MASTER THESIS - THE UNEXPLORED POWER OF BUZZ IN THE VIDEO GAME INDUSTRY SOCIAL SCIENCE, 30 CREDITS - DIVA PORTAL
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Master Thesis
Master of Science in Business and Economics, 240
credits
The unexplored power of buzz in the video
game industry
Social science, 30 credits
Halmstad 2020-05-30
Oskar Hammarsten, Sofie Hägerbrand
HALMSTAD
UNIVERSITY
Acknowledgement We want to express a huge thank you to our supervisor Navid Ghannad for providing knowledge, guidance and support during the length of the process. We would also like to thank our opponent groups for the useful feedback given during the seminars. Further, we are very grateful to all our interview respondents. Without them, this study would not have been possible. They have all contributed with valuable insight, opinions and experiences useful to our research. Lastly, we would like to give a big thank you to each other for all the time and commitment put into this work. We have continuously helped to push each other into making a thesis that we are proud of.
Table of contents
1. Background ................................................................................................................... 1
1.1. Problem discussion ................................................................................................. 4
1.2. Purpose ................................................................................................................... 5
1.3. Limitations .............................................................................................................. 5
2. Theoretical framework .................................................................................................. 6
2.1. Buzz ....................................................................................................................... 6
2.1.1. Pre-release consumer buzz (PRCB) .................................................................. 7
2.1.2. Post-release buzz.............................................................................................. 9
2.1.3. Positive implications of buzz.......................................................................... 10
2.1.4. Negative implications of buzz ........................................................................ 11
2.1.5. Measuring and utilizing buzz ......................................................................... 12
2.2. Customer-based brand equity (CBBE)................................................................... 14
2.2.1. Brand awareness ............................................................................................ 15
2.2.2. Brand association ........................................................................................... 16
2.2.3. Brand loyalty ................................................................................................. 17
2.2.4. Perceived quality............................................................................................ 18
2.2.5. Building customer-based brand equity ........................................................... 19
2.2.6. Managing CBBE ............................................................................................ 19
2.3. Combining the theory of buzz with CBBE ............................................................ 21
2.3.1. Brand awareness ............................................................................................ 21
2.3.2. Brand associations ......................................................................................... 21
2.3.3. Perceived quality............................................................................................ 21
2.3.4. Brand loyalty ................................................................................................. 22
2.3.5. Theoretical framework ................................................................................... 22
3. Methodology ............................................................................................................... 23
3.1. Choice of purpose ................................................................................................. 23
3.2. Research approach ................................................................................................ 23
3.3. Choice of method .................................................................................................. 23
3.3.1. Qualitative method ......................................................................................... 23
3.3.2. Research design ............................................................................................. 24
3.3.3. Choice of case companies .............................................................................. 25
3.4. Data collection ...................................................................................................... 26
3.4.1. Primary data................................................................................................... 26
3.4.2. Secondary data ............................................................................................... 27
3.5. Analysis of data .................................................................................................... 27
3.6. Credibility ............................................................................................................. 28
3.6.1. Validity .......................................................................................................... 28
3.6.2. Reliability ...................................................................................................... 28
4. Empirical data ............................................................................................................. 29
4.1. Ubisoft .................................................................................................................. 29
4.2. Paradox Interactive ............................................................................................... 33
4.3. Fatshark ................................................................................................................ 36
4.4. EA DICE .............................................................................................................. 40
4.5. Mirage Game Studios............................................................................................ 44
5. Results and analysis ..................................................................................................... 47
5.1. Within-case analysis ............................................................................................. 47
5.1.1. Ubisoft ........................................................................................................... 47
5.1.2. Paradox Interactive ........................................................................................ 48
5.1.3. Fatshark ......................................................................................................... 49
5.1.4. EA DICE ....................................................................................................... 51
5.1.5. Mirage Game Studios..................................................................................... 53
5.2. Cross-case analysis ............................................................................................... 55
5.2.1. Buzz in the video game industry .................................................................... 57
5.2.2. Pseudo-promises ............................................................................................ 60
5.2.3. Customer-based brand equity ......................................................................... 61
5.2.4. Game case analysis ........................................................................................ 63
5.2.5. Conceptual model .......................................................................................... 64
6. Conclusions ................................................................................................................. 66
6.1. Theoretical implications ........................................................................................ 67
6.2. Practical implications ............................................................................................ 68
6.3. Recommendations for further research .................................................................. 68
References .......................................................................................................................... 69
Appendices ......................................................................................................................... 81
Appendix 1 - Interview guide .......................................................................................... 81Abstract
Title: The unexplored power of buzz in the video game industry
Authors: Oskar Hammarsten, Sofie Hägerbrand
Level: Master thesis, 30 credits
Keywords: Pre-release buzz, post-release buzz, customer-based brand equity, expectations
Background: The global video game industry is today bigger than both the film- and music
industry and is subject to a lot of competition. Companies are always looking for alternative
ways to reach consumers and buzz is identified as a crucial success factor by many scholars.
From real life examples, buzz is shown to have both positive and negative effects. There is
however little knowledge about the phenomenon and what role buzz can play in the customer-
based brand equity (CBBE) of video game companies.
Purpose: The purpose of this study is to gain a better understanding about buzz and examine
what role it plays in customer-based brand equity for companies within the video game
industry.
Method: A deductive approach was adopted and in order to fulfil the purpose of the study, a
qualitative study (i.e. a case study) was deemed suitable. Interviews were held with five
companies within the video game industry. Also, observations were made of how the
companies work with their promotion and creation of buzz during the pre-release period.
Theoretical framework: The theoretical framework consists of theories regarding the buzz
phenomenon and CBBE. These were combined in order to examine the potential role buzz
plays in the context of CBBE.
Findings: Buzz is shown to play a big role in the video game industry but is becoming
increasingly difficult to maintain. It is also found that buzz can have a “life of its own” and
become unmanageable through speculations. Speculations can lead to higher expectations and
pseudo-promises1, making buzz even more difficult to manage. Regarding CBBE, buzz plays
a role in all aspects. However, it is shown to play a different role in the CBBE of video game
companies depending on how high the brand loyalty is within that company. The study also
results in a conceptual model, illustrating buzz and what role it plays in the CBBE of video
game companies both pre-release and post-release.
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Promises not made by companies but interpreted as such by consumers.
For further discussion, see section 5.2.21 1. Background The global video game industry is today bigger than both the film and music industry and display continued growth (Marchand & Hennig-Thurau, 2013). Total revenue of the industry in 2019 amount to $152.1 billion and growing 9.6% each year (Newzoo, 2019). Today, there are approximately 2.5 billion people across the world that play video games on a regular basis. Also, the average age of people that play games is increasing, today being 31 years old in the EU (Newzoo, 2019). These statistics indicate that the video game media is becoming increasingly mainstream. Marchand & Hennig-Thurau (2013) note that the growth of the video game market has led to a substantial broadening of the consumer group. The continued positive evolution of the gaming industry result in a growing number of companies wanting to capitalize on it, which in turn imply more competition. In Sweden, the number of video game companies has increased with an average of 18% each year between 2013 to 2018 (Dataspelsbranschen, 2019). The growing number of competing video game companies in combination with more games being released should make it increasingly challenging for companies to penetrate the market with new products. There are many companies fighting for customers attention, making the marketing efforts vital in order to gain- and retain market share. At the same time, the effectiveness of traditional advertising is decreasing due to ad clutter and avoidance (Nyilasy, 2007). To combat this, marketers have turned to other alternatives in order to reach customers (Mohr, 2007). For instance, viral marketing developed as a way to spread messages by utilizing the capabilities of the internet and the communication between consumers (Richardson & Domingos, 2002). For video game companies, it is important to create early interest and anticipation among consumers during the pre-release period. The importance of this is further elevated if there are big investments behind a game (Marchand & Hennig-Thurau, 2013). When investigating the phenomenon of consumer interest and anticipation regarding an upcoming product, two terms appear; buzz and hype. Although seemingly similar, there is a distinct difference between the words, which should be discussed. According to the Cambridge Dictionary (2020a), hype is defined as “a situation in which something is advertised and discussed in newspapers, on television, etc. a lot in order to attract everyone's interest”. This definition implies that hype is a phenomenon where something is promoted extensively in order to spark public interest. The term buzz however, is defined in a broader sense as “interest or excited talk about a new product, an event, or a person” (Cambridge Dictionary, 2020b). In order to keep the scope of the study as broad as possible and to have consistency in regard to theory application, the term buzz is chosen as the main focus to be studied. Buzz is identified by several scholars as a crucial success factor for the consumer adoption of new products (e.g. Karniouchina, 2011; Kim & Hanssens, 2017). Further, buzz is particularly important for products with decaying lifecycles, such as entertainment, media and fashion (Houston, Kupfer, Hennig-Thurau & Spann, 2018). This is also indicated by (Karniouchina, 2011), which note that there are clear signs that buzz within the movie industry has major influence on box office sales.
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The pre-ordering of games means that companies are able to convince customers to pay in advance
for a product that is not yet finished. This essentially means monetization on a promise. A clear
example of the value of pre-orders is the launch of the game Grand Theft Auto V, where the pre-
order amount reached roughly 7 million copies before release. For a $60 game, this equates to
$420 million in revenue2 (Cnet, 2014; VGChartz, 2013). Put in perspective, the total cost of
production and marketing of the game was $265 million (International Business Times, 2013).
An example denoting both the potential and risk of buzz is the game Watch Dogs, an action-
adventure game published by Ubisoft. The development of the game began in 2009 and was first
announcement at the Ubisoft press conference at the Electronic Entertainment Expo (E3) in 2012
(IGN, 2016). The game got a lot of attention in video game press, in various online communities
and received numerous award nominations like “most anticipated game 2013” (Polygon, 2013).
Thus, the two years leading up to the release of Watch Dogs in May 2014, resulted in a build-up
of interest and excitement, i.e. buzz, about the game.
The launch of Watch Dogs was a commercial success for Ubisoft. Pre-order sales amounted to
more than 800 thousand and reaching nearly four million units sold in the first week, breaking the
sales record for a new intellectual property (IP) in the UK (Variety, 2014; Gamespot, 2014). Even
though the game was considered a commercial success, the reception by players was not as
positive. Today, the game has an average score of 5.5/10 (Metacritic, 2020a). Many consumers
did not consider the game to have lived up to expectations and that they had not received what
Ubisoft promised to deliver. To further illustrate the effects this had, from the perspective of critics
and consumers, the following section will present some of the reviews Watch Dogs got on the site
Metacritic.
The video game critic site GameCritics (2014) wrote in their review of the game that “nothing
could have realistically lived up to the immense level of hype that Ubisoft stirred up for this game”.
Further, some consumers touch on the same aspect in their reviews: “[Ubisoft] created a massive
hype for a game that is....ok at best” and “[Watch Dogs] did not live up to the hype”. Also, “VERY
few of the promised features are actually available.”. Some consumers state in their reviews the
consequences of their disappointment, e.g. “make us wait so long for a game that doesn't work?
[…] Never buying another Ubisoft title ever! That's a promise”. Also, “I'm never buying a Ubisoft
game on launch again and I hope others do the same. We shouldn't let this one slide.” and “I will
never pay a dime to Ubisoft in advance and will never [pre-order] a game from them!”. (Metacritic,
2020a)
Moving to the next instalment in the series, Watch Dogs 2 received a “mixed or average” score on
Metacritic, 7,1/10 for the PC platform (Metacritic, 2020b). One critic review note that “in the end,
Watch Dogs 2 feels like an improvement over the previous game in the series” (Vgames). Also,
consumer reviews mention that “This is a vast improvement over the first game” and “Ubisoft is
getting back on its track and I love it”. Some consumers compare the second game to the first one
and share their view of both the franchise and the developer, e.g. “I must admit .. i am surprised
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Not taking into consideration distribution costs.3 how good watch dogs 2 is compared to the first game .. it's clear [Ubisoft] learned allot” and “Wow, this game really surprised me. The first one was mediocre and [under delivered]. The second one redeems the series [...]”. One consumer elaborates this notion further by writing: “A pleasant surprise! Wasn't thinking of buying this Watch Dogs, because how cheated I felt with the first one, but I don't regret buying it! [...] my faith for Ubisoft is starting to restore”. (Metacritic, 2020b) The disappointment indicated by the consumer reviews of the first game could be one reason for the dramatically lower sales of the sequel, Watch Dogs 2. The sequel did not reach the estimated pre-order amount set by Ubisoft and only sold roughly one fourth the amount of the predecessor during the first week (GameRant, 2016; VGChartz, 2016). This, in spite of Watch Dogs 2 receiving better reviews at launch (Metacritic, 2020b). This is also indicated in the reviews for the second game, where consumers mention that their expectations were lower due to the first Watch Dogs. Marketing is a way of making promises. Levitt (1981, p. 96) describes it as the following: “When prospective customers can’t experience the product in advance, they are asked to buy what are essentially promises – promises of satisfaction. Even tangible, testable, feelable, smellable products are, before they are bought, just promises.” Since promises can be perceived differently by consumers than what the marketer had intended, and vary depending on whom the promises have influenced, it is not uncommon that these individuals are bound to be disappointed due to their unrealistic expectations (Grönroos, 2009). It is important to regulate these expectations since there is a risk of them damaging the company’s brand equity when consumers’ expectations are not met by the reality. This is a consequence of people having a tendency to see the future through a lens of optimism (University of Georgia, 2007). Keeping promises are often mentioned as an important part of having loyal and recurring customers. This has to do with its positive effect on customers association with the brand. CBBE can be described as: “...what the customers have seen, read, heard, learned, thought and felt about the brand over time” (Kotler & Keller, 2016, p.324). It is, in other words, how the customers feel and associate when interacting with a brand and these feelings affect how they react and respond to it (Kotler & Keller, 2016). High customer-based brand equity can be the defining factor when a consumer is choosing between two similar objects (Roozy, Arastoo & Vazifehdust, 2014). Hence high CBBE is very important in a competitive environment such as the video game industry. Perceived quality or associations connected to the brand are two examples of attributes that influence how a customer responds to a company’s brand (Aaker, 1991). A high CBBE leads to loyal customers which is of great value for companies. It leads to more sales, being able to retain a higher price and can generate positive word-of-mouth spread (Allaway, Huddleston, Whipple & Ellinger, 2011).
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1.1. Problem discussion
As mentioned previously, the video game industry is becoming more mainstream (Marchand &
Hennig-Thurau, 2013). As demand for video games increase, classical economic theory state that
supply should increase as well. This means more video game companies being established and
more games being released each year (Dataspelsbranschen, 2019). The heightened level of
competition makes marketing within the video game industry important. Without the right
marketing strategy and promotional efforts, new game releases risk being unnoticed, resulting in
insufficient sales (Summerfield, June 2014).
There is a lot of research done about CBBE and how, or how not to manage and create it (Atligan,
Akinci, Aksoy & Kaynak, 2009). However, there is no research done combining CBBE with the
concept of buzz. As described in the cases of Watch Dogs and Grand Theft Auto, the build-up of
buzz can be of great value when launching a new game. This value is procured from the potential
to increase the number of pre-orders (Variety, 2014; Gamespot, 2014). However, buzz also comes
with some risk. With a lot of expectations and excitement, there is more room for disappointment
(Grönroos, 2009). One reason why the sequel to Watch Dogs performed below expectations in
terms of pre-orders could be that players felt let down and did not trust the brand and the promises
made as much as before. Buzz should therefore be examined, since it is indicated to have the
potential to impact brand equity.
In the present literature, there is a lack of coverage and understanding regarding the buzz
phenomenon. One of the most recent studies explore pre-release consumer buzz (PRCB) and argue
that it should be seen as a distinct marketing construct which is in need for further exploration
(Houston et. al., 2018). There have been some publications of trade books covering buzz marketing
(e.g. Kirby & Marsden, 2006), however, the subject is still relatively unexplored within academic
research (Mohr, 2007). Also, most research on buzz has focused on the movie industry. The
research has examined if buzz increase sales (e.g. Karniouchina, 2011), can be used as a tool to
forecast sales (e.g. Xiong & Bharadwaj, 2014) as well as in the context of product differentiation
(Mohr, 2007). Consequently, there is a lack of coverage in the literature about buzz in the video
game industry and in particular with a focus on the connection between buzz and CBBE.
In the present study, the focus will be on the connection between buzz and the brand equity of
video game companies. Specifically, consumer-based brand equity is chosen as a theoretical
foundation. This choice is motivated with the perception of buzz being mainly a consumer-side
phenomenon and CBBE focusing on how consumers create the value of brand equity of companies
(Atligan et al., 2009). Since the literature covering the buzz phenomenon is limited, there is no
focus on either pre- or post-release buzz, i.e. buzz that occur before or after the release of a product.
This choice aims to broaden the scope and thus facilitates the understanding of the buzz
phenomenon. Ultimately, the aim of the study is to gain a better understanding about buzz from
the perspective of companies. Also, to investigate the role buzz has on CBBE of video game
companies.5 1.2. Purpose The purpose of this study is to gain a better understanding about buzz and examine what role it plays in customer-based brand equity for companies within the video game industry. 1.3. Limitations In this study, a brand, in the context of video game industry, can be defined either as a video game company (i.e. a developer or publisher), a video game (IP) or a game franchise/series. For the sake of keeping a broad scope, no distinction will be made of the different brands. Even though e.g. a video game series can be considered a brand extension, the connection with the buzz phenomenon should be similar as with a game company brand. The focus is on the role buzz play in the video game industry and in the context of CBBE. Due to the buzz phenomenon being in its early stages of exploration, the theoretical foundation of the subject is mainly formed using research of how buzz works in other industries, foremost the movie industry. However, since both movies and video games can be categorized as entertainment products, the theoretical findings should be applicable to the video game industry as well.
6 2. Theoretical framework 2.1. Buzz As described previously, buzz can be defined as “interest or excited talk about a new product, an event, or a person” (Cambridge Dictionary, 2020b). The word buzz is often used in the context of popular culture to describe that something (e.g. an upcoming video game) is talked about extensively. That there is a lot of consumer interest, excitement and anticipation. In recent years, the buzz phenomenon has been indicated to be valuable within marketing. For instance, consumer buzz has been found to be instrumental as a driver for new product adoption (Houston et. al., 2018). In order to gain a better understanding of the buzz phenomenon, a clear definition is necessary. One issue surrounding this subject is the lack of consensus in the literature. Some papers either only use buzz as a catchphrase or it gets mixed up with the related concept word of mouth (WOM) (e.g. Liu, 2006). Although some initial papers contribute to its conceptualization, there is still a lack of a generally accepted definition. Also, a deeper understanding of the phenomenon is needed in order to guide future research (Houston et. al., 2018). In the next section, some various definitions surrounding buzz is presented. Carl (2006) describe buzz as “contagious talk about a brand, service, product, or idea”. This broad definition highlights the contagiousness, or diffusion, inherent in buzz. That buzz can spread in a network or a population. Thomas Jr (2004) define buzz marketing as the “amplification of initial marketing efforts by third parties through their passive or active influence” (p.1). Also, Houston et. al. (2018) provide a definition of pre-release consumer buzz (PRCB) as the “aggregation of observable expressions of anticipation by consumers for a forthcoming new product” (p. 1). This anticipation indicates that buzz is forward looking. The view of buzz as a predominantly pre- release phenomenon is also shared by (Xiong & Bharadwaj, 2014), that explains it as frequent consumer-generated blog- and forum posts about products before release. The aforementioned consumer behaviours thus indicate interest in a forthcoming product. In regard to the characteristics of buzz, the visibility and observability are important aspects of the phenomenon. The ability to observe the level of buzz for an upcoming product offers consumers “social proof” regarding the attractiveness of the product (Griskevicius, Goldstein, Mortensen, Sundie, Cialdini & Kenrick 2009). This aspect essentially makes buzz surrounding a product generate even more buzz, since some consumers will be interested in the product as a result of the attention it receives. Referring to it as an ‘‘anticipation-cascade’’ (p. 262), where consumers get interested in something mainly due to the level of buzz (Hennig-Thurau, Marchand & Hiller, 2012). The visibility of buzz is well illustrated in the study by Craig, Greene, & Versaci (2015). Here, the measuring of buzz includes the percentage of users on the website Fandango who voted “can’t wait” to see an upcoming movie. This can be seen as a declaration of purchase intention. Also, consumers can vote “don’t care” for an upcoming movie, indicating negative adoption intention
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(Craig et.al. 2015). Websites such as Fandango, IMDb and Rotten Tomatoes are online
communities for e.g. movies and TV shows, which provide consumers with the possibility to
observe if other consumers have interest and purchase intentions. This by e.g. providing a
popularity index for upcoming titles. There is also an option for community members to rate
upcoming movies based on available information like the budget, star cast and trailers. This rating
indicates consumers’ overall expectations of a movie before release. Divakaran et.al., (2017)
introduces the notion of affective expectations, as consumers predict future emotional experience
or the enjoyment value of future consumption.
Thomas Jr (2004) mentions the importance of exceeding expectations in order to get satisfied
consumers. This means delivering more value than what consumers expect to receive. Also,
delivering exceptional value is considered the best way to enhance buzz. By surprising consumers
with more value than anticipated, consumer satisfaction will increase as well as lead to higher
retention rate, improved loyalty and higher levels of buzz. In order to achieve exceptional value,
it is also argued that consumers should be integrated in the development of new products. Thomas
Jr. (2004) further note that dissatisfied consumers are both a more powerful and motivated force
than satisfied ones. However, most companies do not see irate consumers as an opportunity, but
as a problem. If consumers complaints are addressed properly, initially dissatisfied consumers can
be converted into loyal patrons. This can e.g. be done by listening to feedback, solve the problem,
thank the consumer for voicing concerns and reward them for complaining.
Besides the aspects mentioned in the preceding section, Thomas Jr, (2004), link buzz with word
of mouth (WOM) and viral marketing. However, it is also argued that viral marketing, which was
a term popularized prior to the dot.com boom, has since been retired. Even though WOM and buzz
have some similarities, the two should not be treated synonymously. First, WOM is mainly
founded in communication between consumers, whereas buzz is a multi-dimensional construct.
Buzz encompasses not only communication but other consumer behaviours as well (Houston et.
al., 2018). Second, the focus of WOM is on consumer experiences with a product and the sharing
of these experiences with others. To the contrary, buzz is mainly a pre-release phenomenon, which
is based on the anticipation for something that is not yet available to be experienced by consumers
(Houston et. al., 2018).
2.1.1. Pre-release consumer buzz (PRCB)
Pre-release consumer buzz (PRCB) is buzz that occur before the release of a new product. A
notable distinction from other related behaviours like word of mouth (WOM) or consumer
recommendations, since these are based on consumers experience with a product (Houston et. al.,
2018). There are three aspects that makes PRCB unique from other constructs.
First, different information is available before, versus after a products release. The only
information available to consumers prior to release is communication from- and promotion by the
company behind it (e.g. a movie trailer or advertising) as well as distributor promotion actions.
Also, speculation regarding product quality from secondary sources like other consumers, social8 networks and media. From this information, a perception of product quality can be derived. PRCB is therefore largely based on speculation, hopes and expectations from consumers, instead of experience-based quality information (WOM) or personal experience with a product. The intensity of media coverage can also act as an indicator of public interest for an upcoming product. A lot of interest from other consumers and media sources create signals of social salience, which can enhance the overall buzz. (Houston et. al., 2018) Second, prior to the release of a product, consumer behaviours are based solely on anticipation. The anticipatory aspect, meaning an individual’s state of excitement for something that is going to happen in the near future (Cambridge Dictionary, 2020c), is a critical part of the PRCB construct (Houston et. al., 2018). The anticipation by potential adopters result in unique behaviours (e.g. appraisals, emotions and decisions) which is different from post-release behaviours which stem from experience with a product. Anticipation for an upcoming product motivates consumers to engage in behaviours (e.g. information search) that provide temporary satisfaction during the pre- release period. (Houston et. al., 2018) Third, consumer behaviours before versus after the release of a product result in a differing diffusion process. In connection to the diffusion of innovations model by Bass, (1969), PRCB influence mainly the innovators and early adopters of a new product. Thomas Jr (2004) also link the buzz phenomenon to the theory of the adoption cycle of innovations. This theory is based on the notion that new products tend to follow a similar adoption cycle - with innovators and early adopters, early- and late majority as well as laggards. When innovators encounter new products, they pass on information about it to others, e.g. through social networks. PRCB mainly influence consumers purchase intentions prior to, or closely after release. Once the product is released, post- release consumer buzz behaviours and word of mouth becomes more influential. In connection to the diffusion model, these post-release behaviours instead influence the later adopters. (Houston et. al., 2018).
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Houston et. al. (2018): Conceptual uniqueness of PRCB. (p. 341)
The model of the conceptual uniqueness of the PRCB construct, suggested by Houston et. al.
(2018), conveys the differences in consumer behaviours, motives and emotions as well as the
impact of various aspects in the pre- versus post-release stage.
2.1.2. Post-release buzz
Pre- and post-release buzz share some underlying consumer behaviours, yet there are some
important differences between the two. Houston et. al. (2018) argue that the main differences
between the pre- and post-release phase is that (1) different information is available to consumers,
(2) different mental processes occur and (3), consumers’ behaviours have different effects on other
consumers. Pre-release consumer buzz is based on anticipation, excitement and an expectation
about product quality. In the pre-release phase consumers have no way to experience a product
themselves. Thus, there is no way for consumer to share evaluations about product quality to other
consumers. Marchand & Hennig-Thurau (2013) note that this leads to an information asymmetry
between producer and consumer. It is only post-release that consumers are able to engage in
experience-based word of mouth regarding product quality. The consumer behaviours found in
PRCB (communication, search and participation) can still occur after release. However, consumers
engage in these behaviours with different underlying motivations before versus after release.
(Houston et. al., 2018)10
2.1.3. Positive implications of buzz
The occurrence of buzz is claimed by many to be a critical factor for the success of new products
(Houston et. al., 2018). However, Mohr (2007) state that most marketers do not realise the potential
of buzz and that it is therefore often overlooked. In this section, the benefits of the buzz
phenomenon are reviewed in order to build a greater understanding of its importance in different
contexts.
Since buzz is essentially consumers talking about, and in some cases promoting products, buzz
can cut marketing costs (Mohr, 2007). It has been concluded in many studies on the concept of
word of mouth, that this kind of communication is often more effective than traditional advertising
when promoting products (Richardson & Domingos, 2002). Information about a product is often
perceived as more trustworthy if it comes from a personal connection, rather than from a company
(Keller & Fay, 2012). Since consumer buzz is essentially free, compared to traditional advertising,
buzz can be used to reduce the financial risk of projects. Relying on an advertising campaign means
a bigger investment and financial risk, since the campaign may or may not lead to beneficial
results. The cost effective aspect of buzz can be especially beneficial for smaller companies with
limited financial power (Mohr, 2007).
Further, several studies on buzz has explored its positive effects on revenue for e.g. new movie
releases. The results in the study by Karniouchina (2011) indicate that buzz within the movie
industry has a significant impact on box office revenue both at time of- and after release. The study
also concludes that the influence of movie star participation in movies can increase opening week
box office ticket sales and act to boost overall buzz about the movie. Kim & Hanssens (2017)
highlight the value of being able to predict release week revenue. This, by looking at consumer
interest for an upcoming product prior to release, i.e. pre-release buzz. Initial sales for experience
products (e.g. games and movies) is vital for success. Generally, most of the revenue from
experiential products is gained at- and shortly after release (Liu, 2006). Also, many experimental
products have short life cycles. This subsequently makes pre-release marketing for these products
of critical importance (Kim & Hanssens, 2017). By gathering intel about the level of buzz prior to
release, managers can adjust their marketing strategy accordingly. The ability to proactively adjust
e.g. the amount of communication, the content, or the target group based on buzz can be of great
value to managers (Kim & Hanssens, 2017). Also, as for the case of movies, a prediction of the
opening week sales using buzz measuring provides managers with the possibility to adjust the
amount of screenings, locations and can open up discussions of revenue share with cinemas
Divakaran, Palmer, Søndergaard & Matkovskyy (2017).
Even if a product is not received well by consumers, the launch can in some cases still be
considered a success. For instance, a movie that is buzzed about a lot could generate substantially
higher revenues because of it, mitigating the adverse effects on future revenue due to negative
post-release WOM (Karniouchina, 2011). This can be further illustrated by the previously
mentioned example of the game Watch Dogs, which was a major financial success for Ubisoft, in
spite of harsh criticism by players at time of launch.11
Lastly, buzz is founded in anticipation for something. An excitement to be able to experience
something in the future. This forward-looking cognitive process could potentially affect the actual
experience of the product. Chun, Diehl & MacInnis (2017) find in their study that customers
“savouring” a future experience leads to improved perceived enjoyment of the actual experience.
Also, that the subsequent remembered enjoyment of the experience is heightened. Savouring is
defined as “a cognitive process involving awareness of current pleasure from a target-specific,
future consumption experience” (Ibid, p. 97). The study thus indicates that buzz (if it involves or
induces savouring) for an upcoming product, might positively affect the perceived enjoyment of
the product once it is experienced by a consumer (Chun et.al., 2017).
2.1.4. Negative implications of buzz
In spite of the many positive effects often associated with buzz, it should not be viewed as a one-
sided coin. Karniouchina (2011) note that despite buzz being a critical driver for box office sales,
some industry sources believe that high levels of buzz can be harmful. If there is a lot of buzz
surrounding a product, there is also a lot of expectations attached to it. The subject of consumer
expectations is explored by Grönroos (2009) which link expectations to company promises. It is
argued that keeping promises is vital in order to avoid consumer disappointment and to reach high
retention rates. If expectations are not met, consumers might feel let down. For instance, in the
study by Karniouchina (2011), the author find that buzz prior to the release of a movie can have a
future negative impact on revenue in the case that the movie is not received well by the audience.
Also, Houston et. al. (2018) note that “if negative feedback enters the market after product release,
strong buzz might speed product death” (p. 356). As much as buzz can be a powerful force driving
sales, it can also have the opposite effect (Craig et.al., 2015).
According to the literature covering buzz, the phenomenon is coupled with high levels of consumer
expectations (Elberse & Eliashberg, 2003; Houston et. al., 2018; Divakaran et.al., 2017). These
expectations are based on e.g. primary information like trailers and direct communication from the
developers as well as secondary information from media sources, critic reviews and speculation
from other consumers. Such information regarding an upcoming product helps consumers make
predictions about product quality and hence result in certain cognitive expectations. Consumer
expectations can also be affected by the social salience aspect of buzz. Studies on buzz mention
e.g. the anticipation cascade (Hennig-Thurau et.al., 2012), the bandwagon effect (Elberse &
Eliashberg, 2003; Xiong & Bharadwaj, 2014) and the aspect of social proof (Griskevicius et.al.,
2009). These aspects, indicating the contagiousness and social salience of buzz, could impact
consumers development of affective expectations regarding an upcoming product. Affective
expectations explore how consumers predict future emotional experiences and the enjoyment value
attached to these experiences (Divakaran et.al., 2017). Consumers disconfirmation of these
expectations can lead to either satisfaction or dissatisfaction. If a consumer has high expectations
about an upcoming product and the expectations are met (confirmed), the consumer will likely feel
satisfied. Also, if the product exceeds expectation it will lead to positive disconfirmation and if
expectations are not met the result will be negative disconfirmation which will lead to
dissatisfaction (Liao & Cheng, 2014).12
Joshi & Hanssens (2009) examine the effects of high expectation levels for upcoming movies on
post-launch stock price changes and investor relations with the studio behind it. The findings
conclude that “overhyping” movies with limited market potential results in negative stock price
changes post-launch due to exaggerated expectations that are not met. Also, investors might over
time lose confidence in the studio or the management, if overhyping occur frequently (Joshi &
Hanssens, 2009).
In addition to the risk of letting consumers down, there is also a risk that too much buzz makes
some consumers turn their back to the buzzed about product. If something is buzzed and talked
about excessively, some consumers might feel overwhelmed. Houston et. al. (2018) found in their
qualitative study that “overly-positive excitement” (p.356) could decrease interest by some
consumers, ultimately dampening sales. This indicates that there might be a turning point where
the buzz is too much, resulting in adverse effects.
2.1.5. Measuring and utilizing buzz
The level of buzz for a product can be measured using different methodology. Before this can be
done, it is important to understand what elements are inherent in the buzz phenomenon. Through
a literature review of research covering buzz, Houston et. al. (2018) collected common elements
in order to lay a foundation for a clear conceptualization of the phenomenon. Also, a qualitative
study of consumers with interest in different product categories was conducted. This was done in
order to broaden the understanding of the buzz phenomenon through consumer input.
The pre-release consumer buzz construct is divided into three types of behaviours. These are
anticipatory communication, search and participation in experiential activities. The three
behaviours are examined through two dimensions: amount and pervasiveness. Amount refers to
the volume of a specific behaviour, e.g. the number of online searches for an upcoming movie, as
a measurement of search behaviour. The pervasiveness dimension is defined as the degree to which
PRCB behaviours spread in a population, rather than being confined to a group of niche
enthusiasts. The pervasiveness of buzz behaviours it therefore expanding the construct to include
not only the amount of buzz but also its spread. This enables the observation of both the amount
of buzz for e.g. a new movie and how much of it is occurring in the ”general population” versus
being confined to a niche group (Houston et. al., 2018). Other authors have identified similar
behaviours associated with the buzz phenomenon. For instance, Divakaran et.al., (2017) describe
pre-release buzz within online communities as “awareness, word-of-mouth, expectations, and
adoption intention” (p.1). Other observed behaviours are number of trailer views and trailer
comments (Craig et.al., 2015) and blog and forum postings (Xiong & Bharadwaj, 2014).13 The communicative behaviour was indicated by several respondents in the study by (Houston et. al., 2018). This behaviour included communicating with acquaintances face-to-face and other consumers over the internet. The communication can take place in forums, in comment sections and on social media. The search activity behaviour is made apparent by consumers searching for information regarding an upcoming product. Also, some respondents in the study was reported taking note of the number of searches by other consumers. This, to gain insight into the amount of buzz regarding an upcoming product. The search behaviour also includes visiting different ranking websites, which provide statistics of the volume of searches on different products. In addition to communication and search activity, the respondents included participation in experiential activities when describing PRCB. This behaviour is comprised of e.g. watching earlier movies in a series before a sequel is released or trailers, like/dislike videos, playing quiz games and attending social events for an upcoming product. Hence, buzz is a multi-behavioural phenomenon, not only comprised of anticipatory communication. (Houston et. al., 2018) In order to measure the amount of buzz, researchers and managers should observe the above- mentioned behaviours. Kim & Hanssens (2017) use the volume of blog and forum posts as well as the search volume for upcoming products in order to measure buzz. In the study by Liu (2006), the author relies on the volume of word of mouth (i.e. communication). Many studies conducted on buzz only observe one, or a few aspects. In order to increase accuracy of the measurement, Houston et. al. (2018) include three elements (communication, search and participation). Also, an attempt to measure the pervasiveness (i.e. spread between populations) is presented. For instance, the search behaviour can be measured by collecting data from search engines like Google and the participatory behaviour by number of product page likes on social networks like Facebook. These measurements can be used as an indicator of broad behaviours, i.e. behaviours that occur in the general population. In order to measure behaviours in niche groups, Houston et. al. (2018) propose to observe e.g. the volume of posts on product-group specific forums, as a measurement of communication. Comparing the level of broad and niche consumer buzz behaviours makes it possible to distinguish if the buzz is widespread, or merely confined to a small group of enthusiasts.
14 2.2. Customer-based brand equity (CBBE) A lot of research has been done on both brand equity and customer-based brand equity (CBBE) (Atligan et al., 2009). The first model that became of high importance was Aaker’s (1991) model, involving the following five dimensions that captures brand equity; brand awareness, brand associations, brand loyalty, perceived quality and other proprietary brand assets. Two years later, Keller (1993) created another model, which instead focuses on the consumer perspective connected to brand equity and how their response to a brand is a consequence of their brand knowledge. This is where the concept of customer-based brand equity was created (Atligan et al., 2009; Chen, 2001). Peoples reaction when interacting with a brand is caused by their emotions i.e. how they feel about it. These feelings evoked in customers, caused by the brand, are called brand equity (Kotler & Keller, 2016). According to Aaker (1993) the concept of brand equity is different brand properties that can both increase and decrease the value of a product for the consumer. Customer-based brand equity differs from brand equity since it emphasizes that it is created through the perspective of the consumer (Shafi & Madhavaiah, 2014). According to Keller (1993) it can be defined as the following: “the differential effect of brand knowledge on consumer response to the marketing of the brand. That is, consumer-based brand equity involves consumers reactions to an element of the marketing mix for the brand in comparison with their reactions to the same marketing mix elements attributed to a fictitiously named or unnamed version of the product or service” (Keller, 1993). Thus, when a consumer is being presented with two different choices of products or services with the same features and offerings, it is the CBBE that differs the reaction (Roozy, Arastoo & Vazifehdust, 2014). It is therefore only consumers that can create the value of brand equity (Atligan et al., 2009). Although CBBE is created by the consumer, it will not exist without any effort from the company (Keller, 1993). For marketers or managers, one reason for studying the concept can be motivated from a perspective of strategy and market productivity. The motivation for studying it has been high since many markets are coloured by higher costs and increased competition. This means that understanding their customers’ behaviours is a great advantage for companies when creating their marketing strategy. According to Keller (1993) one of the most valuable assets when wanting to improve market productivity is what knowledge has been created in the consumers’ mind about the brand. Not knowing what value has been created or not knowing how to utilize this value leads to difficulties formulating the marketing strategy. It is therefore crucial to measure brand equity through the minds of the consumers and not companies, hence it becomes CBBE. Traditional brand equity is mostly measured through a financial perspective such as sales or return on profit (Hanaysha, Abdghani & Abdullah, 2015). It is of great value for a company to have high levels of CBBE. This is an advantage since it leads to higher consumer preferences and therefore more purchase intentions. (Cobb-Walgren et al., 1995). Another advantage is the enablement of having a higher price and thereby larger margins since high levels of CBBE builds more loyal customers (Keller, 1993). Loyal customers have a tendency of small reactions to price changes since they are more willing to pay a premium price.
15
It can also lead to lower costs due to the lesser need for expensive marketing strategies. It is e.g.
more likely that customers who have a positive relationship with a company will reach out and
seek for distribution channels for a specific product or service, hence, this is a part of the marketing
strategy that companies need to spend less focus on. In other words, CBBE will lead to a more
effective marketing communication (Keller, 1993).
The perspective of CBBE can also be very valuable for managers since it gives another dimension
to measure the company’s performance other than from a financial perspective (Atligan, et al.,
2009). Having control over how high or low the company’s brand equity is will help decide and
predict growth strategies. Lastly, managers can benefit from tailoring their marketing strategies in
accordance to the dimensions of CBBE since it builds loyal and revisiting customers (Atligan, et
al., 2009). To summarize, high levels of CBBE will have a large range of positive effects on
pricing, distribution, growth and promotion (Keller, 1993).
The dimensions of customer-based brand equity mentioned in this thesis is based on the literature
review made by Shafi and Madhavaiah (2014). They have made a framework based on the two
models made by Aaker (1991) and Keller (1993).
2.2.1. Brand awareness
Brand awareness is to recognize the brand when being exposed to different elements of it under
different conditions. The elements can for example be the name or logo (Keller, 1993). Awareness
has been argued to be the most important aspect of brand equity since it has an effect on all the
other parts of the concept (associations, loyalty and perceived quality)(Chen, 2001).
Brand awareness can be divided into different levels (Keller, 1993). Recognition, which is the first
and most basic level means that the consumers can acknowledge prior exposure to one or more
elements of the brand. This acknowledgement will only come to mind when given an indicator or
reminder of one of the elements. If a consumer can remember a brand when not being exposed to
it at that moment, the next level of brand awareness has been reached. Recall means that the brand
is remembered and thought of by the consumer when given the product category it acts in (Keller,
1993). For example, if a consumer is asked about what brands they know within the video game
industry, those companies mentioned have reached this level of brand awareness with that specific
consumer. The third level, top-of mind, is reached by a company when a consumer, when being
asked the same question, mentions that specific company first. The next level is brand dominance
where the consumer only recalls one brand in a specific segment. The last two levels require a lot
of knowledge in the consumer about the brand. Brand knowledge, the second to last level, means
that the consumer knows what the brand stands for. The last level is brand opinion which means
that the consumer has an opinion about the brand (Aaker, 1996).
It is of high importance for companies to have as many consumers as possible reaching some level
of brand awareness regarding their brand when being in a decision-making process concerning
purchases (Shafi & Madhavaiah, 2014). When consumers are in the decision-making process, they
will retrieve the products that they have awareness of. If a brand is not a part of this set of brands,16
it is unlikely that the consumer will choose their products for purchase. Only a few brands can
reach the consideration set in that process, thus a limited amount of brand awareness can have
significant impact (Shafi & Madhavaiah, 2014). Reaching as little as the first level of brand
awareness can sometimes be the defining factor since customers tend to choose a brand that is
familiar to them. This situation, however, requires that there is some brand awareness of the other
brands in the consideration set as well (Keller, 1993).
To summarize, the brand awareness is a consequence of prior experience and exposure to elements
of the brand. As these two evolve and happen more often or have a stronger impact, the level of
brand awareness deepens as the memory linked to that brand becomes stronger.
2.2.2. Brand association
The awareness and experiences linked to the brand creates memories in the consumer that is
connected to the brand (Aaker, 1991). At this stage, once the memories start to occur, the consumer
is creating brand associations. It is not possible to create brand associations before there is
awareness (Shafi & Madhavaiah, 2014). According to Aaker (1991), brand associations are
described as “anything linked in memory to a brand” i.e., these associations can be different beliefs
or thoughts regarding the brand. According to (Keller, 1993), these brand associations are what
creates the perception of the brand and thereby the company’s brand image. This means that
previous memories linked to the brand can have large consequences as to how the consumer feel
or think about the brand. Further, having existing associations helps information connected to that
association to be absorbed by the consumer (Supphellen, 2000). There are three different
dimensions to brand associations; strength, uniqueness and favourability. In order to have high
levels of brand equity, the consumers associations must evoke some level of all three dimensions
(Shafi & Madhavaiah, 2014).
Strength
The strength of the associations is dependent on two different variables; quantity and quality
(Keller, 1993). Quantity refers to how much a person thinks about the brand and are exposed to it,
quality refers to what the person thinks and feels about the information received. The real strength
occurs when combining these two factors. A lot of information must be presented in order to reach
memory and also how it correlates with the already existing brand associations and brand image.
When being exposed to information in line with the current associations, it strengthens them and
makes it truer, hence the perceived quality increases. In addition, the more consumers are being
exposed to (quantity) and are actively elaborating about the information (quality), the stronger the
associations connected to the brand will be (Keller, 1993). According to Loftus and Loftus (1980)
the memory is long-lasting. Hence, when information has been gathered in the memory and the
association has become powerful and valid, it takes a very long time for that association to
diminish. This means that those associations can be more difficult to change once created.You can also read
