Industry

Standard when they launched a groundbreaking conference in San Francisco

(Funk, 2009). Today the conference is organized by UBM Techweb and

O‟Reilly Media and is given the name of Web2.0 Summit and the final one

being held in 2010.1 It includes websites, cultural trends like social

networking, blogging or podcasting, or the technology behind it and the rich

streaming media (Funk, 2009). The users can control their own online

experience and can influence others experiences and success comes by

harnessing power of social networks and the content creators can not

anticipate the distribution, sorting, combination and display as these depend

on the users as well (Funk, 2009). The social web is a online space where

people with common interests can gather for sharing their thoughts,

comments and opinions (Webber, 2009). Social media includes social

networking sites such as Facebook, MySpace, YouTube, Flickr and other

interactive web pages, allow display of user-generated content (UGC) in many

types and forms such as basic bulletin boards, blogs, interactive applications

and discussion forums. The marketers had to utilize the same space with the

UGC for deploying effective marketing strategies online.

Social Customer:

1 O‘Reilly Media (2010). ‗The Web 2.0 Summit 2010‘ (online). San Francisco, CA: O‘Reilly

Media. Available from: http://www.web2summit.com/web2010 (Accessed on 1-1-2011).

http://www.web2summit.com/web2010


30

A customer ecosystem is a sum of all the interactions centred around

customers, taking place over a time. Customer is at the central focus of

strategies and it is exactly opposite to the corporate ecosystem where

company was the point of focus and customers were considered at the

periphery. Customer from being just an object of sale earlier, now drives the

business around self.

Customers 1.0

“They were dutiful consumers of mainstream messaging and one-size-fits-all

goods” (Greenberg, 2010). The previous generation customers would visit the

retail outlets and followed the advice of retailers in making purchase

decisions. They accepted any quality of customer service as the power was in

the hands of retailers.

Customers 2.0

“Now, customers dictate how they will purchase and consume—where, when,

and how much—using a variety of channels largely, if not exclusively,

configured by them” (Greenberg, 2010a).

The customers now guide each other by using community-based tools like

social networking, social shopping and bookmarking. The situation of media-

meets commerce- meets community arises as the customers populate the

social networks, and get connected with trusted people, their networks and so

the social medias are becoming key distribution channels for marketing. The

online social world is full of ratings, reviews and videos of their consumed

items and brand experiences (Greenberg, 2010a).


31

Social customers are easily connected through internet and mobile devices

trust their peers. They have on demand exposure to any information and also

have a desire and tools to share the information with trusted peers on social

media, they might not even know them in some cases. Social customers

require transparency with the companies/brands they deal with and also

authentication by the peers. Social customers feel connected with the brand

and feels rewarded for own effort on behalf of the brand. This makes their

loyalty not only behaviourial but also attitudinal. It invites automatic brand

advocacy if the brand satisfied the customer and this relationship is driven on

trust (Geenberg, 2010 b). The change of customer to social customer is a

cultural shift that is enabled by peer influence and technology. The shift is

from an inside-out to an outside-in approach and the consumer has the power

to produce and to share his/her ideas or complaints to world through variety

of channels (Lieberman, 2010).

Formation of Present scenario:

Social media has many forms but the most popular forms include virtual

worlds (second life), forums, review sites, social bookmarking sites, blogs,

microblogs, social networks (Facebook and LinkedIn) and media sharing sites

(YouTube and Flickr) (Zarella, 2010). The social media as a channel of

communication gives its users an opportunity to post pictures, use their own

quotes that make some meaning and meanwhile connect with their friends

and peers. The new connections are real-time and unbound by the location

(Peck, 2010). The low cost access of internet opened up opportunities for

companies that allowed them to deal directly with numerous customers in an

previously unimaginable way, as it was managed by intermediaries only. This


32

empowered direct marketing to a great extent (Palmer and Koenig-Lewis,

2009). Some websites are very highly popular and if companies and

marketers look forward to deploy experiences for customers through those

websites the return of investment is supposed to be much higher.

Consequently the social networking web sites succeeded in attracting both

users and investors.

„Word Of Mouth‟ goes digital and global, forcing new implications for brands:

The process of diffusion of information among the consumers is referred to as

‗word-of-mouth‘ and the social networks started playing an important role in

the spread of word-of-mouth. The sharing or the diffusion of information

depends upon the relation of the individuals within the virtual community and

there is a significant role of internet self-efficacy of the consumers as they

need to adapt to innovations and try new things (Goldenberg et al., 2001).

The power now shifts in the side of consumers and the content creators on

social media. Johnson and Kaye (2004), made a note that the bloggers who

also are creators of user generated contents (UGC) are unbound by

standards of objectivity and most of them have strong views that they express

openly. Thus, UGC is what runs the brand/ product spectrum from positive to

negative. And this UGC is spared from time and boundaries so it spreads as

word-of-mouth and can be alternatively termed as ‗e-WOM‘. When UGC is

negative, e-WOM is negative and it can have harmful implications for building

and sustaining a brand's equity. A fact that for readers the UGC is more

credible than the content by the brand itself, complements the spreading e-

WOM (Cheong and Morrison, 2008).

Integration of Platforms makes Web 2.0 interactive:


33

Fagerstrom and Ghinea, (2010), demonstrate from their findings the role of

Interactivity in successful web campaigns. Their study considers the case of

SCA Libresse a fashion and consumer products brand from Sweden. The

company does the research of market segments and created an online

campaign. There young girls could participate in a fashion design competition.

The number of hits for the website shoots up after the new introduction. It

demonstrated that interactive and social use of the Internet, helps the

companies achieve increased brand awareness, positive attitude toward a

brand, and increased sales in the target segment. Fagerstrom and Ghinea

(2010) also say about low involvement consumers that they can be attracted

to several web campaigns which have interactive features. They also describe

the examples of Absolut Vodka and Nike as brands that deployed successful

web campaigns and encouraged dialogues between brand and consumer but

the consumption of products is not directly related to successful campaigns.

The campaigns by such brands comprise basically a web application. These

campaigns are easily syndicated with social networking sites in different ways.

The social networking websites act as a magnification to the campaign as

peers can see the user‘s interaction with the brand through its application.

Facebook added a shopping application that enabled the users to search for

required products and then take opinions of those products from other

Facebook members (Cha, 2009). Cyworld.co.kr, a popular Korean social

network that attracts more than one-third of the country's population and 90%

of people in their 20s, carries both real and virtual items (Cha, 2009).

Consumers execute new learned behaviours by adapting to the interactive

visual technologies and marketers need to keep up with the latest


34

modifications through new theories. Any application on Facebook that adds a

new feature can be considered as an integrated service. Integrated service

combines products and services into a single package for users. Integrated

services consist of 3 tiers; Devices, Networks and Applications through which

the customer with a digital lifestyle can be reached (Faith and Tomsen, 2001).

2.5 Brand Loyalty in Digital Age/ e-loyalty framework and its

components:

There are significant differences in the customer loyalty in the traditional

market space and the cyberspace (Gommans et al., 2001). The brand loyalty

in digital world is market controlled concept towards a distribution driven,

consumer controlled and facilitated by technology is different from brand

loyalty in the product driven market of previous generations (Schultz, 2000).

e-loyalty implies quality customer support, prompt delivery of service/product

in terms of price and time, self persuasive product demonstration and

transparent privacy policies (Reichheld and Schefter, 2000). The main

emphasis of e-loyalty in the times of relatively compressed buying cycles

should be on converting behaviourial intent to immediate buying behaviour

Figure 2.3: Model of e-Loyalty Framework

Sources: Lii, Y. (2009) ‗A model of customer e-loyalty in the online banking‘, Economics Bulletin, Volume 29 (2), pp. 891-902.

Gommans et al. (2001) ‗From Brand Loyalty to E-Loyalty: A Conceptual Framework‘ Journal of Economic

and Social Research, Volume 3 (1), pp. 43-58.


35

(Strauss and Frost, 2001). The Figure 2.3 by Gommans et. al. (2001) and Lii

(2008) as verified by their researches shows the e-loyalty model.

Attitudinal Brand Loyalty:

The concept of attitudinal brand loyalty is very important in the e-marketplace

and it includes the affective, cognitive and behaviourial intent (Gommans et

al., 2001).

Highly loyal customers stay loyal to a brand if their attitude towards the brand

is positive and alternatively the ability to convert a brand switcher into a loyal

customer, increases when the attitude towards brand is favourable (Balginder

and Robinson as cited in Gommans, 2001).

Behaviourial Loyalty:

Generally the behaviourial brand loyalty is very nearly the repeat purchasing

behaviour of a customer and when the concept is extended to the e-

marketplace, new factors like the number of visits to website and time spent

on the website come into play (Gommans et al., 2001). As a cell phone is

something that is not purchased frequently, the habitual repeat purchasing

behaviour is less important.

Trust:

It is defined as willingness of relying on an exchange partner in which the

consumer has the confidence by Moormann et al. (2003, cited in Lii, 2009),

and trust is recognised as an important antecedent in most models dealing

with relationships like loyalty and satisfaction (Lii, 2009). Also online

information exchange has the same implication that if the consumer trusts the

source, then the reliability of the information is perceived to be much higher.


36

Trust, has a close relation with security, and plays important role in online

information exchange.

Quality:

The software in an e-CRM system is related closely to the performance of the

system and the quality of the experience needs to be good for acceptability of

a transaction, for both a company and the customer (Taylor and Hunter,

2002).

It is believed that the perceived quality of the service delivered by an e-CRM

application, contributes to a positive outcome which leads to greater levels of

satisfaction and favourable display of marketing behaviours like positive word-

of-mouth (Taylor and Hunter, 2002).

Satisfaction:

The fulfilment of customer‘s expectation improves the perceived usefulness of

the application and Szymanski and Hise (2000, cited in Taylor and Hunter,

2002) prove the importance of e-satisfaction and they complement to the

quality perceptions.

Brand Image:

Brand image is built on the basis of the brand building operations, online and

offline. The brand building activities deployed through social media and

internet are already known and the same can be done though the e-CRM

websites in b2c relations. Offline brand experience also has an effect on the

online brand image and these experiences affect the online satisfaction, trust

and loyalty in different ways depending upon the built relationship between

customer and the brand (Horppu et al., 2008). As on internet space, there


37

many choices to refer at the finger tips of the customers, the internet gives an

opportunity to offer use of unique tools that can build the brand interactively

which is different for traditional brand building activities of mass media

(Gammons et al., 2001). The corporate/ brand image is linked with the

satisfaction and trust and it is considered to create a halo effect on the

satisfaction (Lii, 2008).

Perceived Social Presence:

It refers to the extent to which a given medium allows the user to experience

their psychological presence to others in the same place and it provides

human warmth to the one who gets a space to express (Lii, 2008). Some

interactive website features like human audio, product video, emotive text and

pictures of humans and the ability to control all these actions are known. The

social presence of web 2.0 applications in the computer mediated

communications is helped to reduce ambiguity and increase level of trust.

The results of the research showed that the website quality, corporate image

and perceived social presence had a positive effect on the satisfaction and

trust through hypothesis testing of group H1, H3 & H5 and H2, H4 & H6

respectively. Further there was a strong positive relationship between the trust

and satisfaction. And previous researches had already shown satisfaction and

trust are strongly correlated positively with brand loyalty was affirmed in the

study.

2.6 Social Media CRM/ CRM2.0:

―Social Media CRM is a philosophy and a business strategy, supported by a

technology platform, business rules, processes, and social characteristics,


38

designed to engage the customer in a collaborative conversation in order to

provide mutually beneficial value in a trusted and transparent business

environment. It‘s the company‘s response to the customer‘s ownership of the

conversation‖ (Greenberg, 2010b). A Social CRM system which combines

social media and a CRM enterprise system was first modelled in International

Conference for Convergence and Hybrid Information Technology held in

Daegeon in August 2008 (Mohan et al., 2008).

Kotadia (2009), describes Social CRM as a business strategy of engaging

customers through Social Media with goal of building trust and brand loyalty

and loyalty is referred to as the attitude towards a brand that inclines a

customer to repurchase it and to recommend it. Kotadia (2009) also states

that Social CRM and Social Media are more about building trust and

managing loyalty with customers than about managing relationships or

transactions, which are focus areas of ―traditional‖ CRM. The collaborative

platform of Social Media CRM System and the Social CRM System are

proposed by Mohan et al. (2008), are shown in Diagrams 2.4 and 2.5. The

collaborative platform has Operative CRM and Social Networking Web

Services clubbed together on a Web 2.0 backed platform and by using a

Mashup Technology. CRM 2.0 is all about a outcome of linkage between

Operational CRM and Social Networking Web Services through a highly

sophisticated software Plugin/ Adaptor that links both.Operative CRM is

already linked with the Analytical CRM since the database marketing systems

were started to be used in CRM.


39

The Social Media CRM System shown in Figure5 gives us examples of

web2.0 services that can be used in Social CRM. Facebook, LinkedIn, Digg,

YouTube, Flickr, Pandora, Technorati are some of them. It shows that the

collaborative paradigms are user driven though Social Networking using web

as a platform. Web services and Mashup Technology enables the Social

CRM System (Mohan et al., 2008).

Figure 2.4: The collaborative platform of a Social Media CRM System

Source: Mohan, A. et al. (2008). ―Conceptual Modeling of Enterprise Application System Using Social

Networking and Web 2.0 Social CRM System‖ International Conference of Convergence and Hybrid

Information Technology, Volume August, pp. 231-244. (online). Available at:

http://ieeexplore.ieee.org/xpl/freeabs_all.jsp?reload=true&arnumber=4622830. (Accessed on 14-12-2010).

http://ieeexplore.ieee.org/xpl/freeabs_all.jsp?reload=true&arnumber=4622830


40

The characteristics of Social CRM are described as following, by

Greenberg (2010,a).

It gets fully integrated into an enterprise value chain and that includes the

customer as part of it.

Social media tools like blogs, wikis, podcasts, social networking tools, user

communities are integrated into apps/services:

Customer interactions are encouraged through authenticity and

transparency.

Knowledge is utilized in context to create meaningful conversations.

Figure 2.5: The Social Media CRM System

Source: Mohan, A. et al. (2008). ―Conceptual Modeling of Enterprise Application System Using Social

Networking and Web 2.0 Social CRM System‖ International Conference of Convergence and Hybrid

Information Technology, Volume August, pp. 231-244. (online). Available at:

http://ieeexplore.ieee.org/xpl/freeabs_all.jsp?reload=true&arnumber=4622830. (Accessed on 14-12-2010).



41

The company processes are modelled from the customer point of view.

Both information-seeking and information-contributing behaviour are

encompassed into the customer business ecosystem.

Resides in a customer ecosystem.

Plus style, design and interface do matter a lot.

Creating conversation with customer—engaging customer in activity and

discussion—observing and redirecting conversations among customers are

activities done in the Marketing frontline.

Business is an aggregator of experiences, products, services, tools, and

knowledge for the customer.

The intellectual property that is created with the customer, partner,

supplier, problem solver is also owned together.

The business is focused on environments and experiences that engage the

customer.

Corporate strategy is customer strategy.

Both external and internal sources innovate.

The focus is on all the aspects of relationships (including company,

partners, customers) and specifically on identifying, engaging, and

enabling the ―influential‖ nodes.

Company-customer collaboration.

Focus of technology is on both, operational and social/collaborative areas

and customer is integrated into the value chain.


42

The company customer relationship resembles to a peer to peer

relationship (C2P or P2C, so to speak) but still the company must be an

enterprise in all other aspects.

Facebook CRM: Provider‟s and potential provider‟s example:

There are many IT solution companies that provide CRM systems to various

organizations around the world. The projected investments made by

organisations are already shown in the CRM section of the literature review.

Microsoft Dynamics CRM is one of the CRM solutions provider2. Link

Development is a gold partner of Microsoft Dynamics and has introduced a

newly developed CRM Facebook Connector3. Salesforce.com is the CRM

provider for Facebook Inc. and has listed success stories of their more than

200 international clients4.

2.7 Modified model of e-loyalty / Model of Social CRM and Brand Loyalty

(under investigation of this research):

Based on the model/framework of e-loyalty, by Gommans et al. (2001), Lii et

al., (2008) and Carlson and Sinnapan (2003) and integrating the model of

Social CRM System given by Mohan et al. (2008), the following model is

proposed for testing the effect of introduction of Social CRM System on Brand

Loyalty.

The Social Media in this case as shown in the Figure 2.6 is Facebook and the

investigation in the young UK smartphone market. Hypotheses are formed for

the effect/correlation of Social CRM on the perceived usefulness of brand‘s

2 http://www.microsoft.com/en-gb/enterprise/it-solutions/CRM.aspx

3 http://www.linkdev.com/Sol_Serv/Dynamics/addons.aspx

4https://www.salesforce.com/uk/customers/

http://www.microsoft.com/en-gb/enterprise/it-solutions/CRM.aspx

http://www.linkdev.com/Sol_Serv/Dynamics/addons.aspx

https://www.salesforce.com/uk/customers/


43

application/service, brand image, perceived social presence with a CRM2.0

application. Further there will be hypothesis testing for the correlation

between perceived usefulness and satisfaction and perceived usefulness and

trust in the context of Social CRM (Facebook CRM Application here) being

introduced.

Following hypotheses were formed and will be checked through data

analysis.

Hypotheses formation:

H1: Introduction of Social CRM/ Facebook CRM will have a positive effect on

perceived usefulness of the delivered service by Facebook CRM applicaiton.


Brand Image of the smartphone company.


the perceived social connection of smartphone users with their peers.

H4: Perceived usefulness of the e-service delivered by the Facebook CRM

application of the smartphone brand will have a positive effect on the

satisfaction of smartphone users with their brand.

Figure 2.6: Modified e-Loyalty model/ Model of Social CRM and Brand

Loyalty.


44


application of the smartphone brand will have a positive effect on the trust of

the user on his/her smartphone brand.

2.8 Summary:

All the literature relating to brand loyalty and social media lead to an un-

explored gap of the predicting the effect of introduction of Social CRM on the

brand loyalty. A model is proposed in the end which is a modified version of

e-loyalty framework and hypotheses were formed for this model which will be

in scrutiny in the next chapters.

Chapter 3: Research Methodology

45

3.1 Introduction:

This chapter gives overview of methodological approaches used for the study.

It includes description and justification of the research methods which were

used to determine the effect of introduction of Social CRM on Brand Loyalty in

the young UK smartphone market. The methods adapted are also explained

in detail with the comparative consideration of alternative methods. The

chapter contains the adapted research design, methods and philosophical

approaches. Then chapter proceeds to sample size and target market. The

process of data collection followed by the researcher for reaching the target

population is explained. A questionnaire was designed based upon the aim of

the research. Lastly the ethical issues are discussed at the end of chapter.

3.2 Research Philosophy:

Each research makes certain assumptions about the nature of reality that is

being studied, about how the knowledge is produced and the perspective

from which the research is approached. (Kent, 2007).

Ontology Epistemology Perspective Theory Method Technique

Objectivist Positivist Researcher Deductive Quantitative

Research

Quantitative

Analysis

Realist Activist Client Mixed Mixed

Research

Mixed

Research

Subjectivist Interpretive Participant Inductive Qualitative

Research

Qualitative

Analysis

CHAPTER 3: RESEARCH METHODOLOGY

Source: Kent, R. (2007). „Marketing Research: Approaches, Methods and Applications in Europe.‟

London: Thomson Learning.

Table 3.1: Research philosophy and approaches


46

Table 3.1 summarizes the different approaches that can be used in a

research in terms of its ontology, epistemology, perspective, theory, method

and technique. Each approach implies a different way of „doing science‟.

Epistemology is an area of philosophy that is concerned with how knowledge

is established and ontology is the branch of metaphysics that is concerned

with the nature of reality (Kent, 2007). In this research the nature of reality

that is objectivist in this study, the „positivist‟ epistemological perspective is

adapted. Positivism holds that an accurate and value free knowledge of

things is possible (Fischer, 2004). Objectively verifiable knowledge is possible

in social sciences by setting up hypotheses and then testing them by

identifiable and measurable variables (Kent, 2007). The activist

epistemological perspective is more likely to be followed by client-based

researcher which is opposite to positivist perspective which has a pure

researcher‟s perspective. The theory is deductive which means that

researcher moved from general theories to more specific situations and

observations (Kent, 2007). The deductive theory means the approach is „top-

down‟ moving from theories to hypotheses to observations to confirmation

and the hypotheses become theory if they get confirmed in the study.

3.3 Research Design:

Chapter 1 states the research problem and after having a suitable approach,

the attention is on formulation of a detailed research design. The research

designs can be exploratory, descriptive or conclusive. (Hair et al., 2006).

Exploratory research design is mostly qualitative and is executed by depth

interviews, focus groups and observations. Every research has a exploratory

phase but it is not to be confused with an exploratory design (Kent, 2007).


47

The descriptive and conclusive designs are quantitative research designs.

The descriptive design usually has a description of certain phenomena like

percentage estimates and characteristics of a target population. Hence if the

research involves description of existing characteristics of a market situation,

then descriptive designs are appropriate (Hair et at., 2006). When nature of

relationship is to be determined through hypotheses testing, conclusive/

explanatory designs are suitable (Hair et al., 2006). A combination of both

descriptive and conclusive designs is also a valid option in certain situations if

different kinds of the research aims are targeted (Kent, 2007). This study is

aimed to determine the effect of introduction of Social CRM systems on the

brand loyalty in the smartphone market and also the relationship between the

perceived usefulness of the service delivered (by the Facebook CRM

application) and satisfaction and trust on a brand, a combination of both

descriptive and conclusive designs is used by the researcher.

3.4 Research Methods:

3.4.1 Secondary Data

Secondary data was collected and used in this study to determine its aim.

Secondary data is the data collected for some purpose rather than the

problem at hand. The major source for secondary data of the smartphone

market was Keynote‟s market segment report - Mobile Market 2010 and

Ofcom‟s market segment report. Keynote is the official Athens authenticated

data provider for organisations and academic researchers who are looking for

recent market data. Additionally The Telegraph and The Neilsen Company

were some additional sources for secondary data of the UK smartphone

market described in Chapter 1. GfK NOP and WDS Global were two main


48

bodies reporting the brand loyalty dynamics in the UK smartphone market in

2010. Secondary data about Facebook was obtained predominantly from

Facebook‟s website statistics section. Text books and dissertation writing

books were used for guidelines throughout the dissertation. Electronic

resources gave access to a pool of academic journal articles.

3.4.2 Primary Data: Survey research methods

“The capture of data based on addressing questions to respondents in a

formal manner and taking a systematic record of their responses” is called a

survey (Kent, 2007). Survey allows collection of quiet substantial amount of

data in economical and efficient manner. This study has a descriptive and

conclusive combined design and these methods involve survey and primary

data was collected from a large sample from the target market.

The survey methods are classified according to the method of questionnaire

distribution as Interview Surveys, Telephone Surveys, Postal Surveys and

Online Surveys (Kent, 2007).

The survey link for survey was formed on the survey website

surveymonkey.com. Colourful graphics were integrated in the questionnaire

and a diagram of proposed model to be used in questions was included in the

online questionnaire.

Although online survey was formed and was used in this research and it was

executed using a computer and internet and was administered by self and

also online. A questionnaire was designed carefully in a way that it covered all

questions relating to the aim of the research and the hypotheses that were to

be tested. A large sample size was necessarily targeted to consider it as a

representative of the target market.


49

3.5 Target Population:

Determining the target population is a very important step in any marketing

research. The target population of this research was UK youngsters aged

over 16 and up to 30. Middlesex University students who all belong to this

age group are a subset of the young population of UK. As time and budget

were very limited, it is considered that the study can later be made on entire

young consumer market of UK who use smartphones. It has been explained

in the Chapter 1 how it is validated to research within the young age group

when it involves social media.

3.6 Sample Size:

The best sample size for this research is the entire population of UK in the

given age group of 16-30, who are registered on social media/Facebook as

the research is within social media. But it is not possible to reach all

Facebook/social media users in short period of time and even if they can be

reached, their participation can never be mandatory. So an attempt was made

to reach a representative sample of all Middlesex University students who use

Facebook through a selected sampling methods and a good sample size. It is

a thumb rule that greater the sample size lesser the error and more the

accuracy. 500 people were approached and convinced for participating in the

survey out of which 88 did not have a smartphone and could not answer the

questionnaire. So a total of 412 responses were collected.

3.7 Sampling Method and Data Collection:

The sampling methods are of two types: non-probability and probability. The

probability sampling method keeps a chance of selection according to the

requirement and in non-probability sampling, there is not pre decided chance


50

of a target market respondent (Kent, 2007). As the survey was a combination

of self administered survey and online survey, the sampling was non-

probability sampling. Large sample size and short span of time implied

convenience and snowball sampling to be used.

For convenience sampling, People in Middlesex University were approached

at different locations at different times and were asked to fill up electronic

questionnaire in a touch screen device. Also people at wi-fi spots were

requested to stop and go on a laptop for filling the questionnaires. 217

respondents answered the questionnaire in five days.

For snowball sampling, the survey link www.surveymonkey.com/s/manzil was

used which gave direct access to the online survey page. This was posted as

a social network group message on Facebook‟s Middlesex University „Page‟

and respondents were requested to suggest to friends as well. 195 responses

were obtained online in three days.

3.8 Data collection equipments – Questionnaire:

The questionnaire that was used for data collection is shown in the Appendix.

There were 18 variables identified according to the research aims and

objectives. The required variables were enquired within 16 questions in the

questionnaire. Respondents were addressed at the starting of the

questionnaire by a statement that mentioned the nature of the academic

research, purpose of the research and confidentiality of their answers. The

questionnaire for our understanding will be explained in five sections. The

section 1 deals with objective 1 and aims to know the level of activity of

respondents of Facebook which is explored by questions 1-2 where

respondents have been asked to fill up the approximate range of the number

http://www.surveymonkey.com/s/manzil


51

people and brands they are connected with. Section 2 deals with objective

2, the Brand Experience of respondents with their smartphone brand. This

section had questions that ask about satisfaction with the brand, problems

occurred with the device and their visit on the service website of the brand

through questions 3-6. Further it asks questions about whether they are

looking to change their smartphone brand on next purchase or not and their

liking of the idea of following the brand on Facebook through questions 7-8.

Then a pictorial diagram that explains them what researcher means by using

the term „Facebook CRM Application‟ before starting section3, that deals with

objectives 3, 4 and 5. They are asked about whether they will install their

brands Facebook CRM Application or not in question 9. Researcher‟s aim is

to know the „perceived usefulness‟ of the Social CRM (Facebook CRM

Application here), effect on the „Brand Image‟ and „Perceived social presence‟

after introduction of Facebook CRM Application through questions 10-12.

Section 4 deals with objective 6 has questions that explore the effect of

„perceived usefulness‟ of the service delivered by the Facebook CRM

Application on the „satisfaction‟ with the brand and „trust‟ on the brand through

questions 13-14. The last two questions ask the age and gender of the

respondent. Based upon the suitability various scales like metric, nominal,

ordinal and Likert are used. Before collecting real responses, researcher took

feedback from few respondents about the questionnaire to check there were

no awkward and inconvenient questions which were difficult to understand

and answer. Some minor changes were made in this pilot test and final

questionnaire was then ready for data collection.

3.9 Ethical Issues:


52

The entire research was carried out with conscious consideration of the

ethical issues that might arise though the course of this dissertation. All the

general rules of ethical behaviour were followed specially the honesty with

which the approach of study and reporting of results (Kent, 2007). All the

sources of data and authors whose work is used are acknowledged and credit

was given to all the researchers whose work was used in the thesis to avoid

plagiarism. Care was taken that no data gets manipulated for expression of

better results. Further all the regulation of plagiarism and submitted work

were followed from the guidelines available from

:http://www.web.mdx.ac.uk/regulations/archive/regs0910/postgraduate/sectio

nc.htm.

3.10 Summary:

The chapter is summarized in the order of activity as following:

Selection of Objectivist Ontology, Positivist epistemology

Deductive approach

Descriptive and conclusive design, Quantitative method

Self administered and online surveys

Sample size of 412 respondents, sampling method

Questionnaire design, data collection and ethical issues.

http://www.web.mdx.ac.uk/regulations/archive/regs0910/postgraduate/sectionc.htm

http://www.web.mdx.ac.uk/regulations/archive/regs0910/postgraduate/sectionc.htm

Chapter 4: Research Results and Analysis

53

4.1 Introduction:

Based on the data collected in the study, this chapter further presents findings

and analysis. Statistical package software SPSS version 15 was used for

analysing the collected data. First step in the analysis was to check the

reliability of the selected scales statistically. Then it shows the profile (age

and gender) of the respondents from the sample population of university

students. Initially the descriptive statistics are carried out on the handful data

for addressing the research questions. In the next step the analysis carries on

to correlation tests (direction and strength of the relationship) of certain

variables. The ‘attitude towards introduction of Facebook CRM Applications’

(independent variable/ constant) is explored for its correlation with the

‘perceived usefulness of delivered service quality by the Facebook CRM

Application’, ‘brand image’ and ‘perceived social presence’(dependent

variables). Further the correlation is explored between ‘perceived usefulness

of delivered service quality by the Facebook CRM Application’ (independent/

constant variable) with ‘trust’ and ‘satisfaction’ (dependent variables). Multiple

regression analysis is used for testing the hypotheses made to test

significance and magnitude of the independent/constant variables on the

dependent variables to test the proposed model of ‘Social CRM – Brand

Loyalty.’

4.2 Reliability tests:

The reliability of the scales developed to measure any constructs is measured

in the reliability tests (Pallant, 2005). In SPSS we can measure the internal

CHAPTER 4: RESEARCH RESULTS AND ANALYSIS


54

consistency of scales used in the datasheet. This means researcher can find

out the extent to which the items used in scales measure same construct

(Pallant, 2005). The reliability test gives a coefficient called Cronbach’s alpha

and higher value of alpha means greater reliability. Table 4.1 shows the

variables that are used to measure the level of activity of Middlesex University

students on Facebook. The value of alpha is 0.790 that shows that the scale

is very reliable.

Reliability Statistics

Cronbach's Alpha

Cronbach's Alpha Based

on Standardized

Items N of Items

.790 .790 4

Item-Total Statistics

Scale Mean if Item

Deleted

Scale Variance if

Item Deleted

Corrected Item-Total Correlation

Squared Multiple

Correlation

Cronbach's Alpha if

Item Deleted

FBProfileFriends 10.5097 4.124 .684 .503 .692

FBProfileLikes 10.9660 4.062 .689 .498 .689

InteractionFriends 10.5825 4.906 .577 .357 .750

InteractionBrands 10.9612 4.884 .461 .218 .805

The second group of variables measure the attitudes towards and predict

force of introduction of Facebook CRM Application on the other dependent

variables as shown in Table 4.2. The value of alpha for 5 variables is 0.669

which indicates that the scales are fairly reliable.

Reliability Statistics

Table 4.1: Reliability Analysis – Level of activity

(scale)

Table 4.2: Reliability Analysis – Attitude and effect scales.


55

Item-Total Statistics

Scale Mean if Item

Deleted

Scale Variance if

Item Deleted

Corrected Item-Total Correlation

Cronbach's Alpha if Item

Deleted

AppUsefulness 14.5485 6.380 .315 .687

AppEffBrandImage

13.8058

6.629

.476

.595

AppEffSocialPresence

13.8883

6.941

.461

.605

EffSatisfaction

13.7427

6.810

.441

.611

EffTrust

13.7621

6.634

.471

.597

4.3 Respondent profiles:

Table 4.3 shows the profile of respondents in a frequency table which shows

the number of respondents in each age group and gender. This is supposed

to be an ideal sample in terms of basic respondent classification for

representing Middlesex University students in whole.

Age

Frequency Percent Valid Percent Cumulative

Percent

Valid 16-20 70 17.0 17.0 17.0

21-24 144 35.0 35.0 51.9

25-28 132 32.0 32.0 84.0

28+ 64 15.5 15.5 99.5

28.00 2 .5 .5 100.0

Total 412 100.0 100.0

Gender

Frequency Percent Valid Percent Cumulative

Percent

Valid Male 228 55.3 55.3 55.3

Female 184 44.7 44.7 100.0

Total 412 100.0 100.0

Cronbach's Alpha

Cronbach's Alpha Based

on Standardized

Items N of Items

.669 .685 5

Table 4.3: Profile of respondents


56

Nearly 70% of the respondents belonged to the age group of 21-28. There

were 55% male and 45% female respondents.

4.4 Descriptive Analysis:

It is necessary to check if any unacceptable or unexpected value has been

entered in to the data file during data entry (Pallant, 2005). For this purpose,

all the variables of the data were inspected by the frequency of responses. It

was made sure by the researcher that no false values went into the data

sheet at the time of manual data entry. The descriptive analysis are mostly

univariate statistics and visual tables and graphics like frequency distribution,

percentages, graphs and charts were used to answer the research questions

up to a certain extent.

The set of research questions within Objective 1 and Objective 2 are primarily

explored within the descriptive analysis.

The research objective 1 is to know the level of activity of the respondents on

Facebook. Figure 4.1 shows the range of number of Facebook ‘friends’ of

respondents and ‘likes’ given to ‘Pages’ of various brands. The number of

connections is useful insight into a Facebook ‘Profile’ and gives an idea of

level of activity on Facebook. It shows that very few respondents have less

than 101 connections with friends and brands. Also other observation is that

highest frequency of number of ‘likes’ is 101-150, means connections with

brands tend to be lesser than the number of friends on an average. Figure 4.2

shows the frequency of interaction of respondents with their connections in a

pie chart.


57

This shows that the interaction with friends is mostly very frequent, frequent

or averagely frequent and interaction with brands is more in range of being

average rather than very frequent. This implies that there is significant

participation of the respondents of Facebook. The overall summation is that

they tend to be proactive on Facebook and there are potentially considerable

interactions going on with friends and brands.

Research objective 2 is to find out the current brand experience of the

respondents with their smartphone brands. 128 respondents used Apple, 98

FBProfileFriends

201-250+151-200101-15051-1000-50

Freq

uenc

y

200

150

100

50

0

FBProfileFriends

FBProfileLikes

201-250+151-200101-15051-1000-50

Freq

uenc

y

250

200

150

100

50

0

FBProfileLikes

Figure 4.1: Range of number of Facebook Profile ‘Friends’ and ‘Likes’

very

frequently

frequently

average

rarely

very rarely

InteractionBrands

Figure 4.2: Interaction with Friends and Brands

very

frequently

frequently

average

rarely

very rarely

InteractionFriends


58

used Android, 86 used Blackberry, 54 used Nokia and 46 used other brands

of smartphone and they have had a varied experience and satisfaction with

their brand.

Table 4.4 shows the crosstabulation of smartphone brands and the problems

faced by the respondents and the number of times they visited the service

website of the brand. It shows harmonic responses in terms of number of

times problem was faced corresponds to the number of times the visit was

made to website for services. Figure 4.3 shows the attitude of the

respondents towards following brands on Facebook.

Table 4.4: Brand Experience – Problems and Service website visits


59

This implies for the brands that customers are reaching them quite frequently

for solving any issues with smartphones.

This runs in favour of launching an

application as it would reach customers

on Facebook (quiet an aim of Social

CRM) rather than customers reaching

them giving a possibility of positive shift

in their attitudes towards brands.

The favourability of changing their brand

was the last aspect of brand experience

to be explored in Figure 4.4 which

shows that more than 50% of the

respondents were either ‘likely’ or ‘very

likely’ to change the brand of their

smartphone on the next purchase. This

implies for the manufacturers that any investment made in attempt of

enhancing brand loyalty would give good returns.

Table 4.5 shows the descriptive statistics of the remaining variables which are

aimed towards exploring the answers to research question of objectives 3-6.

already

given "like"to

the page

extremely

like

like

neither like

nor dislike

dislike

BrandPageLike

Figure 4.3: Attitude towards socialising with the Brand.

very likely

likely

do not know

unlikely

very unlikely

BrandChange

Figure 4.4: Switching Probability

Table 4.5: Descriptive Statistics of other variables


60

For each of the variable, the mean is shown on a five point scale.

- The overall attitude of the respondents towards installing the Facebook

CRM Application lies towards positive (M=3.4) side and they are likely

to install the brand’s application with moderate dispersion around

mean. (SD=1.3).

- The perception of usefulness of the Facebook CRM Application is

towards useful (M=3.3) with moderate dispersion around the mean.

(SD=1.25)

- The brand image (attitude towards the brand) is on the better side

(M=3.65) with low dispersion from the mean. (SD=0.9)

- It is likely, (M=3.55) the chance of the respondents feeling more

socially connected (increase in the perception of the social presence)

as an effect of introduction of Facebook CRM Application with low

scattering of the responses from the mean. (SD=0.83).

- It is likely, (M=3.7) that the satisfaction with the brand will increase

depending upon the perceived usefulness of the Facebook CRM

Application with low dispersion of the responses from the mean.

(SD=0.88).

- It is likely, (M=3.67) that the trust on the brand will increase depending

upon the perceived usefulness of the Facebook CRM Application with

low dispersion of responses from the mean. (SD=0.90).

The descriptive statistics tend to provide useful information in answering the

research questions, but the descriptive are not sufficient to know the degree

of statistical significance.


61

4.5 Correlation Analysis:

Bivariate correlation was used to determine the strength and directions of the

relationship between two variables. It is necessary to establish relationship of

variables using Pearson correlation factor (r) before testing hypotheses (Hair

et al., 2006). Pearson correlation factor (r) is considered to be very strong if it

lies between 0.81-1.00, strong if it lies between 0.61- 0.80, moderate if lies

between 0.41-0.60, weak if it lies between 0.21-0.40 and inexistent if it lies

between 0.00-0.20 (Hair et al., 2006).

Table 4.6 shows the correlation of ‘the likeliness/possibility of installing the

brand’s application’ with ‘application usefulness’, ‘improving in Brand Image’

and ‘increasing perceived social presence’. The value of r is 0.576 (strong

positive correlation), 0.221(moderate positive correlation), and 0.132 (no

correlation) respectively for the three variables, with N=412 and significance

level p < 0.0005 for each case.

BrandApp

Install App

Usefulness AppEffBrand

Image AppEffSocialPresence

BrandAppInstall Pearson Corr.

1 .576(**) .221(**) 0.132(*)

Sig. (2-tailed) .000 .000 .480

N 412 412 412 412

AppUsefulness Pearson Corr.

.576(**) 1 .327(**) .019

Sig. (2-tailed) .000 .000 .694

N 412 412 412 412

AppEffBrandImage Pearson Corr.

.221(**) .327(**) 1 .273(**)

Sig. (2-tailed) .000 .000 .000

N 412 412 412 412

AppEffSocialPresence

Pearson Corr.

0.132(*) .019 .273(**) 1

Sig. (2-tailed) .480 .694 .000

N 412 412 412 412

Table 4.6: Pearson Correlation factors

Correlation is significant at the 0.01 level (2-tailed). *.Correlation is significant at the 0.05 level (2-tailed).


62

Table 4.7 shows the correlation of ‘perceived usefulness of the service

delivered with the Facebook CRM Application’ with the ‘increase in

satisfaction with the brand’ and ‘increase in trust on the brand’. The value of r

is 0.531 (strong positive correlation), 0.675 (strong positive correlation),

respectively for both the variables, with N=412 and significance level p <

0.0005 for each case.

4.6 Regression Analysis:

To further determine the statistical significance and the predictive powers of

the independent variables on the dependent variables, the multiple regression

analysis was used. Multiple regression analysis helps in achieving this by

letting researcher to test the proposed hypotheses.


perceived usefulness of the delivered service by Facebook CRM application.

Beta coefficient positive (0.576), and p < 0.05 indicates strong significant

contribution and H1 is accepted.

AppUsefulness EffSatisfaction EffTrust

AppUsefulness Pearson Correlation

1 0.531(**) 0.675(**)

Sig. (2-tailed) .000 .000

N 412 412 412

EffSatisfaction Pearson Correlation

0.531(**) 1 .471(**)

Sig. (2-tailed) .000 .000

N 412 412 412

EffTrust Pearson Correlation

0.675(**) .471(**) 1

Sig. (2-tailed) .000 .000

N 412 412 412

Table 4.7: Pearson Correlation factors


63

H2: Introduction of Social CRM/

Facebook CRM will have a

positive effect on Brand Image of

the smartphone brand. Beta

coefficient positive (0.221), and p

< 0.05 indicates strong

significant contribution and H2

is accepted.


Facebook CRM will have a

positive effect on the perceived

social connection of smartphone

users with their peers. Beta coefficient positive (0.058), and p > 0.05 (0.372)

that indicates no significant contribution and H3 is rejected.

H4: Perceived usefulness of the

e-service delivered by the

Facebook CRM application of the

smartphone brand will have a

positive effect on the satisfaction

of smartphone users with their

brand. Beta coefficient positive

(0.119), and p (0.033) < 0.050

indicates significant

contribution and H4 is accepted.


application of the smartphone brand will have a positive effect on the trust of

Table 4.8: Regression Analysis,

For testing Hypotheses 1-3

Table 4.9: Regression Analysis, For testing Hypotheses 4-5


64

the user on his/her smartphone brand. Beta coefficient positive (0.068), and p

> 0.05 (0.171) that indicates no significant contribution and H5 is rejected.

4.7 Summary:

This section summarizes the data analysis techniques used to find out the

answers to the research questions related to the aim of the research. The

reliability test is used to check the reliability of the scales used to measure the

constructs. It is followed by the descriptive analysis that gives the answers to

the research questions which fall within the first two aims of the research viz.

Level of activity of Middlesex University students on Facebook and the

smartphone brand experience of the respondents. It also gives the descriptive

statistics of the remaining variables used to measure the effect of introduction

of Social CRM (Facebook CRM Application here) on the brand loyalty.

Further bivariate correlation analysis explores the strength and direction of

the relationship between the variables. Finally multiple regression analysis is

used to check the statistical significance of the independent variables on the

dependent variables by testing the proposed hypotheses.

Chapter 5: Conclusion and Recommendations

65

5.1 Introduction:

This chapter aims to establish the effectiveness of the introduction of Social

CRM (Facebook CRM Application in this case) on brand loyalty in the UK

smartphone market (Middlesex University students in this case) and find

implications for the smartphone brands whether to invest in Social CRM

systems with an aim of establishing and maintaining brand loyalty of their

existing customers. The chapter starts with the conclusions to the previously

executed descriptive analysis, conclusion to the correlation test for

relationships (direction and strength of the relationship) between the variables

of the proposed ‘Model of Social CRM –Brand Loyalty’ model, followed by the

conclusions to the hypotheses testing regression analysis on the variables of

the same model.

5.2 Conclusions to analysis:

5.2.1 Conclusions to descriptive analysis.

Questions from Objective 1: Level of activity and interaction on Facebook.

More than 300 out of 413 respondents have more than 100 friends and more

than 250 of the respondents have more than 150 friends. Considering that

average Facebook user has 130 friends1, the number of connections of the

target market is quiet high. The respondents have fair number of connections

with the brands as well as more than 350 respondents are connected with

more than 50 brands on Facebook. The general tendency of the respondents

1 http://www.facebook.com/press/info.php?statistics

CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS



66

of interacting with ‘friends’ and ‘pages’ is strongly towards frequent side

(M=3.75 and sigma 0.7 for friends and M=3.4 and sigma 0.8 for pages).

Question from Objective 2: Brand Experience with their smartphone brands.

128 respondents used Apple, 98 used Android, 86 used Blackberry and 54

used Nokia smartphones and they have varied experiences and satisfaction

with their brands. More than 52% respondents were likely to change

smartphone brand on next purchase. Only 94 respondents never visited the

service website of their brand and 85% of the respondents either already

follow their brand on Facebook or will like to follow their brand on Facebook.

The overall attitude of the respondents towards installing the Facebook CRM

Application lies towards positive (M=3.4) side and they are likely to install the

brand’s application.

Objective 3: What is the perceived usefulness of service delivered by

Facebook CRM Application?

Evidence: The perceived usefulness of the Facebook CRM Application is

towards high (M=3.3).

Conclusion: Respondents perceive the Facebook CRM Application as

useful.

Objective 4: What will be the Effect of Facebook CRM Application on Brand

Image?

Evidence: The brand image (attitude towards the brand) is on the better side

(M=3.65).

Conclusion: There is a strong chance of improvement of brand image.


67

Objective 5: What will be the effect of Facebook CRM Application on

perceived social presence?

Evidence: It is likely, (M=3.55) the chance of the respondents feeling more

socially connected.

Conclusion: Increase in the perception of the social presence as an effect of

introduction of Facebook CRM Application.

Objective 6: What is the effect of perceived usefulness of the Facebook CRM

Application, on Satisfaction with and Trust on the brand?

Evidence: It is likely, (M=3.7) that the satisfaction with the brand will

increase and It is likely, (M=3.67) that the trust on the brand will increase.

Conclusion: The perceived usefulness of the service delivered by Facebook

CRM Application has a strong chance to increase satisfaction and trust on the

brand.

5.2.2 Conclusions to tests of relationship between variables.

Correlation analysis was carried out to determine the strength and direction of

relationship between the following variables

- ‘Attitude toward the introduction of the application’ with ‘application

usefulness’, ‘Brand Image’ and ‘Perceived Social Presence’

- ‘Application usefulness’ with ‘satisfaction’ and ‘trust’.

As shown in Table 5.1 there is no relationship between attitude towards the

application and the perceived social presence, moderate positive relationship

between attitude towards application and brand image. All other variables had

strong positive correlation with each other.


68

Variables Evidence Conclusion

Attitude towards intro of

app/Application

usefulness

r=0.576, N=412,

p<0.0005

Strong positive correlation

between attitude towards app and

application usefulness.


app/ Brand Image

r=0.221, N=412,

p<0.0005

Moderate positive correlation

between attitude towards app and

brand image.


app/ Perceived social

presence

r=0.132, N=412,

p>0.0005

No correlation between attitude

towards application and perceived

social presence

Application

usefulness/Satisfaction

with brand

r=0.531, N=412,

p<0.0005


between application usefulness and

satisfaction with the brand.

Application usefulness/

Trust on brand.

r=0.675, N=412,

p<0.0005


between application usefulness and

trust on the brand.

5.2.3 Conclusions to tests of relationship between variables.

After exploring the strength and direction of relationship between independent

variable (attitude towards brand) and dependent variables (perceived

usefulness, brand image and perceived social presence), the multiple

regression analysis gave the following result and conclusions for the test of

hypotheses.

The table shows the hypothesis, evidences and conclusions for the five

hypotheses from which H1, H2 and H4 were accepted and H3 and H5 were

rejected.

Table 5.1: Conclusions to Correlation tests.


69

Hypothesis Evidence Conclusion


Facebook CRM will have a positive

effect on perceived usefulness of the

delivered service by Facebook CRM

application.

Beta coeff.

+ve (0.576),

and p < 0.05

(0.000)

Accepted



effect on Brand Image of the

smartphone brand.

Beta coeff.

+ve (0.221),

and p < 0.05

(0.000)

Accepted



effect on the perceived social

connection of smartphone users with

their peers.

Beta coeff.

+ve (0.058),

and p > 0.05

(0.372)

Rejected

H4: Perceived usefulness of the e-

service delivered by the Facebook

CRM application of the smartphone

brand will have a positive effect on the

satisfaction of smartphone users with

their brand.

Beta coeff.

+ve (0.119),

and p < 0.05

(0.033)

Accepted

H5: Perceived usefulness of the e-

service delivered by the Facebook

CRM application of the smartphone

brand will have a positive effect on the

trust of the user on his/her

smartphone brand.

Beta coeff.

+ve (0.068),

and p > 0.05

(0.171)

Rejected

Table 5.2 Conclusions to Hypothesis testing.


70

5.3 Conclusions to the Study Aim.

- Introduction of Social CRM/ Facebook CRM will have a positive effect on

perceived usefulness of the delivered service by the brand.

- Introduction of Social CRM/ Facebook CRM will have a positive effect on

Brand Image of the smartphone brand.

- Facebook CRM Application will have no effect on the perceived social

presence.

- Perceived usefulness of the service delivered has a positive effect on the

satisfaction with the brand and no effect on trust on brand.

- The satisfaction with a brand has a strong positive relation with the trust

on the brand.

Three positive outcomes of introduction of Social CRM are the increase in

perceived usefulness of the services delivered by the brand, better brand

image and increase in satisfaction with the brand. Satisfaction has a positive

relation with trust and both have a strong effect on the brand loyalty. The

exact effect on brand loyalty is not calculated. The overall predicted

contribution of Social CRM will be moderately positive on the Brand Loyalty.

5.4 Implications

The adjacent aim of this study was to determine for the smartphone brands

serving customers of UK, whether or not they should invest in developing

Social CRM systems with an aim to create and maintain brand loyalty. As the

effect of Social CRM is positive on brand loyalty in the smartphone market it

is definitely going to be worthy for brands seeking loyalty to invest in Social

CRM systems development. Moreover the level of connection and activity as


71

determined in the descriptive statistics for UK customers is much higher than

the average level of activity on Facebook. This further reinforces the cause of

serving the customers at their place of presence and reaching them straight

through social media than pulling them to the service website.

5.5 Limitations:

The study was carried out on only one form of social media Facebook and not

all the social media’s. Other social media might have slightly different

implications.

The study was carried out on only Middlesex University students, that limits

the respondents geographically and the level of activity on Facebook and

level of brand following is slightly subjective to the social media reference

groups.

As the study was focused on youngsters, and social media followers, this

model will have no effect on a person who does not use any social media. So

overall aim of brand loyalty has a multiplying factor of the ratio of the people

in target market who are on social media.

5.6 Directions for future research:

This study can be extended to all forms of social media and not just

Facebook. It does not have implications only for smartphone brands, but can

be carried out on other market sectors as well. Plus further focus could me

make on the social media perspective of non users and elders after

introduction of Social CRM systems could be an interesting area of study.


72

5.7 Summary:

This section first draws conclusion to the descriptive statistical analysis. Then

conclusions are drawn to the results obtained in the correlation analysis which

expressed the direction and strength of relationship between various

variables. Then conclusions are finally drawn for the results of the multiple

regression analysis for hypotheses testing and accepted hypotheses meant

positive contribution to the strength of the model. These outcomes were then

transferred to be the conclusions of the overall research aim. Based on the

findings, implications are drawn for smartphone brands of UK. The limitations

of the research are followed by the directions for future research.

Appendix 1:

73

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Final Thesis