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Analyzing the usage of digital marketing and relationship ..., Study notes of Digital Marketing

Digital Marketing, Relationship Marketing, Social Media, Small and medium- ... Table 1 - 5S, Internet Marketing (Chaffey and Smith, 2012).

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Bachelor Thesis
Analyzing the usage of digital
marketing and relationship
marketing within Swedish SME’s
in the B2B sector
- Examining what is most effective
Author: Andersson, Malin, Lovisa,
Josefin 19911110 and Pettersson,
Camilla, Louise, Amanda 19910627
Supervisor: Tatiana Anisimova
Examiners: Rana Mostaghel and
Pejvak Oghazi
Date: 2018-05-29
Subject: Degree project on the
International Sales and Marketing
Program, 15 credits
Course code: 2FE22E
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Bachelor Thesis

Analyzing the usage of digital

marketing and relationship

marketing within Swedish SME’s

in the B2B sector

- Examining what is most effective

Author: Andersson, Malin, Lovisa, Josefin 19911110 and Pettersson, Camilla, Louise, Amanda 19910627 Supervisor: Tatiana Anisimova Examiners: Rana Mostaghel and Pejvak Oghazi Date: 2018 - 05 - 29 Subject: Degree project on the International Sales and Marketing Program, 15 credits Course code: 2FE22E

[Page Intentionally Left Blank]

Acknowledgements

We would like to express our gratitude and appreciation to the people who have been involved and shown their commitment during the time that we have been writing this bachelor thesis. We would especially like to thank our tutor, Tatiana Anisimova, for guiding us through our work and giving us feedback during these months and our examiner, Rana Mostaghel, your professional input, your knowledge and advice have helped us when writing this report, we would not be where we are today without the two of you. We would also like to thank our fellow classmates for giving us useful oppositions with valuable feedback and suggestions on future improvements, but also for the first one and half years of fun times together in Ljungby. Also, a special thanks to all the case companies that was involved in the report and who allowed us to interview them and thereby providing us with the information needed in order to conduct this thesis. Furthermore, we would like to thank our families, who has supported and encouraged us to keep pushing forward through the hardest times. Thank you all! Amanda Camilla Louise Pettersson & Josefin Malin Lovisa Andersson

Table of content

  • 1 INTRODUCTION
  • 1.1 BACKGROUND
  • 1.2 PROBLEM DISCUSSION
  • 1.3 PURPOSE
  • 1.4 DELIMITATIONS
  • 1.5 OUTLINE OF THESIS
    1. THEORETICAL FRAMEWORK
  • 2.1 SMALL AND MEDIUM-ENTERPRISES (SMEs)
  • 2.2 BUSINESS TO BUSINESS (B2B)
  • 2.3 DIGITAL MARKETING
  • 2.3.1 The concept of social media
  • 2.3.2 Social media platforms
  • 2.3.3 Social media marketing as a communication tool
  • 2.3.4 Social media marketing adoption & usage within SMEs
  • 2.3.5 Benefits and barriers of social media marketing within SME
  • 2.4 RELATIONSHIP MARKETING
  • 2.4.1 Relationship Communication Model
  • 2.4.2 The Honeycomb Model
  • 2.4.3 The Commitment-Trust Model
  • 2.4.4 Commitment
  • 2.4.5 Trust
  • 2.4.6 Benefits and barriers of relationship marketing within SMEs
  • 3 RESEARCH QUESTIONS
  • 3.1 OPERATIONALIZATION
  • 4 METHODOLOGY
  • 4.1 RESEARCH PURPOSE
  • 4.2 RESEARCH APPROACH
  • 4.3. INDUCTIVE, DEDUCTIVE OR ABDUCTIVE
  • 4.4. QUANTITATIVE VERSUS QUALITATIVE
  • 4.5 RESEARCH DESIGN
  • 4.5.1 Case Study
  • 4.6 DATA SOURCES
  • 4.7 DATA COLLECTION METHOD
  • 4.7.1 Pre-Study
  • 4.7.2 In-depth Interviews
  • 4.8 SAMPLING
  • 4.8.1 Procedure
  • 4.8.2 Respondent validation
  • 4.9 ETHICAL PRINCIPLES
  • 4.9.1 Lack of informed consent
  • 4.9.2 Invasion of privacy
  • 4.9.3 Harm to participants
  • 4.9.4 Deception
  • 4.10 DATA ANALYSIS
  • 4.10.1 Data Reduction
  • 4.10.2 Data Display
  • 4.10.3 Drawing Conclusion
  • 4.11 QUALITY CRITERIA
  • 4.11.1 Credibility
  • 4.11.2 Transferability
  • 4.11.3 Confirmability
  • 4.11.4 Dependability
  • 4.12 RELIABILITY
    1. EMPIRICAL FINDINGS
  • 5.1 COMPANY A
  • 5.2 COMPANY B
  • 5.3 COMPANY C
  • 5.4 COMPANY D
  • 5.5 COMPANY E
  • 5.6 COMPANY F
  • 5.7 COMPANY G
  • 5.8 MARKETING TOOLS FOR ACQUIRING NEW CUSTOMERS
  • 5.9 INTERACTION WITH B2B CUSTOMERS AND PARTNERS
  • 5.10 ACTIVITY ON SOCIAL MEDIA CHANNELS
  • INTENTIONS 5.11 EFFECTIVENESS IN TERMS OF AWARENESS AND PURCHASE
  • 5.12 MEASUREMENTS OF ROI AND CONVERSIONS
  • MARKETING 5.13 CHALLENGES WITH DIGITAL MARKETING AND RELATIONSHIP
    1. ANALYSIS
  • 6.1 SMEs MARKETING AND PURPOSE
  • 6.2 AWARENESS, PUCHASE INTENTIONS AND ROI
    1. CONCLUSION AND IMPLICATIONS
  • 7.1 DISCUSSION
  • 7.2 ANSWER TO RQ
  • 7.3 ANSWER TO RQ2
  • 7.4 FURTHER RESEARCH
  • 7.5 MANAGERIAL IMPLICATIONS
  • 7.6 THEORETICAL IMPLICATIONS
    1. 7 LIMITATIONS
    1. 8 CRITICAL REVIEW
  • 8 REFERENCES
  • APPENDICES
  • Table 1 - 5S, Internet Marketing ( Chaffey and Smith, 2012 ) Tables and Figures
  • Table 2 - Concept overview
  • Table 3 - Quantitative Vs. Qualitative ( Bryman and Bell, 2011)
  • Table 4 - Respondent Information
  • Table 5 - Activity on social media channels
  • Figure 1 - Design of Communication means and strategies ( Andersen 2001 )
  • Figure 2 - The Honeycomb Model ( Kietzmann et al., 2011 )
  • Figure 3 - The Commitment-Trust Model ( Morgan and Hunt, 1994)

message in a way that no one could have predicted 10 or 20 years ago. Social media can be defined as a collection concept for different platforms of websites and services on the internet which can be used for creating and sharing content and being able to communicate with each other (Moncrief et al., 2015; Alves et al., 2016). It is still a quite new and technically difficult area to understand and implementation of such digital strategies can be challenging for companies that lack resources or knowledge (Salo, 2017; Kärkkäinen et al., 2014; Bernard, M., 2016; Lehtimäki et al., 2009). Research also shows that there has been less research devoted to digital marketing and especially social media, within a B2B context compared to the much more extensive research that has been made within the B2C sector (Kärkkäinen and Immonen, 2014; Wang et al., 2016; Flanigan et al., 2016; Habibi et al., 2015; Rodriguez et al., 2012; Cawsey et al., 2016). Although the research that has been made shows that social media marketing is a cost-effective tool of marketing a company's brand, creating awareness and purchase intentions, just to mention a few, many B2B companies still find it challenging adopting social media as a marketing strategy. Some of the factors are for example perceived ease of use, organizational innovativeness and many B2B companies perceive social media as a less effective marketing channel and they also consider social media less important in customer relationship oriented activities than other business models (Iankova et al., 2018; Andersson and Wikström., 2017; Alves et al., 2016; Siamagka et al., 2015). As markets turn more and more competitive, companies might have to change their marketing approach. From having performed transactional marketing many companies are now shifting towards relationship marketing (Gligorijević, M., 2009). Relationship marketing is strategy that emphasizes customer retention, satisfaction, and lifetime customer value. Relationship marketing can be defined as marketing to current customers’ vs new customer acquisition through sales and advertising, it encompasses the study of interactions, relationships and networks (Gummesson, 1994). Furthermore, he states that relational approaches in marketing gradually became the object of research and conceptualization during the past decades. In the 1990s it hit a breakthrough and the interest raised even higher (ibid). Strong relationships are crucial when it comes to dealing with business to business partners, innovative managers worldwide are

experimenting with a myriad of approaches to make relationships with their business suppliers and customers more productive and enduring (Cannon and Perreault, 1999). Academics and practitioners agree upon that long-term collaborative relationships often lead to improved business performance (Spekman and Carraway, 2006; Ulaga, 2003; Ulaga and Eggert, 2006). Gummesson states that “relationships are part of human nature. They are timeless. They are independent of culture. They are there in every type and size of business” (2014, p.5). Geraldo et al., (2007) states that business customer loyalty is mainly due to effective relationship-marketing policies, most of all for SMEs, which are more vulnerable to the aggression of moneyed advertising and information campaigns on carried out by large competitors. Relationship marketing is built on the idea that people want to do business with someone they know, like and trust and when it comes to business within the B2B sector lead generation, relationship marketing becomes even more important since the value of the sale increases and the number of potential, viable customers increases. Comparing to the B2C sector who can find new customers around every virtual corner. So, for companies with niche or very complex products relationship marketing is a crucial component (Morgan and Hunt, 1999). Furthermore, they state that enthusiasts of relationship marketing encourage firms to seek customers or partners for long term relationships by for example focusing on customer retention rather than transactional sale (ibid). Therefore, the authors have chosen to target the B2B sector to be able to contribute with further knowledge on the subject and by comparing relationship marketing to digital marketing, this report strive to provide useful information for managers on what would be most effective in terms of ROI, creating awareness and purchase intentions when it comes to Swedish SMEs (Flanigan and Obermier, 2016).

1.2 Problem Discussion

It has been stated by Yazdanfar & Öhman (2015) that for a firm to survive in today's market it must continue to grow and could also be beneficial for other firms as well. The capability of innovation and the ability to take advantage of opportunities such as for example, digital marketing is mentioned as an important ambition in contributing to a

Lohrke et al., 2006; Carroll and Wagar, 2010). Even though social media marketing may have become a huge part of organizations marketing strategy, enterprises ought to consider how to best engage in the most effective way with potential and already existing consumers (Lohrke et al., 2006). Although the previous section points to that digital marketing is highly beneficial to SMEs, it is also argued by Handriana (2016) that consumers view relationship marketing as a possibly even more sustainable strategy for SMEs to be successful. It is stated that the voice of businesses heard by other businesses increase and depend on mutually satisfaction and long term relationships with key constituents to earn and retain their business (Kotler and Keller, 2016). Morgan and Hunt (1994) argue that relationship marketing should however be handled with concern, both when it comes to selecting appropriate partners as well as engaging in relationships only when it provides a sustainable competitive advantage. Meanwhile, most of the previous research regarding relationship marketing has shown to focus on larger businesses (Morgan and Hunt, 1994; Luo and Donthu, 2007), pointing to the fact that relationship marketing within the context of SMEs is still also limited (Butigan and Mahnic, 2011). Therefore, the researchers of this thesis examine the effectiveness of both relationship marketing and digital marketing within SMEs in Sweden.

1.3 Purpose

The purpose of this study is to understand how SMEs in the B2B sector, in Sweden, market themselves and for what purpose. Also, to analyze relationship marketing and digital marketing and how they are utilized, to get a better understanding of whether one tool is more effective than the other or if they go hand in hand.

1.4 Delimitations

This research delimitates itself to study marketing processes within SMEs in the B2B sector in Sweden. Due to the limited research about the usage of digital marketing and relationship marketing within SMEs in the business-to-business context, it was decided to make a research report about them, seeing what is more effective when it comes to creating awareness, purchase intentions and return of investment. However, since relationship marketing and digital marketing are broad topics, the study will not cover

Swedish firms overall. This report will therefore be delimited to focus on firms that operate within the B2B sector in Sweden. Also, the study is delimited to interviews via Skype/Zoom due to the interviewees lack of time and since the chosen companies are spread out throughout Sweden. The interviewees are managers or employees who are in direct contact with the marketing and sales of the company. Moreover, SMEs within the B2B sector was studied to make the study narrower.

1.5 Outline of thesis

The thesis starts off with an introduction and there is a discussion about the topic. Already existing knowledge is put forward as well as where the missing gaps lie. This should provide the reader with a more in-depth understanding regarding the purpose and focus of the thesis. Research questions are mentioned and then the theoretical part comes next. Following will be the methodology section part that explains what has been done, how it was conducted and the reasons behind it. Ethical principles and quality criteria are also points that are brought forward. The next section will provide empirical data since this study is based on a qualitative research method and the information is collected through in-depth interviews with the chosen SMEs businesses within Sweden. Continuingly, there will be an analysis section with the collected data. The discussion leads up to a conclusion and implications, also suggestions for future research. At last there will be a critical review of the whole study.

sector can at the same time sell directly to consumers as well. According to Kotler and Keller (2006), co-operation and collaborative innovation is usually a huge part of the B2B firms. It is also discussed by Li et al., (2011) that trust is a crucial factor for B2B companies to build these long-term relationships since the transactions usually has a higher price and volume. It is stated that other key sales and marketing differences for B2B transactions compared to B2C include that the amount of money of the goods or services being sold is much higher and that the decision-making process can take up to days, weeks or even months, depending on the size and nature of the order as well as how the company works (Cawsey and Rowley, 2016).

2.3 Digital marketing

Digital marketing as a support to modern marketing has been called many things by academics and professionals, for example digital marketing, internet marketing, e- marketing and web marketing. In this report the term digital marketing is being used since it consists of the use of a range of digital platforms. One can define digital marketing as “achieving marketing objectives through applying digital technologies and media” (Chaffey, 2016, p.11). The activities that make up digital marketing include company websites and social media company pages in combination with online communications methods like for example: search engine marketing, social media marketing, online advertising, email marketing and partnership arrangements with other websites. These tools can be used for obtaining new customers and providing services to existing and new customers which can help to develop customer relationships (ibid). Ainscough and Luckett (1996) states that the Web can be used for publishing, online sales, market research, and customer support. Digital marketing can generate several potential benefits and Scholars like Whitla, (2009) argues that the Web can assist in brand building, generating word-of-mouth, communication among consumers, buzz marketing, and crowdsourcing. In addition to helping with the fulfillment of marketing strategies, the Internet can also improve the firm's overall performance (ibid). Chaffey, (2016) divides media into three groups:

  • Paid media - which is bought media where the company pays for visitors, reach or conversions through search, display ad networks or affiliate marketing.
  • Owned media - this is the media own by the company like company websites, blogs, email list, mobile apps or their social media channels
  • Earned media - is publicity generated media generated through PR invested in targeting influencers to increase awareness and it also includes word-of-mouth which can be stimulated through viral and social media marketing and conversions in social networks, blogs and other communities. Furthermore, the 5Ss of internet marketing created by Chaffey and Smith, (2012) is a model for developing a digital strategy and the model is focused on increasing brand presence, client engagement and ultimately boosting online transactions through 5 objectives presented in Table 1. This model can work as a framework for those companies that are not following a digital marketing plan or just work as inspiration for those who need it. Table 1 : 5S, Internet Marketing (Chaffey and Smith, 2012) Sell Use the internet as a sales channel Includes direct online sales and sales from offline channels influenced online. Serve Use the internet as a customer service channel Achieved through giving customers online or inform about product development through online dialogue and feedback Speak Use the internet to interact with customers Creating a two-way dialogue through web interactions like forums and surveys and conducting online market research Save Take advantage of technology and save on operational costs Achieved through online email communications, sales and service transactions to reduce staff, print and postage costs and through “web-self-service” Sizzle Extend the brand online Achieved through providing new propositions, new offers and new experiences 2.3.1 The concept of social media It is proven by the new 2018 Global Digital suite of reports from We are Social and Hootsuite that over 4 billion people around the world are using the internet, with a 7 percent year-on-year. The reports also show that there are around 3.000 billion social

information with different groups of recipients. According to DeNardis and Hackl (2015) social media platforms can be divided into three specific technological affordances:

  • The intermediation of user-generated content
  • The possibility of interactivity among users and direct engagement with content
  • The ability for an individual to articulate network connections with other users. There are various types of information intermediaries where these three common characteristics materialize within (ibid). It can be for example social networking sites like Facebook and Instagram, networking sites aimed for the business community and professionals like LinkedIn, microblogging platforms such as Twitter, content creating sites like YouTube and mobile image messaging services like Snapchat (Chae, 2018). 2.3.3 Social media as a marketing communication tool According to Baruah (2012), social media refers to the use of web-based and mobile technologies which turn communication into an interactive dialogue. Social media comes in many different forms such as magazines, internet forums, weblogs, social blogs, microblogging, wikis, podcasts, photographs or pictures, video, rating and social bookmarking which are used extensively for communication. The term social media is, according to Andersson and Wikström (2017), a group of internet-based applications which are built on both the ideological and technological foundations of Web 2.0, that allows the creation and exchange of user generated content. Furthermore, the researchers state that B2B companies are increasing their use of social media as a communication tool to enhance customer relationships, support sales and build their brand. Scholars such as Alves et al., (2016) and Holliman et al., (2014) describe social media as a tool that enables communication between businesses and help to build brand loyalty beyond traditional marketing methods. Social media is, according to Siamagka et al., (2015), a powerful marketing communication tool due to its capability of spreading viral messages and therefore generating WOM (word-of-mouth). Baruah, (2012) states that social media has transformed how businesses communicate with each other and that the social tools that are being used today are very cost effective compared to traditional approaches like email and online advertising. Yet, many businesses have

still not fully understood the potential benefits of utilizing social media as a marketing communication tool, especially within B2B organizations (Järvinen et al., 2012; Mehmet et al., 2016; Iankova et al., 2018). 2.3.4 Social media marketing adoption and usage within SMEs Some of the most popular social media channels today are for example Facebook, LinkedIn, Twitter, YouTube, blogs and Instagram (Andersson et al., 2017; Gruner et al., 2018; Bernard, M., 2016). According to Alves et al., (2016), microblogs and social networks are the most commonly adopted social media channels by firms and among others Facebook, Twitter and YouTube seems to be in favor. Marketers operating in the B2C sector actively adopt social media as a marketing tool whereas B2B marketers, especially in SME’s seem underestimate the importance of social media marketing (Bernard, M., 2016; Flanigan et al., 2016; Gruner et al., 2018). Lacka et al., (2016) provides one explanation for it, saying that B2B marketing was traditionally carried out in an offline environment but that in the last decades B2B marketers have also included several online platforms into their marketing strategies. However, those platforms are restricted to a one-way communication for example a company's website. Other researchers, such as Swani and Brown (2011), propose that many B2B marketers believe that the nature of the B2B sector requires face-to-face interaction during the purchasing process and that both parties are actively involved. They claim that this approach cannot be satisfied online, which prevents the adoption of social media usage. According to Karjaluoto and Leinonen, (2009), search engine optimization (SEO), the process of improving the website’s search engine rank in organic search results, and search engine advertising (SEA) has commonly been used among larger companies but SMEs has not quite understood its full potential yet. Although there are obvious uses of social media in B2B companies, academic research indicates that B2B marketers are not as sophisticated or skilled in social media usage as B2C marketers (Andersson and Wikstrom, 2017). Despite the criticisms of B2B social media usage, B2B marketers in SMEs have in recent years increased their usage of online communication channels, which enables a two-way interaction between B2B partners. Among the different online platforms, social media sites have caught the B2B marketers’ attention and this growing interest