Influence of Online Communication in the Grooming and Cosmetics Retail Industry A Small Scale Pilot Study with Chinese Consumers

Transcription

1 Influence of Online Communication in the Grooming and Cosmetics Retail Industry A Small Scale Pilot Study with Chinese Consumers Candidate: Miss Yun (Ring) Xu Research Student School of Management University of Southampton SO17 1BJ Supervisors: Dr. Lisa Harris and Dr. Paul Harrigan from University of Southampton Stage of the Doctoral Research: Early, Beginning of Second Year Summaries of This Research The conceptual domain: The main theoretical underpinning guiding this research encompasses marketing communication models, consumer behaviour in relation to Game Theory and online narrative characteristics. The methodological domain: This research adopts mixed methods with two phases: induction phase and deduction phase. Depth interview is conducted in the induction phase to propose a model of communication and generate hypotheses and online questionnaire survey is carried out in the deduction phase to test the hypotheses and modify the model. The substantive domain: The main objectives of the research encompass (1) the influence of online communication between consumers on consumers purchasing behaviour, (2) the influence of online communication between brands and consumers on consumers purchasing behaviour, and (3) the online communication model applicable in the grooming and cosmetics industry and the variables that influence the model. As the communications happen online, all the observations and questionnaire surveys will take place online with interviews carried out through Skype or face-to-face where applicable. 1

2 Influence of Online Communication in the Grooming and Cosmetics Retail Industry A Small Scale Pilot Study with Chinese Consumers Introduction Given the rapid development of technological innovation, the marketing sphere is taking substantial changes (Kitchen and Burgmann, 2010). As the Internet goes into the Web 2.0 era, communication between people has never been more interactive. The interactivity also brings intimacy between consumers and between brands and consumers that never happened before. The rapid growth of the Internet and the advent of various Web 2.0 applications enable an ordinary consumer to communicate with and influence a mass audience (Daugherty et al. 2008). Brands in many industries have captured the technological waves of marketing and adopt social media marketing approaches (Hoffman and Fodor, 2010). Many brands in the grooming and cosmetics industry have adopted themselves to the Web 2.0 world and many emerging value brands such as Eyes Lips Face (E.L.F.) have made a fortune by playing the social media well. A new generation of celebrities occur on the Internet and people call them make-up artist gurus, beauty gurus, or skin-care gurus. These gurus distribute product reviews online and become advocates of product/service. Online communications involving these gurus or simply between average consumers have been taken more and more seriously by brands marketing department. This research is a project that investigates the mechanism of online communication among consumers and between consumers and brands in the grooming and cosmetics industry. The main objectives of the research encompass (1) the influence of online communication among consumers on consumers purchasing behaviour, (2) the influence of online communication between brands and consumers on consumers purchasing behaviour, and (3) the online communication model applicable in the grooming and cosmetics industry and the attributes that influence the model. This paper is a presentation of the results of the small scale pilot study on Chinese consumers in the late half of the first year of this PhD research. Literature Review Thanks to the proliferation of the Internet, digital social networks are becoming indispensable in almost every aspect of people s lives. The growth of attention in digital marketing and the adaptation of digital waves in marketing become a focus of researchers and practitioners in marketing (Preibusch et al cited in Yilmaz et al. 2010). Holland and Naude (2004) also posit that the use of information system is now embedded in organisation that there should be a better way of conceptualising marketing as an information-handling problem rather than merely transaction-based or relationship-driven problem. Web 2.0-enabled social media can be used to do what traditional marketer do in paper and media -- pushing information to persuade prospects to consume (Fagerstrom and Ghinea 2009). Social media is also capable of doing what is beyond the traditional marketing approaches reach interactive communication and quick spreading in social networks. Marketing communication innovators propose the exploitation of such channels as means of establishing on-going dialogue with customers and prospects (Economist 2006). Social media marketing has been developed rapidly in a variety of forms including but not confined to banner advertisements, ethnographic information scanning, advertisements and updates subscription, online consumer forum, and social networking sites such as 2

3 Facebook, Twitter, YouTube, E-blogger and many others. Network-based marketing improves response (Hill, Provost and Volinsky 2006). Corollaries of this achievement are that companies, which take advantage of social media in marketing and therefore attract more clients, have higher possibility to occupy more market share, and that social media applications can be a resolution for marketing managers who are grappling with the emerging problem of how to maximize the chances of the client segments buying from one particular brand rather than from a competitor. Except for the function of fast message delivery to mass audience, social media marketing frees consumers from their traditional passive roles as receivers of marketing communications (Hoffman and Novak 1995) and gives them the power to be involved in and perhaps more power than the advocators of marketing communications to control direction in which the communication goes. Kolter et al.(2009, p.399) suggested that new approaches of marketing communication need to be shifted to focus more on programmes which could build closer relationship with customers. User Generated Content belongs to those programmes. Blogs written by travellers about a hotel is more credible than the remark by the hotel itself or hotel ranking websites European surveys indicated that blogs 'are second only to newspapers as a trusted information source' (Brown, Broderick, and Lee 2007, p.16). With the value of digital marketing being recognised by practitioners and studied by researchers, consumer behaviours in this particular communication platform have caught researchers attention as well. Two binary modes of behaviour which belong to Game Theory are connected to consumer behaviour in the dot-com era cooperate and defect (Anderson 2010). Industrial examples proved that not all the consumers embraced the new trends in business (Anderson 2010). Table 1 demonstrates the advertising response payoff matrix which can be used as a fundamental tool to judge the marketing techniques in social media. Table 1: The advertising response payoff matrix, retrieved from Anderson 2010, p.39. Consumer: Respond to advertising Consumer: Ignore advertising Marketer: Increase exposure Marketer: Decrease exposure The marketer and the customers have both opposing interests -- each wants to maximise their return on the deal -- and mutual ones, as both hope to make a deal in the first place (Anderson 2010). Therefore, there are two points of equilibrium, the 1-1 lose-lose situation in the upper right quadrant and the 4-4 win-win situation in the lower-left quadrant. Decreased exposure but increased response means fewer amount of but more relevant messages to the consumers. It is an upward spiral in which consumers are more likely to respond to highly relevant messages and in return the marketers get better payoff. Therefore, this has been shifted from what Anderson calls a one-way conquest to a two-way contest (Anderson 2010, p.4). As the psychological path changed to adapt to the digital world, model of communication sure have some changes to fit in the digital world. Marketing communication is partly an attempt to create and sustain a dialogue with various audiences. As communication is the process by which messages are delivered to individuals, each participant in the communication bears a role as an advocator, a receiver, or both. As media develop, the communication formats have taken radical changes. The first and fundamental model of communication is the linear model of communication developed by Wilbur Schramm (1955, Figure 1). This model failed to 3

4 represent all kinds of communication accurately concerning social and relationship dimensions and the impact of interactive communication. As the delivery channel developed, the linear model of communication had been replaced by the influencer model of communication, which depicted that information was distributed from message source to particular groups of people whom other members of the audience refer to for guidance (Fill 2011, p.39, Figure 2). Though the influencer model of communication accounted for individual s participation in the communication process, it still excluded social activities implicitly in the process. As a more advanced model, the interactional model of communication proposed by Fill (2011, pp.41-42) demonstrates how the variety of influences acting during the communication process between individuals in a social context (Figure 3). The adoption of dialogue as the basis for communication changes the marketer vision of the audience (Fill 2011). The importance of participations in the communication is emphasised in the interactional model. Level of interactivity together with audience involvement that the communication encourages determines the success of a dialogue. Research Questions and Research Methodology Consumers reads and have access to more information than ever before in online communities. Messages they receive online, together with the one received offline, guide them in making judgements about accuracy and credibility of the message, the brand and customer expectations (Li and Zhan 2011). It is crucial for marketers to monitor closely the influences that the online communications may have, and utilise it so as to earn greater share of customers purchases (Kotler and Armstrong 2011, pp.44-46). Though online communities and online communications have been the focus of researchers, online communication s influence in grooming and cosmetics industry is barely touched and different levels of 4

5 influence of communication upon consumers hasn t been studied. Therefore, the emerging research questions are: RQ1. How does online communication between consumers influence consumers purchasing behaviour? RQ2. How does online communication between brands and consumers influence consumers purchasing behaviour? RQ3. How does the level of influence between consumers and between brands and consumers differ? Marketing research is mostly applied research, which is used to explain or explore a strategy or to reduce uncertainty in management decision making (McDaniel and Gates 2010, p.10). The nature of marketing research decides that it should be somewhere in the middle of the whole spectrum with positivism on one extreme and social constructivism on the other. Objective methods and subjective methods are both broadly used in marketing research in order to neutralise the drawbacks of each other for the purpose of bringing the optimal results. In this pilot study, mixed methods are applied and two phases of study carried out. Qualitative interviews with online gurus in the grooming and cosmetics industry were conducted in the first stage, followed by the deduction process where online questionnaire surveys conducted through online social networks. Main Findings All together 20 in-depth interviews were carried out and 47 complete and valid questionnaires were used in analysing the data. As in this pilot study all subjects were Chinese, other cultural groups will be included in the whole research. A model of online interaction was proposed in the induction phase and modified in the deduction phase (Figure 4). As shown in the model, the online communication between brands and individual consumers (opinion followers) is still generally one way message delivery bearing weak influence over the consumers purchasing behaviour. The influence level between opinion leaders (gurus) and opinion followers (average consumers) is strong and the communication among average consumers is in fact the most influential one according to the results. Figure 4. Online interaction model in the grooming and cosmetics industry Consumers regard social media as a pool of information source. Personal need of making a purchase of a product/service is the prerequisite of making a query of information online. Consumers are more interested in pragmatic messages in supporting them to make the judgement of purchasing or not. Online discussion has the highest credibility in comparison with messages distributed by brands or information created by opinion leaders. Negative messages created by average consumers (opinion followers) have a significant impact on others purchasing behaviour. The main themes of online communication involved in grooming and cosmetics industry are reviews and how-to tutorials and messages in these two 5

6 types are most often viewed and replied. The implication for the message distributors is simply that the higher proportion of these two themes they deliver, the more attention they get. Also, there is proved to be a significant correlation between the frequency the followers view the content created by opinion leaders and the probability of them making a purchase. Also the frequency that the followers view the content distributed by opinion leaders are positively correlated to the source credibility. Therefore, the more credible the opinion leaders are the more likely the followers will be persuaded by the message. It is important then for marketers to first identify opinion leaders whose perceived credibility is high and let them be the spokesperson for the brands and the products. Also, monitoring the discussion by opinion followers and managing the direction of discussion with caution is necessary given that the interaction among consumers is most influential in shaping their perception of product positioning. 6

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