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CHAPTER 1 INTRODUCTION
1.1 Background and Motivation
In the current era of service economy, there are three important trends (Omar &
Francis, 2013) that the new media have changed how CEOs and CMOs’
marketing strategy from traditional media in the dynamic digital marketing as follows: (a) Primacy of the Customer Experience: As in a world of experiential goods and digital services, customer experience becomes primate as value is primarily created through the process of consumption and the experience through digital platform. (b) Distributed Co-Creation of Value: The way that value is created in the digital marketing become more complex. Vargo and Lusch (2004, 2008) brought up a new concept in the marketing field called service-dominant logic (SDL) and claimed that value now is co-created by not only firms but also customers and other stakeholders. (c) Continuous Sense-and-Respond Experimentation: The key changes in digital platforms with the proliferation of ubiquitous access, ease of capturing data, and digital services, will enable enterprises to engage in continuous sense-and-respond experimentation in ways they could not before.
First, for the trend on primacy of customer experience, there are more and more executives focusing beyond product quality and value as a driver of firm performance, and marketing scholars have begun to focus on customer-based metrics for measuring organizational performance (Forrester Consulting, 2008).
Researchers have proposed to measure the customer engagement behavior (CEB) (van Doorn et al., 2010), going beyond transactions, and may be specifically defined as a customer’s behavioral manifestations that have a brand or firm focus, resulting from motivational drivers. In today’s digital economy, actions of
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the focal firm and its customers are highly transparent and visible to customers of other firms. Over time, such cross-brand and cross-customer utilization of information in the public domain can affect the entire industry (van Doorn et al., 2010). Thus, engaged customers may play a very important role of monitoring firm performance and disseminating information to multiple stakeholders.
Customer engagement thus has consequences for many different stakeholders including the focal customer, the focal brand/firm, as well as other constituents.
Second, for the trend on distributed co-creation of value, Ramaswamy and Gouillart (2010) mentioned that new media could help accelerate the process of value co-creation, a valuable activity completed by two or more stakeholders (Sander & Stappers, 2008). The process of value co-creation can be categorized into four periods: design, analysis, development, and full launch (Hao et al., 2014). This study will focus on improving the design, analysis and development phases of value co-creation on the new media environment. New media are defined as websites and other digital communication and information channels in which active consumers engage in behaviors that can be consumed by others both in real time and long afterwards regardless of their spatial location (Hennig-Thurau al., 2010). Among all the media, the one this study will focus on will be search engine. A 2011 Pew Internet study (Purcell et al., 2012) found that about 59% of Internet users use search engines on a typical day. Thus we believe effort should be made on search engine to achieve the goal of value co-creation.
Third, for the trend on Continuous Sense-and-Respond Experimentation, there is a need of continuous and fast response service system to collect and react in the dynamic digital environment. The service system that this study will propose to catch the dynamical CEB change in new media reference to an engagement site mentioned in a US patent (Judd et al., 2012). The engagement
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site creates and sends electronic communications to customers and prospective customers, and publishes and store electronic communications. Through collecting CEB in multi-media constantly, marketers can then conduct the correct strategy to act on their targeted customer and thus bring deeper engagement level and help adjust the process of value co-creation.
1.2 Research Problem
In the new media era, the CEOs and the marketers will have to react to these three important trends, but the reality can’t match the trend exactly. A Yesmail and Gleanster's study (2013) found that 80 percent of consumer-facing companies don't understand their customers beyond basic demographics and purchase history. It reveals that though marketers think they know their customers well, they still lack the deep data insights that would enable them to develop personalized, relevant service in new media era.
We argue that focusing on problem of CEB that will close the gap in pursuit of the future trends as enlisted below. (1) CEB shortens the gap of Primacy of the Customer Experience: it focuses on customer’s behavioral manifestations which go beyond the transactional data and thus give more insight about customer’s experience. (2) CEB shortens the gap of Distributed Co-Creation of Value: Through CEB, customer and brand partners can contribute their resources within their networks (Nambisan & Baron, 2009) to co-create value with the focal firm. (3) CEB shortens the gap of Continuous Sense-and-Respond Experimentation: Through new media, constant collection of the CEB data can get the insight of the target customers so that firms can choose different strategy to react to the market.
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As our study will focus on the search engine of new media, the most relevant existing research about search engine marketing approaches are search engine optimization (SEO) techniques. Search Engine Optimization (Solihin, 2013) is the process of increasing the number of visitors to a website by achieving high ranking of the search results returned by a search engine.
Common SEO techniques can be categorized into four categories (Solihin, 2013):
Keyword research, Indexing, On-page, and Off-page optimization. Keyword research helps sites to maximize the click through rate by identifying the popular keyword trend and similarity of keyword with the products. Indexing makes sure the accessibility of a website to search engine spider. On-page optimization refers to the alteration of numerous on-page elements to help search engine spiders determine what the page is about and how it may be useful for users.
Off-page optimization refers to the link building process that influences how search engines rank a web page. As we review search engine optimizing approaches, we find that instead of focusing on CEB, marketers put their effort on maximization of page visit which is a minimum level of CEB since it’s the easiest way to measure and improve. For example by pursue the goal of CEB, the company can focus on the target audience’s interaction compared to putting lots of effort on high exposure advertisement or events. Also through the interpretation of CEB, company can get a deeper understanding of customers and thus choose the right strategy to constantly react. Thus we concluded our research problem as following:
(1) What are the factors to maximize customer engagement behavior through the search engine of new media and how does it influence engagement behavior?
(2) What service shall we provide to maximize the customer engagement level in search engine?
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1.3 Research Method
As we can see the gap under the search engine, there is lack of real application to react on CEB quickly and responsively with the brand partners. To design the innovated application, we choose to develop an engagement site to collect, analyze and stimulate the CEB of customers of which the idea comes from the US patent (Judd et al., 2012). In the origin patent, the engagement site includes only data from social media, forum and other customer-related data with email module and web content builder to engage with target customer. In this study, we restructure Engagement site to extend the brand partnership and realize it in three ways:
(1) Extending the value co-creation through brand partnership: Firms might benefit from building brand relationships with their brand partners, especially service-dominant firm (Merz & Vargo, 2009). Through identifying and involving the brand partners, our engagement site works not only for the customers but also design for brand partners. The engagement site through search engine perspective helps identify and disclose information about possible brand partners under the new media.
(2) Creating Engagement site services beyond email and web content builder:
Through extending the engagement site services, it helps marketers to further stimulate their customers’ CEB. The increment of Engagement site services have one big objective that is to help better engage with the brand partners to value co-create and be able to deliver the value to the targeted customers.
(3) Adjusting the engagement site services through CEB to achieve brand partners based optimization: Through collecting CEB not only from the firm’s website but also the engagement site, we can evaluate whether or not
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our co-creation value have been delivered and constantly react the CEB with close interaction with brand partners.
All in all, through development of engagement site we believe we can shorten the gap between future new media trend of primacy of customer experience, distributed co-creation value and continuous sense-and-response experimentation by cultivating and monitoring of CEB with brand partners.
1.4 Purpose and Contribution
The aim of this study is to develop a way to maximize the engagement level under search engine perspectives within the context of different related brand partners. In addition, our system will develop for each focal business to let them optimize CEB. There are two general purposes: one is to help the focal firm identify and involve their brand partners to value co-create and develop customer primacy services. The other one is to optimize the engagement level under the scope of brand partners.
Through developing the above purposes, our study will give two major contributions to management implications. First, through co-creation business could provide a more customer-centric service and bring more value to customers which in terms create the competitive advantage over its competitors.
Second, optimizing CEB in a stakeholders’ point of view help the brand create the impact not only responsive but also sustainable.
For example, there is a small business in service industry; it is pretty new and quite unknown to most of their customers. They decide to establish a marketing strategy which puts focus on identifying suitable brand partners to co-create their services and how to decrease the threshold of potential customers’
finding time to find their co-created service. And they may pay attention to keep
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the brand image consistent under the new media environment. Through co-creating with their service with brand partners and stimulating CEB in new media under our system, the firm can reduce their cost and time on identifying brand partners, delivering their co-create services, and measuring the consequence of the co-create services in terms of CEB.
1.5 Content Organization
In Chapter 1, we elaborate the current new media environment to provide an overall view of our research background, motivations and define the research problem and purposes.
In Chapter 2, which is the literature review section, we will discuss and try to find the theoretical support (e.g. CEB, CEB co-creation, engagement site, search engine optimization) that can help us define the specific objectives that are extended from Chapter 1 and build the knowledge base.
In Chapter 3, we get a bigger picture of iEngagement project through building the conceptual framework and its architecture. At the end of Chapter 3, we develop a scenario to give reader an idea of our system’s value.
In Chapter 4, we build a conceptual framework from the review and finding in the Chapter 2 and try to use information technology to develop a possible solution that can be realized. An engagement site of maximization CEB of brand partners-based will be introduced in detail.
In Chapter 5, we sum up the contribution of the study from the academic and the industrial point of view and the future work that will be developed.
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