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Bulletin of the Transilvania University of Braşov

Series V: Economic Sciences • Vol. 9 (58) No. 1 - 2016

Blending traditional and digital marketing

Raluca Dania TODOR1

Abstract: It is a matter of fact that we are in the digital era and internet marketing and
social media have a significant impact on the way consumers behave, companies do business
and it is a must for companies to adapt to the new reality. Due to the fast evolution of the
technology, the continuous increase in demand and supply, the supply chain elongation and
the big amount of date, the only solution to face the major changes is the automation of all
the processes. But even though the new era of communication is here, specialist suggest that
companies should not ignore traditional methods, and to try to blend digital marketing with
traditional campaigns in order to achieve their goals.

Key-words: digital marketing, traditional marketing, inbound marketing

1. Introduction

Marketing is everything a company does to place its product or services in the hands
of potential customers. In order to do this better than the competition they must
know everything about their customers from what their need is and how they can
satisfy it, to what need can they further create.
In order to be successful, the companies need to maintain a very good
relationship with their existing customers and to know their future need even before
they know it. The focus nowadays is to sell as much as one can to a customer,
focusing on the existing customers while acquiring new ones and treating them as
individual persons and not as a target group. The amount of big data coming from
everywhere, starting with the website, social media or direct calls helps companies
to know their customers, to do analysis and forecasting. But in order to use wise
these big amount of data, companies need to automate their marketing processes
through marketing automation tools.
Brand awareness and customer retention may rise if companies become more
aware of the potential blending both digital and traditional marketing campaigns.

Transilvania University of Braşov, raluca.todor@unitbv.ro
52 Bulletin of the Transilvania University of Braşov • Series V • Vol. 9 (58) No. 1 - 2016

2. The digital marketing concept

“The practice of promoting products and services in an innovative way, using

primarily database-driven distribution channels to reach consumers and customers in
a timely, relevant personal and cost-effective manner is known in the theory and
practice as digital marketing” (Wsi, 2013)
Digital marketing is a blanket term for the targeted, measurable, and
interactive marketing of goods or services using digital technologies in order to
reach and convert leads into customers and preserve them. The main objective is to
promote brands, shape preference and boost sales through several digital marketing
Alternative terms for digital marketing are often: 'online marketing', 'internet
marketing' or 'web marketing'. The fundamental concept in digital marketing is
based on the inbound marketing approach or generally it’s called customer centric
Inbound marketing means to promote a business through blogs, podcasts,
video, eBooks, enewsletters, whitepapers, SEO, physical products, social media
marketing, and other methods of content marketing which serve to interest
customers through the different stages of the purchase funnel. Inbound marketing
means marketing activities that bring visitors in, earning the attention of consumers,
making the business easy to be found, and also drawing customers to the website by
generating stimulating content (Halligan, 2009).
As long as technology continues to advance, digital marketing will as advance as
well. Digital marketing is similar to traditional advertising, but the main difference
is in the use of digital devices.

2.1. Digital marketing’s advantages

• Cost efficiency: compared to traditional mass media marketing, digital

marketing has much lower cost and in many cases websites can generate
traffic even for free.
• Interactivity: the online users can choose when to initiate contact and for how
• Empowering effect One of advantages of online marketing is related with its
enabling effect especially on small businesses since “internet can extent
market reach and operational efficiency of small and medium enterprises
(SMEs)“ (Dholekia, 2004).
• Infinite audience: a web for example can reach an entire globe, but if
necessary it is also possible to tailor a digital campaign to reach a local net.
• Duration: online information is permanently available.
R.D. TODOR: Blending traditional and digital marketing 53

• Active users approach: the offered online content is offered to users on an

ongoing basis, and they choose to consume it or not (Wsi, 2013)
• Dialogue with and among users: online marketing allows collaboration
between users and gives the wright to free expression of their opinion
regarding the product /service.
• Rich content: digital marketing offers practically unlimited content and also
the possibility to easily update the content when necessary.
• Easy measurable: digital technologies allow the measuring of impact much
easy than traditional marketing.
• Adaptable: It is easy to change online content based on users feedback
(Varbanova, 2013)
• Personalized: digital marketing is able to create offers and programs that can
be customized or personalized based on the profiles or consumer behavior and
their preferences.

2.2. Disadvantages of digital marketing

• The copyright: internet marketing campaigns can be easily copied by a
competitor. Trademarks or logos can be used to defraud customers.
• Difficulties may appear in case of slow internet connections, if the web sites
are too complex or too large, it may take too much time and eventually
customers can get bored.
• The e-commerce doesn’t allow the user “to touch” the merchandise before
purchasing it.
• Other factor is the payment: many users still don’t trust in the electronic
methods of paying and give up buying online because of this.
• The lack of trust of the users because of the big number of frauds regarding
virtual promotions. Honest companies may be affected since their image and
reputation of quality can suffer damage.
• The cash on delivery system: which doesn’t guarantee the 100% purchase of
the product. This is a disadvantage because there are many cases when users
with false identities order online with no real intention of picking and paying
for the goods.
• Internet marketing is not yet embraced by all people: some customers,
especially older ones still don't trust digital environment, preferring to use the
traditional methods.
• Internet marketing is highly dependent on technology which can be prone to
• The use of digital media marketing strategies can take some time to obtain
measurable success (Safko, 2009).
54 Bulletin of the Transilvania University of Braşov • Series V • Vol. 9 (58) No. 1 - 2016

2.2. Measuring digital marketing success

One important aspect is the return on investment (ROI) from any digital marketing
campaign. To understand what the ROI is, we need to understand what the goals or
aims of the company are, what they wish to get from a digital marketing campaign
and then measure these goals.
To be able to find out the company must look at the Key Performance
Indicators (KPIs) and the goals for each one.
Types of key performance indicators are the following:
• General Performance - Traffic, leads, reach
• Channel Based - Website, blog, social networks, search engines
• Source based performance - Direct traffic, Organic search, referrals, email,
• Campaign based performance - Lead generation, click through, conversions,
conversion rates (Safko, 2009).

3. Traditional marketing

Longevity is the main reason why people are accustomed to traditional marketing.
Finding ads in magazines and newspapers, or reading billboards are still
familiar activities and people still do them all the time. In most of the cases
traditional marketing is reaching a local audience even though it is not limited to
There are many facets of traditional marketing and examples might include
tangible items such as business cards, print ads in newspapers or magazines. It can
also include posters, commercials on TV and radio, billboards and brochures.
Traditional marketing is anything except digital means to brand your product or
logo., it is considered “outbound marketing“ and it means buying attention,[1] cold-
calling, direct paper mail, radio, TV advertisements, sales flyers, spam,
telemarketing and traditional advertising.

3.1. Advantages of traditional marketing

• Faster results: traditional marketing may produce results that are faster or
more effective if the ads are placed well and suitable to the targeted audience,
compared to digital marketing methods that can take several weeks to produce
• Durability: some offline materials are often more durable than the online ones,
many sites are in reality abandoned.
• The level of trust: may be higher for traditional marketing, and it can be said
this is number one advantage. Many people are still trusting more the offline
R.D. TODOR: Blending traditional and digital marketing 55

buying and also because of the high number of frauds that occur in the online
environment, people are reluctant to trust some of the information.

3.2. Disadvantages of traditional marketing

•Difficulties in measuring: the results are not easily measured, and in many
cases cannot be measured at all.
•High costs: traditional marketing is in most of the cases much more expensive
than digital marketing.
• Static: with traditional marketing there is no much interaction with the
audience if any in many cases. It means throwing information in front of
people and hoping that they decide to take action.
•Timing: in this case companies use static text or advertising commercial to
promote the product/service. If changes occur the content can not be changed
fast enough.
• Customization: when using traditional marketing methods for advertising it is
hard to target a specific customer. Segments of the market can be targeted, but
not an individual. For example, an ad may target young women. In
comparison digital marketing techniques can track a viewer fields of interest
and suggest similar products.
• Pricing options: in traditional marketing it is difficult to offer complex
pricing, meanwhile in online marketing the information can explain all the
different pricing variations that may appeal to buyers.

4. The balance between traditional marketing and digital marketing

It is no doubt we live in a digital era and the use of internet has increased and still
growing as statistics show. The world has transitioned into a very digital
There is a continuous debate on whether digital marketing is overpowering and
surpassing traditional marketing or not. Many analysts think that digital marketing
has taken over and traditional marking has lost his importance. But others consider
that traditional marketing is still very much used and digital marketing is combining
very well with it.
A recent study conducted in 2015 by ZenitOptimedia shows that in the last
five years the use of internet has grown a lot and on the other hand the use of other
media has decresed or just slightly grow. The situation states as follows: Internet
(+105%), Outdoor (+3%), Television (-8%), Cinema (-11%), Radio (-15%),
Magazines (-23), Newspapers (-31%).
56 Bulletin of the Transilvania University of Braşov • Series V • Vol. 9 (58) No. 1 - 2016

The same study made by ZenitOptimedia reveals that in average people spend over
490 minutes daily using some sort of media but what is still surprising is that
television remains dominant, representing approximately 3 hours of daily media
consumption, while internet is on second place. But the trend shows a decrease for
television, while internet has constantly growing. The biggest increase in the use of
internet has been among young adults, with time spent online almost tripling in the
past 10 years, fuelled by increasing use of tablets and smartphones. Older people
may seem to still prefer to spend their time on more traditional media channels like
television or radio and in consequence they are still consumers of traditional

5. Conclusions

Even though few years ago the era of traditional marketing was predicted to come to
it/s end, studies show that this is not true. It is true that the use of internet is
constantly growing and also the amount of time people spend on online. In
conclusion the best solution for o company when it comes to the efforts for
increasing visibility on the market, as well as for rising brand awareness is to try to
make a combination of the two strategies. On one hand there is the mature group of
customers used and attached to the traditional marketing items, who still spend time
on television, radio, reading magazines, and on the other hand as statistics show, the
young population which tend to spend more and more time online.

6. References

Halligan, B., 2009. Inbound marketing: get found of Google, Social Media and
Blogs. New York: John Wiley &Sons, p. 11.
Safko, L. and Brake, D., 2009. The Social Media Bible: Tactics, Tools and
Strategies for Business Success. New York: John Wiley &Sons, p. 181; 243.
Varbanova, L., 2013. Strategic Management in the Arts. New York: Taylor and
Francis, p. 161.
Wsi, 2013. Digital Minds: 12 Things Every Business Needs to Know about Digital
Marketing. Victoria: Friesen Press, p. 7.

Article (in journal)

Dholakia, R. and Kshetri, N., 2004. Factors Impacting the Adoption of the Internet
among SMEs. Small Business Economics, 23(4), pp. 311-322.
International Journal of Economic Practices and Theories, Vol. 5, No. 3, 2015 (May), Special Issue on
Competitiveness and Economic & Social Cohesion, e-ISSN 2247–7225

Digital Marketing for Identifying Customers’ Preferences – A Solution for SMEs in

Obtaining Competitive Advantages

Radu Ioan Mogoș
The Bucharest University of Economic Studies, Romania

Abstract. The paper presents the Digital Marketing (DM) importance for small and medium enterprises (SMEs) from the
competitive point of view, a set of existing platforms for business models that implement the use of DM and a description of
some related case studies relevant at international level. The paper also proposes a framework for DM, having the main goal
to identify the customers’ preferences. The framework originality consists in the use of cloud computing (CC) technology
and in the way the data client is collected. The framework benefits from the advantages of CC technology. Using the DM
framework, the management board of an enterprise may understand better their clients’ needs and behavior. By doing this,
the enterprise could improve the business, gaining a competitive advantage on the market.

Key words: digital marketing, customers’ preferences, cloud computing, multi-agent system
JEL classification: M31, M37, C63

1 Introduction collection and use of goods and services to meet

current and future needs including decision-
In recent years, one of the most significant making processes that precede and determine
discussions in marketing domain, is a new these acts ". According to (Karding et. al, 2011),
approach, approach that is used more and more "consumer behavior entails all consumer
often because of its encouraging results. It is activities associated with the purchase, use, and
centered on customer orientation (OC). Its disposal of goods and services, including the
positive performance is due to the development consumer's emotional, mental, and behavioral
and information technology facilities that offer response that precedes cause, or follow these
increasingly more support to OC approach for activities".
specific processes. Processes like data Identification of customer behavior in turn
collection, data storage, data processing, requires obtaining relevant data about
analysis and dissemination. These processes are customers, data preprocessing and processing,
aimed to transform operative results in analysis and interpretation of results as well.
knowledge that can help top management in Digital Marketing is one of the main forms of
decision making, decisions that affect marketing marketing made possible thanks to the special
strategies and policies within a company. support provided by current IT technologies.
In the client-oriented approach, an important Digital Marketing (DM) according to Jon Orton
role is to identify customer preferences as it (Director, Marketing Operations at Uponor)
provides information about which product or (Orton, 2014) is defined as being "an agile
service to be provided and especially regarding framework that integrates three basic elements
the manner in which they are offered. In this that might be more internally focused: people
context, the customers’ profile analysis is an (influencing behavior change internally while
essential process which is based on data creating a compelling call-to-action or
availability of the company and its analysis. In experience for the targeted audience), process
the paper (Florescu et. al, 2005) consumer (investing in continuous improvement / change
behavior is defined as "a multidimensional management to evolve the marketing platform)
concept that covers all acts decision made at the and technology (disciplined approach to
individual or group level directly related to the technology adoption)".

International Journal of Economic Practices and Theories, Vol. 5, No. 3, 2015 (May), Special Issue on
Competitiveness and Economic & Social Cohesion, e-ISSN 2247–7225

In terms of technology, Cloud Computing is a interact with the brand through servicing and
technology with high potential in terms of delivery of digital media."
achieving digital marketing facilities because of The main directions of its use are currently
the support that is offers. In this paper it is promoting company products and services,
proposed a Cloud Computing based framework generating sales, increasing visibility of
that aims to identify the customers' preferences, advertised products/services. Compared to these
highlighting also the data collection approach. directions, the main processes used are:
The paper is structured into six sections, as - Online Behavioral Advertising - activity
follows: in the Introduction, there have being which consists in gathering information about
defined and described terms like consumer site visitors and targeted platforms in order to
behavior, marketing and digital technology send them customized offers according to their
Cloud Computing; in the second part, Digital preferences (Code 2015).
Marketing, describes the main directions for the - Influencer marketing - used to identify and
use of DM and the advantages and influence the opinions of those consumers with
disadvantages of its use; the third part, Digital influence over the other, accessing certain sites
Marketing (DM) and Cloud Computing (CC), or platforms that can in turn influence the
describes the main three CC models and the good/services selecting process of other
advantages of using them in the DM; in the potential buyers (Wong, 2015);
fourth part, DM and CC - Case Studies and - Collaborative environment - creating
platforms, there were described two major collaborative environments to help
companies, each one with its platform for CC organizations interconnection in order to
used for DM; in the fifth part, Identifying optimize the use and reuse of resources, access
Customers' preferences framework based on to data and information. Cloud Computing
cloud computing technology, a CC based technology can offer a number of solutions in
framework for DM is proposed, having the this regard.
main goal to identify the customers' preferences In Figure 1 are mentioned the main issues that
and clients' profiles. In the final part, a set of make easier achieving one of the main goals of
conclusion and future research directions are digital marketing, this means to identify clients'
mentioned. preferences based on data which the company
holds about them.
2 Digital Marketing (DM) Other processes consist of email marketing,
optimizing the websites to appear better
Digital Marketing is a special approach of the positioned in the results returned by search
marketing activity among the other types. It engines, and to improve the use of social
makes use of the IT technology in a big way networks to promote products/services.
(Morrow and Chiron, 2012; Greenberg and The main advantages of DM are:
Kates, 2013; Kaufman and Horton, 2014; Ryan,  the use of the latest technologies allows
2014). software platform for all mobile devices that
According to Techopedia (Tech, 2015), Digital targeted customers may have, to receive
Marketing "includes rack of internet marketing offers about products or services that might
techniques, such as search engine optimization interest them
(SEO), search engine marketing (SEM) and link  creating a direct connection with customers;
building. Also, it extends to non-Internet  less allocated resources for sites and
channels that provide digital media, such as advertisements designed for mobile devices;
short messaging service (SMS), multimedia  an efficient resource use for collaborative
messaging service (MMS), mobile callback and environments were the use of DM desired;
on-hold ring tones, e-books, optical disks and
games. A key objective is engaging digital
marketing customers and allowing them to

International Journal of Economic Practices and Theories, Vol. 5, No. 3, 2015 (May), Special Issue on
Competitiveness and Economic & Social Cohesion, e-ISSN 2247–7225

parts of the world, the percent is below 50%

(Figure 2).
Although dependent on the internet, digital
Internet /
marketing can improve a number of specific
Intranet Online issues using the technology of Cloud
advertising Computing. It offers a number of features that
can eliminate the differences between large
Customized companies and small/medium ones offering the
Digital Marketing Influencer Advertising
marketing and Offer
possibility of the latter to be more competitive
on the market.

Software Collaborative
and environment

Figure 1. Digital Marketing aspects

 the ease of goods purchase becomes

important when data store process is useful
when the customer is using a an electronic
device with internet access, because
customer related data is easier to obtain.
This process contributes to data collection
that can be used later to profiling him and in Figure 2. Internet penetration in the world
identification of its preferences; Source: http://wearesocial.net/blog/2014/01/social-
 provides facility to easier measure digital-mobile-worldwide-2014/
advertising if the commercials really get to
the customers, I they have consulted them One aspect on which attention is drawn in the
and, eventually, the time spent over an offer. paper (Lee, 2014) is that customers become
Among disadvantages we can mention: suspicious when they are receiving an offer
 the approach may be considered intrusive in highly customized, believing that it entails and
some cases in terms of customer violation customization costs. It is therefore
intimacy; recommended that an offer to be made to a
 mobile device type must be considered, in group of clients with similar expectations.
terms of software, screen resolution,
performances, access rights to the sites; 3 Digital Marketing and Cloud Computing
 large companies may allocate a larger
budget to specific activities of data analysis The concept of Cloud Computing is a relatively
to obtain profiles of clients (egg. greater recent one, occurring in the IT vocabulary eight
investment in hardware, more specialists to years ago. It is sustained by the service oriented
process data and obtain results, investments paradigm. In works like (Kavis, 2014; Erl and
in intelligent software sites , etc.); Puttin, 2013; Bahgat and Madisetti, 2013) is
 limited degree of internet access or local debated this topic. Services that are in the
intranets and broadband (traffic speed). In network cloud can be accessed from any device
general, at the international level, the that has internet or intranet connection,
highest percentage of number of people who depending on the cloud's properties. In essence,
have internet access is in the United States Cloud Computing is a set of distributed
(81%) followed by Europe (78%). In other computing services, software, and data storage
and backup for creating them (usually

International Journal of Economic Practices and Theories, Vol. 5, No. 3, 2015 (May), Special Issue on
Competitiveness and Economic & Social Cohesion, e-ISSN 2247–7225

surcharge), elements that can be accessed pricing, sales promotion, brand identification,
regardless of where the user is located research sales, direct marketing, product
geographically. placement, market research). In the paper (Patel
Therefore, Cloud Computing technology offers and Gohilu, 2014) there are mentioned some of
clients a large range of physical and virtual the most important aspects of the Cloud
resources, which the user can consume as needs Computing useful for Digital Marketing with a
them and paying exactly how much he has big impact as follows:
consumed. From a user/company perspective a) storing data of the user in the cloud is the
they seem limitless, being distributed in order to future solution for large companies and for
serve all the customers. medium and small ones. Forbes predictions
The three main models offered by CC are: companies like Cisco and Gartner indicates
Software as a Service (SaaS), Platform as a that one third of digital content will be
Service (PaaS), Infrastructure as a Service stored in the cloud until 2016, given that in
(IaaS) (Coyne et al., 2014). 2011 the percent was 7%.
SaaS model – it is assumed that the cloud b) In terms of storage average capacity for a
network owner has installed software and user, it will increase from approx. 0.5
applications on powerful computers and servers. terabytes in 2011 to 3.3 terabytes in 2016.
It gives access to them to users/customers who Financial Cloud technology services market
will use them through a web interface to is estimated to grow to $40.7B as it was
connect from any device they use connected to listed in 2011 at approx. $ 240 billion in
internet (Chappell, D., 2008). Examples of 2020. It is also estimated that by 2020 users
companies that use infrastructure services: to quit using local programs and
Saleforce, Workaday. applications installed on their computers in
PaaS model – the cloud provider allows to favor of web-based applications offered in
clients to design their own software applications the cloud. This will largely be due to the
using cloud infrastructure as well as having financial reasons and will force companies
control over them. Examples of companies that to extent migration to cloud.
offer this model are Force.com, Amazon Web c) reaching to the clients or to potential clients
Services and Microsoft Windows Azure. - one of the MD aims is to reach the
IaaS model - the model is characterized by the customer in as many ways to present and/or
fact that users can install or run their own promote the products or services. In this
operating system or application using the case, CC technology can offer a number of
infrastructure provided by the supplier. Supplier solutions. For example, a potential customer
shall provide the client storage resources, who watch TV and write a message sitting
processing, network elements and all that in armchair normally would not be affected
resources that client might need. An example of by digital marketing. CC technology makes
such a service is offered by the company it possible for a person, his data to be
Amazon (Amazon EC2). accessed via phone or TV without leaving
CC technology we can say that although is not a the room. This is possible because the
mature technology, is currently pretty much telephone and television services may be
used by companies around the world, integrated part of the same services cloud network that
in business planning and model. The main can communicate with each other.
advantage that digital marketing has based on
CC technology is the one that concerns the 4 DM and CC - Case studies and platforms
storage and data processing and analysis
necessary in order to obtain its customer profile a) IBM SmartCloud for Smarter Commerce – an
and to identify their preferences. This has a big all-in-one platform. It offers two major kinds of
influence over the all components of a solutions (IBM, 2015):
marketing plan (advertising, publicity, strategy,

International Journal of Economic Practices and Theories, Vol. 5, No. 3, 2015 (May), Special Issue on
Competitiveness and Economic & Social Cohesion, e-ISSN 2247–7225

 Smarter Commerce: Customer Engagement using Azure we can mention: NBC Sports,
Solutions – offers solutions also for channels Mazda, 3M, Xerox, AccuWeather.
and e-Commerce responsible for enabling
targeted and personalized marketing and 5 Identifying customers’ preferences
seamless cross-channel customer experiences framework based on Cloud Computing
and also for sales. Some aspects of this category technology
are: Real-time personalization, Customer
Engagement (B2B and B2C Commerce In this section we propose a framework based
Models), Customer experience management, on cloud computing technology which aims to
Digital marketing optimization, Omni-channel identify customer preferences and profiles to
Marketing, Omni-channel merchandise achieve their digital marketing. To achieve this
optimization, Customer analytics, Customer process, it is required to obtain a data collection,
experience suite, Customer experience data storage and analysis and the interpretation
management. of the results as well. The data collected can
For example, IBM real-time personalization cover many information categories related to
solutions, according to (IBM, 2015), “can help consumers, namely, data on demographic
an organization to turn individual customer information, personal actions taken by the
interactions into an opportunity for consumer, about the products and services
personalized, relevant engagement”. Real-time purchased, etc. Also it can be selected
personalization solutions enable organizations information regarding visited websites, in
to better understand each client behavior. By internet pages areas where mouse click are
doing that, some recommendation might be made, time spent on which website page. Given
offered regarding the desired products or the huge amount of data stored via the Cloud
services, customized offers, the impact of the Computing technology (which is not a problem
commercial over the customer behavior. for small and medium companies due to the
 Smarter Commerce: Partner and Supplier facility of accessing data stored in the cloud
Engagement Solutions – offers solutions for network) must be carefully determined what
B2B integration and secure exchange of data will be used. For example, data can be used
corporate data, executives in procurement, for email campaigns, direct marketing, social
supply chain and IT responsible for enabling networks, telemarketing, etc.
adaptive procurement and an optimized supply Another important aspect that contributes to the
chain. Some aspects of this category are: process of data analysis is the amount of data
Enterprise and category spend management, that is used in the analysis process. That is why
B2B integrations and collaboration, Supply a central database is necessary which can
chain management, Source to contract, manage all the data that can be obtained through
Supplier management, risk and compliance, electronic devices from consumers.
Managed file transfer, Aspera file sharing suite. In this case the database is provided as a service
b) Microsoft Azure – platform offered by cloud infrastructure. An advantage may be the
Microsoft. It offers complex solutions for service that can offer data facilities for data
DM (Azure, 2015). Among the most acquisition, data storage, processing, analysis
popular solutions that this platform offers and their interpretation in order to obtain
are: Web Sites and Web Hosting, Virtual customer profiles and to identify their
machines, SQL Databases, Machines preferences. This will be very helpful in order to
learning, Mobile BackEnds Services (allows generate and send personalized offers to them or
you to build IOS, Android and Windows consumer groups with similar behavior among
applications), Remote application (it brings members.
scale, agility and global access to a business Using such kind of information, a set of
applications). Among the clients that are measures regarding the results of the impact on
consumers in terms of offers received,

International Journal of Economic Practices and Theories, Vol. 5, No. 3, 2015 (May), Special Issue on
Competitiveness and Economic & Social Cohesion, e-ISSN 2247–7225

advertisements and promotions made in digital services are provided within the network cloud.
marketing as well may be achieved. Figure 3 The entire activity performed by the user can be
presents the high-level architecture framework monitored and relevant information can be
proposed site. stored in the primary database. All these
The proposed framework aims the customer that databases, being in the cloud, can easily
uses electronic devices with internet access. communicate with a central database containing
Using these devices, the customer (which can all the information about a customer. The
become consumer) will access various websites central database will be able to use a special
for consultation or even to purchase products service to update new information stored in the
and/or services. primary database. To optimize updating data
process in the central database is recommended
Cloud Computing
– Data services
to use a multi-agent system to reduce the
Electronic Data Data network traffic by collecting only relevant new
device storing analysis
Selecting and sending
Identifying customer preferences Base location of the software agents belonging
customized offers Client profile to the multi-agent system will be represented by
the central server used for data collection that
Figure 3. High – level architecture for the proposed holds the central database. An aim of an agent is
framework to visit the location of a primary database and to
extract relevant information. Then, it returns to
After accessing a site that requires a new the base location updating it with information
account, all information will be introduced to collected. Using this solution, network data
create the account records in a database related traffic is reduced because all the new
to that site, located in the cloud database. Also, information is sent from the primary database to
after logging in, all information on that user the central database while being carried by the
activity will be recorded (for example, pages mobile agent.
viewed, number of clicks on a category of Otherwise, it would take that with each update
products, the time spent to on a web page, etc.). of the primary database to be sent to the central
Once data are stored, they are analyzed and, database, which would generate high data
based on it, using an intelligent data analysis traffic.
technique (egg. data mining technique) it can be In the central server there will be a suite of
identified some of the future consumer programs and software that will facilitate data
preferences, and to create customer profiles. As analysis (Data Analysis Modules like Business
there is more information about the consumer in Intelligence Module), that make use of data
the central database, the profile will be more mining techniques. After analyzing the data, it
accurate by using amore attributes in the data can obtain information about customer profiles
analysis. Once a profile is selected, it can be and their preferences.
identified consumers fitting this profile and Clustering algorithms (such SimpleKMeans,
through various digital marketing techniques EM, Farthest First, Filtered Clusterer,
they receive customized offers. Hierarchical Clusterer) and classification (such
In Figure 4 is shown a detailed architecture for as J48, Id3, NBTree, RepTree, SimpleCart)
the proposed model based on cloud computing provides encouraging results in this. Based on
and it is described below. the profiles identified, customized offers can be
The user who uses electronic devices such as created for products and / or services. Because
mobile phones with different operating systems the system already offers at least one way to
(iOS, Android, Windows), laptops, tablets, reach the consumer (egg. by email, accounts
desktops can access via the Internet or intranet created on different platforms, by registration
applications, programs, platforms or other required to use certain applications) digital
services provided by the companies. All these

International Journal of Economic Practices and Theories, Vol. 5, No. 3, 2015 (May), Special Issue on
Competitiveness and Economic & Social Cohesion, e-ISSN 2247–7225

marketing can be done in a proper manner that  in order to retrieve information about a
will have a big impact over the consumer. consumer, it is necessary to offer their data
by creating an account by registering it;
 taking data regarding a client without an
agreement of his side and only making use
of the available infrastructure.
Data Group Storage
access Database

Phone Programs
6 Conclusions
uses access Central
data database
store Database

Intelligent Agents
In this paper was presented a Cloud Computing
access Recipient

store Database
Exchange Servers
based technology approach regarding how
technology may help achieve digital marketing
goal by showing how it may collect, store and
Filter offers depending
Identifying customer
Data Analysis
analyze data in order to identify consumer
on customer profile and Customer Data
preferences and their profiles. The framework
Profile n
proposed aims to highlight the facilities
Profile 1
provided for those operations under CC
Cloud Computing –
Data collection framework technology using to collect data from primary
Figure 4. A detailed architecture for the proposed cloud databases and send them to a central database
computing based framework
using agent-oriented technology. For the
proposed framework are mentioned also the
The advantages of this model based on Cloud advantages and disadvantages.
technology Computing are: The proposed solution offers benefits both
 a decreased amount of network traffic due to
consumers and companies, companies that want
the use of intelligent technologies to achieve great impact with their marketing
respective, agent oriented technology; campaigns but also want a resource
 easy communication between data sources consumption optimizasion. Using multi-agent
thanks to the compatibility between them, technology to collect data in the Cloud
their compatibility is assured by the network Computing technology is a solution that
cloud. delivers good results. In the following years, the
 data storage from various sources which phrase "move to the cloud" will become a
occupies a large space. Large amount of reality for many companies currently operating
data is needed to achieve more accurate after the classic way. CC migration is,
customer profile and preferences; according to the IT specialists and not only, the
 low cost from companies that use cloud direction that will greatly reduce the
services, such as for example the one that
competitive advantage that large companies
are using services for data storage and have in front of medium-sized and small.
analysis Because of its particularities, digital marketing
 lower resource consumption by companies will be that part of the marketing domain that
in order to get the results; will benefit most from CC technology.
 it is possible that all data of a digital Marketers need to understand better the benefits
marketing campaigns (input data, results, that cloud computing technology offers so that
impact on consumers) to be stored and they can enjoy all the benefits that it offers. In
compared against subsequent campaigns. this regard, it takes special training and
adaptation in understanding how the Internet
The limitations of the proposed framework are: and writing code for advertisements and offers
 Type of services provided by cloud service must be written and promoted.
providers and performance that
With the use of technology CC, storage data
characterizes them;
space and analysis, the submitting of the

International Journal of Economic Practices and Theories, Vol. 5, No. 3, 2015 (May), Special Issue on
Competitiveness and Economic & Social Cohesion, e-ISSN 2247–7225

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Hands-On Approach, 2013. Everyone: Connect with your customers, grow your
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Bucureşti, 2005

Author description

Radu-Ioan MOGOŞ is a PhD. Assistant at the Faculty of Cybernetics, Statistics and Economic IT,
Academy of Economic Studies from Bucharest. He is working in the IT and Cybernetics Economic
Department being member of the Romania Project Management Association. Research domains include
artificial intelligence, programmig, data analysis and project management.

Proceedings of the 52nd Hawaii International Conference on System Sciences | 2019

Challenges of Digital Transformation in SMEs:

Exploration of IT-Related Perceptions in a Service Ecosystem

Claudia Pelletier, DBA L. Martin Cloutier, Ph. D.

Université du Québec à Trois-Rivières Université du Québec à Montréal
Claudia.Pelletier@uqtr.ca cloutier.martin@uqam.ca

Abstract inexpensive. Indeed, SMEs have access to technology

applications in support of business functions, such as
Supported by a service ecosystem that is marketing (e.g., platforms for e-commerce, including
social media applications); finance and accounting
increasingly immersed into the digital transformation,
(e.g. open source software or mobile secure payment
SMEs have access to turnkey IT applications, which
solutions) or human resources (e.g., collaborative
may come free of charge but not free of concerns. tools, such as videoconferencing, shared calendars and
Using the group concept mapping (GCM) as the instant messaging). These IT can either be completely
methodological framework, a concept map was free or pay per use as they are based on a service-
estimated for a group of entrepreneurs in SMEs. Six oriented architecture (SOA) accessible over the
main themes were identified as conceptual Internet [4].
representations. The perceptions of the three main In addition, designed and developed by IT
actor groups which interact in the ecosystem (i.e. specialists, turnkey IT applications, and their
entrepreneurs, IT specialists, socioeconomic support infrastructure, are presented in a way that suggests a
professionals) were estimated and compared. The reduction in the complexity of management processes,
analysis of IT-related perceptions shows as well as more fruitful customer, supplier and
entrepreneurs tend to rank as relatively more business relationships. As useful and necessary as they
may appear to be a priori, the use of this type of IT
important the IT evaluation support identified on the
may pose several important challenges for SMEs:
concept map rather than the nature of the digital (1) the fair and realistic IT needs assessment [5] and,
strategy to be implemented when compared with IT as a result the coherence of IT choices with respect to
specialists and socioeconomic professionals. The business objectives (e.g. IT strategic alignment) [6];
discussion highlights issues of perceptions which vary (2) the need for skills required to ensure the
among these interacting actors, and stresses the need management of newly implemented IT [7]; (3) the
to develop a shared understanding of IT challenges in consideration of a growing complexity in the
a service ecosystem. ecosystem [8], including the establishment and
management of relationships with IT specialists and
1. Introduction service providers such as socioeconomic support
professionals (e.g. management specialists in public
To better support operations and management organizations).
activities, and to access resources and skills they do In parallel with needs of entrepreneurs and the
not possess internally, small and medium-sized growing IT offer for SMEs and their users, the use of
enterprises (SMEs), with fewer than 20 employees expressions such as “digital transformation” and
who represent 70% of all businesses in Canada [1], are “digital strategy” is increasing in socioeconomic and
under pressure to adopt and use information political arenas [3]. These new expressions, which
technology (IT) more intensively. This paper definition remain unclear, lead to highly uneven
examines issues and challenges in the adoption and use perceptions of issues experienced among actors in
of turnkey IT applications by SMEs from an ecosystems [5]. Adding to challenges of divergent
ecosystem perspective [2]. representations of this phenomenon, the imperative to
Based on the need to take the digital shift and engage into the digital transformation is presented to
improve business competitiveness on the world stage SMEs in ways which emphasizes the urgency of large-
[3], the prevailing discourse carries with it the notion scale and quick actions. To do so, the socioeconomic
that IT has become more accessible, user-friendly and support professionals are called upon and mobilized to

URI: https://hdl.handle.net/10125/59934
ISBN: 978-0-9981331-2-6 Page 4967
(CC BY-NC-ND 4.0)
offer support, training, and expand the service range (p. 105); (2) the attention given to actors’ cognition
[9], especially in the area of digital and innovation which is also relevant to a service-dominant logic
support for SMEs across all industrial sectors [1, 3]. (S-D) approach in an ecosystem that relies on actor-to-
Hence, several socioeconomic support organizations actor (A2A) orientation for value creation [19]; (3) its
are currently expressing the need for clearer focus on actors, and their conceptualizations,
definitions and guidelines from all levels of behaviors and relationships. All of the above is
government. consistent with specificities of the entrepreneurial
Nevertheless, even with the complementarity of context, SMEs and their business environments [20,
specialized IT products and services offered [10], all 21].
actors involved might not hold a common or shared
perception regarding issues of IT adoption and use in 2.1. Social and relational dimensions of digital
a business context [11, 12], and this problem ought to transformation in SMEs
be investigated to help develop effective digital
transformation interventions [5, 13]. The notion of Digital transformation in SMEs addresses
representation based on the concept of sensemaking psychological inertia at the individual level (e.g.
seems promising to tackle this issue [14]. Specifically, entrepreneurs), socio-technical inertia at the group
the group concept mapping (GCM) as a level (e.g. IT specialists), and economic and political
methodological framework is employed [15, 16]. The inertia at the systemic level (e.g. socioeconomic
objective of the study is to explore the different support professionals) [13]. The reasons are threefold.
perceptions pertaining to IT and digital transformation First, the specific and emerging IT needs that result in
issues within an ecosystem that includes the increased interdependence of varied and more
entrepreneurs, IT specialists and socioeconomic frequent new relationships among actors working
support professionals. Hence, the research question is: together [22]. Second, the possibility that critical
How do three groups of actors interacting in a service resources or key technological activities for the
ecosystem primarily dedicated to SMEs collectively enterprise and its operations stand outside
perceive and assess challenges of digital organizational boundaries [10], especially regarding
transformation when adopting and using turnkey IT resources required as input into innovation and
applications? services offered [17]. Third, the need to better defined
Given the growing interdependence and among actor boundaries and conditions which impact
redefinition of relational and communication activities and exchanges [9]. In other words, given all
boundaries in the digital era [17], the research challenges of digital transformation, SMEs are
contributions are threefold: (1) identify needs in terms increasingly in need of specialized IT resources. These
of human, financial and time resources that must be resources are accessible in the business environment
allocated by SMEs; (2) define specific technical skills and on the Internet [4]. Their effective management,
desirable in this context [9], and (3) focus on the however, requires some attention be given to relational
organizational and strategic capabilities that can be [10], social [11], and cognitive dimensions [18]. This
supported through better targeted decision-making in is mainly because these resources support the
IT-oriented socioeconomic interventions [2]. development of new behaviors [23], as much as key IT
competences in SMEs [8], jointly with IT specialists
2. Background and other socioeconomic actors in the ecosystem.
Hence, for SMEs facing digital transformation, the
Several IT-related topics have been studied with ecosystem is of paramount importance for two main
two main approaches [11]. One approach focuses on reasons. First, the added value for the enterprise is
the “what”, that is, the “content” related to IT, created mainly by relationships established on a free-
strategies, structures, and plans that support them. This form basis rather than based on a vertical chain of
approach dominates the information system (IS) field command [19, 24]. Second, an emphasis on the
[18]. The other approach focuses on the “who”, i.e. relational aspect of IT raises questions on the part of
actors within the organization, their values, beliefs, entrepreneurs on elements, both personally and
attitudes, communications, as well as their socially important to the enterprise [23]. Indeed, actors
understanding of issues experienced. Hence, the are faced with the need to divert their attention away
reasons for the greater relevance of the latter approach from a product or service process that occupies a
to answer the research question are: (1) its coherence significant part of their time, to set up and manage new
with the definition of IS/IT-enabled organizational ones, such as non-existent structures or new
transformation, which is “a global phenomenon in relationships induced by turnkey IT applications [17].
which psychological, socio-cognitive, sociotechnical, The accelerating digital shift places IT specialists
economic and political considerations intertwine” [13] in front of two challenging situations regarding social

Page 4968
interactions among each other or with other actors. are outside of company pipelines, users/user
First, the need to develop managerial and business communities, governmental bureaucrats/policy
competences that may not be aligned with personal makers, and consortiums” (p. 6). Based on their
and social skills which are inherently more technical categorization, the five business ecosystems are
in nature [25]. Second, the questioning of certain actually components of the second type of ecosystem
collective interests, so as to favor a homogenous introduced. Thus, they broaden the composition of the
grouping of specialized professionals [18, 26], a group/network formed as well as they distinguish
situation that is relatively common in the field of IT different types of relationships their members hold
and technological ecosystems. Moreover, given an among them.
increasingly actor-to-actor and service-oriented A focus on organizational actors makes possible
perspective where “it’s all B2B” [19], IT specialists the examination of longer-term IT-related issues [11].
are called in to design and develop IT applications of To do this, actors can rely on an increased role for
commercial value as much for them, as for their IS/IT [13], or new behaviors and service innovations
customers. From a learning perspective, this situation by actors involved, either at the development or at the
refers to the development of a type of co-specialization deployment phases [17]. Hence, the digital
concerning information and know-how between IT transformation implies a service-dominant (S-D) logic
specialists and users with the underlying idea of [28]. In short, this orientation is specifically based on
enhancing the lived common experience [10, 27]. This networks of actors involved in a given system. Their
corresponds to the “value cocreation framework” behaviors and relationships they establish make
where service is defined as a “process of using one’s possible the joint resource integration rather than the
resources for the benefit of another, rather than an maintenance of a more limited producer/consumer
output (i.e. an intangible product)” [28] (p. 518). The relationship. Thus, it is through the exchange of IT
social aspects surrounding the work of IT specialists resources and specific skills and knowledge which
interacting with other actors are crucial. Indeed, as come along with them, that various actors
documented, it is through shared understanding among (entrepreneurs, managers, IT specialists, specialized
actors the 'positive' break-up of functional boundaries stakeholders, consultants, etc.) build value as part of a
regarding learning and IT in the SME context can cocreation process. In other words, the S-D logic of
occur [4, 29]. digital transformation goes beyond the microeconomic
Finally, with respect to socioeconomic support perspective of the traditional business ecosystem of
professionals, particularly the ones focused on customers, suppliers and other stakeholders with
financial services, their client needs change and evolve hierarchical or strictly complementary relationships
rapidly in response to digital transformation pressures. [19, 28, 31].
In other words, they may not feel prepared enough to To summarize, the digital transformation from a
offer this emerging or higher knowledge-based service ecosystem perspective is based on actors not
intervention [3, 9], given the rising strategic fundamentally different, but who exchange skill and
importance of IT for SMEs [30]. This includes the knowledge resources of various kinds to meet specific
clarification of existing guidelines to better adapt needs [32]. We no longer refer to resource
existing programs and socioeconomic support production/consumption, but to the resource
interventions to the emerging digital business context integration between organizations during exchanges
and its ecosystem [5]. whose coordination is based on “rules of the game”
shared by the actors. [19, 31]. This supports a complex
2.2. Business ecosystem or service ecosystem? vision of the digital transformation process that begins
with humans in relation to each other and not
Tsujimoto et al. have identified five types of exclusively on technological artifacts [10, 13]. Given
business ecosystems: a) digital; b) complementary this, the ecosystem of interest is based on the S-D logic
(sub-industry); c) supplier; d) business group (M&A); of a service/multi-actor ecosystem [2, 19].
and e) global professional human networks. Although
their definitions may vary, researchers focus on two 2.3. Challenges of digital transformation in
main elements, namely actors/players concerned SMEs
(business player networks), their behaviors and the
mechanisms acting in the background (network One of the challenges of adopting, using and
dynamics and patterns) [2] (p. 4). They also managing turnkey IT applications in SMEs, is the
distinguish these networks from another type of struggle to assess IT needs, as much as the
ecosystem called “multi-actor network” that includes contingencies to which they are exposed [8, 21]. SMEs
“entrepreneurs and private investors, innovators who often achieve mixed results because IT value creation

Page 4969
is way more difficult than anticipated at the onset by “digital strategy” [3]. Based on an increased use of
entrepreneurs and managers. This situation may seem IS/IT that involves different opportunities for
paradoxical given IT is unavoidable [7], and is innovation, specifically for service innovation [17],
sometimes directly imbedded in the business model of organizational transformation is “understood as a
firms [33]. In addition, turnkey IT applications are process that engenders a qualitatively different
usually offered through a service-oriented architecture organization” [13] (p. 103). In an actor-to-actor (A2A)
(SOA) [34], so companies can access different features orientation for value creation [19], the ecosystem
and set options at various costs. There is a number of offers a wide range of resources and services through
explanations for this. First, the difficulty for SMEs to IT specialists and various suppliers and professionals
achieve a strategic alignment of IT through technology (e.g. service/multi-actor ecosystem). These represent
choices consistent with business objectives [29]. major challenges given the growing strategic role of IT
Second, a one-size-fits-all approach to the adoption specialists [2, 34]. The situation has also evolved for
and use of IT that does not take into account specific socioeconomic support professionals who must
needs and expectations of entrepreneurs and SMEs, as reconsider their roles as well as the nature of their
well as their specific characteristics and contingencies interventions [9].
from the environment [21]. Third, a focus that remains Thus, all actors involved ought to (re)evaluate their
on operations within a short time horizon [20]. Fourth, exchange modes given resource integration, including
a perception limited to IT as a “commodity” [30]. the way they manage multiple actors in a “real” service
Fifth, informal management practices that restrict the ecosystem [28, 31]. In other words, a context such as
use of IT for greater strategic purpose [8]. Finally, a a service ecosystem should be based on “relatively
business context within which it is not uncommon that self-contained, self-adjusting system of resource-
IT resources and technological competences are integrating actors connected by shared institutional
underestimated, poorly perceived and presented, arrangements and mutual value creation through
idealized, fragmented or simply misunderstood by service exchange.” [28] (p. 518). To do this, the
entrepreneurs and managers as well as by internal and exploration of shared ideas [18], common interests
external actors [11, 25]. [26], shared languages, including terminology used by
In other words, SMEs have access to turnkey IT various actors [12, 25], symbols, institutions and
applications that support a number of business technology that interface with the actor needs [19] as
functions (e.g. Google Analytics for marketing; well as dimensions of IS-enabled organizational
Amazon, PayPal for e-commerce or other social media transformation which relate to inertia and/or socio-
solutions, including Facebook which offers a range of technical path dependencies is key [13].
features for SMEs; Skype, Teamviewer and Messenger Given what precedes, the use of representations
for collaboration, etc.). Nevertheless, as useful and based on the notion of sensemaking appears promising
necessary as they appear at first glance, the adoption [14]. Specifically, because representations are useful
and use of these IT by SMEs pose significant to study: (1) cognitive elements, behaviors, and
challenges to strategies and processes they require relationships [23, 33]; (2) decision-making in a
upfront [7, 20]. Emerging needs include indispensable dynamic environment [26] and, finally (3) similarities
relationships with IT specialists and different service and differences displayed by managers in managerial,
providers, such as socioeconomic support strategic and technological terms [18].
professionals. Hence, exchanges between all these
actors could at times be difficult, given the lack of 3. Methods
shared terminology and language [25], or even a
common understanding of business issues and needs Relevant for examining the collective or group
[11, 12]. aspects related to IT [18], the present study employs
the group concept mapping approach. The GCM is a
2.4. Making sense of digital transformation mixed methods-based approach (qualitative/
quantitative) employed with groups of participants. It
On the one hand, the emergence and intensification is used to highlight deliberate and unintentional
of the use of IT for digital transformation, and the shift learning systems, as well as complex interactions
from a traditional “producer/consumer” ecosystem among underlying dimensions of business and service
(e.g. business ecosystem) has become more ecosystems, including those of very small
challenging for SMEs [7]. One the other hand, the enterprises/SMEs [35]. The GCM method appears in
entrepreneur who wants to ensure business success is the field of program planning and evaluation where it
also strongly encouraged by public and support was first introduced [36, 37].
organizations to initiate a rapid “digital Based on a group construction of the reality
transformation”, as well as to elaborate a deliberate experienced by actors in the service ecosystem [11],

Page 4970
the GCM is used to study the adoption and use of CS Global MAX® (www.conceptsystems.com). First,
turnkey IT applications. The method consists in the data collected during Task 2, Step 3, organized in
estimating the representations, on the one hand, and to a total similarity matrix formed with participants’ item
evaluate the perception, on the other hand, of the sorts were analyzed using non-metric
various issues associated with the digital multidimensional scaling analysis (MDS) [38], to
transformation from the perspective of entrepreneurs, generate the bidimensional X,Y coordinates of the
IT specialists, and socioeconomic support group’s dot map spatial structure. Second, the X,Y
professionals. There are six methodological steps as coordinates of the dot map are used to conduct
part of the methodological framework as conducted in hierarchical agglomerative cluster analysis (HCA)
this study. [39], so that non-overlapping clusters can be identified
Step 1 Preparing for GCM was conducted with a on the resulting group concept map for interpretation
steering committee established for the project. It and use.
included the research team and socioeconomic actors Step 5 Interpreting the maps takes the results from
involved in delivering IT training for entrepreneurs the Step 4 back to the steering committee
and SMEs. This step is for the purpose of timeline supplemented with additional interested participants to
definition and logistical planning, as well as to identify determine and interpret the ‘definitive’ concept map.
participants. It was decided that three groups of actors There are two reasons for this. First, participants are
would be recruited for the study: entrepreneurs, IT given the printout from the HCA starting from 12
specialists, and socioeconomic support professionals. down to 5 clusters. For example, the printouts include
For Step 2 Generating the ideas, group discussions the list of items on a per cluster basis, showing at each
(GD), taking the form of brainstorming sessions, were iteration the merger between two clusters on the
held. A total of six (6) GDs were held with n = 39 concept map. The role of the HCA is to help determine
participants in total. During GDs, participants were the spatial conceptual proximity between clusters of
prompted to share ideas to complete the following items in a strictly statistical sense. Second, participants
sentence: “Regarding the use of turnkey IT debrief among them about the conceptual proximity of
applications and electronic platform, a particular issue the proposed cluster merger and decide whether items
for my organization would be….”. After ideas were on these clusters ought to be merged or not. The
collected and synthesized, a total of 90 items were exercise was conducted with entrepreneurs’ HCA
formalized. Examples of statements obtained during outputs of item sorts. During the group debriefing
GDs are: ‘To use IT to develop my enterprise’; ‘To discussion, participants settled on a six cluster
measure the impact of IT tools (e.g. ROI, sales, representation (a stylized version of the final concept
performance)’; ‘To link my expectations with the map is in Figure 1, section 4.1). Given clusters are
reality of apparent user-friendly IT turnkey platforms’; formed of items, and the HCA results reveal where
‘To be better informed about available IT training’; they are located on the concept map, the scale results
and ‘To establish transparent communications are averaged out for each item. It becomes possible to
between entrepreneurs and IT specialist about determine perceptions the three groups hold about the
expectation and deliverables to avoid a deception’. various themes each cluster represents, and to compare
The Step 3, Structuring the items, was conducted them. Illustrative results comparing the relative
in person with entrepreneurs as the chosen importance for each cluster by actor profiles are
participants’ profile to estimate its conceptual displayed in Figure 2, section 4.2.
representation. Three tasks were completed by this The Step 6 Answering questions uses the estimated
group of participants. Task 1 included a short group concept map (representation) to analyze
contextual survey. For Task 2, participants were asked associated perceptions, from both a theoretical and a
to sort the 90-item deck of cards provided into piles to practical managerial perspective for all three groups
organize them based on the conceptual proximity of (entrepreneurs; IT specialists and socioeconomic
contents. The Task 3 included rating items on two support professionals).
5-point Likert type scales to obtain perception
measures of relative importance and relative feasibility 4. Results
(1 = not important/not feasible, and 5 = extremely
important/extremely feasible). For this task, the rating This section includes two sets of results. The group
data were also collected from 14 IT specialists, and concept map conceptual framework for entrepreneurs
from 14 socioeconomic support professionals so that is described in section 4.1, and the relative importance
perception measures could be estimated for all three rating by clusters across actor profiles (entrepreneurs,
groups. IT specialists, and socioeconomic support
The Step 4 Estimating concept maps includes professionals) are presented in section 4.2.
multivariate statistical estimations using the software

Page 4971
4.1. Entrepreneurs’ conceptual framework including: determination of the appropriate online
marketing performance measures; enterprise brand
The group concept map as determined by and image; online contents; information updating; and
entrepreneurs comprises six non-overlapping clusters striking the right balance in between IT usefulness and
(see Figure 1), where the number of items in each one ROI.
is reported in brackets, and these are: IT Expectations and Deliverables is a 25-item
 Digital Strategy (12) cluster, the most densely constituted. This cluster
 IT Evaluation and support (13) highlights elements of the relationships between
 IT Expectations and Deliverables (25) entrepreneurs and IT specialists. Some of these
 IT Competence Development (15) include: the need to establish and maintain transparent
 IT Use and Understanding (13) discussions between entrepreneurs and IT specialists
 IT-Related Attitudes and Behavior (12) regarding deliverables; the quality/price ratio for the
Each cluster comprises a number of items that were type of business; simple language communication;
allocated to them based on the HCA. The GCM results, optimal service levels.
unlike most alternative concept mapping methods, are The IT Competence Development cluster has
bottom-up, participative, rather than top-down. This 15 items to describe the different types of training
means they are based on statistical estimation, from needed about IT, fulfilling both customized and
participants’ content coding, rather than on general IT-related needs. Some of these relate to
researchers’ content coding. Thus, it is depicting a general knowledge about IT, or more specific
complex system [40]. The stress value, a measure of technical information, which can be obtained from
internal statistical reliability is 0.29; which is interactions and communications with socioeconomic
considered appropriate within the range expected in support professionals.
GCM pool studies [16]. The IT Use and Understanding is a cluster of
The map shows that as part of their representation, 13 items. Some of them concern the choice of the
entrepreneurs have placed the Digital Strategy at the appropriate IT application and the determination of the
center of their systemic representation and it includes use of IT associated to specific business needs, and as
12 items. Technically, all other concepts emerge from well as making sure that legal and technical aspects,
the center of that system and go back to it [40]. On this and that metadata produced by IT applications are part
cluster, the item “Use IT to develop my enterprise” is of what needs to be managed.
right at the center of the concept map. Other items Last, but fundamental, the IT-Related Attitudes and
relate to setting IT objectives in relation to revising Behavior cluster includes dimensions such as the
business objectives; invest in IT from a qualitative blurring of the frontier between the personal and the
standpoint (purpose, timing); and taking the required professional life and imperatives; the need to dedicate
time to determine the various options that meet the more time to the passion underlying the business than
business strategic objectives. to IT management; social media crisis avoidance; and
A cluster is dedicated to the notion IT Evaluation to set expectations at the appropriate level regarding
Support and this one includes 13 items. This cluster the adoption and use of turnkey IT applications.
addresses all types of “evaluation” support needed,

Support for IT use and

IT Evaluation understanding

Digital Strategy

IT-related Attitudes IT Competence

and Behavior Development

IT Expectations
and Deliverables

Figure 1. Conceptual representations of entrepreneurs

Page 4972
4.2. Pattern matches between actors’ specialists and socioeconomic support professionals
perception of relative importance considered that the Digital Strategy ought to be the top
The figure 2 presents and compares the pattern Second, the IT Expectations and Deliverables; IT
matches regarding the relative importance of each Competence Development; and IT Understanding and
cluster of the concept map between the three groups, Use clusters were considered, in absolute terms
on the five-point scale. relatively less important by entrepreneurs than by the
There are a few distinguishing features in this other two profiles. But their relative ratings were
graph. First, the entrepreneurs rank first the IT similar among them on the scale.
Evaluation Support, while IT specialists and Finally, it would be interesting to further
socioeconomic support professionals perceived the investigate why all three groups have rated, as
Digital strategy as relatively more important. Both IT relatively low IT-related Attitude and Behavior.

Small Business IT Specialists Support
Entrepreneurs Professionals
4.55 4.55

IT Evaluation Support

Digital Strategy
IT Expectations and Deliverables
IT Competence Development

IT Understanding and Use

IT-related Attitude
and Behavior

3.40 3.40

Figure 2. Pattern matches per actor profile of relative importance:

Entrepreneurs, IT specialists, Socioeconomic support professionals

5. Discussion socioeconomic support professionals can overlap in a

number of ways, yet the assessment of the relative
The results highlight how IT issues are perceived importance of their respective action set reveals an
and evaluated in different ways, depending upon one’s essential linkage regarding actors’ success and the one
position in the ecosystem (i.e., entrepreneurs, IT the ecosystem.
specialists, socioeconomic support professionals). From a relational view, to generate a real
These types of disparities among all actors are competitive advantage four conditions must be met by
documented in the IS/IT literature [25]. However, they its actors: (1) invest in specific relationship-type
had not been examined on the semantic front where assets, hence the use of turnkey IT applications
they refer to the common language shared between designed and developed outside the enterprise;
groups. Following Reich and Benbasat (2000), the (2) have an exchange of knowledge through
terminology used by different groups has an impact on collaborations or services that extend beyond the
the language shared (or not) between actors [12]. boundaries of the enterprise; (3) combine resources
Hence, the results startlingly show there remains work and capabilities into inimitable assets, which respect
to be done to ensure that digital transformation actors the idiosyncrasy of SMEs needs to offer differentiated
can achieve more effective communication exchanges products/services to various markets based on
that will, in turn, support more fruitful relationships to different strategies; and (4) lower transaction costs
sustain competitiveness [10], including innovation in through “unified” governance with socioeconomic
their respective service offers [17]. In addition, the actors called in to play a new role as digital support
issues identified by entrepreneurs, IT specialists and professionals [10]. For example, through interventions

Page 4973
which cover both the explicit (information) and the seldom used to study complex phenomena such as
tacit (know-how) IT components [41]. Given the S-D digital transformation [13, 23]. Founded on the
logic, this situation means the ecosystem is built on: perception measures obtained from three groups of
(1) service as a fundamental basis of exchanges; actors of a service ecosystem whose main activities are
(2) value cocreation by multiple actors; (3) integration dedicated to SMEs, the theoretical contributions of the
of resources by all social and economic actors; research allow for a more precise identification of
(4) value that is determined by the beneficiary, and issues facing SMEs in turnkey IT applications
(5) value cocreation that is coordinated through adoption and use. In doing so, the contribution of the
“shared institutions” (e.g. social norms, rules, symbols GCM framework highlighted the complex interactions
and other normative and heuristic guidelines) [19, 28, found in such a context. Also, the results provide a
31]. better understanding of the boundaries and
At the conceptual level, individual intervention relationships that exist between entrepreneurs, IT
support programs allow to act on the idiosyncratic specialists, as well as socioeconomic professionals
elements, whereas those made in groups rather aim at providing support services, a situation more
elements of similarities [18]. In any case, better commonly found in SMEs in the digital age.
targeted interventions, given empirical results, cover On the practical front, the research contributes to
the intellectual (knowledge), social (mutual the awareness, and offers a broader reflection about IT
commitment) and relational (transfer) dimensions and digital transformation challenges on the part of
required to ensure greater long-term technological and entrepreneurs. For IT specialists, the sharing and
strategic coherence [6, 11]. By doing so, transfer of knowledge among participants to the
socioeconomic support professionals could act as a identified challenges of using turnkey IT applications
catalyst between SMEs and IT specialists when already suggests the importance of developing and
sharing knowledge [10, 27], even if the environment using a more common vocabulary and a language that
remains dynamic [26]. is closer to the business management going concerns
Finally, there is a common thread to the three [25]. For socioeconomic support professionals, the
groups of actors examined in terms of adoption, use aim is to be in a better position to develop programs
and technological change. More specifically, although which support the digital shift with interventions
interactions are growing between actors, focused on similarities and differences that emerge
communications, as much as service exchanges are among SMEs [19], and this, whether they are working
still struggling to be established in ways that are really in different business sectors, they already use turnkey
rooted in the recommended sociotechnical approach to TI applications or simply anticipate doing so.
IS/IT [10, 13]. Thus, it is important for IT specialists Further analysis of issues already identified could
to be cognizant of two things: (1) the “dependence” of focus on understanding established relationships as
SMEs on their products and services will vary greatly well as desirable behaviors and decision-making
based on their specific needs [21], and (2) the concrete principles for all actors in the ecosystem examined [2,
(or not) contribution of IT to the competitive 17, 26]. As seen, this includes an in-depth
advantage of some SMEs [27]. In other words, are investigation of some specific IT-related Attitudes and
turnkey IT applications adopted and implemented by Behaviors.
SMEs complementary resources of a strategic nature
for intra or inter-organizational service innovation? 7. Conclusion
[17]; or are they for additional organizational
resources? [10]; or are they simple operational The digital transformation is accelerating and has
commodities? [30]. The anticipated answer to these implications for actors who perceive and understand
questions is also central to explaining priority the situation and its challenges in multiple ways while
differences highlighted between the relative maintaining both cooperative and competitive
importance of issues identified by entrepreneurs, IT relationships [17, 19]. Moreover, although promising
specialists and socioeconomic support professionals in for the digital transformation of SMEs, the growing
the study. To summarize, the results precisely target universe of IT applications of all kinds requires
the importance of social interactions and user significant efforts in a context generally not equipped
perceptions for IS development and implementation to cope with business requirements, at once
and/or adoption and use of existing IT [33]. technological and managerial. As seen, a successful
and consistent digital transformation requires
6. Contributions and future research investing not only in IT artifacts and infrastructure
(e.g. hardware, software, networks, etc.) [13, 34], but
Despite the repeated interest for the “who” also in strategic, intellectual, structural, formal and
approach in IS/IT-related research [11] it remains informal, social and cultural dimensions [6]. Thus,

Page 4974
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Is Your Business
Ready for a
Digital Future?
SUMMER 2015 Successfully incorporating today’s digital technologies
requires companies to operate in new ways. However, many
employees are not impressed with how their companies are
responding to digital trends.

Gerald C. Kane
Doug Palmer
Anh Nguyen Phillips
David Kiron

Vol. 56, No. 4 Reprint #56415 http://mitsmr.com/1BkggSi

D I G I T A L B U S I N E S S : B U S I N E S S T R A N S F O R M AT I O N

Is Your Business Ready

for a Digital Future?
Successfully incorporating today’s digital technologies requires THE LEADING
companies to operate in new ways. However, many employees QUESTION
are not impressed with how their companies are responding to How are
digital trends. technologies
the way
do business?
FOR THE 2015 SUPER BOWL football game, McDonald’s Corp. hatched an ambitious mar- FINDINGS
Simply implement-

keting plan — to give away an item related to every commercial airing during the game. The catch ing or using digital
was that McDonald’s managers didn’t know what products were going to be advertised during the technologies is not
game. Some were surely going to be big-ticket items, such as automobiles, while others — like alco-
The key to successful

hol — would be illegal to give away as part of a contest. digital transforma-
tion is less a
Pulling off this feat required the company to assemble a digital newsroom where McDonald’s em- question of technol-
ployees from marketing and legal teams, representatives from the company’s various advertising ogy than of strategy,
culture and talent
agencies, as well as employees from the company’s enterprise social technology provider, New York- development.
based Sprinklr, could engage with the environment as it unfolded. McDonald’s ambitious marketing Many survey re-

spondents question
goal required real-time reactions and monitoring and analysis of social media trends, as well as on-the- whether their com-
pany’s leadership
spot decision making to produce the best spending decisions about which products to has the skills and
give away to maximize exposure cost-effectively. The project brought together abilities to lead the
organization in a
employees from various departments and business partners to work digital environment.
together during the most expensive and high-profile advertising
hours of the year in the United States. The effort was
largely successful, drawing 1.2 million retweets,
including some from high-profile celebrities
such as Taylor Swift, and becoming a globally
trending topic on Twitter.
In reflection, Lainey Garcia, manager of
brand reputation and public relations at
McDonald’s, noted of the effort: “I think for
me, the biggest takeaway was the power of
integration. You can accomplish amazing
things when you have all those pieces work-
ing together collectively in a holistic way,
and when you’re putting all of your re-
sources together. I really think it’s almost

McCormick & Co. Inc., a 126-year-old spice and flavor

manufacturer, developed a FlavorPrint algorithm that
represents the company's flavors as a vector of 50 data points.

D I G I T A L B U S I N E S S : B U S I N E S S T R A N S F O R M AT I O N

what Ray Kroc, our founder, would always say, Using results from this quantitative and qualitative
‘None of us is as good as all of us together,’1 and I data, we provide insights regarding the state of dig-
think it really brought that to light.” ital business and help managers understand some
To achieve this level of integration, McDonald’s of what they need to know and do to navigate and
had to employ multiple digital technologies and benefit from these trends.
reconfigure its internal communication and opera- A key concept that drove our research is digital
tional processes, as well as its relationship with business maturity. We asked survey respondents to
business partners. While this one-time, real-time “imagine an ideal organization transformed by digi-
event could be managed from a temporary digital tal technologies and capabilities that improve
newsroom, McDonald’s successful Super Bowl ini- processes, engage talent across the organization, and
tiative wasn’t accomplished only on Super Bowl drive new and value-generating business models”
night. The company, which the CEO has acknowl- and then to rate their company against that ideal on
edged initially lagged some competitors in a scale of 1-10, with 1 being the farthest from that
incorporating new digital technologies into its res- ideal and 10 being the closest. (See “Rating an Orga-
taurants,2 has been working for the past two years nization’s Digital Maturity.”) Forty-five percent of
to transform itself into an organization that, en- respondents placed their companies in the middle or
abled by digital technologies, can be more agile, “developing” group (ratings 4-6), while 29% put
experimental and collaborative. their companies in the higher “maturing” category
As the McDonald’s Super Bowl project illus- (ratings 7-10). The remaining 26% placed their
trates, successfully incorporating today’s digital companies in the lower “early” (ratings 1-3) group.
technologies requires companies to work in new (See “About the Research” for an explanation of how
ways. To explore how digital technologies are we defined digital business maturity.)
changing the way companies do business, MIT Perhaps the most important overarching insight
Sloan Management Review and Deloitte3 surveyed from our research is that the key drivers of digital
more than 4,800 respondents and interviewed 19 transformation are not the digital technologies
business and thought leaders. (See “About the Re- themselves. While we found some differences in
search.”) Our central question: How are companies technology usage by respondent companies across
using digital technologies — such as social media, high and low digital maturity and by companies
data and analytics, mobile devices and cloud across industries, there was far less difference than
computing — to compete and operate differently? we expected in the types of digital technologies im-
plemented and the extent to which they were used.
Instead, we found greater differences between
To understand the challenges and opportunities associated with the use of social and high- and low-maturity companies across the busi-
digital business, MIT Sloan Management Review, in collaboration with Deloitte, con- ness aspects of the companies — in particular,
ducted a survey of more than 4,800 business executives, managers and analysts from strategy, culture and talent development. These
organizations around the world. The survey, conducted in the fall of 2014, captured differences represent an important distinction
insights from individuals in 129 countries and 27 industries and involved organizations
between companies with high and low digital
of various sizes. The sample was drawn from a number of sources, including MIT
alumni, MIT Sloan Management Review subscribers, Deloitte Dbriefs webcast sub- maturity and offer insights for executives.
scribers and other interested parties. In addition to our survey results, we interviewed
business executives from a number of industries as well as technology vendors to The Importance of Digital Strategy
understand the practical issues facing organizations today. Their insights contributed
Simply implementing or using digital technologies
to a richer understanding of the data.
As part of the survey, we asked respondents to rate the maturity of their organiza- is not enough. For example, listening to Twitter
tion’s digital business practices on a scale of 1-10: “Imagine an ideal organization data alone is inadequate. Companies must know
transformed by digital technologies and capabilities that improve processes, engage what to listen for, how to analyze and interpret the
talent across the organization, and drive new and value-generating business models. data, and how to respond. What’s more, they must
How close is your organization to that ideal? (1=‘Not at all close’ and 10=‘Very close’)”
Organizations whose respondents rated their organization’s digital business practices
then be able to act quickly on the information the
as 1-3 were categorized as “early”; 4-6 were categorized as “developing”; and 7-10 platform provides. In general, effective digital strat-
were categorized as “maturing.” egies are less about acquiring and implementing


the right technology than about reconfiguring your RATING AN ORGANIZATION’S DIGITAL MATURITY
business to take advantage of the information these We asked respondents to imagine an ideal organization transformed by digital
kane2 technologies and capabilities that improve processes, engage talent across
technologies enable. Companies must bring to-
the organization, and drive new and value-generating business models. Their
gether a variety of digital technologies integrated responses reflect how close they believe their organizations are to that ideal,
across people, processes and functions to achieve on a scale of 1-10, with 10 representing the highest level of digital maturity and
an important business advantage. 1 the lowest.
Our data suggest that effective strategy is actu- Maturing 17%
(7-10) 15% 15%
ally more strongly associated with digital maturity Early 14% 14%
than technology use. Nearly 40% of respondents 26% 29%
from the least digitally mature companies (which 9%
we call “early-stage companies”) reported that 45% Developing
Early 3%
their company uses digital technologies to a mod- 3%
erate or great extent, but only 15% reported that Developing Maturing
their company actually has a clear digital strategy. 1 2 3 4 5 6 7 8 9 10
Organization’s digital maturity level
In contrast, 88% of respondents from digitally
maturing companies said that their company uses
digital technologies to a moderate or great extent, would not have predicted some of the revolutions
while 81% reported having a clear digital strategy. in social or in continuous or predictive analytics
While there is a 48-percentage-point difference capabilities by attempting to predict the evolu-
in technology usage between the two groups, the tion of existing technologies. So, I’d rather start
difference in strategy clarity is a dramatic 66 per- from the standpoint of rethinking business and
centage points. rethinking commerce and challenging patterns
The objectives of a company’s digital strategy of social interactions and then work back into
also differ depending on digital maturity. We find how those capabilities are made available or
that, regardless of maturity level, the vast majority enriched by the digital trends. New capabilities
of surveyed companies want to use digital technol- make new solutions possible — and desired
ogies to improve customer interactions. What solutions demand new emergent capabilities.
differentiates the most mature companies, how-
ever, is a willingness to use digital to transform As an example, Konsynski cited McCormick &
their business more broadly. In our survey results, Co. Inc., a 126-year-old spice and flavor manufac-
digitally maturing companies were 35 percentage turer based in Sparks, Maryland.4 Recognizing that
points more likely than early-stage companies to personalization is likely to be a key feature of the
report that “transforming the business” (business future digital environment, McCormick developed
processes and/or business models) is a major goal a FlavorPrint algorithm that represents the compa-
of their digital strategy. (See “How Digital Strategy ny’s flavors as a vector of 50 data points. Today,
Objectives Vary,” p. 40.) McCormick uses the FlavorPrint algorithm to rec-
How do companies go about developing an ommend recipes, but the company’s vision
effective digital strategy? Benn Konsynski, the stretches far beyond such modest applications.
George S. Craft Distinguished University Professor Once the flavors are digitized, McCormick can
of Information Systems and Operations Manage- begin to tailor the flavors to account for regional,
ment at Emory University, suggested one route to cultural or personal preference distinctions.
strategic digital thinking that may be a bit counter- McCormick can create a saltier salt or a spicier pep-
intuitive. Rather than assessing the current digital per depending on who wants it, for what purpose
landscape and plotting your organization’s next and where they live. The technology has shown
steps, he advised the opposite approach: such promise that McCormick recently spun off
FlavorPrint into its own technology company,
Work backward, not forward — the future is Vivanda Inc., with former McCormick CIO Jerry
best seen with a running start. Ten years ago, we Wolfe as its founder and CEO.5


D I G I T A L B U S I N E S S : B U S I N E S S T R A N S F O R M AT I O N

HOW DIGITAL STRATEGY OBJECTIVES VARY decade or more. A long-term vision of where your
Across the board, organizations are using digital technologies to improve efficiency and business needs to go that considers the organiza-
customer experience. However, higher-maturity organizations differentiate themselves
by using digital technologies to transform their business.
tional impact on your people, processes and
technology can allow you to reverse-engineer the
To what extent do you agree that the following are future and help identify the practical steps and pri-
objectives of your organization's digital strategy? orities for today. The goal of this approach is to avoid
(Respondents who answered “Strongly agree” or “Agree”)
capitalizing on the state of current technology for
Percentage of respondents agreeing
short-term advantage, only to realize later that it
Improve customer moved you faster in the wrong direction.
experience and
Increase efficiency
Culture and Transformation
Our research also suggests that organizational culture is
Improve business
60% decision making critically important to effectively leveraging digital
Improve innovation technologies in the workplace. One of the factors re-
40% Transform the business spondents said is most important to effectively leverage
digital technologies is the “willingness to experiment
and take risks.” They also reported that this trait is
among the most lacking in their organizations —
something reported by 52% of respondents from
0% early-stage companies and even by 36% in the matur-
1 2 3 4 5 6 7 8 9 10
Organization’s digital maturity level ing group. (See “The Key Abilities Companies Lack.”)
B. Bonin Bough, senior vice president, chief
Of course, predicting the future is a significant media and e-commerce officer for Mondelēz Inter-
challenge for all companies and therefore requires national Inc., the global snack food spinoff of Kraft
pragmatism. John Halamka, CIO of health care Foods Inc., spoke of technology companies’ ability
provider Beth Israel Deaconess Medical Center in to tackle this challenge:
Boston, Massachusetts, acknowledged the challenge
of predicting the future for health care IT. He noted They’ve been able to unlock something that’s a to-
that most business leaders simply don’t know what tally new mindset and approach. Part of it is this
their technology needs will be five years from now: notion of iteration, this notion of constantly rein-
venting the core, constantly cannibalizing what
So how do you get a set of crisp requirements and you did before, and the fear that their space moves
specifications that are going to be foundational so fast that you can’t sit and wait. We [non-tech
to an IT project? Do you try to get together, bot- companies] have to begin to bring that attitude
tom up, a bunch of people and skate where the into our businesses. And so we have to, in a lot of
puck is going to be? You guess! So in effect, what I respects, shift culture [and] cultural mindset.
have to do across 22,000 employees, 83 [network]
locations, 4,000 doctors and two million patients The relationship between organizational cul-
is try to take a best guess at what the future will ture and digital technologies requires a certain
be. So that’s sort of strategy issue number one. mindset, and it may require a shift in your existing
mindset before you can leverage digital technolo-
In other words, companies that want to capitalize gies effectively. For example, Mohamed-Hédi
on digital trends should not start by researching or Charki, an associate professor at EDHEC Business
acquiring technology. You might not even start with School in France, is a researcher studying the
a rigorous analysis of today’s business problems. impact of a digital collaboration platform in a
Instead, start by envisioning the impact digital European cosmetics company. He noted that
technologies are going to have on your industry, par- changing the siloed culture of the company was
ticularly your customer experience over the next the biggest challenge associated w ith the


implementation of the company’s social collabora- Developing Digitally Savvy Talent
tion platform. In fact, the CEO believed that the Another factor distinguishing the most digitally
company’s siloed culture was a barrier to collabora- mature companies from the least is the development
tion and creativity. The company is still coming and training of digitally savvy talent. Respondents
around and learning to use the tool to communi- from companies across all maturity levels reported a
cate and collaborate more effectively. lack of certain key skills. The major difference, how-
However, we also found examples where the ever, is in what the companies are doing about it.
technology itself began to change the culture of the Only about 19% of surveyed employees from com-
organization. A relatively small business-to-business panies that are in the early stage of digital maturity
telecommunications company, trying to overcome agreed or strongly agreed that their organizations
the challenge of being a fairly small player in a very provide them with the resources or opportunities to
competitive market, began an initiative that encour- obtain the right skills to take advantage of digital
aged employees to become brand ambassadors, trends. This contrasts with 76% of employees from
empowering them to communicate via social media maturing digital companies.
on behalf of the company. To do this, the company Consistent with the results seen elsewhere in our
provided formal social media training for employee research, the skills and abilities that respondents indi-
volunteers. It also offered clear, simple guidelines for cated are most important for leveraging digital
how employees should communicate about the technologies are not purely technical. Respondents —
company on social media employing a “use your best regardless of company maturity level — indicated that
judgment” approach. On all company memos, the the most important ability necessary for taking advan-
company provided preapproved examples of how tage of digital trends is “knowing the business and
employees might share the information in various being able to conceptualize how new digital technolo-
social media channels. gies can impact current business processes/models.”
The result did not simply accomplish the stated This ability was also identified by the highest percent-
goal of higher recognition in the marketplace for age of respondents as lacking in their organizations.
the company. It also had the unanticipated effect of Hiring managers are beginning to recognize and
spawning a positive cultural shift in which the respond to these changes. For example, when asked
employees were more connected to the company,
engaged with the brand and aware of the organiza- THE KEY ABILITIES COMPANIES LACK
Survey respondents indicated that having both business and technology
tion’s digital strategy.
Even if you start a digital initiative in one small kane4
knowledge as well as being willing to experiment are areas that represent
digital business challenges for many organizations.
part of the division, its effects can begin to creep
Which of the following skills or abilities are most
into other areas of the organization. Such a senti- lacking in your organization? (Select up to three.)
ment was echoed by Carlos Dominguez, president Percentage of respondents
and COO of enterprise social technology provider 60%
Knowing the business and
Sprinklr: being able to conceptual-
ize how new digital
technologies can impact
The platforms start to get deployed, and all of a current business
sudden, employees say, “Hey, we need a customer 40%
Willingness to experiment
relationship management system and we need to and take risks
provide the connectors to it.” At that point, you’ve Ability to use digital
technologies such as
got to start engaging with the CIO, who controls social, mobile, analytics
that infrastructure. It starts to become a different 20% and the cloud to execute
one’s job
animal, because more people and departments
Ability to manage or work
begin to get involved. They’re asking, “What’s in distributed, digitally
your security policy? How do you do this?” So savvy teams in fast-paced
0% environments; flexibility
this platform that could have started anywhere 1 2 3 4 5 6 7 8 9 10
Willingness to share and
in the company is suddenly unifying everything. Organization’s digital maturity level be collaborative


D I G I T A L B U S I N E S S : B U S I N E S S T R A N S F O R M AT I O N

what types of skills she looks for in new hires, Perry executives to lead its digital strategy. While this could
Hewitt, chief digital officer of Harvard University, have to do with senior executives knowing their own
said, “We often seek agility over specific skills. And skill and ability levels better than their employees
interest and aptitude in addition to demonstrated know them, it still raises the likelihood that these
track record. We look for people who are ‘data in- capabilities aren’t being clearly demonstrated or
formed and mission driven’ — striking a balance communicated to the broader organization.
between serving the mission of the institution and One way of overcoming this lack of skills at the
having robust digital skills.” leadership level is to hire executives from technology
Many survey respondents also questioned companies. David Mathison, founder and CEO of
whether their company’s leadership has the skills the CDO Club, a global professional community of
and abilities to lead the organizations in a digital digital executives, noted that many organizations are
environment. In fact, only 44% of respondents said recruiting from the technology sector to obtain the
that their organization’s leadership has sufficient requisite skills to lead in the digital age. He said:
skills and experience to lead their organization’s dig-
ital strategy. These responses varied substantially by What we’re seeing now is that a majority of
digital maturity levels — with only 15% of employ- chief digital officers are coming up through
ees from early-stage organizations and 76% from general management ranks, particularly from
maturing organizations believing their leaders have technology companies. The new, first-ever CDO
sufficient skills and expertise to lead their organiza- at McDonald’s, Atif Rafiq, was most recently
tion’s digital strategy. Even in the developing general manager of Kindle Direct at Amazon.
maturity group, the numbers are unsettlingly low, Before that he was general manager at Yahoo!
with less than 40% of respondents indicating that and founding member of the corporate strategy
they believe their organization’s leaders have suffi- and business development groups at AOL. Indi-
cient skills and expertise for the task. (See “Employees’ viduals working at digital native organizations,
Perspectives on Digital Leadership.”) What’s more, maybe as a GM, somebody who has P&L
these leaders may not recognize their own deficien- responsibility, are being pulled into a variety
cies: Our survey found that the higher in the of sectors … to figure out how to digitally
organization respondents work, the greater their transform a company.
confidence in the ability of the organization’s
The Threat of Employee
Many survey respondents from companies at early-stage and developing digital While employees are not necessarily confident in
maturity levels are not satisfied with the way their organizations are responding to
the ability of their leadership to digitally transform
digital trends. Such attitudes likely have implications for recruiting and retaining talent.
the organization, they are more optimistic about
Percentage of respondents digital technologies themselves. Ninety-one per-
How important to you is it cent of survey respondents across industry sectors,
to work for an organiza- company size and region agreed or strongly agreed
tion that is digitally
80% enabled or is a digital that digital technologies have the potential to fun-
leader? (Very important or
extremely important)
damentally transform the way people in their
60% Our organization’s organization work. Surveyed employees also
leadership has sufficient widely reported the importance of using digital
skills and experience to
lead our organization's technologies for their work. Eighty-five percent of
digital strategy. (Strongly
agree or agree)
respondents said that the ability to use digital tech-
I am satisfied with my nologies is important for their job; that number
20% organization's current is relatively stable across digital maturity levels,
reaction to digital trends.
(Strongly agree or agree) varying only a little more than 10 percentage
0% points between respondents from companies in
1 2 3 4 5 6 7 8 9 10
Organization’s digital maturity level the maturing and early levels.


Seventy-eight percent of employees across our survey
said it is either very important or extremely important to
work for a digitally enabled company or a digital leader.

What’s more, more than half of our respondents currently working for a company with low or even
indicated that their companies are using digital moderate digital maturity may move to a more digi-
technologies to a moderate or great extent, and tally mature company if given the opportunity.
more than 70% said that these digital technologies These data portend a potential flow of talent toward
are impacting their job today. While 82% of our digitally enabled and mature companies.
respondents indicated that their organizations Steve Milovich, senior vice president of global
view technology as an opportunity, only 26% of all human resources and talent diversity and senior vice
respondents said that their organizations view it as president of employee digital media at the Walt
a threat. This optimism, of course, is not entirely Disney Co., had one explanation for this low satis-
logical. If digital technology can increase your faction with many organizations’ response to digital
organization’s operational performance, it can cer- trends. He noted that most employees use sophisti-
tainly do the same for your competitors. cated social media platforms and interact with
It may come as no surprise that more advanced companies using seamless digital technologies in
digital companies see greater opportunity in digital their personal life, but things become decidedly
technologies than do less digitally advanced com- more difficult when they come into work: “When we
panies. Yet what may be surprising is that the started this journey, we had a gap that existed be-
percentage of organizations that view digital tech- tween how someone interacted with relative ease in
nologies as a threat is virtually identical, regardless their personal life — to tap on an app and do his on-
of a company’s level of digital sophistication. The line banking or to quickly look up the weather where
very companies that should be most concerned they lived — and how they interacted at work.”
about the threat digital technologies pose to their Disney is making great strides in overcoming this
business may not be. gap, allowing its employees to interact with the
Our survey findings could have important impli- company and their coworkers through more sophis-
cations for a company’s ability to attract and retain ticated mobile interfaces to do employee reviews,
talent in an increasingly competitive global market. find onsite conference rooms and apply for new jobs
Respondents expressed a strong preference for work- within the company. The company now receives
ing for a digitally mature company. Seventy-eight many requests for new apps from within the com-
percent of employees across our survey said it is either pany, and Disney is trying to prioritize the most
very important or extremely important to work for a important and create a digital road map for the
digitally enabled company or a digital leader. future. The irony here, of course, is that Disney is one
A surprisingly high number of respondents are of the world’s leading companies for using digital
dissatisfied with how their companies are reacting to technologies to interact with customers but is only
digital trends overall. While 81% of surveyed em- now applying this expertise to interact with its own
ployees from digitally maturing companies are employees with the same level of digital sophistica-
satisfied with their organization’s response to digital tion. If a digitally innovative and mature company
trends, only a paltry 10% of employees from early- such as Disney is facing these issues, it is very likely
stage companies are. Perhaps most telling is that that other companies are doing so as well.
even employees in developing-stage companies are
not satisfied with their organization’s response to Next Steps
digital trends, with only 38% of employees in those As companies continue to advance on their digital
organizations reporting satisfaction. Employees journey, it is important to recognize that digital is


D I G I T A L B U S I N E S S : B U S I N E S S T R A N S F O R M AT I O N

Success will depend less on the technologies themselves —

and more on your company's ability to implement them
innovatively by rethinking strategy, culture and talent.

more than a technology to implement. Instead, As you consider your company’s digital strategy,
digital requires a corporate shift in mindset that keep in mind that the road map you develop will
companies of all sizes and sectors need to embrace shift as technology advances and your competitors
to position themselves to successfully compete now execute their own digital strategies. While it may be
and in the future. Consider the following questions very difficult to predict future technologies, busi-
as you prepare to lead your organization into a ness success will depend less on the technologies
digital future. themselves — and more on your company’s ability
1. Do you have a digital strategy for the future to implement them innovatively by rethinking
that considers the full organization? If you don’t, strategy, culture and talent.
begin working on one now. If you already have a
strategy, does it deal with implementing current Gerald C. (Jerry) Kane is an associate professor
of information systems at the Carroll School of
technologies or preparing for future ones? Have Management at Boston College and MIT Sloan
you clearly communicated that strategy to your Management Review’s guest editor for the Social
Business Big Idea Initiative. Doug Palmer is a
employees so they can become ambassadors and
principal at Deloitte Consulting LLP and leader of
better lead the change? If the answer to any of these Deloitte’s Social Business practice. Anh Nguyen
questions is no, then reevaluating your strategy Phillips is a senior manager within Deloitte
Services LP, where she leads strategic thought
needs to be priority one.
leadership initiatives. David Kiron is the executive
2. Is your company culture allowing your dig- editor of the Big Ideas Initiatives at MIT Sloan
ital initiatives to succeed? Are you fostering Management Review. Comment on this article at
http://sloanreview.mit.edu/x/56415, or contact
collaboration and experimentation? Do your dig-
the authors at smrfeedback@mit.edu.
ital initiatives require a cultural shift to achieve
their full potential? Could different digital tech-
nologies or approaches help bring about that
cultural shift? 1. P.S. Harris, “None of Us Is as Good as All of Us: How
McDonald’s Prospers by Embracing Inclusion and Diver-
3. Does your organization have the talent and sity” (Hoboken, New Jersey: John Wiley & Sons, 2009).
skills that you need? Are your employees being
2. J. Maze, “McDonald’s Service Push Includes Big Digi-
given the opportunity to obtain the right skills to tal Spending,” Nation’s Restaurant News, December 12,
succeed in a digital environment? Do your digital 2014, www.nrn.com.
leaders have the right blend of business and tech- 3. As used in this document, “Deloitte” means Deloitte
Consulting LLP and Deloitte Services LP, which are
nology skills? If not, how are you going to go about
separate subsidiaries of Deloitte LLP. Please see
acquiring those skills — both for individuals and www.deloitte.com/us/about for a detailed description of
for the organization as a whole? Looking beyond the legal structure of Deloitte LLP and its subsidiaries.
Certain services may not be available to attest clients
your own sector to technology companies may be under the rules and regulations of public accounting.
an option.
4. G.C. Kane, “Are You Ready for the Certainty of the
4. What do employees need to succeed? How Unknown?” March 10, 2015, sloanreview.mit.edu.
might your company’s existing digital infrastruc- 5. K.S. Nash, “Tech Spin-off From Spice Maker McCormick
ture be impeding your employees’ ability to succeed Puts CIO in the CEO Seat,” The Wall Street Journal CIO
Journal, April 1, 2015, www.blogs.wsj.com.
in a changing competitive environment? Can your
employees meet their professional needs through Reprint 56415.
the digital technologies available to them through Copyright © Massachusetts Institute of Technology, 2015.
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Asia Pacific Journal of Marketing and Logistics
The influence of perceived social media marketing activities on brand loyalty:
The mediation effect of brand and value consciousness
Ahmed Rageh Ismail,
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To cite this document:
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Ahmed Rageh Ismail, (2017) "The influence of perceived social media marketing activities on brand
loyalty: The mediation effect of brand and value consciousness", Asia Pacific Journal of Marketing
and Logistics, Vol. 29 Issue: 1, pp.129-144, https://doi.org/10.1108/APJML-10-2015-0154
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Social media
The influence of perceived marketing
social media marketing activities

activities on brand loyalty

The mediation effect of brand 129
and value consciousness Received 11 October 2015
Downloaded by DRB-HICOM University of Automotive Malaysia At 03:44 26 February 2019 (PT)

Revised 16 May 2016

Ahmed Rageh Ismail 3 November 2016
Accepted 4 November 2016
School of Business, Curtin University, Miri, Malaysia

Purpose – The purpose of this paper is to investigate the impact of social media marketing activities on
brand loyalty, value consciousness and brand consciousness.
Design/methodology/approach – A self-administered questionnaire was developed and administered to a
convenience sample of 346 undergraduate students
Findings – The findings of this research indicated that social media marketing has a significant effect on
brand loyalty; brand consciousness and value consciousness mediate the relationship between social media
marketing and brand loyalty.
Originality/value – This study confirms the growing importance of social media marketing. It also provides
insights for marketers on envisioning brand loyalty.
Keywords Brand consciousness, Brand loyalty, Social media marketing, Value consciousness
Paper type Research paper

Social media is defined as “a group of internet-based applications that build on the ideological
and technical foundations of Web 2.0, and that allow the creation and exchange of user
generated content” (Kaplan and Haenlein, 2010, p. 61). Those applications take a variety of
forms, including weblogs, social blogs, microblogging, wikis, podcasts, pictures, video, rating
and social bookmarking. In January 2014, 74 percent of online adults worldwide use social
networking sites (Duggan et al., 2015). Social media platforms play a big part in the daily lives
of their users (Okazaki, 2009). Moreover, social media allow users to connect with peers by
adding them to networks of friends, which facilitates communication, particularly among peer
groups (Ahuja and Galvin, 2003; Zhang and Daugherty, 2009). Globally, more than 50 percent
of social media users follow brands on social media (van Belleghem et al., 2011) and 29 percent
follow trends and find product reviews and information, and 20 percent comment on what is
hot or new or to review products (Gallup, 2014). In Malaysia social media penetration is
64 percent, which is considered one of the highest in Asia pacific region – second only to
Singapore. Marketers view the social media landscape in Malaysia as vibrant, with most of the
Malaysian population turning to social media platforms (www.marketing-interactive.com/
state-social-media-malaysia/, 2016).
Consumers use social media to find information about desired products with the best
prices. Social media have inexorably changed how consumers and marketers communicate
(Hennig-Thurau et al., 2004; Nambisan and Baron, 2007). Social media gives consumers a
voice, and allows them to interact and share their experiences with any person anywhere in
Asia Pacific Journal of Marketing
the world (Kozinets et al., 2010). In general, consumers have different orientations when and Logistics
making purchase decision. Consumers are either brand conscious who view brands as Vol. 29 No. 1, 2017
pp. 129-144
symbols of status and prestige, or value conscious, who use social media to check and © Emerald Publishing Limited
compare the prices of different brands, to get the best value for their money. Businesses are DOI 10.1108/APJML-10-2015-0154
APJML joining social media to target those two types of consumers and actively perform less costly
29,1 integrated marketing activities. An overwhelming majority of marketers worldwide
97 percent are participating in social media marketing to market their business
(Stelzner, 2014). More than half of marketers 54 percent chose Facebook as their most
important platform. Social media being used as a marketing tool mainly for four purposes:
market research and feedback generation; publicity, branding, and reputation management;
130 business networking; and customer service and customer relationship management
(Thoring, 2011). Although businesses have joined social media to increase brand awareness
and acquire more customers, the question still remains of how brand loyalty can be built and
strengthened through social media? Understanding how social media marketing activities
Downloaded by DRB-HICOM University of Automotive Malaysia At 03:44 26 February 2019 (PT)

influence brand loyalty is important for strategic marketing. Another question that
is addressed in this study is: what is the effect of perceived social media marketing activities
on brand- and value-conscious consumers? The current study is attempting to address this
knowledge gap by developing a research model to test the relationships among social
media marketing activities, brand consciousness, value consciousness and brand loyalty.
The paper is organized as follows. The next section describes the hypotheses on the
relationships among perceived social media marketing activities, brand loyalty, brand
consciousness and value consciousness. Then, methodology and empirical results will be
presented, and finally the conclusion and limitation of the study.

Theoretical background and hypotheses

Perceived social media marketing activities and brand loyalty
In recent years, many firms used social media to engage customers with the brand (Okazaki
et al., 2015). However, those firms still struggle to accomplish brand loyalty because they do
not fully understand how to build consumer-brand relationship in social media setting
(Fournier and Lee, 2009). Social media marketing is “a broad category of advertising spending,
including advertising using social network, virtual worlds, user-generated product reviews,
blogger endorsement, RSS feeds of content and social news sites, podcasts, games, and
consumer generated advertising” (Tuten, 2008, p. 9). Also social media marketing is defined as
“a form of online advertising that uses the cultural context of social context, including social
networks (e.g. Youtube, Myspace and Facebook), virtual worlds (e.g. Second Life, There, and
Kaneva), social news sites (e.g. Digg and del.icio.us), and social opinion-sharing sites
(e.g. Eopinions), to meet branding and communication objectives” (Tuten, 2008, p. 19). Social
media marketing activities are subset of online marketing activities that complete traditional
web-based promotion strategies, such as e-mail newsletters and online advertising campaigns
(Barefoot and Szabo, 2010, p. 13). Social media, in a way, converts consumers into marketers
and advertisers, who generate, edit, and share online information about companies, products
and services. That may attracts attention and encourages online users to share it with their
social networks (Akar and Topçu, 2011).
In the very beginning of social media usage, consumers joined social media to keep in touch
with family and friends, as time has passed, social media interest has increased and brands
have discovered that there is an audience for them. Nowadays, consumers can follow their
favorite brands on social media sites, such as Facebook and Twitter, to stay informed of the
latest products, to receive discounts, to access to special promotions and to get to know more
news regarding the company. Branding literature indicated that marketers can enhance their
brand loyalty by strengthen consumer-brand relationships (Aaker, 1996; Fournier, 1998;
Kapferer, 1998; Keller, 1998). Valuable consumer-brand relationship results in many benefits to
the consumer, such as product or service quality, price and special treatment (Liao et al., 2014;
Chen and Hu, 2010). Those perceived relationship benefits can boost customers’ satisfaction
and generate positive word-of-mouth and build brand loyalty through brand community
(Muñiz and O’Guinn, 2001; McAlexander et al., 2002; Schau et al., 2009; Lee et al., 2014).
Social media has become a hub for promoting goods and services which enables Social media
marketers to actively communicate with customers. Also, it has shifted the previous marketing
one-way communication channel to a two-way communications channel which enables more activities
customer engagement and creates a sense of equality between the consumers and their
brands (Evans, 2012). Furthermore, social media-based communication provides consumers
with relevant information and reduce their efforts to search for information (Merisavo and
Raulas, 2004; Laroche et al., 2013). Additionally, it enables customers to voice out their 131
satisfaction or displeasure with the brand. Finally, social media also can be a positive form
of advertising for brands. Ultimately, if a consumer responds favorably toward a company’s
advertisements and promotions through social media, then a relationship will begin to
Downloaded by DRB-HICOM University of Automotive Malaysia At 03:44 26 February 2019 (PT)

develop between the consumer and the brand (Fournier, 1998) and consequently, strong
consumer-brand relationship in social media would lead to brand loyalty (Fournier, 1998).
Therefore, it is believed that, as customers appreciate regular communication from the
brand, it can further enhance their brand loyalty (Merisavo and Raulas, 2004). Therefore,
it is hypothesized that social media marketing activities will contribute to brand loyalty:
H1. Perceived social media marketing activities will have a positive effect on brand loyalty.
Brand consciousness. Brand consciousness refers to the mental orientation to select products
that are well-known and highly advertised brand name (Sproles and Kendall, 1986).
Consumers often express personal characteristics and preferences through brand (Manrai
et al., 2001). Those consumers with high levels of brand consciousness tend to buy more
expensive and well-known brands (Liao and Wang, 2009; Sproles and Kendall, 1986). They
use the brands as symbols of status and prestige (Escalas and Bettman, 2005; Jamal and
Goode, 2001). They gain confidence in constructing their own self-identity and present such
an identity to others (Phau and Teah, 2009; Wang et al., 2009). Therefore, they are willing to
pay a price premium for a well-known brand’s product (Liao and Wang, 2009; Sproles and
Kendall, 1986). Despite its importance, the impact of perceived social media marketing
activities on brand consciousness remains relatively unknown. Previous studies showed
that the traditional instruments (TV, radio and magazines, etc.) of marketing
communications have a positive impact on different constructs such as brand loyalty,
brand association and brand awareness (Yoo et al., 2000). Consumers, nowadays, are
turning away from traditional media and are increasingly using social media to search for
information (Mangold and Faulds, 2009) because it is regarded as a more trustworthy source
of information than those traditional instruments of marketing communications used by
companies (Foux, 2006). For example, one of many venues that have been gaining
considerable attention from consumers is Instagram. Members of the Instagram community
share photos and videos. Photo-sharing could be a good way to draw follower’s attention to
the brand and inspire participation and discussion from users and ultimately contribute to
brand consciousness. Thus, it is assumed that perceived social media marketing activities
will positively influence brand consciousness:
H2. Perceived social media marketing activities will have a positive effect on brand
Symbolic self-completion theory (Wicklund and Gollwitzer, 1981) posits that individuals use
material possessions and other indicators as socially recognized symbols to communicate
this identity to others. A symbol can be defined as “any facet of the person that has the
potential to signal to others (who understand the symbol as related to the identity) that one
possesses the identity in question” (Braun and Wicklund, 1989, p. 164). The symbolic
self-completion theory supports the notion that consumers use brands as a means to protect
their self-identity. For example, highly brand conscious consumers may buy expensive
brands and remain loyal to the brand not because of quality perceptions per se, but because
APJML others may perceive them as socially positive due to the high price (Bao and Mandrik, 2004).
29,1 Thus, this study proposes that brand consciousness is related to brand loyalty:
H3. Brand consciousness will have a positive effect on brand loyalty.
Value consciousness. Not all consumers believe that acquiring goods is a driver of happiness
and signals of social status. Frugal consumers are more value conscious (Lichtenstein et al.,
132 1990); they carefully use resources and avoid waste (De Young, 1986, p. 285). Value
consciousness is defined as “a concern for paying low prices, subject to some quality
constraint” (Lichtenstein et al., 1990, 1993, Ailawadi et al., 2001). Value-conscious customers
tend to be concerned equally about low prices and product quality (Sharma, 2011). They are
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also more likely to habitually use social media platforms to shop for the lowest cost which
brings a number of significant benefits; i.e. saving money by enabling them to achieve
lowest price, identifying the right products to satisfy their needs and compare other prices
from different brands. For example, price comparison website priceline.com Facebook page
has more than 600,000 followers. Customers who have liked this page are signaling that
they are interested in the products and services they offer. Therefore obtaining goods at
lower prices is relatively important than product quality or brand image in purchasing
decision (Batra, 1997; Cui and Liu, 2001). Therefore:
H4. Perceived social media marketing activities will have a positive effect on value
According to Russo (2014), 78 percent of consumers admit they are not loyal to any
particular brand. In a price competitive and dynamic marketplace such as internet, value-
conscious consumers are less likely to engage in routinized brand choice behavior
(Garretson et al., 2002). While searching the “web” for products, value-conscious consumers
are motivated to purchase products based on the price, if the price is too high, a consumer
may dismiss his/her choice entirely and seek a brand with a better price. Therefore, value
consciousness negatively influences brand loyalty:
H5. Value consciousness will have a negative effect on brand loyalty.
Mediation effects. As stated earlier, social media platforms offer brands opportunities to
develop and increase brand consciousness. Similarly, perceived social media marketing
activities contribute to brand consciousness and in turn, brand loyalty will exist when the
consumer is highly conscious about the brand. In the same vein, social media marketing
activities may boost value consciousness and value consciousness will negatively be
associated to brand loyalty. Therefore, the following hypotheses put forward:
H6. Brand consciousness will mediate the relationship between perceived social media
marketing and brand loyalty.
H7. Value consciousness will mediate the relationship between perceived social media
marketing and brand loyalty.
The research model to guide the objective of this first study is presented in Figure 1.
It is argued that perceived social media marketing is related to brand loyalty, brand
consciousness and value consciousness. Additionally, value consciousness and brand
consciousness have a direct effect on brand loyalty (see Figure 1).

Asia Pacific region accounts for 52.2 percent of global social media users. Asia is central to
Facebook growth; the region has more than 426 million monthly active users. Time spent on
Social media
Consciousness activities

H4 133
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Social Brand
Media Loyalty
Marketing H1


Figure 1.
Research model

social media (hours per day) in Malaysia is 3:24 h. Malaysia is ranked number three after
Indonesia and Vietnam in the Asia Pacific region to use Facebook, 94 percent of its online
population (19 million according to US census bureau) use Facebook, whereas 59 percent use
twitter (http://wearesocial.net/tag/malaysia/, 2015).

Data collection and sample

Subjects. A structured questionnaire was designed to collect the data required to test the
conceptual model. Data were collected from a sample marketing students. A convenience sample
of 346 undergraduate students, in University of Northern Malaysia was recruited through
self-administered survey with the incentive of extra credit for classes in which they were
enrolled. Their age is between 19 and 25 years old. As the focus of this study is on young adults’
use of social media, therefore, college-aged students sample is considered appropriate.
The questionnaire included a synopsis of the goals of the study, contact information of the
researchers. College students are known to be among the most connected group. The researcher
distributed the survey directly to students in their classes. Participation in the survey was limited
to student living in Malaysia only and 73.1 percent were females, while 26.9 percent were males.
A screening question excluded unqualified participants who had never used any social
media websites: during a typical day, how much time do you spend on social media activities?
(1 none, 2, 3, 4 a lot). Members of a brand community in any social media platform were the
target sample in this study. So, we asked participants to list the brand communities they are a
member of and follow on social media. Furthermore, we asked them to keep in mind these brand
communities while answering the questions. With this procedure, which is consistent with
previous studies in online contexts (Bagozzi and Dholakia, 2006; Steenkamp and Geyskens,
2006; Laroche et al., 2013). Participants then answered questions relating to the constructs of
interest (see Table AI), followed by demographic questions. Overall, the respondents were heavy
social media users; 62.7 percent of the sample reported using the social media a lot during a
typical day, whereas 37.3 percent have identified themselves as moderate users of social media.
APJML Measures
29,1 The variables in the theoretical model were measured on seven point scales ranging from
1 ¼ “strongly disagree” to 7 ¼ “strongly agree.” All the scales are obtained from previous
studies. The scale of perceived social media marketing activities was adapted from Kim and
Ko (2012). The scale of consumer decision-making styles depicts the mental orientation
when consumers make choices (Sproles and Kendall, 1986). It has a subscale called “brand
134 consciousness,” which was used in the present study. “Value consciousness” scales were
adapted from Lichtenstein et al. (1993), and “brand loyalty” scale developed by Ailawadi
et al. (2001) was used in the current study.
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Data analysis
To estimate the relationships in the model, structural equation modeling with AMOS
17.0 and maximum likelihood estimation is used. Confirmatory factor analysis (CFA) is
conducted to assess the psychometric properties of the scales and test the discriminant
validity of the measures. Following the procedures outlined by Byrne (2001), the first step
consisted of testing for the factorial validity of the theoretical constructs.

Two items (using social media to look for the brand I am considering to buy is fun and
I would like to share contents from social media with my friends) were removed from the
scales measuring perceived social media marketing activities construct, because their
loading factors were less than 0.5 after CFA first run. Test statistics indicate that the
measurement model represents a good fit to the data. The overall model were
CMIN ¼ 217.215, df ¼ 98, p ¼ 0.0, CMIN/df ¼ 2.216. The fit indices were CFI ¼ 0.96,
GFI ¼ 0.93 TLI ¼ 0.95 and RMSEA ¼ 0.059. Internal consistency reliability, the most widely
used reliability method, was measured using Cronbach’s α. The reliability of the scales
ranged from 0.81 to 0.89 (see Table I). Following the widely recognized rule of thumb of
using a reliability level of 0.5 (Hair et al., 2006), the analysis indicated that the measurement
scales are highly reliable.
The next step is to assess convergent validity by checking the factor loadings of each
item and the values of average variance extracted (AVEW0.5). The factor loadings of the
measurement items are significant and substantial, i.e. p W0.5 (Hair et al., 2006), as
well as composite reliabilities of each of the constructs and average variance extracted
(see Table III) average variances extracted were W0.50. Thus, the convergent validity of the
latent constructs was confirmed. Discriminant validity was investigated following Fornell
and Larcker’s (1981) suggestion. According to them, the average variance extracted must
exceed the corresponding squared interconstruct correlations estimate between the two
constructs. In the current study, all the variance extracted estimates were greater than the
corresponding interconstruct squared correlation estimates; the correlation matrix of latent
variables is in Table I.
Moreover, assessment of nomological validity is based on the correlation matrix
(Hair et al., 2006) provided in Table I. The results support that these constructs are positively
related to one another and these relationships simply make sense. The structural model

1 2 3 4

1. Perceived social media marketing activities 1.00

2. Brand consciousness 0.54 1.00
Table I. 3. Value consciousness 0.35 0.21 1.00
Correlation matrices 4. Brand loyalty 0.43 0.45 0.45 1.00
displayed a good fit with the data, compared with the suggested fit criteria. The fit statistics Social media
were CMIN χ2 ¼ 217.524, df ¼ 99, p ¼ 0.0, CMIN/df ¼ 2.197. The fit indices were all in marketing
acceptable ranges with CFI ¼ 0.96, GFI ¼ 0.93, TLI ¼ 0.95 and RMSEA ¼ 0.059. Models with activities
cut-off values above 0.90 for CFI, and below 0.08 for RMSEA are considered to have a good
fit between the hypothesized model and the observed data (Hu and Bentler, 1999). Figure 2
displayed all of the structural relationships among the studied constructs; path coefficients
and their significance, R2 for each dependent construct are also presented in this figure. 135
As indicated in Figure 2 all hypotheses, except for H5 were supported by the data.
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Mediating effects
Bootstrapping procedures were implemented to obtain estimates of the indirect effects and
to test their significance by using confidence intervals. If a zero is not included in the
95 percent confidence interval of the estimate, it means that the indirect effect is statistically
significant. As there was more than one mediating effect in the structural model, in order to
separate the indirect effects and test the significance of each of the mediating effects,
phantom variables and bias-corrected bootstrap method were used. The researcher
requested AMOS to generate 1,000 bootstrap samples and selected bias-corrected bootstrap
method with 95 percent confidence intervals (Mallinckrodt et al., 2006). The first phantom
model was created in which the indirect effect was found significant with 0.001 p-value and
point estimate 0.161. The bias corrected lower and upper confidence interval are 0.076 and
0.284 which means that there is no zero in between therefore brand consciousness mediates
the relationship between perceived social media marketing and brand loyalty. The total
effect is 0.288, with 0.002 p-value o0.001, significant and direct effect is 0.078 with p-value
0.224o0.001, significant. The second phantom model showed that the indirect effect was
found significant with 0.001 p-value and point estimate 0.115. The bias corrected lower and
upper confidence interval are 0.067 and 0.189 which means that there is a zero therefore

R 2 = 0.13


R 2 = 0.35

Perceived Social
Brand Loyalty

0.54*** 0.30***


R = 0.29 Figure 2.
Validated model
Notes: *p < 0.05; ***p < 0.001
APJML value consciousness mediate the relationship between perceived social media marketing and
29,1 brand loyalty. The total effect is 0.212, with p-value o0.001 and direct effect is 0.218 with
p-value o0.001. Table III shows the mediating effects of brand consciousness on the
relationship between perceived social media marketing and brand loyalty as well as the
mediating effect of value consciousness on the relationship between perceived social media
marketing activities and brand loyalty. From the bias-corrected bootstrap test result, it was
136 confirmed that brand consciousness and value consciousness significantly mediated the
influences of perceived social media marketing activities on brand loyalty.

Common method variance (CMV)

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Since the data in the current study was collected using self-report questionnaires at the same
time from the same participants and both independent and dependent variables are
perceptual measures derived from the same respondents, CMV may be a concern (Podsakoff
and Organ, 1986). Harman’s (1967) one-factor test was performed following the approach
outlined by Podsakoff et al. (1984). All the items of the study were entered into a principal
component analysis with varimax rotation According to this technique, if a single factor
emerges from the factor analysis or one “general” factor accounts for more than 50 percent
of the covariation in the variables, CMV is present. The analysis revealed that there is no
single factor in the factor structure. Therefore, it does not appear to be a common method
bias concern in the present study. Another test was run to check the CMV in the data set
using common latent factor, whereby a common latent factor was added to the CFA model
and then the standardized regression weights of that model were compared to the
standardized regression weights of the model without common latent factor. The results
showed that all the differences were less than 0.2 so common method bias was not a major
threat in the data set (Tables II and III).

The findings of this study confirmed that perceived social media marketing activities will
assist marketers in conceiving brand loyalty, brand consciousness and value consciousness.
The current research supports the idea that perceived social media marketing activities is a

Hypotheses Path estimates t-values Test results

H1: perceived social media marketing activities will have a positive 0.15 7.13 Accepted
effect on brand loyalty
H2: perceived social media marketing activities will have a positive 0.54 8.64 Accepted
effect on brand consciousness
H3: brand consciousness will have a positive effect on brand loyalty 0.30 2.10 Accepted
Table II. H4: perceived social media marketing activities will have a positive 0.33 4.10 Accepted
Summary of effect on value consciousness
Study 1 results H5: value consciousness will have a negative effect on brand loyalty −0.35 5.72 Accepted

Independent Test
Hypotheses variables Effect Significancea results

H6 Brand consciousness 0.161 0.001 Accepted

H7 Value consciousness 0.115 0.001 Accepted
Table III. Notes: Mediator, brand consciousness and value consciousness; dependent variable, brand loyalty.
Mediation effects Significant levels based on phantom variables and bootstrapping techniques
key driver of brand loyalty because followers of the brand pages on social media platforms Social media
tend to be loyal and committed to the brand (Bagozzi and Dholakia, 2006). The finding is marketing
congruent with previous studies which have founded that online brand communities, can activities
enhance customer’s loyalty to the brand (McAlexander et al., 2002; Muñiz and O’Guinn,
2001; Schau et al., 2009; Zhou et al., 2011). Therefore, the study concluded that perceived
social media marketing activities is effective tool developing relationship with customers,
and building brand loyalty within the social media-based brand community. 137
Also, this study has set out to examine the impact of social media on marketing on brand
consciousness from consumer’s perspective. The assumption of perceived social media
marketing activities exert an important impact on a brand consciousness is believed to be
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valid. Previous research mainly has demonstrated the impact of the traditional instruments
(TV, radio, magazines, etc.) of marketing communications on brand loyalty, brand
association and brand awareness (Yoo et al., 2000). However, today’s consumers, especially
young, are more brand conscious, they regard social media as a more trustworthy source of
information about their brands than traditional instruments of marketing communications.
Consumers searching for clothing, cosmetics, shoes, perfumes, fashion accessories or other
products are exposed to a plethora of social media marketing activities in addition to the
traditional media such TV commercials and other promotional activities, this exposure
makes consumer well informed about their brands. In a nutshell, the social media marketing
is good strategy for brand consciousness. It is considered as an informative tool for
customers to get up-to-date details about the products. The contribution of current study
findings to theory is that the extension of marketing communication tools to incorporate
social media and its impact on brand consciousness.
The study has also examined the mediating effect of brand consciousness on the
relationship between social media marketing and brand loyalty. Whether it is a customer
reaching out to a company or a company sharing information with its followers, this
constant communication is ideal for encouraging brand consciousness which, in turn
enhances brand loyalty as demonstrated in the current study. This study also yields a new
insight into how perceived social media marketing activities influence value consciousness
consumers. Based on the above findings, the conceptual model has shown a direct positive
effect of perceived social media marketing activities on value consciousness. That means
social media marketing has been influential to the brand followers who are value conscious.
Value-conscious consumers are of a great importance to marketers to target in today’s
uncertain economy, whereby everyone is considered a value shopper. According to
Forrester Research, price is becoming a more important driver in the purchasing decisions
of consumers (Dunnhumby, 2014). The findings of this study have shown that social media
value-conscious consumers are not brand loyal, as value consciousness and brand loyalty
variables are negatively related.
The results also showed that value consciousness I negatively related to brand loyalty.
They have personal experience with the product and willing to share their opinions and
recommendations with many others in person and online across social media.

Limitations and directions for future studies

This research has certain limitations. First, the study has been conducted in only one of the
emerging market countries (i.e. Malaysia) (International Monetary Fund (IMF), 2012). Future
research should look into the comparison between developed countries and less developed
countries in this regard. Second, the participants in this study were undergraduate students
aged between 19 and 25. Although young adults within this age range are generally
heavy users of social media, those in other age groups are not represented in the study.
Therefore, the results of this study are not generalizable beyond the specific age
group under examination. Future research should adopt a more representative sample to
APJML rectify this issue. Third, there may exist other moderators that regulate the effectiveness of
29,1 perceived social media marketing activities on the study variables, such as age, gender,
education, income and personality. These moderators are not discussed in this research.
Future research should examine a greater variety of moderators. Finally, future research
should further compare the impact of traditional media marketing and social media
marketing and identify which media exert a stronger impact on the study variables.
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Appendix Social media
Cronbach’s Composite
Item Constructs Mean SD Loadings α AVE reliability

Brand consciousness 143

BCNSS1 I pay attention to the brand names of the
products I buy 4.23 1.62 0.735 0.81 0.52 0.81
BCNSS2 Brand names tell me something about the
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quality of the products 5.21 1.42 0.730

BCNSS3 Sometimes I am willing to pay more
money for products because of its brand
name 4.33 1.54 0.739
BCNSS4 Branded products that cost a lot of money
are good quality 4.54 1.56 0.671
Social media marketing
SMAC2 I find interesting contents shown in social
media about the brand I am considering to
buy 4.34 1.46 0.762 0.83 0.54 0.82
SMAC3 It is easy to deliver my opinion about the
brand I am considering buying through
social media 4.26 1.35 0.763
SMAC4 Using social media to search for
information about the brand I am
considering buying is very trendy 4.45 1.32 0.696
SMAC5 I would like to pass along information on
brand, product, or services from social
media to my friends 4.51 1.43 0.710
Value consciousness
VC1 I am very concerned about low prices, but
I am equally concerned about product
quality 5.60 1.30 0.716 0.89 0.66 0.89
VC2 When shopping, I compare the prices of
different brands to be sure I get the best
value for the money 5.61 1.40 0.817
VC3 When purchasing a product, I always try
to maximize the quality I get for the
money I spend 5.60 1.36 0.905
VC4 When I buy products, I like to be sure that
I am getting my money’s worth 5.64 1.33 0.810
Brand loyalty
BL1 I would rather stick with a brand
I usually buy than try something I am not
very sure of 4.76 1.49 0.666 0.86 0.62 0.85
BL2 I have certain types of brands that
I always buy 4.85 1.47 0.874
BL3 I consider myself to be loyal to one brand
of product 4.30 1.50 0.799
BL4 I feel confidence in a brand that Table AI.
I always buy 5.05 1.40 0.785 Item statistics
Notes: CMIN ¼ 267.702; df ¼ 101; CMIN/df ¼ 2.651, RMR ¼ 0.125; GFI ¼ 0.912, AGFI ¼ 0.881, NFI ¼ 0.886, and measurement
TLI ¼ 0.911, CFI ¼ 0.925, RMSEA ¼ 0.069 model results
APJML About the author
29,1 Ahmed Rageh Ismail is a Senior Lecturer at the School of Business and Humanities, Curtin University,
Miri, Malaysia. His main research and teaching interests fall into areas such as branding, marketing
communications, cross-cultural marketing, consumer behavior, services marketing, internet marketing
and retailing. He has published in the Qualitative Marketing Research: An International Journal, Journal
of Promotion Management, Journal of Fashion Marketing and Management amongst others.
Ahmed Rageh Ismail can be contacted at: a.rageh@rocketmail.com
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