CHAPTER 2

REVIEW OF LITERATURE
2.1. The Collaborative Web
2.1.1 Web 2.0
The collaborative version of the internet, termed Web 2.0, as coined by Tim OReilly in 2005,
has altered the manner in which information is published, consumed and utilized on the internet
resulting in a paradigm shift in the way interactions take place within the organizational
workspace as well as between the organization and the external customers. Web 2.0 is a
collection of open-source, interactive and user-controlled online applications expanding the
experiences, knowledge and market power of the users as participants in business and social
processes [1].
Personal websites have been replaced by blogs, Content Management Systems by Wikis,
Directories by Tagging, Encyclopedias by Wikipedia and participation is the new keyword
connecting

organizations,

employees,

customers,

suppliers,

partners

and

any

other

intermediaries. Differential patterns of combining data, content, services through collaboration

and increased access to information by consumers has opened up new dimensions for
organizations to interact with the various players involved in the business.
Content creation by consumers facilitating the flow of ideas and knowledge has given corporates
access to huge volumes of data which can be leveraged for decision making. Commonly and
collectively called Web 2.0 tools, these new content-sharing sites, discussion and collaborative
webspaces, and application design patterns or mashups are transforming the consumer web. They
also represent a significant opportunity for organizations to build new social and web-based
collaboration, productivity, and business systems, and to improve cost and revenue returns
[2].Web 2.0 is the business revolution in the computer industry caused by the move to the
Internet as a platform, and an attempt to understand the rules for success on that new platform
[3]. Web 2.0 applications support the creation of informal users' networks facilitating the flow of
ideas and knowledge by allowing the efficient generation, dissemination, sharing and
editing/refining of informational content. Web 2.0 also appears to have a substantial effect on
consumer behavior and on new challenges facing strategists and marketers [4]. Corporate Blogs,
Online communities, social networks, wikis, micromedia and folksonomies are some Web 2.0
8

concepts being used by businesses in the field of marketing, brand promotion and customer
relationship management. Web 2.0 also appears to have a substantial effect on consumer
behavior and has contributed to an unprecedented customer empowerment. The consequences
are far reaching, affecting not only the area of technology development but also the domains of
business strategy and marketing owing to changing consumer attitudes, new customer needs,
emerging new value perceptions and the change of consumer search tactics and buying behavior.
Of significance is the emergence of the collaborative web as an influencer in consumer buying
behavior and further as a new source of consumer creativity, influence and empowerment [5].
Consumer behavior is increasingly influenced by peer opinions and collective intelligence [6].
Several organizations are using collaborative product-development tools, such as initiating
discussions on blogs to test ideas, involving customers in the use of collaborative design tools, or
testing how well products sell in virtual worlds. A new type of communities is gaining
momentum on the web and is reshaping online communication and collaboration patterns and the
way information is consumed and produced [7]. Individual desires for self actualization,
belonging to a group and gaining prestige facilitate participation and mutually maximize the
collective intelligence of the participants. The value attributed to these applications is not based
on the classic customer value approach but rather on some feeling of achievement through
personal gratification. Collective intelligence, which can be defined as the knowledge that is
distributed within a group reflects the knowledge of all participants and continuously adapts to
changes in the environment or opinion leadership [8].
As the collaborative web ushers in a new philosophy of information management, of interest are the
varied tools and associated concepts. I now move onto a brief discussion on some web 2.0 tools-

Online communities, Social and Business networks and Wikis before focusing on our research
area-Corporate Blogs.
2.1.1.1. Online communities
An Online community or a virtual community represents a group of people that primarily or
initially communicate or interact via the internet [9]. The dawn of the information age found
groups communicating electronically rather than face to face. A computer mediated community
uses social software to regulate the activities of the participants. These are places where people
gather to share knowledge, build recognition and tap opportunities. Initially sensed to be
resource pools for value addition, where people ventured to fulfill their need for self9

actualization, participation in online communities and forums started as a medium for exchange
of ideas and information, and now organizations have started using these communities for
marketing through consumer evangelism and support. A web based communication model
utilizes the features of the network for B2C as well as peer to peer communication. On the
Internet, electronic tribes structured around consumer interests have been growing rapidly. To be
effective in this new environment, managers must consider the strategic implications of the
existence of different types of both virtual community and community participation [10].
Consumers join these forums because of the multifaceted opportunities they provide to members.
Not only do they provide information on products and services and latest promotional schemes,
they are also triggers for innovation. As like minded people converge together, these are new
cliques where organizations can use opinion leaders for evangelism, while harnessing consumer
generated content for product improvement and co-creation. Corporates like Dell have
introduced Ideastorm as a virtual interaction centre for consumers who participate in the
development and enhancement of Dells products and services by sharing their ideas online.
Enabling interactive electronic dialogue with user communities is one way of getting closer to
the customers.
2.1.1.2. Business and Social Networks
Networking on Business and Social Networks, which are essentially groups of individuals and
organizations, has emerged successful in modern marketing. The high volumes of individual
presence across these networks makes them viable marketing tools. While increased consumer
interaction results in higher levels of trust, these are also being used extensively by salespeople
for generation of leads to drive demand.
The focus is on the VCP model (Visibility, Credibility, Profitability) of Relationship Marketing
[11]1. Visibility-The success of all networking is based on the ability of people to remember an
individual/organization or product/service associated with the same. As network connections
grow much faster than the number of participants, the growth of a communications network
strongly enhances its value.
2. Managing Relationships-Evolving simple acquaintances into credible relationships is the
essential thought. Real networks have a high local clustering which can be utilized to build
relationships.
10

3. Collaborating-Joining together for achieving business goals, by making best use of

opportunities, because of high level of participation by network members, which speeds up with
the involvement of certain network hub members.
Many brands have successfully used social networks like Facebook and Myspace. Companies
have been able to build substantial brand recognition and adoption by involving the audience on
the networks, supporting community goals, allowing self expression of members, providing
greater access to information, referrals and integrating the campaigns on these networks along
with the other organizational channels. The relationship capital has huge potential to create better
opportunity pipelines and acts as a catalyst in creating business relationships. A networks value
grows quickly as participants join. As per Metcalfes law, the value of a network is the
summation of the individual values in the network and the community value of a network grows
at a much faster rate than the individual values. Hence, as the network grows, the added links
accelerate the growth of the community value. Each new user benefits from joining the network
and contributes a new value laden connection to all the existing members of the network.
Organizations can capture the values of large networks which can be leveraged for marketing
and customer relationship management, in both the B2B and B2C domains. Business networks
are useful where people can try and locate prospective clients, and further by posting messages
regarding products and services on available networks, generating enquiries automatically.
2.1.1.3. Wikis
A wiki is a collection of Web pages designed to enable individuals to contribute or modify
content, using a simplified markup language. Wikis are often used to create and power
collaborative and community websites. The most prominent Wiki application is the Wikipedia
on which every Internet user can become the knowledge provider of its contents. In such
architecture, both peers and experts are equally welcomed and valued to participate in the
knowledge refinement process. Wikis are used in business as effective knowledge management
systems.Wikis enable site visitors to add their own content and build up, in an additive fashion,
on the content created by others. They hence create a common platform for people in the targeted
and specified community to not merely participate in the communications but also to be the
content and knowledge providers of the group. The properties of a wiki platform make it easy to
track activities such as the viewing, reading, adding, and editing of content, changes to content
over time, the most active contributors, as well as the opportunity to recruit specific users for
11

more focused research projects. When done right, wikis can drive key metrics that online
marketers labor to achieve including increased page views, a higher level of consumer
engagement, and higher rates of user contributions. Wikis can also be used for gathering market
intelligence by analyzing the content added by consumers which can provide insight into
possible future trends or competitor offerings. They can also aid in market research where
researchers enter the discussion and conduct focused surveys or discrete experiments. Wikis
offer companies the opportunity to encourage user generated content.
2.1.1.4. Folksonomies
The collaborative web has seen the emergence of new communication models producing
incredible amounts of distributed information that knowledge workers need to link, aggregate,
and organize in order to extract knowledge. Folksonomies attempt to provide a solution to this
issue by introducing an innovative distributed approach based on social classification [12]. The
huge volume of content available online today, has resulted in the evolution of more relevant
aggregation and concept matching tools, by addressing web-specific classification issues,
specifically with reference to the vast volumes of content created by consumers on the web.
Folksonomy (also known as collaborative tagging, social classification, social indexing, and
social tagging) is the practice and method of collaboratively creating and managing tags to
annotate and categorize content. Folksonomy describes the bottom-up classification systems that
emerge from social tagging [13]. In contrast to traditional subject indexing, metadata is
generated not only by experts but also by creators and consumers of the content. Usually, freely
chosen keywords are used instead of a controlled vocabulary [14]. Folksonomy (from folk +
taxonomy) is a user-generated taxonomy. A detailed discussion on use of folksonomies to
aggregate consumer generated comments on a blog for response modeling to aid the process of
campaign management will be undertaken as I develop my conceptual model.
Tags are created with the intent of signifying or suggesting concepts that are potentially or
accompanying or associated with possible content ontologies. Tags are understood to be
inherently connotative, social and possibly democratic [15].
2.1.1.5. Blogs
The dictionary meaning of a blog is a frequent, chronological publication of personal thoughts
and links. Blogs are customizable online webspaces that allow users to post content, which is
displayed in reverse chronological order. Depending on the blogging software or service used,
12

entries may include video and other rich media. Visitors to an individuals personal blog can
typically post comments to specific entries and can also elect to be automatically notified
whenever a new entry has been posted by subscribing to a blogs feed. Blogs are personal
journals or reversed-chronological commentaries written by individuals and made publicly
accessible on the web. To many people, blogs are not much different from regular websites,
however, they have distinctive technological features that differentiate them from other forms of
computer mediated communication. These features include: 1) easy-to-use content management
system; 2) archive-oriented structure; 3) latest-information-first order; 4) links to other blogs;
and 5) ease of responding to previous blog postings [16]. However, with the evolution of
blogging technology, and the fast expansion of the blogosphere, the form, content and functions
of blogs have expanded tremendously. These weblogs are often perceived as low-threshold tools
to publish online, empowering individual expression in public. Although a weblog is a personal
writing space, its public nature suggests a need to communicate [17] and invites feedback.
Weblogs can be positioned as their own genre, situated on an intermediate point between
standard web pages and asynchronous computer-mediated communication along dimensions of
frequency of update, symmetry of communicative exchange and multimodality [18]. Because of
the flexible and interconnected nature of blogs, people can use blogs for various purposes
including: keeping personal diary [19] [20]; interacting with other bloggers [21]; building a
virtual community; and disseminating messages to a mass audience [22].
Even though the majority of blogs contain personal thoughts or feelings of authors that are not
intended for mass dissemination, blogs exist in a public arena, the Internet, and messages posted
in blogs are open to anyone with an Internet connection [23]. More and more bloggers are
recognizing this mass communication potential of blogs and use blogs to publish their opinions
on public issues and to disseminate them to a mass audience [24]. Bloggers desire connection
with their audience, want to insert themselves into known, sometimes unknown social spaces, to
update, inform or advise, to greet or grumble, to pontificate, confess, create and to think [25].
Blogs are a global phenomenon that has hit the mainstream. In 2008, Technorati tracked 133
million blogs in 81 languages. Technorati is a real-time search engine for blogs that tracks what
is current and popular. Bloggers are collectively creating close to one million posts every day
and blogs have become integral to the media ecosystem. The Blogosphere is the collective
community of all blogs. Since all blogs are on the Internet by definition, they may be seen as
13

interconnected and socially networked. Discussions in the Blogosphere have been used by the
media as a gauge of public opinion on various issues. The active Blogosphere can be defined as The ecosystem of interconnected communities of bloggers and readers at the convergence of
journalism and conversation [26]. Bloggers are not a homogeneous group. There are personal,
professional and corporate bloggers, all having differing goals and covering a myriad range of
topics, using different techniques to drive traffic to their blogs, different publishing tools on their
blog and distinct metrics for measuring success.
2.1.2. Corporate Blogs
This concept has found widespread acceptance in the corporate world with the emergence of
corporate or organizational blogs. These are people who blog in an official or semi-official
capacity at a company, or are so affiliated with the company where they work that even though
they are not officially spokespeople for the company, they are clearly affiliated [27] and
endorsed explicitly or implicitly by the company. Also termed as a hybrid of the personal blog
[28], they are increasingly being explored by public relations practitioners and feature the
insights, assessments, commentary, and other discourse devoted to a single company.
Organizational blogs seem to appear at the intersection of personal reflection and professional
communication. They have evolved from both online and offline modes of communication and
have characteristics of both personal and professional communication [29]. Posts in blogs are
tagged with keywords, allowing for content categorization and also for gaining access to the
content through tagging as a theme based classification system. Linking is also an important part
of the blogging activity as it deepens the conversational nature of the blogosphere and its sense
of immediacy [30]. Blogging is shaping into a useful organizational tool for brand propagation
and interaction with consumers with several corporates having effectively launched Corporate
Blogs. An effective blog fosters community and conversation [31], drives traffic to the product
website, and serves as a medium for interaction with consumers thereby shaping consumer
perception, eliciting responses, and through a two way thought exchange process, aids in
fostering a connection with the consumers. Further, consumer feedback can be leveraged for
organizational consumption with respect to new product development, product features and
consumer expectations. Blogs have a comparative advantage of speedy publication-they have a
first mover advantage in socially constructing interpretive frames for current events [32]. Blogs
are no longer a subculture of the Internet; they have become a mainstream information resource.
14

They further provide a tremendous opportunity for forward-thinking companies and management
to have a significant positive impact on their public perception [33]. People who read
organizational blogs perceive an organizations relational maintenance strategies as higher than
those who read traditional web content only [34], thereby making a blog a useful tool for
creating and maintaining value laden relationships with current and potential customers. Usage
as an information repository materialises. As blog audiences grow and persist over hundreds of
posts, more of the back story is contained in an archive or across conversations throughout the
community and more and more is taken for granted as known [35]. Launching a corporate brand
blog is representative of an organizational desire to share information and engage in a
conversation. This is especially true when the blog allows visitors to post their own comments.
The informality of communication helps companies build trust [36], converse with people and
even manage public perception by posting suitable responses. The ability of a blog to induce
consumer participation by making consumers comment on the posts hosted by the organization
creates a dialogue and helps the organization achieve consumer engagement. While the ability of
a blog to achieve higher volumes of engagement in terms of volume of comments is significant,
of greater importance is the knowledge capital created through exchange with consumers which
can be mined to extract explicit information which can be leveraged by the organization as a
decision support system for consumer segmentation and strategy formulation. The advantage of
blogs is that posts and comments are easy to reach and follow due to centralized hosting and
generally structured conversation threads. Currently, all major browsers support RSS technology,
which enables readers to easily access posts without actually having to visit the blogs. Corporate
Blogging is primarily about three attributes-Information, relationships and knowledge
management. Although there are many different types of corporate blogs, most can be
categorized as either Internal or External.
2.1.2.1. Internal Blogs
Internal blogs are generally accessed through the corporation's Intranet, and accessible to all
organizational employees. Organizations benefit from internal blogs as employee participation
enables better exchange of ideas and discussion on diverse issues, harnessing collective
intelligence, and providing direct communication between various layers of the organization
structure. Corporate knowledge benefits that emerge from these blogs include gaining broad
knowledge about the aspects of the firm and getting the pulse of the company, which implies
15

gaining a specific perspective on what is valued in the firm. Internal corporate (enterprise or
business) blogs encompass all non-public blogs hosted within the organization on their intranets.
Employees use such blogs during the course of their daily responsibilities, to share expertise on
products and services, to voice opinions, and to initiate discussions on issues of interest to other
employees. They are sometimes used as communication channels in lieu of meetings and email
interactions and can be especially useful when the people involved are geographically distant or
located in different time zones.
Blogs protect the ownership of employee ideas and are viewed as collaboration tools enhancing
productivity, and as enablers for business and competitive intelligence. They are also considered
as a tool for workforce journalism [37]. Communities of blogging practices emerge-that is, group
of people who share certain routines and expectations about the use of blogs as a tool for
information identity and relationship management [38]. Community formation in the
blogosphere is not a random process, but an indication of shared interests, binding bloggers
together [39]. Internal corporate blogs can hence, be successfully used for Knowledge
management, Content sharing, Harnessing collaborative intelligence, Dissemination of ideas,
Meeting announcements, Learning and training and Team building. These include Knowledge
blogs which are the online equivalent of professional journals in which authors document new
knowledge in their professional domains, including research progress, references, and
observation. Now companies are starting to recognize that weblogs written by their employees
can be valuable communication and knowledge management assets, providing ways to speak in a
human voice within or outside the organization, to find previously undocumented expertise, and
to create unexpected connections between people and ideas. The growing familiarity of young
people with the form and analysis of its potential [40] motivate a look at early adopter
organizations, teams, and individuals. Blog posting is temporally similar to email, while blog
reading is more similar to Facebook messaging and participation is both work-related and social,
indicating a desire to connect to coworkers at multiple levels [41]. Corporates like Google see
benefits in corporate blogging by using internal blogs for tracking meeting notes, sharing

16

diagnostics information and code [42]. Organizations like Hewlett-Packard have dipped their
toes in the world of Web logging, or blogging [43].
2.1.2.2. External Blogs
External blogs are publicly available weblogs where company employees, teams, or
spokespersons share their views. They are thereby a window to the company culture, are often
treated more informally than traditional press releases and sometimes all posts go through a
review before they're posted. Comments are allowed on posts in some blogs. External corporate
blogs, which are primarily tools to interact with organizational consumers, partners, marketing
intermediaries, associates and components of the external environment of the organization viz.
media, government agencies, and other general bodies offer a more uptodate view of the
organization as compared to other traditional communication channels. They serve as tools for
marketing, customer relationship management and public relations. At times organizations hire
community evangelists to derive maximum benefits by engaging individuals (consumers,
partners, marketing intermediaries, employees etc.) and benefiting from community
participation. For the purpose of my research I shall focus on External Corporate Blogs.
These Corporate Blogs are being used by organizations to create an ecosystem to serve as a tool
towards moving customers and prospects through the sales and marketing process to land new
customers or up-sell existing ones by providing means for breaking down organizational barriers.
By providing an unmediated way to engage consumers or revealing personalities behind a
product, providing informal product views, disseminating timely information which helps
supplement the public relations and marketing processes, providing stories about the decisions
that shaped the product, propagating time sensitive information that would take too long to
publish through formal channels, strong consumer associations with the product can be
developed. They are giving established companies and obscure brands alike the ability to connect
with their audiences on a more personal level, build trust, collect valuable feedback and foster
strengthened business relationships. More importantly, these companies are enjoying tangible
returns in their blogging investment in the form of increased sales, partnerships, business
opportunities, press coverage and lead generation.

17

Key Findings of a study conducted by the Society for New Communications research in 2009
include the following 81 of the Fortune 500 companies or 16% currently have public-facing blogs.
Five of the top ten companies have public blogs: Wal-Mart, Chevron, General Motors, Ford,
and Bank of America.
90 percent of the Fortune 500s blogs have the comments feature enabled.

The computer software/hardware technology industry has the most blogs, followed by the

food and drug industry, financial services, Internet services, semi-conductors, retail and
automotive respectively.
2.1.2.3. Structure of a blog
Most corporates use simple well defined blog structures. Each post usually has a title, a body, a
permalink, a date/time stamp. They generate newsfeeds, representing weblog content in machine
readable format, or notify centralized tracking tools about updates. Blog archives enable readers
to access previously posted content. The relatively simple structure of weblogs coupled with a
variety of tools and services that enable the tracking and analyzing of weblogs makes them
useful organizational tools. For example, weblog inbound links or popularity rankings can be
checked at Technorati, trends can be tracked across weblogs at Blogpulse, or selected subsets of
weblogs can be read online at Bloglines. Significantly functioning as content management
systems, a substantial volume of organization specific information is available on a blog and the
online accessibility of the blog satisfies the need for information at any point of time. Used in
reference to a consumers quest for company specific information, a blog serves as a valuable
data repository, maintained by suitable organizational representatives or community managers
dedicated to the function of blogging, which can shape a consumers perception about an
organization or brand. Every new post in a blog is actually a new page which has a permalink
(i.e. a permanent URL identifier to a specific post). This favors the indexing of a post by Google
(i.e. potential customers can come across organizational product posts through Google) [44] and
allows for bookmarking the same using appropriate sites. A blog promotes user participation by
allowing users to comment on the organizational posts. The comment link on blogs is usually
located at the bottom of every post, with a number indicating volume of comments already
posted for that particular post. The user comments are listed in a chronological order below each
post. In this way, comments are integrated into a post, resulting in a themed conversation
18

between the corporate, the user (consumer) and other users (consumers) who have posted a
comment, forming an interesting supplement to the post hosted by the organization. Apart from
this, blogs can also host trackbacks which are a type of linkback method for blog authors to
request notification when somebody links to a post. A trackback is an acknowledgment. This
acknowledgment is sent via a network signal (ping) from the originating site to the receiving site.
The receptor often publishes a link back to the originator indicating its worthiness. Trackback
requires both sites to be trackback-enabled in order to establish this communication. Trackback
does not require the originating site to be physically linked to the receiving site.
Trackbacks are used primarily to facilitate communication between blogs; if a blogger writes a
new entry commenting on, or referring to, an entry found at another blog, and both blogging
tools support the TrackBack protocol, then the commenting blogger can notify the other blog
with a TrackBack ping; the receiving blog will typically display summaries of, and links to, all
the comment entries below the original entry. This allows for conversations spanning several
blogs that readers can easily follow.
2.1.2.4. The Gartner Hype Cycle for Emerging Technologies and Corporate Blogging
A hype cycle provides a cross-industry perspective on the technologies and trends IT managers
should consider in developing emerging-technology portfolios. As per the Gartner Hype Cycle
for Emerging Technologies, the five stages of a hype cycle are1. Technology Trigger-The first phase of a Hype Cycle is the technology trigger or
breakthrough, product launch or other event that generates significant press and industry interest.
2. Peak of Inflated Expectations-In the next phase, a frenzy of publicity typically generates overenthusiasm and unrealistic expectations. There may be some successful applications of a
technology, but there are typically more failures.
3. Trough of Disillusionment-Technologies enter the trough of disillusionment because they
fail to meet expectations and quickly become unfashionable. Consequently, the press usually
abandons the topic and the technology.
4. Slope of Enlightenment-Although the press may have stopped covering the technology, some
businesses continue through the slope of enlightenment and experiment to understand the
benefits and practical application of the technology.

19

5. Plateau of Productivity-A technology reaches the plateau of productivity as the benefits of it

become widely demonstrated and accepted. The technology becomes increasingly stable and
evolves in second and third generations.
According to the Gartner Hype Cycle for Emerging Technologies, 2009, Corporate Blogging has
moved up from the Trough of disillusionment and is now in the Slope of Enlightenment, inching
slowly towards widescale mainstream adoption as more and more benefits become visible.

2.1.2.5. Conclusions drawn after review of literature and concepts about blogging
These technologies have the potential to usher in a new era by knitting together the enterprise
and the consumer. Content sharing owing to high degrees of centralization and commonality not
only facilitate knowledge capture, but also better levels of productivity due to greater
accessibility. Mining the inputs of the consumers, with respect to the content they generate on
corporate blogs, branded online communities and other organizational networks, serves as an
excellent market sensing tool. The consumer ideas and thoughts can be leveraged by

20

organizations to achieve greater customer centricity through product improvements and cocreation. From a blogging perspective, benefits to users are social as well as informational, and
that connecting with their community is an important value sought by all types of users and
heavy users of the system realize the greatest benefits [45]. It was clear that these web 2.0 tools
could be effectively used for organizational benefit, both in B2B (Business to Business) and B2C
(Business to Consumer) domains. However, when this research commenced, in 2006, most of the
published literature available was regarding application of these tools to the field of computer
mediated communication. A survey of the blogosphere showed that a detailed study into using
corporate blogs for Marketing and CRM was absolutely missing. Interactions with some
researchers in the field further showed that most research was being carried out in the domain of
employee blogging and usage of blogs for internal organizational communication. The
organizational benefits derived in terms of mapping the consumer were not being adequately
studied. In view of these aspects, it was decided to take up CRM as a specific domain and fill the
gap by studying the specific CRM goals which benefit from the usage of a Corporate Blog, as
also the other external factors impacting the same. In 2006 only 8% of Fortune 500 companies
had corporate blogs and empirical studies from academia exploring corporate weblogs were
scarce. I proceeded to derive both research questions and hypotheses to test within future studies
after considering already published research in the domain.
2.2. Interactive Marketing
When companies began delving into the consumers cognitive space for value exploration, they
used focus groups as one of the several methodologies extensively used to collect feedback on
how well customers liked certain products. However, with the increasing complexity and
competitiveness in the business world, and with technology offering newer ways to help
organizations reach out to consumers in meaningful ways and involve them, the inadequacies of
the previously used media made firms try newer options. A well defined internet marketing
strategy coupled with the interactive web 2.0 tools enables greater contact between consumer and
brand, thereby increasing the perceived value of the customer and improving product
positioning. Web 2.0 is paving the way for integrating direct and brand marketing, enabling realtime dialog with customers and the joint creation of content that increases and improves brand
awareness and perception, and generates sales and leads [46]. The future of marketing is
collaborative and participatory.
21

2.2.1. Interactivity
For decades, businesses tried to determine what their customers wanted using focus groups that
offered feedback about how well customers liked certain products. As the business world got
more complex and markets became more competitive, the kind of information that could be
gleaned from focus groups became inadequate for most businesses. They didnt provide enough
information, nor was the information valuable after a product was already released.
Realizing the limitations of focus groups and similar marketing practices, companies decided
that they needed to know more about who their customers were, how they interacted with the
company, and how the company could reach out to customers in a meaningful way. This idea of
getting a 360-degree view of customers was a nice concept, but it was never really achievable
within the limited spectrum of marketing and communication tools that were available [47]. This
is where interactive marketing had a vital role to play. Marketing has moved from a transactionbased effort to a conversation and Interactive Marketing can be defined as the ability to address
the customer, remember what the customer says and address the customer again in a way that
illustrates that we remember what the customer has told us [48]. The collaborative web is
evolving as a significant interactive marketing tool and the ability to remember what the
customer has said is made easier when we can collect customer information online and
communicate with the customer easily using the connectivity provided by the internet.
Corporate Blogging is being utilized by organizations for the core business processes of market
sensing, customer acquisition and CRM. By using a blog as a tool for value exploration in the
customers cognitive space, firms are increasingly attempting to impact the consumer
expectations and experiences. Blogs bring in customers by affecting mindshare. In a competitive
environment where all players are vying for the consumer mindshare, a typical consumer only
has a limited amount of mindspace which can be targeted. Hence it is vital for companies to
develop a strategy to approach this mindspace by creating meaningful interactions through
touchpoints where consumers can engage in a dialogue with the organization. Interactivity is
thereby an important dimension in the study of the usage of a Corporate Blog for marketing and
CRM. I shall explore the domain of interactivity as I discuss the evolution of my conceptual
research model in the following chapter.

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2.3. Customer Relationship Management (CRM)

CRM or Customer Relationship Management is an enterprisewide initiative that belongs to all
areas of an organization [49]. It reflects the comprehensive strategy and process of acquiring,
retaining, and partnering with selective customers to create superior value for the company and
the customer.
The Goals of CRM are1. Build long term and profitable relationships with chosen customers.
2. Getting closer to those customers with every point of contact with them [50].
CRM is an enterprisewide approach to understanding and influencing customer behavior through
meaningful communication to improve customer acquisition, customer retention, customer
loyalty, and customer profitability. CRM can be viewed as an application of one-to-one
marketing and relationship marketing, responding to an individual customer on the basis of what
the customer says and what else is known about that customer [51]. It is a management approach
that enables organizations to identify, attract, and increase retention of profitable customers by
managing relationships with them [52] and further identifying strategically significant customers
[53].
In the academic community, the terms relationship marketing and CRM are often used
interchangeably [54]. The heart of marketing is relationships and nurturing long term
relationships should be the goal of marketing practice [55]. Five macroenvironmental factors
responsible for the growth of relationship orientation in marketing [56] included-Rapid technological advancements, specially in the field of information technology.
-The adoption of total quality programs by companies.
-The growth of the service economy.
-Organizational development processes leading to the empowerment of individuals and teams.
-An increase in competitive intensity leading to concern for customer retention.
Increased competition reduces brand loyalty making the job of the marketers more complex.
Further, customers also become indifferent to the myriad marketing messages being thrust upon
them. As a result, marketing needs to be more well directed and specific, because customers,
whether consumers or businesses, do not want more choices. They want exactly what they want,
when, where and how they want it, and technology now makes it possible for companies to give
it to them [57].Customers have hidden or overt preferences which marketers can reveal by
23

building a learning relationship. Earlier, marketers were attempting to interpret consumer needs
on the basis of their buying behaviors. Now with the arrival of consumer generated media, which
I discuss in the next section, marketers have another avenue to learn about the consumer. The
objective is to keep the consumers satisfied and keep them loyal towards the company or brand.
CRM, which has also been described as information-enabled relationship marketing [58],
comprises processes used by organizations to manage consumer relationships which also include
collecting, storing and analyzing data, and is often termed as data-driven marketing. CRM
attempts to provide a strategic bridge between information technology and marketing strategies
aimed at building long-term relationships and profitability. This requires information-intensive
strategies [59]. It is vital to maintain appropriate Customer Information Management systems by
acquiring customer databases and consolidating customer feedback.
Four main CRM strategic capabilities [60] include Technology-This will enable the desired functionality for the CRM practice.
People- Skills, abilities and attitudes of the people responsible for the CRM initiative.
Process-The processes that the company has identified to enable or to ensure that the CRM
objectives are fulfilled-these include the transactional interactions with the customers.
Knowledge and insight-To ensure stronger and deeper relationships with the right set of
customers, companies need to identify the right approaches that will enable them to gain
knowledge to gain insight for enhancing the customer value significantly.
For the purpose of our research I use the following two definitions of CRM.
1. Customer Acquisition and Retention are the twin objectives of CRM.
2. CRM is a strategic approach that is concerned with creating improved shareholder value
through the development of appropriate relationships with key customers and customer
segments. CRM unites the potential of relationship marketing strategies and IT to create
profitable, long-term relationships with customers and other key stakeholders. CRM
provides enhanced opportunities to use data and information to both understand
customers and cocreate value with them. This requires a cross-functional integration of
processes, people, operations, and marketing capabilities that is enabled through
information, technology, and applications [61].

24

2.3.1. Customer Acquisition

A simple definition of "Customer Acquisition" is the process of acquiring or obtaining new
customers, and/or converting prospects to customers. Successful CRM begins with the
acquisition of the right customers [62]. The cost of acquiring new customers is considerably
higher than the cost of servicing existing customers. Adding a new customer costs three to seven
times more than keeping an existing one. Firms have tried out various ways to acquire new
customers by spending less on the acquisition costs.
The cost of acquiring new customers includes the cost of sales, promotions, branding, customer
trials, etc. Therefore, the ratio of customer acquisition to retention becomes very important for
the firm [63]. CRM can enable better retention and therefore enable the firm to enjoy a better
ratio between acquired and retained consumers. Studies by U.S based Bain and company have
shown that a customer becomes more profitable with time because the initial acquisition cost
exceeds gross margin while the retention costs are much lower. When an organization retains a
customer, it gets a larger share of the customers wallet at a higher profit-1 percent increase in
sales to existing customers increase profits by 17 percent while the same amount of sales to new
customers increase profit by only 3 percent [64]. Companies can boost profit by increasing
annual customer retention and further the probability of selling a product to a prospect is much
lesser than the probability of selling a product to an existing customer. Hence, since it costs
many times more to acquire new customers, the firm should ensure that customers once acquired
should be retained and that their Customer Lifetime Value realized to the maximum possible
extent. Customer Lifetime Value is the present value of the future cash flows attributed to the
customer relationship. Firms should invest in an appropriate consumer segmentation process
once a new consumer is acquired, to target them appropriately for future sales generation.
The internet and the collaborative web are proving to be very useful to the organizational
consumer acquisition process by enabling organizations to reach out to a large number of
consumers across the world without needing offices in diverse geographical locations.
Acquisition is a vital stage in building a customer relationship and a focused and contextual
interaction with the customers with respect to their roles as Initiators, Influencers, Deciders,
Buyers and Users is required by any organization while moving towards growth or success. A
vital strategy to achieve acquisition is to initiate a forum for open and integrated channels of
communication and to alleviate any doubts or fears in the minds of the customers. A good CRM
25

strategy aims at providing a win-win platform for both the organization and the customer by
paying adequate attention to the process of adoption by focusing on options available to
customers, appropriate promotion campaigns, and concentration on existing customers. The idea
is to keep the current and prospective customers abreast with the developments in the
organization, as also providing clarifications to any information circulating in the environment.
Also needed is the ability to quantify the effectiveness of results of various promotional
activities. This allows organizations to realize continuous improvements in both promotional
activities and customer acquisition systems. Also of significance are campaign management and
response management functions. These are discussed in detail in the subsequent chapter.
2.3.2. Customer Retention
Customer Retention is the process of keeping, sustaining, and/or growing the relationship of
consumers with the company and its products and services. It is the process of keeping customers
loyal to a company for an unending period by meeting the needs and expectations of customers
and is a significant contributing factor in the growth rate of businesses. Customer Retention has
replaced cost effectiveness and cost competitiveness as the greatest concern of business
executives today. The foundation of CRM is built on an iterative process of learning and
customization. Companies interact with customers, treat them as organizational assets, learn
about them and through the process of incorporating feedback and co-creation, develop a level of
intimacy with them. This serves the objective of better marketing investment prioritization as
improving marketing intelligence will definitely aid firms in improving the selling context.
Organizational processes need to change in a way that the organization can recognize individual
customers and extract information on who they are and what they want [65]. Customers want to
be listened to. They do not want to be passive receptors of a company's sales pitch. CRM is a
comprehensive business and marketing strategy that integrates technology, process and all
business activities around the customer [66] and further serves as an active listening mechanism
and forms relationships with customers by focusing on their perspective, hence achieving
Customer Retention.
Companies now have developed proven CRM practices that enhance firm performance, by
recognizing the central role of the customer for the strategic positioning of the company. The
ambition to become a customer centric organization affects every aspect of the firm and the
principal components of CRM are by now well described [67]. By realizing the need for a
26

customer centric vision, incorporation of the same into organizational strategy and facilitating
organizational change, corporates are organizing processes around the customer lifecycle. The
customer life cycle which traces the movement of a consumer across stages which lead him to
product purchase and then move him forward towards either building a relationship with the
organization and becoming a loyal customer or exhibiting churn and moving onto another
product or brand is representative of changes in consumer behavior over time. Knowing not only
the current state of the customer, but also the path to this state, can provide critical additional
clues to a customers potential and future behavior. Knowing the path provides powerful inputs
to the marketing approach to be used to address the current state of the customer.
The value of customer touchpoints is also being realized. A customer touchpoint refers to all
interaction channels between organization and consumer. Each communication, human resource,
branding, marketing and sales initiative creates touchpoints. The quality of touchpoint
experiences drives perceptions, actions and relationships. They encompass the physical,
communication, and human interactions that organizational customers experience during their
relationship cycle with the company. It is important to take into account every point in time the
customer touches or connects with an organization throughout the entire product/service
delivery; pre, during and post-purchase cycle. Customer information must be available at all
customer touchpoints, information technology should support these touchpoints and enable
customer centric interactions. This should help the organization to build customer related
knowledge and to integrate front and back-office processes [68]. CRM objectives comprise
coordination of customer-related data, meta-data and knowledge and the centralized planning
and evaluation of measures to increase customer lifetime value. Use of customer lifetime value
as a marketing metric tends to place greater emphasis on customer service and long-term
customer satisfaction, rather than on maximizing short-term sales.
2.3.3. ECRM
ECRM comprises activities to manage customer relationships by using the Internet, web
browsers or other electronic touch points. A higher degree of interactivity possessed by these
channels further allows companies to engage in dialogue, organize consumer redressal, solicit
feedback, respond to controversies and establish and sustain long-term customer relationships.
Existing companies are being challenged to rethink the most basic business relationship-the one
between the organization and its customers. Customer Relationship Management is a
27

comprehensive business and marketing strategy that integrates technology, process and all
business activities around the customer. Despite media hype about the internet changing the rules
of engagement with customers, it hasnt changed the underlying fact that addressing customers
needs leads to sustainable profit, [69] and that ECRM is related to customer satisfaction [70]. In
this scenario, where information overload in the internet age can force people to become passive
receptors of information, it is important for an organization to make sure that the right
information reaches the right people at the right time. A higher perceived value by the consumer
in the organizational information will stimulate consumer interest leading to a desire to interact,
achieving engagement from the organizational perspective.
While CRM can be considered as an approach or business strategy providing seamless
integration of every area of business that touches the customer, namely sales, marketing,
customer service and field support, through integration of people, process and technology,
ECRM on the other hand, takes advantage of revolutionary internet technology to expand the
traditional CRM techniques by integrating technologies of new electronic channels and combines
them with e-business applications into the overall enterprise CRM strategy.
The practice of CRM involves tracking customer transactions and interactions across all contact
points and analyzing the transactions or interactions to make sense of the customers behavior.
The terminologies associated with these issues comprise operational and analytical CRM. I now
focus on the three components of the ECRM framework- Operational CRM, Analytical CRM
and Collaborative CRM.
2.3.3.1. Operational CRM
Operational CRM aims at combining sales, support and marketing databases into a single
repository that tracks and manages interactions with customers, thereby focusing on improving
the efficiency of customer interactions. It is concerned with the customer facing functions and
the capturing of data generated as a result of interactions with the consumer, across all contact
points. Operational CRM focuses on actual customer interfaces. A company usually in course of
its day to day transactions collects large amounts of data about its customers, competitors and
details about its processes and the environment in general. Such data contains hidden implicit
knowledge which could be profitably used by the company. Extraction of this data requires data
analysis using statistical and other such techniques.

28

2.3.3.2. Analytical CRM

Analytical CRM comprises the analysis of customer data for strategic or tactical purposes to
enhance both customer and firm value [71]. Analytical CRM aids decision making using various
tools ranging from simple spreadsheet analysis to sophisticated datamining [72]. The analysis
should enable insight into consumer behavior, and meet the objectives of the CRM initiatives, for
the purpose of business performance management and improvement. The aspects that could be
covered include prediction of consumer behavior, creating segments of consumers based on their
purchase behavior, understanding consumer purchase preferences, understanding changing
trends, identifying consumers at the risk of churn, analyzing responses to campaigns and
retention strategies. Customer analysis applications predict and interpret consumer behavior and
the integrated customer information is used to build a business campaign strategy and assess
results. Also built are predictive models to identify the customers most likely to perform a
particular activity. Segment selection processes improve response rates and campaign
effectiveness and lower campaign costs by reducing the size of the original target segment.
Usually there are three major types of customer analysis applications-online analytical
processing, datamining and statistics. Datamining applications perform the analysis and extract
relevant consumer information. Analytical CRM depends on Operational CRM for getting the
input data on which analysis is to be done.
2.3.3.3. Collaborative CRM
Collaborative CRM facilitates interactions between customers and companies and between
members of the company around customer information to improve communication and
coordination, to raise customer switching costs and to increase customer intimacy and retention.
Some collaborative CRM technologies are voice, conferencing, email, web based and other
interactive technologies. Collaborative CRM is primarily geared towards increasing the
interactions between the customers and the companies.
2.3.3.4. Consumer Generated Media (CGM)
I take a closer look at the concept of services marketing, that views the customer as a cocreator
and coproducer [73] [74] [75]. CRM is of major importance for companies that serve multiple
groups of customers and exploit different interaction channels for them. This is due to the fact
that information about the customers, which can be acquired for each group and across any
channel, should be integrated with existing knowledge and exploited in a coordinated fashion
29

[76] for organizational benefit. While CRM includes numerous aspects, the basic theme is for the
company to become more customer-centric. Web based tools and internet presence are offering
newer opportunities in this dimension, by allowing consumers to create content about an
organization or brand or products and services.The democratization of consumer expression has
lead to a viral proliferation of information online, and the new age communication ecosystem has
prompted the need for a careful evaluation of the potential of what is being called Consumer
Generated Media, creating new challenges for data management. With the ability to impact
business environments, these offerings of the information age have garnered adequate potential
to engineer business transformations.
Consumer-Generated Media (CGM) encompasses the millions of consumer-generated
comments, opinions and personal experiences posted in publicly available online sources on a
wide range of issues, topics, products and brands. CGM is also referred to as Online Consumer
Word-of-Mouth or Online Consumer Buzz [77].Consumers place far more trust in their fellow
consumers than they do in traditional marketers and advertisers [78]. For any marketer,
advertiser or business professional trying to be heard or break through the clutter, understanding
and managing this high-impact CGM is critical for marketplace understanding and success. A
large number of online users trust consumer reviews posted online over other forms of
advertising, before making a purchase [79]. This has ushered in discussions about the
empowerment of consumers, thereby besieging the studies of consumer behavior with the ability
of this medium to influence purchase decisions, hence creating an intrinsic need to mine this
data. Leveraging CGM and channelising it appropriately has become critical for organizations
for understanding and managing market performance, product positioning and driving brand
reputations. The huge volume of daily postage data has significantly created huge repositories of
accessible textual data, thereby focusing on the need for information retrieval and analysis. The
biggest challenge in front of organizations is to harvest CGM to help marketers gain insight into
the online market conversations taking place, and the tools being used to do the same. Efforts are
on by organizations to track the volume, origin, flow and trajectory of the conversations in real
time as they evolve, and map the scope, reach and influence of the same on topics that might
have a positive or negative impact on a company's products, promotions and reputation.

30

2.3.3.4.1. CGM and Consumer Behavior

Consumer behavior is witnessing the impact of consumer generated media, which is also
affecting product positioning and driving brand reputations in such a big way, that the power of
the ordinary content creator can no longer be ignored. These new web based interaction tools, by
giving birth to CGM have changed company relationships with their consumers from a
unidirectional "attract customer" strategy to a culture of participation and co-creation. Whether
or not a brand has launched a social media strategy, more likely than not, its already present in
the blogosphere. Several consumers post brand or product reviews, and company information or
gossip and everyday retail experiences are fodder for the majority of bloggers. As consumer
voices start echoing, the need is to establish a meaningful interaction with them and use them as
advocates for the company. Many companies have already started reaching out to bloggers, by
enlisting them as brand advocates.
2.3.3.4.2. CGM and consumer empowerment
The feeling of empowerment [80] is unique. It gives a consumer an immense sense of
satisfaction to know that they have a tool to provide feedback to the organization they have
sourced a product from. This further helps a consumer augment his self-concept. The thought
that content generated by him may later be read and analyzed by the concerned company gives a
consumer a feeling that he has the ability to contribute to the customer management and
feedback analysis systems of the company and becomes a primary motivator to make him
create content. CGM has provided a medium to the common man to unload his thoughts and
sentiments, thereby stimulating a catharsis by providing tools for conversation by building
communities of people using similar products and airing their views.
2.3.3.4.3. CGM and Opinion leaders
Opinion Leaders [81] have an informal influence over consumer behavior and impact consumer
acceptance of new products and services. Consumer Generated Media has provided a new source
of communication for these opinion leaders who adopt CGM for the following reasonsSelf-Projection and Self Confirmation [82] - A feeling of superiority or status by demonstrating
expertise by generating content and on being considered an authority on a subject. Research
shows that individuals categorized as opinion leaders are four times more likely to be asked for
advice/voice their opinion on any subject under discussion. This acts as a channel to reduce own
post-purchase dissonance or self doubt regarding a purchase, by discussing the product features,
31

pricing or other related issues in a medium which will garner some comments, which if positive,
will reassure the concerned individual regarding the appropriateness of his/her purchase.
Social involvement-Some people love sharing product related experiences and use these
conversations

as

means

of

being

part

of

the

community.

As the keen desire for knowledge and information drives an opinion leader to be an innovative
consumer and share his experiences, his gregarious nature and access to the community coupled
with the fertile opportunities provided by the collaborative web, can be utilized by organizations
by creating Customer Evangelists [83] and generating favorable conversations about their
products

and

services.

2.3.3.4.4. Peer reviews, Word of mouth and the dissatisfied customer

More and more online buyers are turning to peer-reviews for product related advice, before
adopting a product [84]. Studies have shown that, when asked to note their most trusted
information source, sixty per cent of online buyers said consumer reviews, as compared to 31 per
cent who said newspapers or magazines. Further, a large no. of online buyers indulge in
comparison shopping and are early adopters of social networking such as writing or reading
blogs, customer reviews, and community websites and are more likely to share their opinions and
give reviews online than people who shop the old-fashioned way. A dissatisfied customer
reaches out to a larger audience, as compared to the word of mouth generated by a satisfied
customer [85], thereby damaging consumer perception about a company and its products. As it is
now clear that a consumer's pre-purchase research finds more value and credibility in an
informal source of information, rather than a company's advertising campaign or it's salespeople,
CGM and opinion leaders are fast becoming forces to reckon with. It is hence vital for
companies to identify these Influencers or Opinion Leaders and analyze the content generated
by them. A case in point has been Dell which embraced corporate blogging to become part of the
conversations in the blogosphere which its customers were having without it [86].
2.3.3.4.5.Correlation

between

Consumer

Generated

Media

and

Sales

The high impact of the ability of CGM to generate incremental publicity for certain products,
enough to affect their commercial prospects has prompted marketers to formulate a role for
CGM in the Marketing Mix. This has prompted the need to mine this Consumer Generated
media as there appears a strong correlation between buzz and sales and buzz also helped in
generating accurate forecasts.
32

2.3.3.4.6. The Value of the power of influence

With the role of opinion leaders and influential personnel in influencing consumer behavior,
being defined, it is clear that influence, defined by Wikipedia as the ability to indirectly control
or affect the actions of other people or things. is a key psychological driver affecting the
behavioral outcomes of individuals.
It is hence important for organizations to analyze this media generated by the consumers to
identify the influencers, the key drivers affecting consumer behavior, monitoring consumer
perceptions and measuring the magnitude of this influence and outline strategies to harness the
influencers for organizational gain.
2.3.3.4.7. Mining CGM-Objectives, Scope and Methodology
The online information clutter needs to be processed to convert the myriad online voices,
references and opinions into crystal clear insight and to extract valuable knowledge and
actionable intelligence. Consumer Generated Media is an important tool for

Market sensing to gain an insight into the consumers mind, and secure inputs on
consumer perceptions on organizational products and brands.

Build stronger bonds with influencers and channelise them for good Word of Mouth.

Measure the impact of marketing strategies and understand emerging trends.

Uncover the ideas for new products and identify opportunities for improving current
products.

Disseminate this market intelligence data across the organization and formulate strategies
to create customer value.

Analyzing consumer generated media and using it as an organizational resource has emerged as
an excellent opportunity for marketers. This can be tapped during the formulation of marketing
strategy, tracing the outcomes of organizational campaigns and identifying influencers who can
be recruited as customer evangelists.
2.3.4. Datamining for Customer Relationship Management
Analysis of large quantities of data require approaches that are very different from the traditional
data analysis approaches and this has given birth to the field of Knowledge Discovery in
Databases (KDD), more popularly known as Datamining. Knowledge Discovery in Databases is
a non-trivial process of identifying valid, novel, potentially useful and ultimately understandable

33

patterns in data [87]. Others look at datamining in terms of a set of tools and techniques that
operate on and extract implicit patterns from data. Knowledge Discovery and Data Mining
(KDD) is an interdisciplinary area focusing upon methodologies for extracting useful knowledge
from data for Business Intelligence. The ongoing rapid growth of online data due to the Internet
and the widespread use of databases has created an immense need for KDD methodologies. The
challenge of extracting knowledge from data draws upon research in a wide variety of fields to
draw upon tools that can synthesize and organize knowledge on any given topic of interest from
a corpus of documents. There is an increasing realization that effective customer relationship
management can be done only based on a true understanding of the needs and preferences of the
customers. Under these conditions, data mining tools can help uncover the hidden knowledge
and understand customer better, while a systematic knowledge management effort can channel
the knowledge into effective marketing strategies. This makes the study of knowledge extraction
and management particularly valuable for marketing [88].
Datamining tools and Techniques operate on large databases and extract patterns that are implicit
in them, resulting in actionable information. Datamining can be directed or undirected. Directed
datamining attempts to explain or categorize some particular target field such as income or
response (in a CRM context). Undirected datamining attempts to find patterns or similarities
among groups of records without the use of a particular target field or collection of predefined
classes [89].
Customer understanding is the core of CRM. It is the basis for maximizing customer lifetime
value, which in turn encompasses customer segmentation and actions to maximize customer
conversion, retention, loyalty and profitability. Proper customer understanding and actionability
lead to increased customer lifetime value. Incorrect customer understanding can lead to
hazardous actions. Similarly, unfocused actions, such as unbounded attempts to access or retain
all customers, can lead to decrease of customer lifetime value (law of diminishing return).
Hence, emphasis should be put on correct customer understanding and concerted actions derived
from it.
In view of the above, corporates commenced accumulation of wide spectrum of consumer data
viz. transaction data, customer databases based on consumer behavior and purchase transactions
and in this context, creation of data warehouses. But, due to lack of appropriate tools and
techniques to analyze these huge databases, a wealth of customer information and buying
34

patterns was permanently hidden and unutilized in such databases. Data warehouses are
important constituents of a balanced CRM ecosystem and provide enterprises with memory. But,
memory is of little use without intelligence. The central idea of datamining is that data from the
past contains information that will be useful in the future. It works because consumer behaviors
captured in corporate data are not random, but reflect the differing consumer needs and
preferences. Knowledge-based marketing, which uses appropriate datamining tools and
knowledge management framework, addresses this need and helps leverage knowledge hidden in
databases. Customer Profiling is one of the major areas of the application of data mining for
knowledge-based marketing. This is of relevance because consumer behavioral data is a more
valuable source of information than consumer demographics data.
Further, in the context of data generated by consumers on the internet, measuring where a
message appears and how many people see it is no longer enough. Companies need to track the
volume of CGM and the richness of the dialogue among people to understand how a message
evolves. This true customer knowledge combined with interactive technology can lead to
successful relationship marketing and management of each segment in terms of its stage of
development. For effective customer centric marketing strategies, the discovered knowledge has
to be managed in a systematic manner. Trend analysis can be used to study volume of CGM for a
particular product/ brand through Blogpulse, (2006), a Neilsen Buzzmetrics tool. Buzzlogic,
(2007) could further be used for identification of key influencers across the blogosphere.
2.3.5. Datamining techniques
Datamining techniques are algorithms and methods used to carry out datamining tasks. They
differ from each other in type of data handled, assumptions about the data, scope and
interpretation of the output. A few techniques which have relevance to the fields of Marketing
and CRM are discussed here2.3.5.1. Market Basket Analysis and Association rules
In the domain of CRM, Market Basket analysis is an operation that seeks relationships between
product items characterizing product affinities or buyer preferences. For example, a manager in a
retail store is very concerned about the display of goods and would be interested in displaying
only those products that are likely to be purchased. Optimizing the shelf space with the products
that are most likely to be sold would help the manager in improving the revenue from the store.
If the marketing manager mines for association rules, thereby focusing on items that sell
35

together, by using these rules the display space can be redesigned and better utilized. The display
can thus be made to accommodate principally those items that sell together. By reconfiguring the
display space, the store manager can increase the amount of sales [90].
2.3.5.2. Nearest Neighbor technique-Memory Based Reasoning
The human ability to reason from experience depends on the ability to recognize appropriate
examples from the past [91]. Identification of similar cases from experience and application of
knowledge of those cases to the problem at hand is the essence of memory based reasoning. A
database of known records is searched to find preclassified records similar to a new record.
These neighbors are used for classification and estimation.
Application of MBR to customer response predictionThe next customers likely to respond to an offer are probably similar to previous customers who
have responded. MBR can easily identify the next likely customers.
MBR focuses on two operations - A distance function capable of calculating distance between
two records and a combination function capable of combining results from several neighbors to
arrive at an answer. These functions are readily defined for many kinds of records, including
records with complex or unusual data types such as geographic locations, images, and free text
that are usually difficult to handle with other analysis techniques.
2.3.5.3. Clustering
Cluster Analysis, also called data segmentation, relates to grouping or segmenting a collection of
objects (also called observations, individuals, cases, or data rows) into subsets or "clusters", such
that those within each cluster are more closely related to one another than objects assigned to
different clusters. Hence, objects in a cluster are similar to each other. They are also dissimilar to
objects outside the cluster, particularly objects in other clusters. Clustering algorithms function
such that intracluster similarity is the maximum and the inter-cluster similarity is minimum.
Clustering also has applications in the field of marketing segmentation.
There are two major methods of clustering-hierarchical clustering and k-means clustering. For
our study I use the technique of Hierarchical Cluster Analysis. This is a statistical method for
finding relatively homogeneous clusters of cases based on measured characteristics. It starts with
each case in a separate cluster and then combines the clusters sequentially, reducing the number
of clusters at each step until only one cluster is left. When there are N cases, this involves N-1

36

clustering steps, or fusions. This hierarchical clustering process can be represented as a tree, or
dendrogram, where each step in the clustering process is illustrated by a join of the tree.
2.3.5.4. Regression
Regression is the operation of learning a function that predicts the value of a real valued
dependent variable based on the values of other independent variables. It is a technique used for
the modeling and analysis of numerical data consisting of values of a dependent variable and of
one or more independent variables. The dependent variable in the regression equation is modeled
as a function of the independent variables, corresponding parameters (constants), and an error
term. The error term is treated as a random variable and represents unexplained variation in the
dependent variable. Parameters are estimated to give a "best fit" of the data. Most commonly, the
best fit is evaluated by using the least squares method, but other criteria have also been used.
Regression can be used for prediction (including forecasting of time-series data), inference,
hypothesis testing, and modeling of causal relationships.
2.3.5.5. Decision trees
Decision tree methods have wide applicability for data exploration, classification and scoring.
They are a good choice when the datamining task is classification of records or prediction of
discrete outcomes. Decision trees should be used when the goal is to assign each record to one of
a few broad categories [92].
2.3.5.6. Textmining
Text Mining is the discovery by computer of new, previously unknown information, by
automatically extracting information from different written resources. A key element is the
linking together of the extracted information to form new facts or new hypotheses to be explored
further by more conventional means of experimentation.
2.3.6. Consumer Profiling
Consumer profiling involves creating consumer models, based on which a marketer can decide
on the right strategies and tactics to meet the needs of the customer. Profiling is an innate tool
used for consumer behavior and preference prediction. Consumer profiles can be formed based
on their purchase data or any other behavioral data. Individual Customer signatures can be
developed. Customer signatures are records that describe customers containing information from
different subject areas. A customer signature is mostly a summary of consumer behavior
designed for analytical purposes and is representative of a consumer at any given point of time.
37

2.3.7. Brand communication

A brand is a name, term, sign, symbol, association, trademark or design which is intended to
identify the products or services of one provider or group of providers, and to differentiate them
from those of competitors. A brand has functional and emotional elements which create a
relationship between customers and the product or service. Regular communication between
organization and consumer reinforces organizational image and product messages, builds brand
awareness and strengthens brand recall. By creating meaningful brand encounters, the consumerbrand relationship can be strengthened. The degree of consumer involvement is expected to
influence both the amount and quality of a consumers cognitive response. Involved consumers
engage in more labored research and acquisition strategies [93].When consumers are regularly in
contact with a brand, they may begin to perceive it as a person, a trusted friend who is part of
their everyday life, thereby strengthening their loyalty towards the brand. Customer/brand
loyalty in cyberspace demonstrates an evolution from the traditional product driven, marketer
controlled concept towards a distribution driven, consumer controlled, and technology-facilitated
concept [94]. When consumers engage in a brand relationship [95], they begin to perceive the
value
affects

related
future

to

purchases

via

the
a

brand.

brand

relationship

Brand
path

that

knowledge
includes

brand

satisfaction, brand trust, and attachment to the brand [96]. Finally consumers who have greater
expected benefits and utility from an ongoing relationship are more likely to commit to it.
Having a regular touchpoint to interact with the customer results in learning related to the brand
and generates a positive attitude by creating a brand association. When consumers form
relationships with brands they use norms of interpersonal relationships as a guide in their brand
assessments [97]. Further, improving the level of interactivity of the online medium being used
by the organization, increases the reach(percentage of all Internet users who visit a given site)
of the medium [98].By targeting the brand image in the consumers mind, the customer
expectations and perceptions can be influenced. It is the volume and content of brand
communication that are vital parameters in this context.
2.3.8. Consumer Engagement
The ability of marketing to cause consumer engagement is significant as this is the first step to
enable consumers to perceive value in a product. The engagement theory comprises the
dimensions of Involvement, Interaction, Intimacy and Influence [99]. The level of user
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engagement achieved by interaction between organization and consumer is an important factor

contributing to product adoption, driving sales and brand loyalty as demonstrated in the case of a
corporate blog which allows consumers to interact with products, brands and organizations.The
concept of consumer engagement will be handled in greater detail in the subsequent chapter.
2.3.9. CRM 2.0
The demands on the marketing function have increased considerably due to ever increasing
competition. In view of this, requirement of adequate consumer specific data to enable
appropriate targeting of marketing campaigns and consumer segmentation are issues of
immediate concern for the marketing function. This is where the interactive features provided by
the collaborative web or Web 2.0 as it is usually addressed as, has created opportunities for CRM
2.0. As consumers have greater access to information, the increased knowledge with respect to
product and service opportunities coupled with the ability to leverage product comparisons, has
tilted the scales in the favor of the consumer. With the internet fast appearing as a channel of
mass personalized communication, there has arisen the need to introduce specificity in this
communication by categorization of prospects and consumers for streamlining the consumer
acquisition process. Also required is an analysis of the consumer generated content on the web to
formulate appropriate consumer targeting and retention strategies.
The demands on the marketing function have increased considerably due to ever increasing
competition. Marketing has been transformed by the information revolution, which is
restructuring the performance of marketing tasks. In view of this, requirement of adequate
consumer specific data to enable appropriate targeting of marketing campaigns and consumer
segmentation are issues of immediate concern for the marketing function. Marketing does not
stop once customers have been acquired. There are cross-sell campaigns, up-sell campaigns,
usage stimulation campaigns, loyalty programs and so on. These campaigns can be considered as
competing for access to customers.
This is where the interactive features provided by the collaborative web or Web 2.0 as it is
usually addressed as, have created opportunities for CRM 2.0. As consumers have greater access
to information, the increased knowledge with respect to product and service opportunities
coupled with the ability to leverage product comparisons, has tilted the scales in the favor of the
consumer. With the internet fast appearing as a channel of mass personalized communication,
there has arisen the need for
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i) Using the medium to deliver messages to the consumers.

ii) Leverage the consumer generated content available to aid the twin CRM objectives of
consumer acquisition and retention.
2.3.9.1. CRM 2.0 Best Practices
Analyst firm Forrester Research recommends several CRM 2.0 best practices for organizations
to benefit from the collaborative-web-created social media technologies. The following extracts
are from Forrester's best practices for CRM practitioners research:

Support customer-to-customer interaction. Sharing resources via file exchanges (such as

VoIP and content networks) allows nodes in the network - in other words, individuals - to
sustain one another and to rely less on institutional support.

Embrace customers as co-creators. Soliciting user input is cheaper, better, and faster than
more-structured, top-down methods of product development. This means complete
strangers can co-develop open-source software and collaborative information banks such
as Wikipedia. As more people tote camera phones with Internet access and install
webcams and microphones at home, user-generated content will provide companies with
great insight.

Understand the new consumer-behavior patterns. Although social computing is having a

profound effect on buyers, it affects different types of consumers in different ways. Effective
next-generation CRM strategies will be grounded in a deep understanding of social consumer
behavior as well as more-traditional demographic and psychographic attributes.
2.3.9.2. Campaign Management
Campaign management solutions help in segmenting the customers and develop targeting and
positioning strategies for each segment, defining products that match the customer requirements,
help in pricing and selecting distribution channels for those products and finally implement
communication strategies to build brand awareness, generate interest and motivate purchase
[100].Often, due to lack of data regarding the consumer sentiment for the organization and its
products, organizations resort to blanket promotions for their consumers, thereby not matching

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the true consumer expectations. Campaign management software applications allow marketing
users to segment groups of customers (and prospective customers) into smaller groups by
identifying and understanding unique customer patterns and then specify the interaction that
should take place with those individuals, by creation of customized offers for small groups of
customers that correspond to those patterns. This involves the process of response modeling evaluating consumer interactions with the organization and modeling organizational responses
accordingly. A Corporate Blog can be used to deliver promotional outbound messages to the
consumers and further to analyze the consumer responses on the blogs for effective campaign
management. The consumer thought process as reflected in the comments under the posts is
knowledge capital which can be mined to extract explicit information which can be leveraged
from the organizational perspective for diffusion and exploitation and subsequent competitive
advantage. A corporate blog can hence serve as an online platform for campaign management,
providing an opportunity to segment consumers on the basis of their interactions with the
organization, rather than those based on simple demographics. Appropriate targeting strategies
can be developed for different consumer segments.
2.3.9.3. Sentiment mining
Text mining, sometimes alternately referred to as text data mining, roughly equivalent to text
analytics, refers generally to the process of deriving high-quality information from text. This is
done by determination of patterns and trends through means such as statistical pattern learning.
Text mining usually involves the process of structuring the input text, along with the addition of
some derived linguistic features and the removal of others, and subsequent insertion into a
database, deriving patterns within the structured data, and finally evaluation and interpretation of
the output.
Sentiment mining is a computational approach used to identify expressions made about topics
within a span of text [101]. With the growing availability and popularity of opinion-rich
resources such as online review sites and personal blogs, new opportunities and challenges arise
as people now can, and do, actively use information technologies to seek out and understand the
opinions of others. These contents have been recognized as measurable resources and various

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opinion mining methods have been developed to analyze the contents [102].The sudden eruption
of activity in the area of opinion mining and sentiment analysis, which deals with the
computational treatment of opinion, sentiment, and subjectivity in text, has thus occurred at least
in part as a direct response to the surge of interest in new systems that deal directly with opinions
as a first-class object. Given an opinionated piece of text wherein it is assumed that the overall
opinion in it is about one single issue or item, it is possible to classify the opinion as falling
under one of two opposing sentiment polarities, or locate its position on the continuum between
these two polarities [103]. In case of document mining, the semantic orientation of the terms in a
document of unknown sentiment is added up, and if the overall score is positive, the document is
classified as being of positive sentiment, otherwise it is classified as negative [104]. This concept
of sentiment mining is adapted for mining sentiment of consumers, as represented by their
comments under an organizational blog post to determine positive or negative sentiment polarity.
The regression like nature of the strength of feeling, degree of positivity seems relevant to
sentiment categorization. It is traditional in information retrieval to present a piece of text as a
feature vector wherein the entries correspond to individual terms. In sentiment analysis, Pang et
al obtained better performance by using presence rather than frequency, because overall
sentiment may not be reinforced by a frequent use of the same words. Words that appear a single
time in a given corpus are found to be high precision indicators of subjectivity.
I now move forward to develop a conceptual model for our study in the next chapter.

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