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 http://digiworldhanoi.vn 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) http://digiworldhanoi.vn The fundamental premise of this talk… Because marketing is relational, social network theory (SNT) helps to advance marketing theory and practice http://digiworldhanoi.vn Discussion Topics 1 A Historical Perspective • How does the marketing perspective compare to the sociological perspective? 2 How has SNT advanced relationship marketing thought and practice? • 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? 3 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? http://digiworldhanoi.vn 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 Marketing Applications • “Between-ness” • Word of Mouth – The frequency with which an – Actors: opinion leaders, actor is intermediary to other gatekeepers/market mavens and nodes and controls the flow followers of resources • Those who are likely to influence others • Degree • Those who know and provide information – The number of actors with but have no influence whom an individual has a • Those who are likely to be influenced via direct connection passive or active solicitation of info – Profile of actors • Knowledgeable, involved, confident, active – Content • Valence (positive or negative) • Product attributes (new, important, distinctive, risky) • 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 • focuses on equivalence of all actors are interconnected actors in a subgroup – Relations (strands): based on social strata content, direction and and strength – Does not assume social relations – Ties: – Assumes structural Weak/Strong based on frequency equivalence of social contact, importance of relation http://digiworldhanoi.vn – Multiplexity the number of relations in a tie http://digiworldhanoi.vn 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 http://digiworldhanoi.vn 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 http://digiworldhanoi.vn The Socio-Cognitive Perspective: Typical Variables Examined Social Cognition Outcomes Structure •Tie Strength •Group Cognitive Structure •Info Seeking •Position •Subgroup Cognitive Structure •Purchase Decision Influence •Physical Distance •Individual Cognitive Structure •Efficient use of •Strata (Profession) •Expertise (sender and receiver) •network resources •Org Restructuring •Business Unit Identity •Inertia of Social Structure •Manager Beliefs The socio-cognitive perspective inserts cognition into the structural perspective, to better explain outcomes http://digiworldhanoi.vn A Look at the Future… Consumers and marketers are engaged by social media • Blogs – Over 50 million people read blogs (forbes.com; 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 (cnn.com)… – 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)… ... 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... and information-seeking strategies? – How social networks influence behavior and outcomes in an industrial marketing context • Typical Methods – Interviews and surveys (consumer marketing) ... 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