Transcript Document

Advances in Relationship Marketing
Thought and Practice: The Influence
of Social Network Theory
Presented at the
Networks and Complex Systems
A talk series at Indiana University Bloomington
September 18, 2006
Constance Elise Porter, Ph.D.
Assistant Professor of Marketing
University of Notre Dame
Marketing focuses on the exchange
process, making it relational, by definition.
• Relationship marketing is a dominant
paradigm of marketing practice. (Dwyer, Schurr and Oh
1987; Morgan and Hunt 1994)
– It emerged in the B2B arena because the number of relationships
managed were smaller (e.g. B2B sales)
– Is is now dominant in the B2C arena via due to technology-laden
concepts such as “CRM and “One-to-One Marketing”
• Marketing researchers and practitioners seek
to understand relational behavior:
– Between firms and customers/consumers (traditional)
– Among customers/Among business partners (emerging work in
customer collaboration, customer/professional
communities/knowledge networks)
The fundamental premise of this
Because marketing is relational,
social network theory (SNT) helps to
advance marketing theory and
Discussion Topics
A Historical Perspective
How has SNT advanced relationship marketing
thought and practice?
How does the marketing perspective compare to the
sociological perspective?
What are the three key perspectives of SNT that have
influence marketing theory and practice?
How have researchers used these perspectives to advance
marketing theory and practice?
A Look at the Future
How do current trends reflect the importance of SNT to
marketing thought and practice?
How could social network theory enhance my investigation
of relationship marketing in virtual communities?
A Historical Perspective
Marketers use basic SNT concepts, but
questions and methods differ.
Points of Alignment:
Networks are socially connected actors (more than 2)
Resources (e.g. information) are transferred among actors in
a network
There is a flow of resources within the network
Points of Difference:
SN theorist (and early marketing researchers) seek to describe
individual actors and their relations/patterns of connections
Sociometric theory….Whole Network…Software tools (e.g. UCINET and KRACKplot)
Contemporary marketing researchers tend to examine specific
marketing outcomes related to influence in social networks
Psychometric theory…Sample/Ego-centered…SPSS/SAS for regression techniques
Centrality also is important to both, but
marketers apply the concept differently.
Social Network Theorists
• “Between-ness”
Marketing Applications
• Word of Mouth
– The frequency with which an
actor is intermediary to other
nodes and controls the flow
of resources
– Actors: opinion leaders,
gatekeepers/market mavens and
• Those who are likely to influence others
• Those who know and provide information
but have no influence
• Those who are likely to be influenced via
passive or active solicitation of info
– Profile of actors
• Knowledgeable, involved, confident, active
– Content
• Valence (positive or negative)
• Product attributes (new, important,
distinctive, risky)
– The number of actors with
whom an individual has a
direct connection
Diffusion of Innovations (borrowed
from Rogers) & New product adoption
Finally, marketers tend to take a
relational perspective of networks.
(exception: Hopkins, Henderson and Iacobucci 1995)
Relational Perspective
Positional Perspective
• focuses on the extent to which
all actors are interconnected
– Relations (strands):
• focuses on equivalence of
actors in a subgroup
based on social strata
content, direction and and strength
– Ties:
Weak/Strong based on frequency
of social contact, importance of
– Multiplexity
the number of relations in a tie
– Does not assume social
– Assumes structural
How has SNT advanced
relationship marketing
thought and practice?
The Most Popular SNT
perspectives used in Marketing
• The Structural Perspective
• The Socio-Economic Perspective
• The Socio-Cognitive Perspective
The Structural Perspective:
“The structure of relations drives marketing outcomes.”
• Typical Research Questions:
– How do relationships influence consumer choice of
brands, referral sources and information-seeking
– How do social networks influence behavior and
outcomes in an industrial marketing context
• Typical Methods
– Interviews and surveys (consumer marketing)
– Case studies, interviews, document analysis and other
qualitative methods
Typical Variables Examined within The
Structural Perspective
•Interpersonal Relations
•Strength of Tie
•Membership in a subgroup for one good
•Cosmopolitaness (out-network ties)
•Brand Congruence
•Brand Congruency for Multiple Brands
•Flow of Communication across subgroups
•Diffusion of Innovation
•Likelihood of Activation as a referral source
Findings based on the Structural Perspective
• Brand congruence exists within social cliques
– even for privately consumed products (Reingen et al 1984)
• Strong ties and Weak ties affect marketing
– Strong ties are more likely to be activate as a referral sources…
– …but consumers also actively seek information from weak ties in
situational conversation (Reingen and Kernan 1986; Brown and Reingen
• Individual influence in the buying systems in a
B2B context (Ronchetto, Hutt and Reingen 1989)
The Socio-Economic Perspective
“Utility maximization is enhanced by social ties”
• Typical Research Questions:
– Do social ties between buyers and sellers improve the
likelihood of a transaction?
– How does the value of information moderate the effect
of social structure on relationship outcomes?
• Typical Methods
– Surveys and simulations
Typical Variables Examined within the
Socio-Economic Perspective:
•Degree of Indebtedness to hostess
•Moral Hazard/Information Value
•Tie Strength
•Relational Embeddedness
•Knowledge Redundancy
•Likelihood of Purchase
•Willingness to communicate w/in network
•Information & Knowledge acquisition
•New Product/Process Creativity
•Speed of New Product Development
Findings based on the Socio-Economic
• Social tie strength increases likelihood of
transactions between buyer and seller (Frenzen
and Davis 1990)
– This effect is moderated by perceptions about potential
opportunism in WOM information exchanges (e.g. nonreciprocating behavior) (Frenzen and Nakamoto 1990)
• Weak ties are not that strong in B2B
– The more valuable the info, the less powerful is the weak
tie (Frenzen and Nakamoto 1990)
– Weak ties among horizontal partners are less powerful
than among vertical alliance partners. (Reindfleisch and Moorman
The Socio-Cognitive Perspective:
“Cognition mediates the effects of social relations.”
(Bansal and Voyer 2000, Gilly et al 1991, Houston et al. 2001, Ward and Reingen 1996)
• Typical Research Questions:
– What is the relationship between social structure and
cognitive structure?
– How do changes in social structure affect existing
social identity, social ties and beliefs?
• Typical Methods
– Interviews surveys, simulations and case studies
The Socio-Cognitive Perspective:
Typical Variables Examined
•Tie Strength
•Physical Distance
•Strata (Profession)
•Org Restructuring
•Group Cognitive Structure
•Subgroup Cognitive Structure
•Individual Cognitive Structure
•Expertise (sender and receiver)
•Business Unit Identity
•Manager Beliefs
•Info Seeking
•Purchase Decision Influence
•Efficient use of
•network resources
•Inertia of Social Structure
The socio-cognitive perspective inserts cognition
into the structural perspective, to better explain outcomes.
A Look at the Future…
Consumers and marketers are
engaged by social media.
• Blogs
– Over 50 million people read blogs (; Lenhart and Fox 2006)
– 27% of bloggers want to influence what other people think
– 29% of bloggers want to motivate others to take action
• Social Networking Sites
– MySpace hit #1 on web —29 billion pageviews during two weeks in July
2006..beating Yahoo and Google (…
– Facebook …over half of college students use
(Mark Chassman (Facebook), Carol Phillips (Brand Amplitude)—Jan 2006
• Virtual Communities
– 84% of Americans visit or obtain info from VCs …more than
participate in transactions online… (Horrigan 2001)…
Young consumers dominate the
use of social media.
(Forrester 2006)
• Younger consumers lead in cross channel use
– 54% of Gen Yers research online and buy offline
– Gen Xers also are more likely to have researched and
purchased a product online
– Gen Xers also dominate online shopping
• Younger consumers are:
– more likely to be influenced by “what’s hot/what’s not”
– more likely to read a blog
• Older consumers prefer face-to-face interactions
• Older consumers are more brand loyal.
Marketing researchers are reengaged with the sociological aspects
of consumer behavior.
• Using brand communities and
virtual customer communities
– Focus on fostering consumer relationships and
achieve relationship marketing outcomes
(Balasubramanian and Mahajan 2001; Devaraj, Porter and Sun 2006; Dholakia et al 2004;
Kozinets 2002; Muniz and O’Ginn 2001; Porter and Donthu 2004; Schouten and Koenig 2002)
Questions for future research
integrating SNT and marketing
• Marketing across cultures
– We know very little about the role of culture in social networks…any
new studies could inform us!
• Leveraging social media to drive marketing
Viral marketing via the Internet
Social Networking Sites
Instant Messaging
Interdisciplinary research opportunities are plentiful!
Findings from My Research
My Questions
• Is it possible for marketers to proactively manage
VCs in a way that fosters trust? If so, what should
they do and what type of outcomes should they
• Does gender matter in the trust formation process
in marketer-sponsored VCs?
• What is the relative value of marketer-sponsored
vs. consumer-initiated virtual communities?
Study 1: Relational Trust &
Attribution Theory in Virtual
Perceived Effort
of Marketer
Cognitive Response of the Community Member
Relational Outcomes
Info Sharing
with NPD
Sociability Framework
Attribution Theory
Relationship Marketing Framework
• Marketers can form trust-based relationships
in virtual consumer communities that they
sponsor. (Porter and Donthu 2006; Devaraj, Porter and Sun 2006)
– Sponsor efforts related to Content and
Embeddedness drive beliefs and trust
– Trust leads to valuable outcomes (info, npd, loyalty,
positive word-of-mouth, brand preference)
– Opportunism has little influence on trust formation
Study 2: Social Role Theory and Uses and
Gratifications Paradigm of Trust Formation
in Virtual Communities
Quality Of
Perceived Degree
Perceived Degree
Of Community
About A Sponsor’s
Sense of
Shared Values
Belief About
A Sponsor’s
Sense of
Belief About
Trust in
• Gender moderates the trust formation process
of younger consumers.
– Gender moderates trust influences of content,
embeddedness and interaction
• For males, sponsor efforts regarding content and
embeddedness are more salient trust influencers
• For females, sponsor efforts regarding interaction and
embeddedness are more salient
– No moderation by gender with direct determinants
of trust
Study 3: The Value of Virtual Communities:
A Test of Competing Models
• Both member-initiated and firm-sponsored
virtual customer communities can be valuable to
marketers, based on relational trust in the
sponsor. (Devaraj, Porter and Sun 2006)
– Member perceptions of information quality drive trust
and value in member-initiated virtual communities
– Sponsor efforts drive trust and value in firm-sponsored
• Higher value is derived from firm-sponsored