Keep On Running. - progressing customer experience through digital platforms: a case study of Nike+ Erik Elowsson and Jessica Johansson

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1 Keep On Running - progressing customer experience through digital platforms: a case study of Nike+ Erik Elowsson and Jessica Johansson

2 Acknowledgements The authors of this thesis would like to express their deepest gratitude to everyone that participated to make this thesis happen. Thank you to all participants involved in the Nike+ movement for contributing with your time, engagement and knowledge. Without you this thesis could not have been possible. A big thank you to our supervisor Patrick L Espoir Decosta for his great support, motivation, guidance during the entire process of writing this thesis. Erik Elowsson and Jessica Johansson Stockholm, Sweden January 12, 2014

3 Abstract Digital platforms have established new ways within marketing for consumers and brands to interact. This has called for a paradigm shift denoting a phenomenon of shifting consumer and company roles, creating opportunities for interaction and value creation. Nike the worlds biggest sports apparel company has succeeded in embracing these new conditions with their digital service application Nike+ and the related brand community. This case study of Nike+ sets out to investigate how these new structural conditions of digital platforms have affected the interactions between consumer and firm at the level of the brand. Ten semistructured interviews with users of the Nike+ application were conducted together with a netnography of the Nike Running forum on Facebook. The data revealed how firms with the use of digital platforms, independent of locational boundaries, can form a synergy that allows for interaction and value creation for both brand and consumer. Consumers are given flexibility in the creation of brand experience, through the resources facilitated by the brand, hence having the opportunity to create and co-create useful value. From the process of this synergy brands are given a second life in the digitized sphere. A second life where consumer and brand process cooperate in order to influence each other s processes as well as being a way to claim a central place in the everyday life of the consumer. Keywords: Co-creation, value, digital platforms, brand ecosystem, brand community, branding, digital marketing, Nike+ 3

4 Table of content ACKNOWLEDGEMENTS! 2! ABSTRACT! 3! TABLE OF CONTENT! 4! CHAPTER 1. INTRODUCTION! 6! 1.1 Introduction! 6! Background! 6! Problem rationale! 8! 1.2 Purpose and objectives! 8! 1.3 Theoretical framework! 9! 1.4 Methodology and analysis! 9! 1.5 Significance of the thesis! 10! 1.6 Outline! 10! CHAPTER 2. LITERATURE REVIEW! 12! 2.1 Introduction! 12! Brand ecosystems! 12! Consumer identity! 13! Brand management! 15! Brand communities! 16! Multi-stakeholder brand meaning co-creation (MSBMCC)! 18! Value! 19! Value spheres! 20! Consumer co-creation of value! 21! CHAPTER 3. METHODOLOGY! 24! 3.1 Philosophical and methodological approach! 24! 3.2 Research method! 25! 3.3 Sampling! 26! 3.4 Data acquisition! 27! Semi-structured interviews! 27! Netnography! 27! 4

5 3.5 Analysis! 28! Grounded theory-based! 29! Coding! 29! 3.6 Trustworthiness! 30! 3.7 Limitations! 31! 3.8 Ethical aspects! 32! CHAPTER 4. ANALYSIS AND DISCUSSION! 33! 4.1 Introduction! 33! 4.2 The coding process! 34! 4.3 Netnography! 41! Nike Running Forum! 41! !Augmenting!experience!of!value!...!43! !Walking!the!talk!...!45! !Spurring!brand!movement!...!46! 4.4 Semi-structured interviews! 47! Devoted runners and hobby runners! 48! !Augmenting!experience!of!value!...!48! !Spurring!brand!movement!...!50! !Glocalizing!brand!communities!...!52! 4.5 Overlapping themes! 53! Flexibility! 54! Co-creation! 54! Curating! 55! CHAPTER 5. CONCLUSION! 56! 5.1 Conclusion! 56! 5.2 Significance of the thesis! 58! 5.3 Limitations! 58! 5.4 Suggestions for further research! 58! LIST OF FIGURES AND TABLES! 64! APPENDIX 1: INTERVIEWS, DEVOTED RUNNERS! 65! APPENDIX 2: INTERVIEWS, HOBBY RUNNERS! 90! 5

6 Chapter 1. Introduction This chapter introduces the background of the general topic for this thesis and guide the reader towards the specific purpose and objective set out for investigation. The theoretical framework and methodology will be presented briefly as well as the significance for the thesis. 1.1 Introduction The digital revolution is well under way and has left the world far more complex and interconnected. Thanks to the rise of mobile platforms and the digitization of media, today s consumers have been given almost limitless access to free content and information. This has transformed the entire field of marketing and changed how companies interact with their consumers and how they manage their brands (Quinton, 2012). Traditional marketing channels like TV and print-ads have declined in relevance, which is reflected in the crisis within traditional media and the drop in ad spending in those sectors (marketingcharts.com). This development has empowered consumers and forced companies not only to adapt to but also let the customers be a part of the creation of brand meaning (Quinton, 2012) Background In this new economic climate old barriers have been broken down and new ones raised. Subsequently, consumers have seen their level of power and potential influence increase exponentially when they now, through the grace of the Internet, have access to the same broadcasting tools as corporations (totalcustomer.org). At the same time companies are faced with the daunting task of trying to break through the noise and reach out to the consumer. To achieve this companies need to establish a new type of relationship with the consumer and offer them a truly personalised experience. A constructive way for companies to tackle these new conditions is by treating the consumer as a source of competence (Prahalad and Ramaswamy, 2000) and engages in an active and progressive dialogue with them. To create a rich and personalised customer experience the company must provide 6

7 a multidimensional environment for the interaction to take place within. The prevalent way of doing this is through brand-based digital platforms (adage.com), where the consumer is not only in charge of his or her own experience but where they also can connect with like-minded peers (Prahalad and Ramaswamy, 2000). These platforms can be used to induce a holistic brand experience with the capacity to seduce consumers and stimulate emotional responsiveness. One such company, Nike - the world s biggest sports apparel company - can be seen as a pioneer in digital marketing and has made a shift from traditional marketing strategies towards a more interactive and dialogic approach. This was marked by the launch of the ecosystem of a digital extended fitness services called Nike+, in 2007 (management.fortune.cnn.com). Through this service the user can log training activities, receive help to create a workout schedule, set goals, share achievements and interact with other runners on the online Nike+ forum. Stefan Olander, head of Nike Digital Sport, describes the difference between this innovative way of communicating with the consumers and more traditional marketing approaches as follows: In classic marketing, buying the product is the end of the relationship. The thinking has completely shifted so that the purchase of any Nike product needs to be the beginning of the relationship. [With Nike Plus] We created a link stronger that anything we could ever say in our communications. (- Olander, 2012 (marketingweek.co.uk)) The digital service of Nike+ illustrates the shifting away from the traditional marketing approaches, toward new innovative ways of communicating with customers. The customer is no longer a passive receiver of the corporate message, but rather a partner involved in continuous interactions. In accordance to this, Nike has achieved engaging content and a dynamic dialogue with their consumers, something that only a selected number of companies has managed (Neelotpaul, 2010). Nike has also extended their service of Nike+ to include an online Facebook forum, Nike Running, as well as local Nike+ Run Clubs, were users for free can participate in running workouts under the brand name of Nike. Nike has increased their market share for running shoes from 48% in 2006 to 61% in 2008 (forbesindia.com). The positive response is also shown in the company s 7

8 stock returns of 120% over the past five year period which, compared to the 2,5% of the SPX index 1, is a show of great strength and momentum (management.fortune.cnn.com). These figures indicate the success in empowering the consumer and letting them be part of the value co-creation. Through enabled interaction platforms and brand communities firms defy their managerial control in order to serve their users Problem rationale Through the development of digital platforms new interfaces of communication between brands and consumers have emerged. Through these platforms power and control has shifted turning the brand into a supportive and co-creating partner, rather than a symbolic one (Quinton, 2012, Prahalad and Ramaswamy, 2004), indicating the continued loss of control to consumers over brand meaning. This shift has turned the relationship around, making the parties more equal in regards to information and knowledge (Prahalad and Ramaswamy, 2004). Brands no longer just deliver a product but rather support the consumer in their everyday life, acting as a joint through which consumers interact and uses a service. From the Nike-example a new phenomenon is discerned. Through the two bodies, digital platforms and community branding, a synergy is created that allow brand communities to help create value for the brand. From this process brands are given, what in this thesis will be called, a second life in the digital sphere, where value is created through interactions based on the idea of brand communities. From the synergy of these two bodies co-creation of value is progressed. 1.2 Purpose and objectives This thesis aims to investigate the processes of interactions between consumer and brand that has been enabled through the new structural conditions of digital platforms, that have empowered the consumer, with regard to information and control. Interactions can occur in many different forms between a number of 1 The SPX index is a stock market index based on the 500 largest companies listed on National Association of Securities Dealers Automated Quotations (NASDAQ) or New York Stock Exchange (NYSE). 8

9 different actors. This thesis focuses on the interactions occurring within the digital sphere since the new structural conditions have transformed the way communication and marketing is conducted. The research question is thus as follows: 1. How have the new structural conditions of digital platforms affected consumer s interaction with the brand? 1.3 Theoretical framework This thesis takes on a consumer perspective to digital interactions. Nonetheless, concepts developed from a managerial perspective will be useful for the researchers as well since the interactions appearing between consumer and firm are studied at the level of the brand. The concepts of co-creation (Prahalad and Ramaswamy, 2000, 2004), brand management (Louro and Chuna, 2001) and value spheres (Grönroos, 2013) serves as the managerial guidelines for initiating value and interaction. The concept of brand ecosystem (Bergvall, 2005; Fournier, 1998) prevails throughout the entire theoretical lens. The concept provides an understanding of the shifting roles within marketing and the incorporation of consumer control over brand meaning, as well as giving a technological perspective on the matter. Consumer culture theory, with particular focus on consumer identity (Arnould and Thompson, 2005; Wallendorf and Arnould, 1991; Fournier, 1998) is also discussed to provide an understanding on the consumer motives for participating in digitized interactions. Overarching concepts such as brand communities (Fournier and Lee, 2009), value (Arvidsson, 2009) and a multi-stakeholder perspective on co-creation (Vallaster and von Wallpach, 2013) are discussed systematically throughout the thesis in relation to the research question. 1.4 Methodology and analysis This thesis aims to investigate the structural conditions of digital platforms that have emerged through the development of the Internet and how this have affected the interactions between consumer and brand. The thesis takes on a qualitative methodological approach, collecting data through semi-structured interviews and a netnographic study. Two set of interviews were conducted and the respondents 9

10 were categorized into two groups by the researchers in order to gain a broader view of the usage of the application between more or less frequent runners. A total of ten interviews were conducted and all respondents were users of the Nike+ application. Six of them were also participants in the Nike+ Run Club Stockholm. Participants in the Nike+ Run Club Stockholm were categorized by the authors into a group named devoted runners, hence representing the more frequent runners. The four remaining respondents formed a group called hobby runners. A netnography was conducted and analysed through a qualitative content analysis of the Nike Running forum on Facebook. By studying posted comments and activities on the forum in combination with the interviews of the two groups a triangulation of data at the analysis level was provided. A snowball sample was used and the data was analysed through the steps of grounded theory, explained by Bryman (2008). 1.5 Significance of the thesis The contribution of this study is to shed light on the structural conditions of digital platforms. This has enabled consumers to interact and create meaning with the brand in ways that was not possible before the rise of the Internet and the digitized society. The thesis provides an insight to the process of digital interactions at the level of the brand and by this, also a possible direction for marketing in this new paradigm shift. Theoretical concepts connected to the studied literature have been developed to deal with branding and interaction in a digital context. These have been used to provide insights on how to arrange and impose interactions and value to fuel the relationship and commitment between consumer and firm. 1.6 Outline Chapter 1 of this study seeks to introduce the reader to the topic of research, outlining the intention, purpose and significance of the thesis as well as acquainting the reader with the theoretical and methodological elements. Chapter 2 outlines in depth the theoretical framework and concepts used for the thesis. Chapter 3 entails the methodological approach, presenting the research methods, 10

11 data acquisition, sampling, analysis and a discussion of the impacts and limitations of the chosen method. Chapter 4 deals with the analysis and discussion generated by the research. Chapter 5 is a conclusion of the thesis and brings forth implications of the results as well as suggesting areas for further research. 11

12 Chapter 2. Literature review This literature review chapter investigates the theoretical framework relevant for this study. The information will give a better understanding of the views on value creation and brand communities from a digital perspective. The discussion aims to compile the research done within the area to highlight the important aspects relevant to this thesis. 2.1 Introduction Managing consumer relationships are nothing new within marketing, but the rise of the Internet and social networks has called for a paradigm shift within the field. The research question for this thesis is situated within this paradigm shift, denoting a phenomenon of shifting consumer and company roles, creating opportunities for interaction and value creation at the level of the brand. This literature review will examine theories and concepts appropriate to the research question when forming the theoretical framework. The general area of research presents concepts within the field of brand management, consumer culture theory, value spheres, co-creation and brand ecosystems. Overarching themes such as brand communities, consumer identity and value are also discussed throughout the following chapter Brand ecosystems The concept of brand ecosystems has shifted over the years from being more firm-oriented to focusing increasingly on social and cultural matters (Bergvall, 2005). Brands and brand interactions are deeply embedded in culture, hence being an important part of consumer identity construction. Due to the shifting control over brand meaning, moving away from a managerial perspective towards a consumer-oriented view (Fournier, 1998), new insights to brand interaction has emerged, showing numerous ways of interpreting communication (Bergvall, 2005). Bergvall (2005) argues that it is neither consumers nor managers that 12

13 control the brand, but that it is rather cultural codes that work to construct meaning for brands. The term ecosystem reflects the dependence and responses, to both internal and external forces, from all stakeholders involved with the brand. Ecosystems illustrate the complex set of relationships involved when speaking about culture (Bergvall, 2005). One of the relations significant for this thesis is that of technological standards as the study has a digitized approach. Digitization is a rapidly evolving occurrence in our modern society, hence being a source of competitive advantage for companies when used properly. Bergvall (2005) confirms this idea by highlighting the importance of incorporating technology into the ecosystem as it widens the understanding of culture and hence, brand meaning. However, it is also a matter of creating or being part of the standardization of technology in order to make the ecosystem prosper, for example through co-branding with other companies (Bergvall, 2005). Correlative to what Nike did with Apple when launching their Nike+ service in 2006 (apple.com). Combining music with running through new technology became a perfect fit for Nike, providing the consumer with the possibility to personalize the experience and construct meaning through the provided resources (Sherry, 1998) Consumer identity Consumer culture theory (CCT) incorporates a group of theoretical aspects that addresses the relationships between consumer, marketplace, social dynamics and cultural meaning from a sociocultural perspective (Arnould and Thompson, 2005). The theory incorporates a specific concept called consumer identity projects (Arnould and Thompson, 2005), which deals with the construction of consumer identity through commitment to brands (e.g. Fournier, 1998; Wallendorf and Arnould, 1991). Due to the continuous evolvement of the Internet and social networks consumer identity has extended to also incorporate digital identity, where consumers use brands to construct identities online through computer-mediated environments (CME) (Schau and Gilly, 2003). During recent years there has been a shift in marketing strategy giving more room for the perspective of the consumer and consumer s relationship to brands (Fournier, 1998). Brand managers have had to realize that they no longer solely have ownership over brand meaning but that consumers also play a part in the 13

14 interpretation of the brand. Identity construction is an important aspect for understanding consumer s involvement and commitment to brands. According to Fournier (1998) consumers form identity and self-image in collaboration with brands and consumer culture. This argument is also confirmed by Holt (2004) who state that consumers use brands to address their identity desires in relation to tensions in society. Continually, Aaker (2009) discusses the interconnection between brands and products and that brands no longer solely can rely on just technical or functional benefits. Rather brands need to combine functionality with benefits connected to emotion, self-expression or social aspects. Aaker (2009) means that consumers commit to a brand due to what the brand can bring to them in terms of identity and that their commitment is not based on rationality. Hence, brands need to combine tangible resources, such as functionality, with intangible resources linked to feelings, identity or personality (Gardner and Levy, 1955). Nike+ has combined the tangible benefit of functionality through application with intangible benefits, such as those of social interactions, through the brand community and mobile application. Furthermore, researchers distinguish between individual and affiliative identity (Kleine, Kleine and Allen, 1995). The individual identity focuses on personal achievements, skills, strengths and goals, whereas affiliative or group identity focuses on establishing an identity within a group of for example peers (Schau and Gilly, 2003). Henceforth, individual identity is self-centric and affiliative identity is group-centric, both expressed through symbols and interactions. These two sides of identity construction also align with Pongsakornrungslip and Schroeder s (2011) research on co-consuming groups. Here members participate in communities due to individual and collective goals, all achieved through social interactions. Nike has incorporated possibilities for interaction through their application, online brand community as well as through their local run clubs, making this concept significant for this thesis. Beyond this it is also important in regards to how these possibilities could lead to co-creation of value (Prahalad and Ramaswamy, 2000, 2004: Vargo and Lusch, 2004). 14

15 2.1.3 Brand management Brand management can be described as the strategic and executive functions where brand value is being realized, cultivated and then turned into business performance and improved market positioning. These activities are based on the view of brands as competitive enhancing resources. Louro and Chuna (2001) established the concept of the four brand management paradigms, which identifies and examines the major approaches to brand management. Each paradigm represents a separate view of the brand concept and of the process of brand value creation (Louro and Chuna, 2001). Brand management paradigms constitute the principal discourse within an organisation regarding the meaning of and operation around brand assets. Louro and Chuna s four brand management paradigms are: the product paradigm where brands are seen as supporting entities of products, the adaptive paradigm has a consumer centred perspective on brands, the project paradigm brands are viewed as company controlled outputs, and lastly the relational paradigm where brands are seen as evolving bodies shaped through consumer-firm interactions. The increased consumer influence in the formation process of brand meaning and the increased importance of brand communities to create engagement are central factors that point towards a radical shift of the state of brand management today. From the four paradigms by Louro and Chuna (2001) Quinton (2012) further developed the theoretical body into a fifth management paradigm, the community brand paradigm. This paradigm goes further in accepting continued loss of control to the customers over brand meaning. The view of brands is that of autonomous entities defined by the context which they exist within and where official brand management only represents one of several influential forces. Furthermore, new interfaces between brands and consumers have emerged and no longer require purchase or consumption. The possibility of connection through viral channels within the brand community has enriched the relationship between the two parties, like in the example of Nike+ where brand communities have emerged both online and offline. Furthermore, brand management theory gives a much-needed managerial perspective of brand-related interactions between firms and consumers. 15

16 The community brand paradigm resonates with the research problem of this thesis since it provides a theoretical basis, as well as important tools for examining the managerial side of the issue. It is also relevant due to the shift in control over brand meaning, giving room for the consumers perspective and their relationship to brands (Fournier, 1998). Continually, it shows the shifting away from a transactional consumer-firm relationship to instead emphasizing the experience and value creation (Prahalad and Ramaswamy, 2000, 2004) that can emerge through these new interfaces. From the concept of brand management a number of central themes can be observed, including the loss of firm control and power, as well as the emergence of something of a curating role for management. Another significant tendency that can be noted is the democratizing of the media and communications landscape, which has gradually moved the consumer to the centre of the branding process. Consequently, brand management s ability to listen to consumers and get inside their heads has become increasingly important. Firms today have the opportunity to participate in interactions with consumers to a greater extent, understanding their needs and create valuable interfaces for both parties. Furthermore, the concept of brand management theory gives a much-needed managerial perspective of brand-related interactions between firms and consumers for this thesis Brand communities Continuing along the concept of group identity Fournier and Lee (2009) established a theory on how to organize brand communities. A brand community is defined as a group of admirers of a brand gathered by a shared passion independent of geographical location (Muniz & Guinn, 2001), such as the community of Nike+. Fournier and Lee (2009) points to the importance of actively designing the community around the brand and identifies three building blocks of communities: pools, webs and hubs. Pools entails like-minded consumer-groups that share values, goals and favoured activities. Webs, on the other hand, are consumer constellations characterized by peer-to-peer connection, interaction and support. Finally, hubs are groups of consumers joined together by the admiration for a central figure, for example a world-class athlete. 16

17 Brand management theory has traditionally been focused on pool-oriented brand building efforts. The objective has been to establish emotional links between the brand and consumers, by communicating a fixed set of clearly defined values. However, today this is believed to be a limited and often inadequate method, because of its theoretical angle and lack of emphasis on interpersonal connections (Fournier and Lee, 2009). People are rather believed to be interested in the social connections that the brand affiliations bring, than the theoretical values associated with it. This continues the argument on consumer identity by Arnould and Thompson (2005) where consumers construct their identity in collaboration with brands both individually and within a group. It also shows that brands need to emphasize their intangible resources in order to connect and interact with the consumer (Gardner and Levy, 1955). Furthermore, the pool-approach is also problematic since the core values can easily become blurred if the brand attempts to grow, or change its scoop in any way. Accordingly, Fournier and Lee (2009) suggests that pools need to be steeped in peer-to-peer web connections and peppered with hubs, to fully bring about a thriving brand community. Another of Fournier and Lee s (2009) relevant points is that brand communities are not to be viewed as assets of firms, but belong to the people in them and exist to serve their needs. Thus, the question is not how much control to exert, but instead how to cultivate and support the community in order to make it thrive. The authors advocate a design-based approach, where there is a balance between structure and flexibility. Consequently effective brand management within the brand community perspective is more about cooperation and co-creation than authoritarian control. Fournier and Lee (2009) mention nine so called designscript archetypes, which are templates for the central functions and inner dynamics of the community. Two of these archetypes are thought to be relevant for this thesis: The Performance Stage and The Tribe. The performance stage is an archetype of brand communities that supply members with a reliable audience for their performance, whereas deep connections and shared rituals and events characterized the tribe. The tribe metaphor is highly relevant for the Nike+ community, since dedication to running is associated with a certain kind of lifestyle. A lifestyle that is typically related to qualities like persistence, performance and focus, traits that set these people apart form the more hedonistic 17

18 general population. Furthermore the performance stage archetype relates in obvious ways to the brand community at hand. Running is a greatly measurable and performance oriented sport and the Nike+ system is all about collecting your personal data and then sharing this data with the outside world. Brand communities connected to consumer identity construction, particularly in a digitized sphere, seem to be the part of the new direction within marketing. Emphasis lies within the collaborative nature of branding where different stakeholders are thought to collectively define brand meaning and value and being part of the new marketing paradigm. This community strategy is a novel concept in brand management that reaches far beyond the territories of traditional marketing. It can be seen as part of an overall tendency in today's marketing research, which to a greater extent emphasizes the collaborative nature of branding, where different stakeholders are thought to collectively define brand meaning. Accordingly, this body of theory share significant ground with the others included in this literary review, which also can be said to be part of this new paradigm within marketing and branding Multi-stakeholder brand meaning co-creation (MSBMCC) There is research done where co-creation intersects with a stakeholder-network brand perspective. This novel research concept is called multi-stakeholder brand meaning co-creation (MSBMCC) and was developed through a case study in which interactions within a stakeholder network, in the midst of a brand crisis, was studied (Vallaster and von Wallpach, 2013). It disclosed how brand meaning was being negotiated through a dialog within the stakeholder network that surrounds the brand at hand. The study brought forth a new perspective on brands that view them as continually shifting texts, driven by the social interplay between stakeholders. Vallaster and von Wallpach (2013) calls the material realization of brand meaning multi-logs, which are the discursive traces in various channels, such as news articles and business forums as well as official brand channels. The continued progression of the Internet and of the virtual environments that it conveys has been essential for this new brand dynamic. However, the most significant input to this development can be attributed to the birth of social media 18

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