Social media use by Dutch supermarket chains A digital marketing analysis on brand loyalty Thomas Dijkman 11026057 August 21st, 2018 Supervisor: Dick Heinhuis 2nd Examiner: Tom van Engers Bachelor thesis Information Science Faculty of Science University of Amsterdam ABSTRACT Social media have grown from being entertaining communication platforms into powerful business tools for marketing, promotion and customer service. Consequently, businesses have had to make changes in their marketing strategies to take advantage of the opportunities created by this new social ecosystem. Brand loyalty, which is one of the main goals of marketing efforts, is influenced by social media through different factors like trust and feelings of community. This thesis assesses the efforts made by Dutch supermarket chains on social media to test the effect of social media on their perceived brand loyalty. The factors that stimulate brand loyalty that were found in an extensive literature review were challenged through field research to test their effect on Dutch supermarket brands. The findings of this research show that there is no significant effect of social media efforts on brand loyalty in the case of Dutch supermarket chains. On the contrary, present research confirms that there are unexplored opportunities for Dutch supermarket chains to use social media to increase brand loyalty. From these findings, a general discussion and conclusion are offered, as well as directions for further research. 2 Table of contents 1 Introduction………………………………………………………………………………………………………… 5 1.1 Research objectives……………………………………………………………………………………… 6 1.2 Relevance……………………………………………………………………………………………………. 6 1.2.1 Academic relevance………………………………………………………………………………. 6 1.2.2 Managerial relevance…………………………………………………………………………….. 7 1.3 Research question and subquestions………………………………………………………………. 8 1.4 The Dutch supermarket industry……………………………………………………………………. 8 1.4.1 The Dutch online grocery industry…………………………………………………………. 8 1.5 Social media use in the Netherlands……………………………………………………………….. 9 2 Literature review………………………………………………………………………………………………….. 10 2.1 Social media…………………………………………………………………………………………………. 10 2.2 Marketing…………………………………………………………………………………………………….. 11 2.3 Brand…………………………………………………………………………………………………………… 11 2.4 Brand loyalty………………………………………………………………………………………………… 12 2.4.1 Factors for brand loyalty……………………………………………………………………….. 13 2.5 Social media and brand loyalty………………………………………………………………………. 16 2.5.1 Factors for brand loyalty created by social media…………………………………….. 17 2.6 Comparison………………………………………………………………………………………………….. 19 2.7 Hypotheses…………………………………………………………………………………………………… 20 3 Methodology………………………………………………………………………………………………………… 20 3.1 Supermarket chains………………………………………………………………………………………. 20 3.2 Social media platforms………………………………………………………………………………….. 21 3.3 Research procedures……………………………………………………………………………………… 21 3.3.1 Opening questionnaire………………………………………………………………………….. 21 3.3.2 Test groups………………………………………………………………………………………….. 22 3.3.3 Data processing……………………………………………………………………………………. 22 4 Results…………………………………………………………………………………………………………………. 22 4.1 Opening questionnaire………………………………………………………………………………….. 22 4.2 Test groups…………………………………………………………………………………………………… 24 4.3 Findings per brand……………………………………………………………………………………….. 24 4.3.1 Albert Heijn…………………………………………………………………………………………. 24 4.3.2 Jumbo…………………………………………………………………………………………………. 25 4.3.3 PLUS…………………………………………………………………………………………………… 25 4.3.4 DEEN………………………………………………………………………………………………….. 25 4.3.5 Lidl……………………………………………………………………………………………………… 26 4.3.6 Picnic………………………………………………………………………………………………….. 26 4.4 Brand loyalty factors and hypotheses testing…………………………………………………… 26 5 Conclusions………………………………………………………………………………………………………… 28 5.1 General discussion………………………………………………………………………………………… 28 5.2 Academic contribution and managerial implications………………………………………… 29 5.3 Limitations and further research……………………………………………………………………. 29 5.3.1 Limitations and reflection……………………………………………………………………… 29 3 5.3.2 Directions for further research………………………………………………………………. 30 References…………………………………………………………………………………………………………………. 31 Appendix…………………………………………………………………………………………………………………… 38 Appendix 1: Background information supermarket chains……………………………………….. 38 Appendix 2: Social media following per brand…………………………………………………………. 39 Appendix 3: Questionnaire 1…………………………………………………………………………………. 40 Appendix 4: Questionnaire 2…………………………………………………………………………………. 42 Appendix 5: Brand loyalty factors and related questions………………………………………….. 44 Appendix 6: Combined questions to factor……………………………………………………………… 45 4 1. INTRODUCTION In recent years, social media have grown from being entertaining communication platforms into powerful business tools for marketing, promotion and customer service. This disruptive change in the marketing field has brought a new aspect to brand image, brand-customer relationships and brand loyalty. Businesses have had to make changes in their policies and strategies to not only survive this new disruptive trend, but also to leverage its opportunities. Social media have opened up new ways of communication with and between consumers, of a kind which was never before apparent (Mangold & Faulds, 2009). Data gathering from these platforms has created opportunities for customized and personalized advertising which is beneficial for both seller and buyer. The seller has a higher chance of successfully reaching the target audience thanks to data categorization, while the consumer is faced with less irrelevant advertisements and therefore gets more value from the ads they are shown. Social media also generate free promotion by shares and likes, also known as ‘electronic word-of-mouth’ (eWOM). According to Blackshaw and Nazzaro (2004, p.3), “web-enabled word-of-mouth behavior … now includes the ability to post and send photos, video clips, audio clips and instant text messages”. Users of platforms like Facebook spread the word without you asking them by sharing your message, picture, video or blog with their friends. This concept is supported by social proof, where we assume that something our friends promote or like is also something we would like ourselves, with possible effects of free distribution of your content. The idea of social proof through word-of-mouth distribution has been known for longer in traditional marketing, but in the case of eWOM, a new dimension or layer should be added. All in all, the rise of social media has created a new ecosystem for marketeers and businesses which is yet to be fully explored and taken advantage of. Het Grote Content Marketing Onderzoek 2017 [The Big Contentmarketing Research 2017] shows that many marketeers and their businesses are struggling to deal with this new social environment. For example, half of the organizations in this research outsourced their content marketing. Also, only half of the organizations were working on community management, which involves fostering the network around the organization or the brand. Both of these findings show the lack of efficiency in business-use social media, resulting in brands not achieving the aspired brand image creation at adequate levels. The research also shows that many businesses are struggling with the engagement rates of their content and how to measure the effect of their efforts (Nederlands Platform Content, 2017), which has resulted in a critical point of view from the business world on the low return-of-investments (ROI) of their online efforts. A paper by Hanna, Rohm and Crittenden (2011) also explained that businesses are treating each platform as a separate entity, where social media should be seen as a connected ecosystem. According to marketing agency ANCHOVY (2017), social media should be just as important in marketing strategies as traditional tools such as search engine optimization (SEO), search engine marketing (SEM) and pay-per-click (PPC) marketing. This because, on top of general ‘findability’ online, it is important to create an identity that differentiates your company from competitors, a good impression also helps build consumer trust. In this statement, transparency and social media presence are highlighted as key factors towards getting a consumer’s attention and building trust. Edelman (2010) concludes that large proportions of marketing budgets are being spent on the ‘consider’ and ‘buy’ stages of the consumer’s ‘purchase-cycle’, whilst the ‘evaluation’ and ‘after-purchase’ stages showed to allow for more 5 influence by social media marketing. Therefore, the efforts of marketeers should focus on the entire cycle, more so than we are used to in traditional marketing like TV advertising which mainly focusses on the persuasion of consumers. Marketing nowadays should be seen as a creative field where marketeers make efforts to capture consumers by getting their attention through advertising, enhancing experiences in stores and fostering online relationships on social media both for promotional use as well as customer support. 1.1 RESEARCH OBJECTIVES A study by Tont (2014) has analyzed high-street fashion brands Zara, H&M and River Island on how they have been using social media, particularly Facebook and Twitter, to develop customer relationships between the brand and its customers. Hudson and Thal acknowledge the impact of social media on consumer decision processes in their 2013 study and highlight the implications for this change on the tourism industry. Knox and Walker (2001) researched the grocery business on ‘offline’ brand loyalty