2. Literature review
2.2. The theoretical foundations of consumer engagement
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2. Literature review 2.1. Overview
Chapter Two provides a relevant literature review in the area of focus. This chapter describes the theoretical foundations of consumer engagement. It also reviews the theories and concepts that, according to many scholars, provide an underpinning for the development of consumer brand engagement. It also provides an overview of those theories, which include: relationship marketing, consumer culture theory and service-dominant logic including an overview of
previous research in the marketing literature and concepts developed by those studies. It highlights the aspects of consumer engagement in the research’s context of mobile service
provider brands. Finally, it provides details of the research context of Taiwanese mobile service sector and related industry background.
2.2. The theoretical foundations of consumer engagement
Throughout the past decades marketing focus has been moving away from the product and getting closer to the consumer, where the relationship, and not the transaction is emphasized.
The emergence of the relationship marketing perspective in the 1980’s brought a new popular paradigm to marketing that has highlighted the role of services marketing and has been expansively researched in the following decades. In recent years, the term customer engagement
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has gained popularity and been thoroughly researched. Brodie, Hollebeek, Juric, and Ilic (2011) view the foundations of the emerging consumer engagement concept in relationship marketing, consumer culture theory and the newly formulated marketing dominant logic that “addresses interactive experience and value co-creation within marketing relationships.” namely service-dominant (S-D) logic. However, Vivek et al. (2012) highlight the lack of focus on new or potential customers under the relationship marketing perspective. Hence, the incorporation of consumer engagement and S-D logic will allow brands to enrich their marketing perspective to engage both current and potential customers (Brodie et al., 2011b).
2.2.1. Relationship marketing
Relationship marketing refers to ‘attracting, maintaining, and enhancing customer relationships’
(Berry, 1983). In their study, Morgan and Hunt (1994) indicated that ‘relationship marketing
refers to all marketing activities directed toward establishing, developing, and maintaining successful relational exchanges.’ The domain encourages companies to build long lasting
relationships and goals with customers, rather than focusing on a short term oriented transactions (Kotler 1992). Relationship marketing factors that describe the interactions between the company and consumers, and describe the relationship quality between them, include trust, satisfaction, and commitment. In his paper, Berry (1991) declares that trust ‘may
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be the single most powerful relationship marketing tool available to a services company.’
Morgan and Hunt (1994) emphasize that ‘commitment of exchange partners is the key to achieving valuable outcomes’, whereas brand loyalty, on the other hand, is most often mentioned as a consequence of relationship quality factors.
2.2.2. Consumer culture theory
Next to relationship marketing, consumer culture theory (CCT) is another broad area within the
consumer behavior study field. This particular consumer research ‘addresses the sociocultural, experiential, symbolic, and ideological aspects of consumption’ (Arnould & Thompson, 2005).
It provides researchers with an academic foundation about consumption and marketplace
behaviors (Arnould & Thompson, 2005). The focal study about CCT revolves around ‘hedonic, aesthetic, and ritualistic dimensions’ of consumption and possession practices (Arnould &
Thompson, 2005). The theory sees the theme of consumers as identity seekers, who by participating in value co-creation of products and services available in the marketplaces create a version of self. Value co-creation in the cultural context has been heavily investigated in recent years as it has been balancing on the edge across disciplines of CCT, S-D logic and practice theory (Belk et al., 2013). Also, past studies associated with the CCT have included
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many core constructs underpinning consumer behavior, including brand loyalty (McAlexander et al. 2002) and consumer involvement (Coulter et al., 2003).
2.2.3. S-D logic
Vargo and Lush (2004) took a different approach to define the customer participation in value co-creation by providing the conceptual framework to service-dominant logic, further referred to as the S-D logic. The authors argue for a shift from the traditional goods-oriented marketing approach toward a new dominant logic, where the service ‘identifies the logic of interactivity’
and intangible resources and relationships are central (Vargo and Lush, 2004; 2008). Vargo and Lush (2004, p.6,12) argue that
‘Service-centered dominant logic implies that value is defined by and co-created with the consumer rather than embedded in output. (…) It implies that the goal is to customize offerings, to recognize that the consumer is always co-producer, and to strive to maximize consumer involvement in the customization to better fit his or her needs.”
As such, in the service-dominant view of marketing both customers and relationships are central.
Based on the marketing relationships arising from multiple interactions between the customers and other actors, such as the firm, stakeholders, or other customers, the authors (Vargo and Lush, 2004; 2008) have proposed ten foundational premises, later referred to as FPs, which create the framework and help in understanding the new dominant logic. The ten FPs are:
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FP1 Service is the fundamental basis of exchange
FP2 Indirect exchange masks the fundamental basis of exchange FP3 Goods are a distribution mechanism for service provision
FP4 Operant resources are the fundamental source of competitive advantage FP5 All economies are service economies
FP6 The customer is always a co-creator of value
FP7 The enterprise cannot deliver value, but only offer value propositions FP8 A service-centered view is inherently customer oriented and relational FP9 All social and economic actors are resource integrators
FP10 Value is always uniquely and phenomenologically determined by the beneficiary Among the above ten foundational premises, four premises, namely FP 6, 8, 9, 10 are central to providing the grounds and supporting the development of consumer engagement concept (Brodie et al., 2011). Firstly, as implied by FP6, within the service-centered marketing view highlighting the interactive consumer/brand relationships and “continuous-process perspective, in which separation of production and consumption is not a normative goal,” “The customer is always a co-creator of value” (Vargo and Lush, 2004; 2008). Secondly, FP8 implies that both customer and relationship are the focal points of the exchange process. Thirdly, FP9 implies that the context of value creation lies within networks, which act as the resource integrators.
Finally, FP10 emphasizes the experiential nature and idiosyncratic determination of value co-creation.
Concurrently, Pralahad and Ramaswamy (2004) argue that jointly created value, where customer actively participates in creating unique experiences will determine firm’s success in gaining and upholding competitive advantage in the new market reality, where the customer
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and his interactions with the firm, and not the product are the focal point of value creation and extraction.