Explore Rice

6/15/2005 12:10:00 AM

Marketers build brand loyalty by welcoming customers to join the club

What do Star Wars fans, MacIntosh-user groups and Harley-Davidson owner clubs have in common? For the corporations who sponsor them, they represent lots of loyal users and most important, future purchasers of their brands. New studies by Rice University marketing researchers link this relatively passive form of marketing called brand communities or clubs to the potential for long-term profits.

--------------------------

In the automobile industry, where only 34 percent of its customers re-purchase the brand of car they currently own, retaining loyal customers is particularly challenging. One way to do so is through brand communities -- a less established, but increasingly popular marketing tool. According to a Rice marketing expert, organizing and sponsoring these communities of customers, while a relatively passive form of marketing, can significantly reinforce consumers' loyalty to a brand and their willingness to recommend it to others.

“The notion of brand communities is a very different way of looking at how marketing works,” says Paul Dholakia, an assistant professor of management at the Jesse H. Jones Graduate School of Management.

“It's not a matter of attempting to directly influence consumers, but of providing them support in interacting with each other through activities of their brand community, which, in turn, increases their level of engagement and loyalty.”

In a report titled “The Social Influence of Brand Community: Evidence from European Car Clubs,” Dholakia and his colleagues, René Algesheimer at the University of Zurich and Andreas Herrmann at the University of St. Gallen in Switzerland, show by way of European car clubs how consumers' membership in corporate-sponsored brand communities can have positive and negative consequences. Their research also demonstrates how the size of the brand community and the degree to which its members are knowledgeable about the product affect their relationship with the brand community and, ultimately, with the product and company itself.

Particularly important to marketers is the study's finding that brand community marketing programs are more useful for retaining customers than acquiring new ones.

Dholakia cites Audi, which uses its corporate-supported Audi club of North America to recruit new customers, specifically by promoting driving schools for new drivers who have not yet purchased a car.

“Their hope is that the new drivers will become involved in the Audi club and ultimately purchase an Audi,” Dholakia says, “ but we found that the consumers' interest in joining a brand community stems from their pre-existing relationship with the brand.

“It may be more effective for a firm to solicit and enroll its existing and long-tenured customers who already have a very positive relationship with the brand.”

The researchers also found that consumers' membership in a brand community ultimately has an impact on the company's profitability. For example, members who are strongly engaged in the brand community are more likely to remain attached to the group, participate in group activities more often, and recommend the brand community to non-members.

“Consumers' high level of participation in a brand community raises their level of involvement so they not only purchase more products and services from the company, but they encourage others to do so as well,” Dholakia explains.

Brand communities can also influence their members in negative ways. In particular, as members become more involved, they also can potentially experience greater pressure to conform to the brand community's norms and objectives. For example, owners of a particular type of car may feel they have to wave at owners of that same car as a token of their fellowship in that car club or brand community.

“The greater the pressure on members to conform, the more burdensome will seem the association with and participation in the brand community,” Dholakia says.

“Ultimately, this could have a negative effect on the member's brand loyalty and future purchases.”

In looking at the size of brand communities and how knowledgeable their members are about the brand itself, Dholakia and his colleagues find that the brand community is most influential with members who know more about the product.

“We feel that the more participants know about the brand, the more closely they will identify with and engage in the brand community,” Dholakia says.

“If influencing customers is the goal, it's important for firms to recruit seasoned customers instead of novices into brand communities.”

Similarly, if the company's goal is to strengthen members' commitment to, and level of participation in, the brand community and willingness to recruit non-members into the community, firms should foster and support large brand clubs – those with 50 or more members.

To explain brand communities' influence on consumers, Dholakia and his colleagues designed a framework drawing upon recent marketing studies of brand communities, social identification and group-based consumer interactions. Additionally, they incorporated new scales to measure members' level of community identification and engagement, and the degree of pressure members felt to conform to the club's goals and rituals.

  Subjects for the study were recruited from all German-speaking car clubs in Germany and regions of Switzerland and Austria and asked to complete a web-based survey on their opinions of car clubs in those three countries. Ten weeks later they were supplied with additional questions by e-mail regarding their behavior toward their car brands and toward their brand communities in the intervening period.

An assistant professor of management at the Jones School, Dholakia has done extensive studies on customer communities and other relational marketing programs, the motivational psychology of consumers and online marketing issues.

His research is forthcoming or has been published in a number of journals, including the Journal of Marketing Research, Marketing Science, Management Science, the Journal of Consumer Research, the Journal of Marketing and Harvard Business Review.

Professor Dholakia received a bachelor's degree in industrial engineering from the University of Bombay, a master's degree in operations research from Ohio State University, and a master's degree in psychology and a Ph.D. degree in marketing from the University of Michigan.

To learn more about this research, contact Debra Thomas in the Jones School at dthomas@rice.edu.