An investigation of online branding strategies in D2C firms : With an emphasis on social media

An investigation of

online branding

strategies in D2C

firms

BACHELOR THESIS WITHIN: Business Administration NUMBER OF CREDITS: 15 ECTS

PROGRAMME OF STUDY: Marketing Management International Management Civilekonomprogrammet AUTHOR: Alva Andersson

Elise Baksås Martinsson Joona Kopakkala TUTOR: Lucia Pizzichini

JÖNKÖPING May 2020

With an emphasis on social media

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Acknowledgements

This thesis would not have been possible without the guidance and support of a few key figures. Therefore, the research team would like to take the opportunity to thank and acknowledge them. Firstly, we want to thank our tutor, Lucia Pizzichini for her guidance and feedback throughout the writing process. With her help and constant availability, we were able to seek out her guidance whenever needed.

Secondly, we want to show our gratitude to our two respondents at RevolutionRace for taking part in this study. Without their participation, this study would not have been possible.

Thirdly, we wish to acknowledge Anders Melander for a good and informative introduction into this process.

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Bachelor Thesis in Business Administration Management

Authors: Alva Andersson, Elise Baksås Martinsson & Joona Kopakkala Tutor: Lucia Pizzichini

Date: 2020-05-17

Key terms: D2C; Direct-To-Consumer; Branding strategy; Online branding strategy; Social media

Abstract

Problem: With the rise of e-commerce and online marketplaces, the Direct-To-Consumer

(D2C) business model has gained wide popularity. An evident gap in the literature motivated the authors to research further how D2C companies implement their branding strategies. Moreover, social media is well-rooted in people’s lives and has created a new paradigm for firms and brands to find new ways to engage with consumers. Thus, it was essential to keep social media in mind and emphasize it throughout the thesis.

Purpose: The purpose of this thesis was to investigate how Direct-To-Consumer firms

implement their online branding strategies with an emphasis on their social media marketing strategies.

Method: A qualitative approach was applied in this thesis. A case study was conducted with

the case company RevolutionRace. Extensive semi-structured interviews were held with the social media manager and the marketing manager of the firm. This helped to gain deeper insights regarding the online branding strategies of D2C firms.

Results: It can be argued that several factors differentiate D2C firms from other firm types in

terms of building their branding strategies. The findings indicate that social media is a pivotal part of the online branding strategies in D2C firms. Gaining the most relevant attention through online platforms is crucial for D2C firms since it is the only way for them to gain sales. Adapting their marketing content and properly segmenting the target customers are both factors that D2C firms should consider. Two-way communication with customers creates high interactivity and brings the customer closer to the firm. Integrating all the important parts creates a way for D2C firms to gain brand awareness and build the desired brand image.

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Table of Contents

... 1

1.

Introduction ... 1

2.

Literature Review ... 5

2.1.1 Multichannel branding strategies ... 6

2.2 Online branding strategies ... 7

2.2.1 First pillar – Understanding customers ... 7

2.2.2 Second pillar – Marketing communications ... 7

2.2.3 Third pillar – Interactivity ... 9

2.2.4 Fourth pillar – Content ... 10

2.2.5 Integration ... 11

2.2.6 Brand familiarity ... 11

2.3 Direct-To-Consumer ... 11

2.3.1 Direct-To-Consumer branding strategies ... 12

3.

Methodology and Method ... 14

3.1 Methodology ... 14 3.1.1 Research paradigm ... 14 3.1.2 Research approach ... 14 3.1.3 Research design ... 15 3.2 Method ... 15 3.2.1 Data Collection ... 15 3.2.2 Case study ... 16 3.2.3 Interviews ... 16 3.2.4 Selection of respondents ... 16 3.2.5 RevolutionRace ... 17 3.2.6 Data presentation ... 18 3.3 Ethics ... 18 3.3.1 Trustworthiness ... 19 3.3.1.1 Credibility ... 19 3.3.1.2 Transferability ... 20 3.3.1.3 Reliability ... 20

4.

Empirical findings ... 21

5.

Analysis ... 37

5.1 Online branding strategies ... 37

5.1.1 First pillar – Understanding customers ... 37

5.1.2 Second pillar – Marketing communications ... 38

5.1.3 Third pillar – Interactivity ... 41

5.1.4 Fourth pillar – Content ... 42

5.1.5 Integration ... 43

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5.2 Direct-To-Consumer branding strategies ... 45

6.

Conclusion ... 48

7.

Discussion ... 50

8.

Reference list ... 53

9.

Appendices ... 57

9.1 Appendix 1 – Literature review table ... 57

9.2 Appendix 2 – Interview question for respondent 1: Swedish version ... 59

9.3 Appendix 3 – Interview questions for respondent 1: English version ... 60

9.4 Appendix 4 – Interview question for respondent 2: Swedish version ... 61

9.5 Appendix 5 – Interview questions for respondent 2: English version ... 62

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1. Introduction

___________________________________________________________________________ This section will go into detail on background of this thesis. It will provide justifications for the choice of topic and the research question is identified. Furthermore, the most relevant terms are defined in order to facilitate the understanding.

___________________________________________________________________________

1.1 Background

Rowley (2009) describes branding as a long-term process of creating value for the customer through the offering of a brand promise, something that is consistent and compelling. The brand promise then needs to be enhanced by a brand experience, a positive customer experience with the brand that will ultimately satisfy the customers’ needs as well as encourage them to return. The long-term branding process creates a possibility to build brand relationships with consumers. This will generate return business and allows the firm to, later on, adjust prices, create barriers of entry for competitors and strengthen the brand’s positioning. All in all, the branding process is what creates the brand value or the brand equity of the business. It is, to a great extent, a customer’s positive online experience that generates brand equity.

Additionally, Rowley (2009) emphasizes the importance of a clear objective of what the company wishes to achieve with its online branding strategy in order for it to become successful. Essential aspects of brand building include online brand communities, effective customer service, two-way dialog, rewards, and loyalty schemes (Rowley, 2009). Goswami (2015) also stresses the importance of communicating brand values in order to strengthen brand positioning. As online marketing has increased during recent years, so has the spending on online marketing activities.

1.2 Problem

The Swedish Institute For Polls (Svenska Institutet För Opinionsundersökningar, aka. SIFO) conducted a survey among the Nordic countries, showing that the Swedish population spent nearly 93 billion SEK on e-commerce purchases in 2018. In comparison, the Danes ranking second in e-commerce purchases spent 56.2 billion SEK, indicating high popularity in online

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purchases in Sweden (Statista, 2019). With the rise of e-commerce and online marketplaces, the Direct-To-Consumer (D2C) business model has gained wider popularity. In 2015, the growth in D2C sales in the US was 14.6%. This increased in 2016 to a growth of 15.8%, making D2C sales 7.5% of the total consumer sales (Bower, 2017). However, despite the growth in companies using the D2C business model, research shows a significant gap in the literature properly covering D2C or branding strategies related to it. Gielens & Steenkamp (2019) argue that practitioners within the field are ahead of academia since they point out a lack of empirical work available on brand websites and their effects on the brand itself. This evident gap in the literature motivated the authors to research further how D2C companies implement their branding strategies.

Social media is well-rooted in people’s lives and has thereby created a new paradigm for firms and brands to find new ways to engage with consumers (Godey et al., 2016). According to Aral et al. (2013, p.3), social media is “fundamentally changing the way we communicate, collaborate, consume, and create.” Due to this, social media has an impact on a high number of business processes, from finance to operations and marketing. According to Statista (2018), investments into worldwide social media advertising are forecasted to grow to approximately 48 billion US dollars by 2021. That is an increase of 16 billion US dollars from 2017, substantiating the importance of social media as a marketing tool. Since D2C companies work within the online forum, social media becomes a relevant segment to research in combination with D2C companies.

Furthermore, an increasing number of the population maintains an active and healthy lifestyle as it is becoming an essential part of people’s lives. Therefore, a wide range of industries is using the term health and wellness to attract customers (StellaRising, 2020). For instance, people are participating in a variety of activities such as going to the gym, running, walking, hobbies involving sports, or hiking and enjoying the outdoors. A survey from SIFO (2019) shows that going on training trips has nearly doubled in recent years. With increased popularity in healthy lifestyles, the demand for outdoor apparel has also increased. Furthermore, SIFO reported that among the most purchased product categories online in the Nordic countries were clothing and footwear (Statista, 2019). Thus, the need to limit the research area led to the decision to focus on the outdoor clothing industry as we find it to be an undiscovered territory.

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1.3 Purpose

The purpose of this thesis was to investigate how D2C firms implement their online branding strategies with an emphasis on their social media marketing strategies. The main focus was on the online perspective since almost all D2C firms are established online, and thus, it is not relevant to look into the D2C firms that use offline marketing as well. Additionally, the authors decided to research how multichannel firms implement their branding and use it as a comparison tool since an extensive amount of research regarding these types of firms already exists. The first objective of this study was to fulfill a descriptive purpose by explaining how D2C firms implement their branding strategies. Secondly, this thesis also aimed to serve an exploratory purpose by further investigating and comparing strategies found with the branding strategies of multichannel firms. There is a gap in the current research and literature regarding the online branding strategies of D2C firms, and it is therefore important to further investigate this topic. Thus, the developed research question is the following:

“How do Direct-To-Consumer firms implement online branding strategies, with an emphasis on social media?”

1.4 Definitions

Direct-To-Consumer

Direct-To-Consumer (D2C) is a business model used when selling products directly to consumers (Crehan, 2019). In this thesis, online D2C firms will be the focus since that is the platform of choice for most D2C firms and also for the company used in this study.

Multichannel firms

Multichannel firms can be defined as organizations that sell their products or services to customers through more than one channel. These channels consist of physical stores as well as various online channels or other non-store channels such as catalogs (Zhang et al., 2010).

Branding

Branding can be defined as the process of differentiating the product by creating perceived values that go beyond the physical value of said product or service (Supphellen, 2000).

4 Customer-based brand equity

Brand equity has several different definitions. In this thesis, brand equity is defined from the perspective of the customer. Hence, customer-based brand equity will be referred to as brand equity throughout the thesis. Customer-based brand equity is defined as “the differential effect of brand knowledge on consumer response to the marketing of the brand” (Keller, 1993, p. 1).

Brand awareness

Brand awareness can be defined as the “buyer’s ability to identify a brand within a category in sufficient detail to make a purchase” (Percy & Rossiter, 1992, p. 264).

Social Media Influencer

Social media influencer is a third-party endorser who affects or shapes audience attitudes through the use of various tools such as blogs or posts on social media (Freberg, Graham, McGaughey & Freberg, 2011).

Influencer marketing

Influencer marketing is defined as the practice of individuals to post information about a brand's product or service in exchange for something agreed upon (Campbell & Farrell, 2020).

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2. Literature Review

___________________________________________________________________________ This section presents theories and research related to online branding strategies, including social media, branding strategies of multichannel firms, and D2C firms that will be used in the analysis section.

___________________________________________________________________________

2.1 Multichannel strategies

According to Zhang et al. (2010), one benefit of using a combination of different channels is to satisfy the differing needs of customers better. This, in turn, can increase overall customer satisfaction and loyalty. It is important to note that many consumers prefer physical stores because it is possible to evaluate the products using all five senses. Furthermore, they can acquire personal service, and they have the option for cash payment, among other benefits. On the other hand, non-store channels offer other benefits for customers. For example, the possibility to buy products whenever and wherever, broader product selections, better access to information, and easier comparison of products (Zhang et al., 2010). It can be argued that these positive effects on customer satisfaction and loyalty indirectly improve how customers perceive the brand. According to the study, the two main benefits of using online channels are better access to important customer information and improved knowledge to offer the customers seamless shopping experience through the integration of channels (Zhang et al., 2010).

There are also challenges with multichannel strategies. Firstly, the implementation of multichannel strategies can create channel conflict between the channels’ members such as the suppliers and retailers (Webb, 2002). Secondly, when multiple channels are used, profits from each new channel decrease, which makes it more difficult for a firm to recover its costs (Sharma & Mehrotra, 2007). Zhang et al. (2010) also mention increased difficulties with channel coordination and the communication between channels, important to consider. Channel cannibalization is another common concept within multichannel strategies. This is closely connected to the concept of channel conflict that has been mentioned above. When a firm adds new channels to its operations, this can sometimes lead to decreases in sales or profits of their existing channels and therefore harm the firm instead of creating synergies across channels (Kollmann, Kuckertz & Kayser, 2012).

6 2.1.1 Multichannel branding strategies

Multichannel online marketing appears on several digital channels (Klapdor, 2013). A study by Chang and Thorson (2004) claims that there exists a synergy between online and offline channels. They argue that consumers who only get access to marketing from one single channel do not get the same positive association with the brand as the ones receiving the marketing from multiple channels. Despite these potential synergies between offline and online channels, Bock et al. (2012) suggest that in some cases, retailers fail to convert their offline brand trust to their online channels. Furthermore, it is shown that multiple message sources most certainly lead to a maximizing chance of finding information. Klapdor (2013) emphasizes that, for most cases, every additional channel a firm includes in their marketing more than doubles the possibility for a consumer to go through with the purchase. According to Li and Kannan (2014), customers often use multiple channels before a conversion occurs to look for products and services.

Firms have increasingly introduced multichannel strategies to better interact with consumers in more efficient ways. Rezaei and Valaei (2017) argue that these channels, such as interactive channels, are an important aspect of how consumers associate the brand. For instance, the consequence of changing marketing channels and how it would affect the brand are examples of how it has become essential to understand these environments. Retailers have the opportunity to apply in-store brand experiences and brand awareness to differentiate themselves from competitors. This is a strategy that online firms are not able to take advantage of (Dolbec and Chebat, 2013). However, it is shown that brand experience and online brand equity are connected with a competitive advantage (Rezaei and Valaei 2017).

Due to this, it appears to be effective to use multiple channels when marketing a brand, not only to reach a larger scale of people but also to improve the relationship with the consumers.

The strength of multichannel firms is that they offer consumers multiple contact points with the possibility to enhance the consumer relationship with the brand (Frasquet et al., 2015)

Keller (2010) suggests that multichannel firms are in a more advantageous position to build brand-consumer relationships than pure online retailers. The challenge for multichannel firms is to understand the brand-consumer relationships across channels. In particular, how the strength of these relationships affects online loyalty and fulfillment. If firms want to convince

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their consumers to increase the use of online channels, they should work on building attachment and trust towards the brand (Keller, 2010).

2.2 Online branding strategies

Simmons (2007) introduces a framework for online branding called “The Four Pillars of i-branding”, providing a framework of how to manage online branding. The four pillars are “Understanding customers”, “Marketing communications”, “Interactivity”, and “Content”. The last pillar, “Content”, has a higher significance in the online environment.

2.2.1 First pillar – Understanding customers

By fully understanding their online customers, a company maximizes its ability to develop a customer relationship based on trust. This lay the foundation for online branding to become effective. One approach to understanding customers is by utilizing different online methods to gather information regarding the characteristics and requirements of consumers and then segmenting the online market. This can be done by using online surveys, databases, and client-side data capture (cookies). By segmenting the market, a company can get a more detailed understanding of the market and who the customer is. The understanding of the customer enables the company to target customers more precisely. Simmons (2007) claims that this might be the only way for online companies to avoid competing solely based on price. Social media platforms provide new opportunities for interaction with consumers, making it possible for marketing researchers to get close to the consumer. This facilitates the collection of data about the desires, needs, and preferences of the target customers (Kozinets 2002).

2.2.2 Second pillar – Marketing communications

The Internet makes it possible to combine two seemingly opposites, mass media reach, and personalized two-way dialogue with consumers (Simmons, 2007). Both Goswami (2015) and Davis et al. (2014) also emphasizes the use of two-way communication with customers. However, Yan (2011) addresses the risk of using a platform as a one-way channel. It may lead to a lack of engagement with the consumers and thereby making the brand equity weaker by not being transparent. Simmons (2007) argues that a brand's relationship with consumers is most vital to the success of its marketing communications. This aids in breaking through the

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noise of advertisements since a relationship with the brand makes consumers more susceptible to any information from it. Namely, three conditions make the Internet a valuable tool in marketing communications. The three conditions are presence, relationships, and mutual value. The presence refers to, in simple terms, a company's online presence. The main objective of a company is to attract customers to their websites. Through the website, companies can influence customers' perception of the brand by tailoring their websites to meet the needs of customers (Simmons, 20017). Yan (2011) discusses social media and “The nine goals of social media in branding” and explains that all social media strategies aim to provide benefits to the firm. One of the goals motivates firms to get consumers to feel a positive association with the brand, make them feel engaged with the brand, and to achieve brand awareness.

The second condition is marketing communications ability to help in building a relationship between the customer and the company. Simmons (2007) states that a relationship is something that develops as customers and companies interact. The Internet enables this by allowing for a two-way dialogue in contrast to traditional advertisements and commercials. Gao and Feng (2016) accredit social media as a tool for developing close relationships since it allows firms to hold conversations directly with customers. Due to this, social media has been seen as probably the strongest tool for building relationships. Tsimonis and Dimitriadis (2014) demonstrate that customers feel more engaged in the relationship with firms that exist on social media platforms. To a greater extent, the Internet provides customers a platform to provide feedback as well as give means for data collection (Simmons, 20017). Nevertheless, there are certain risks with marketing on online platforms. One of them is the unpredictable negative comments that could appear (Dekay, 2012).

Lastly, mutual values are a result of company’s and customers’ ability to interact. As companies can understand their customers better, they become better equipped to tailor their communication messages in a way that creates value for both parties (Simmons, 2007). Tsimonis and Dimitriadis (2014) suggest that social media also becomes a valuable marketing tool due to its low-cost marketing solutions.

Traditionally, marketing communication has taken on a linear nature, much due to the media available for promotions. Traditional media such as television, radio, magazines are more suitable for a push approach and one-to-many communication. However, with the rise of the

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Internet, media better suited for non-linear communication (two-way communication) has become available. Simmons (2007) lists three online tools made available by the Internet; company website, e-mail marketing, and viral marketing. E-mail marketing has several functions. It can help share information with customers, build relationships, alert customers on order confirmation and push certain products. Goswami (2015) found that all pure online retailers offer their customers an e-newsletter.

In most cases, a subscription will earn the customer a discount on their next purchase. Viral marketing aims to exploit existing social networks in order to generate brand awareness among these communities. Simmons (2007) describes it as an epidemic where one person shares an offer with people within their network. The Internet has shifted the power from offline to online, and consequently, given customers greater control (Simmons, 2007). With social media, companies can create and share a message and then let the customers pass on the information through different platforms. A higher number of people are therefore reached with a reduced effort for the firm (Gao and Feng 2016).

2.2.3 Third pillar – Interactivity

Simmons (2007) defines interactivity as the ability for businesses and individuals to have direct communication with each other, regardless of any distance or time differences. Another perspective of this is “machine interactivity”. It looks at the mechanical side of interactivity. In short terms, machine interactivity occurs when customers are enabled to interact with the medium itself, such as a website. Simmons (2007) suggests that a website with high interactivity leads to a positive brand perception since customers have a positive response to highly interactive websites. In order to properly develop website interactivity, there are three stages to go through. Stage one consists of two substages, attracting customers to the website and engaging them once they have found their way there. To attract customers to the website requires attracting customers from outside the website. For this to be plausible, a traditional advertising approach, as well as word-of-mouth, should be utilized (Rowley, 2009). Sheth (2020) connects word-of-mouth (WOM) marketing to influencer marketing, saying that WOM marketing historically was restricted to local areas but has evolved into a global form through social media. This enables opinion leaders/influencers to share their advice, opinions, and recommendations to a network stretching across nations (Sheth, 2020). Once customers find a

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company's website, the design of the website is vital in the return of customers. Interactive features and a navigational design are, therefore, important when engaging with customers (Simmons, 2007). Stage two and three concerns the collecting of visitor’s inputs and using this to provide individual buyers with a direct response. The degree of personalization may vary depending on the company; the response delivered can be the same for everyone or tailored to the preferences of individuals (Goswami, 2015).

In order to successfully implement these three stages, certain tools can be used. Blogs, short for “web logs”, can be utilized to build interaction on specific topics. Another tool is online communities. They refer to gathering people with common interests, from geographically different locations, in a virtual community. These communities are beneficial for marketers since they allow them to observe behavioral patterns within these groups. This might generate useful insights regarding the customers. Goswami (2015) mentions the use of tools such as loyalty schemes, online reviews, customer surveys, and social media, as ways to build brand relationships and brand community. Especially loyalty schemes are used in order to create a positive perception of the brand among customers and a community around the brand. Examples of these loyalty schemes are discounts when making recommendations, purchase coupons, and monthly prizes. The level of interactivity positively affects online performance by building stronger brand relationships (Simmons, 2007).

2.2.4 Fourth pillar – Content

For online branding to be successful, companies must reach their customers with unique messages, functionality, and, most importantly, content (Simmons, 2007). From a customer perspective, marketing through social media channels creates expectations of a constant online presence from the company. This has resulted in a trend where marketers tend to switch from agencies to influencers, in order to seize their particular skills and their close connection to the target audience. The advertisements of influencers appear online and usually blend into the influencer´s image by matching their content to the formats of the firms (Campbell and Farrell, 2020). If it becomes too difficult for the customer to find the right information or content, or even make it hard for them to place an order, they become more likely to develop negative brand perception (Simmons, 2007). Furthermore, Yan (2011) claims that there are challenges regarding technical problems that could limit the brands´ appeal. Thus, it becomes crucial to

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design the website in a manner that facilitates the navigation of the website. In order to make it effortless for the customer to navigate, the company must look at it from a consumer’s perspective when designing the website. In a world where brands strive for creating content on social media, influencers have become specialists at generating the right content for customers, which increases brand awareness (Campbell and Farrell, 2020).

2.2.5 Integration

In order for the four pillars to become a successful tool in online branding, they need to be properly integrated. For example, in order for marketing communication (pillar two) to be effective, one must fully understand the customer (pillar one) and have the right content (pillar four). This proves the importance of integration between all the pillars (Simmons, 2007).

2.2.6 Brand familiarity

Something that becomes of great importance in the virtual world compared to the real world is trust. According to Rowley (2009), online loyalty stems from the consumer’s trust. Research has shown that greater brand familiarity is directly related to purchasing. Customers use brand familiarity as an internal information source when making a purchasing decision. This means that customers that are familiar with the brand are more likely to purchase from that brand (Park & Stoel, 2005). This is further strengthened by Goswami (2015), who suggests that brand familiarity and knowledge about a brand positively affect the purchasing intention. Prior experience with online shopping is another factor in the purchasing decision. Consumers who have previous experience with online shopping, perceive the risk with online shopping to be lower than those with no prior experience (Park & Stoel, 2005). Furthermore, research shows that emotional brand associations, such as excitement and authenticity, influence consumers’ purchase behavior (Rowley, 2009).

2.3 Direct-To-Consumer

Moser (2019b) describes the Direct-To-Consumer (D2C) business model as ‘cutting out the middlemen’. This means not using retailers but rather being a manufacturer that sells directly to the customer. Piippa (2009) explains that the D2C business model is about knowing the customer and having two-way communication with them, where the customer engages with the

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company. There is a focus on customer relationships and direct transactions. Moser (2019b) states the advantages of such a model being the decrease in costs as well as the increase in control over manufacturing, sales, marketing, and distribution. Havener (2017) describes it as a model where the manufacturer stays in control of the entire supply chain, from the design of the product to the purchase. By utilizing the D2C business model and keeping control over the entire supply chain, no other parties, such as a retailer, can claim any profits made.

The cause for an increase in D2C companies comes from the changing behavior of consumers due to the introduction of new technology. This has made the D2C business model a possibility (Moser, 2019a). With a large variety of online retailers, D2C companies face the challenge of getting customers to their website (Havener, 2017).

2.3.1 Direct-To-Consumer branding strategies

The branding strategy of a Direct-To-Consumer (D2C) company significantly differs from traditional companies in one specific aspect; they have to ensure traffic to their website. For a company using retailers, the key factor of success is to ensure that any marketing efforts attract the consumer to the retailer´s shelf and that one’s product takes up the majority of the shelf space. However, in the case of D2C, there is no shelf space in the same sense, and there is no competition for it. Instead, the marketing efforts of a D2C company have to result in driving traffic to their website, which will result in sales (Bower, 2017).

Bower (2017) states that D2C companies gain their consumer base through a mix of traditional marketing approaches as well as digital marketing, something that is confirmed by (Haibi, 2017). Haibi (2017) also discusses the importance of data analytics for the D2C company. Through the direct connection to their customer base, D2C companies can use big data regarding customer needs and use it in their brand strategy as it can be used to determine brand positioning as well as develop valuable advertising (Gielens & Steenkamp, 2019). Bower, (2017) further underlines the importance of consumer information for a D2C company in their efforts to reach new consumers and highlight the use of social media in order to customize the marketing message to consumers. Thus, they become more efficient in connecting with their target consumer. The goal is to directly engage the consumer through social channels (Diorio, 2016). Diorio (2016) also discusses how big data can be of help in creating value for the

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consumer. It helps deliver relevant content and personalized experiences to consumers. In contrast, Bower (2017) claims that the best result for the D2C business model lies within “small data” as it provides more personalized information regarding the individual consumers, helping a company target its consumers more directly. Furthermore, direct communication between D2C companies and consumers gives way for customer relationships that can help build customer loyalty (Piippa, 2009).

D2C companies face various challenges as a result of their exclusion of retailers and intermediaries. One challenge is driving traffic to their website. This may be a particularly challenging task for brands that do not enjoy top-of-mind awareness (when a brand is the first in consumers mind when thinking of a specific category) among consumers or a loyal customer base (Gielens & Steenkamp, 2019).

Gielens & Steenkamp (2019) also mention the decision of whether to outsource the management of customer relations and any website activities or keeping those activities inhouse. By keeping such activities inhouse, it is easier for a company to maintain a close relationship with its customer base. However, a lack of experience of direct-customer relations could call for the decision to outsource. The value of effective management of customer relations is the ability of a company to have customer information, which helps to deliver products tailored to the needs of the consumer (Gielens & Steenkamp, 2019).

Having their only presence in the online forum, D2C companies can reach a large and international market (Gielens & Steenkamp, 2019). By using technology in all areas of the D2C business model, costs can be cut, making it possible to generate higher profit margins and a better position to offer consumers a desirable price (Haibi, 2017). It also provides the opportunity to offer products better suited for the consumer needs by utilizing the direct connection to consumers to its full potential (Gielens & Steenkamp, 2019). This could also help to create better consumer experiences and help to build a strong relationship with customers, which can result in strong brand loyalty. Additionally, having the ability to collect data from consumers and having a strong customer relationship gives the company more control over the brand (Hrastovec, 2018).

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3. Methodology and Method

___________________________________________________________________________ This section describes the methodology and method of this study. The overall research strategy and how the data was collected are discussed in more detail. A demonstration of why and how the company was chosen for the case study is also given by providing background information about our case company. Lastly, the trustworthiness of the study is discussed.

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3.1 Methodology

3.1.1 Research paradigm

The research philosophy builds a fundamental basis for how the research will be conducted. It consists of two paradigms that guide the focus of the research, positivism, and interpretivism. Positivism states that reality is independent, and the main objective is to discover theories and absolute knowledge with a basis on empirical research. It is concerned with experimenting and observing different phenomena, which is usually achieved through quantitative methods. Interpretivism sees reality as being highly subjective and socially constructed. It also emphasizes that knowledge is subjective and dependent on the context. Interpretivists use mostly qualitative methods to seek a deeper meaning and understanding in a study (Collis & Hussey, 2014). It was not expected for this thesis to bring absolute knowledge or a numerical result. Instead, this thesis aimed to gain a deeper understanding regarding the branding strategies of D2C firms through interviews. Therefore, utilizing an interpretivist paradigm was optimal. It enabled the collection of subjective data and deeper insights from the respondents.

3.1.2 Research approach

In accordance with the interpretivist paradigm, this thesis is based on an inductive research approach. The empirical findings from the conducted interviews were used in order to build a basis for the analysis and theory since the inductive approach refers to moving from empirics to theory. The idea of this method is for the researchers not to have expectations or hypotheses about what they will find when searching for data. When finding suitable data of what they wish to investigate, unbiased conclusions are made from the empirics to then build a theory. A deductive approach works the other way around, moving from theory to empirics (Collis & Hussey, 2014).

15 3.1.3 Research design

There are two main types of research, quantitative and qualitative research. Quantitative methods focus on objective, standardized measuring, and the usage of numerical or statistical analysis of data, which has been collected in different ways, for example, through surveys or questionnaires. It creates an opportunity to obtain more structured, precise data that is usually collected by gathering a high number of respondents (Williams, 2011).

The qualitative method makes it possible to get a unique depth of understanding in comparison with a quantitative method where the data would often be collected by using closed questions (Collis & Hussey, 2014). Qualitative methods focus on gathering data that is non-numerical. Furthermore, it emphasizes communication and collecting information in a free, more flexible manner to gain a deeper understanding regarding a certain issue (Williams, 2011). A common way to conduct qualitative research is through interviews. Careful interpretation and analysis of this empirical data is a crucial part of the process (Denzin & Lincoln, 2005). The qualitative method manages to fulfill the purpose of this thesis.

3.2 Method

3.2.1 Data Collection

The secondary data used in this thesis was collected by searching through various databases, primarily Google Scholar and Primo. The main themes and keywords were discussed. The ones that were most relevant for the thesis were chosen. In order to better structure our literature search, a table was created on Excel (See Appendix 1). This made it possible to better categorize and collect the secondary data in a way that ensured a focus on the search within these keywords and themes. At first, one requirement for the literature was not to use sources published before 2015. However, when the authors were unable to find relevant literature to fulfill the requirement, this had to be overlooked. The primary data was collected through a case study, which is presented below in more detail.

16 3.2.2 Case study

By using a case study, it is possible to collect data from a practical perspective. This can be beneficial for other companies when applying the findings in their operations as well. The data was collected by interviewing two respondents from one company. The interviews with the respondents were approximately one hour long. Thus, it was possible to go into more detail regarding the most important aspects and topics. However, if several companies would have been interviewed, it would have been easier to generalize the results of the case study.

3.2.3 Interviews

The study in this paper is based on a semi-structured interview approach. This means that a couple of questions were decided in advance, while others were recognized during the interview (Wilson, 2014). Through this technique, the interview became more similar to a discussion rather than a regular interview. This resulted in more relevant answers and an increase in information that was easy to comprehend. Additionally, open questions were used. The respondents could then answer the questions without restrictions. This made it easier to modify the follow-up questions in real-time. As mentioned, the primary purpose of this thesis was to investigate how D2C firms implement their online branding strategies with a focus on their social media marketing strategies. Thus, it was relevant to give a possibility for the respondents to explain and elaborate on their opinions more descriptively without restrictions.

The interviews were held in Swedish since this is the native language of the respondents. By doing this, it was assured that there were no misunderstandings, and it was possible to achieve clarification to a greater extent. To make sure that no recordings were lost within the process, a decision was made to record on two separate devices to prevent any loss of valuable information due to technical difficulties. The interview questions that were decided prior to the interview can be found in the Appendix 2-5, in both Swedish and English.

3.2.4 Selection of respondents

Two managers from RevolutionRace were interviewed:

· The Digital Marketing Manager

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The decision to interview these particular respondents was mainly based on their positions within the company. They both hold positions of high influence and with great insight into the various parts of their marketing department. In order to show the positions of the respondents, the authors created an organizational chart. The red boxes mark the positions held by the respondents at the time of the interview. The dotted box represents the new position of the marketing manager.

Table 1. Organizational chart

3.2.5 RevolutionRace

The choice of the company was largely based on the social connections available to the thesis group. In addition to the fact that they are a D2C company, they caught our interest in being a fairly new company with a great focus on social media.

RevolutionRace AB was founded in 2013 by Niclas and Pernilla Nyrensten. The idea for the company originated during their hike to the Mount Everest base camp. They found the outdoor clothes in the market to be too expensive and ill-fitted. This resulted in the idea of making outdoor clothes with a good fit and for a reasonable price.

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RevolutionRace strives for multifunctional clothes. Therefore, their clothes are customized to make them suitable for several different activities. Their goal is to satisfy the customers by selling high-quality products at a lower price than their competitors. They only sell their products online, which gives them full control over the whole chain. This makes it possible to sell products for a lower price with faster product development since they are closer to the end-customer. This way of thinking helped them become “Facebook success story” in 2016 and “Entrepreneurs of the year” in Borås in 2016 ("Om oss - RevolutionRace", 2020).

3.2.6 Data presentation

The structure of this thesis is based on a funnel approach. This means that the interviews began with more general, unstructured questions and then gradually progressed into specific topics. Multichannel firms were not included in the interview questions since a sufficient amount of literature regarding multichannel firms can be found. Instead, the multichannel literature was used in the analysis as a comparison tool between D2C firms and multichannel firms. In the findings section, quotes from the respondents for the most relevant interview questions are provided on separate tables. After each table, additional information that further explains the respondent’s answers is also shown. Two of the themes identified in the literature section were used in the analysis: online branding strategies and Direct-To-Consumer branding strategies. “The Four Pillars of i-branding” by Simmons (2007) were used as a theoretical model in the analysis. However, this thesis was not based on the theoretical model. Rather, it was used as a tool to support the findings.

3.3 Ethics

Research Ethics refers to how research is conducted and how the findings are communicated (Collis & Hussey, 2014).To ensure that the data for this thesis was collected ethically, a few actions were taken. Consent forms were sent out to the respondents prior to the interviews (See Appendix 5). The forms guaranteed that they were aware of the purpose and informed the respondents about the length of the interviews. It also specified their right to skip any questions and remain anonymous. The confidentiality of the answers was communicated, and it ensured respondents that the recordings would be disposed of after the interviews.

19 3.3.1 Trustworthiness

Depending on whether a thesis is carried out in a quantitative or qualitative manner, the focus of the trustworthiness is different. According to Shenton (2004), quantitative studies prove their trustworthiness by addressing the study’s validity and reliability, but in qualitative studies such as this thesis, the important criteria are credibility, transferability, and reliability. In this section, the mentioned criteria are discussed in order to evaluate the trustworthiness of this thesis.

3.3.1.1 Credibility

According to Wagar (2014, p. 873), credibility is defined as “the quality of being believed or trusted”. The concept of credibility is of high importance since it must be reassured that the results of the thesis can be trusted. It is important that people who intend to read a thesis can be assured that all aspects correlate to empirics, facts, or research.

Along with the context of this, Casse and Bahanan (2013) explain three key factors that make up the foundation of credibility:

• Truth

• Proof

• Faith

Further, they explain the content of these three dimensions, whereas the truth makes up the most apparent factor in the credibility. Truth is perceived to exist when there is a correlation between people's assumptions and what they read. The second factor is proof. In order to have proof, research should be based on some empirical evidence or facts. Lastly, Casse and Bahana (2013) mention faith as a part of the credibility. They argue that credibility is based partly upon beliefs. This would indicate that people tend to find individuals credible based on assumptions. One thing that decreased the credibility of this thesis was the fact that only one company was used. In order to reinforce the credibility of this thesis, multiple cases should have been investigated. By using several cases within the same industry and segment, a more general result might have been accomplished. Another factor decreasing the credibility of the research is the literature used in certain sections. Since there is an evident lack of literature regarding D2C, it was necessary to remove some of the stricter requirements in order to find enough literature.

20 3.3.1.2 Transferability

Transferability refers to whether the findings of a study apply to other contexts (Shenton, 2004). By having high transferability within a study, the resonance for the readers increases. If the results are transferable to other situations and contexts, it is more meaningful and useful for the readers (Kuper, Lingard & Levinson, 2008). Since qualitative studies, like this thesis, seldom use large samples, it is often difficult to transfer the results to other contexts. Nevertheless, the main objective of qualitative research is to gain a deeper understanding of certain phenomena. Thus, it can be argued that transferability is not an important limitation since this thesis explores a specific phenomenon of online branding within a certain company type, D2C firms.

Additionally, Shenton (2004, p. 69) also mentions that “although each case may be unique, it is also an example within a broader group and, as a result, the prospect of transferability should not be immediately rejected”. This argues the point that it is still possible to gain transferability within qualitative research. Thus, even though the focus is narrowed down to specific phenomena, it is still possible to transfer the knowledge acquired from the research to other situations. It is still worth mentioning that since only one company was interviewed, it is a limitation in order for this thesis to achieve full transferability.

3.3.1.3 Reliability

Reliability refers to the outcome remaining the same when duplicating or reproducing an investigation. This means that an investigation can be considered to be reliable when it shows the same outcome if remade with the same participants and methods (Shenton, 2004). Further, Shenton (2004), claims that in order for an investigation to be reliable, a clear explanation of how the study was conducted should be defined. In general, this is described under the headline of “method”. Such is the case in this thesis, where the procedures have been described above.

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4. Empirical findings

___________________________________________________________________________ In this section, the most relevant questions asked in the qualitative interviews are shown in tables with added quotes from Respondent 1 and Respondent 2. A summarized version of the answers from our respondents is provided below.

___________________________________________________________________________ The questions were modified slightly for each respondent to make sure that the questions relate to their positions, and some questions were asked to clarify or get more information about a certain topic. The social media manager will be referred to as Respondent 1 (R1) and the marketing manager as Respondent 2 (R2). Quotes used in this section have been translated into English and to the best of the authors’ ability. The findings are in more of a summarized form. In some questions, the quotes were self-explanatory, so further explanations were not included. The most questions and the most relevant quotes from the interviews will be displayed in tables 2-32.

Table 2. Q1

R1 mentioned that they are a D2C firm, and these types of firms are almost in every case focused on a digital marketing strategy by taking advantage of digital channels such as social media, Google, YouTube, Google AdWords, or using influencers. Therefore, no traditional marketing tools are being used, as even their newsletter comes in a digital form.

R1 also believes that their customers exist in the digital world, so they do not use traditional marketing channels, which R2 talked about as well. Both respondents also said that they have gotten plenty of useful data through customer surveys and Facebook about their target customers and groups, which is important to find the right types of customers they should target.

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R2 also added that they spend a large amount of their budget on marketing and that efficiency is a crucial factor, so it might be beneficial to focus on specific target groups. However, RevolutionRace is currently focusing more on mass marketing but intends to adapt their marketing content in the future.

Table 3. Q2

R1 argues that there is increased flexibility, which one does not have if external channels such as newspapers, television, billboards, or other types of traditional marketing are used. It was also mentioned that currently, they have the greatest potential for building a brand through digital platforms since building brand awareness is about gaining general awareness from potential customers, and one can get that by gaining as much visibility as possible.

Another aspect that both the respondents talked about was that it is a lot easier to track the digital channels’ efficiency to make sure that they are worth marketing through and that it is easier to target different target groups by having specific marketing messages for each group on different channels. As mentioned, the current focus for RevolutionRace is still mainly on mass marketing. R1 warns about the risk of missing out on new channel trends, such as TikTok, if one focuses most of its marketing on Facebook or Instagram. RevolutionRace decided not to follow the TikTok trend, but it could potentially harm them in the long term if potential customers start using their current marketing platforms less and switch to new platforms.

23 Table 4. Q3

If they feel that one channel is becoming obsolete or something else is trending increasingly, they could consider adapting to these situations. Secondly, R1 claims always to be alert to new possibilities when it comes to marketing and that they are constantly asking themselves the question “Where does the attention exist?” since the attention builds brand awareness.

Table 5. Q4

The respondents said that owning their entire profit margin makes it easier to sacrifice a bit of the gain compared to firms that use multiple channels. R2 added that then they do not have to worry about other stakeholders such as retailers which can often make your operations more complicated. It is also possible to segment and target more specific target groups, even with a lower budget and experiment and do testing with different marketing strategies more easily and cheaply through digital channels.

24 Table 6. Q5

R1 said that even if they manage to keep up with the current trends, their second challenge is still about finding out where the relevant attention for them is. Since they do not have physical stores, it is crucial for them always to consider where the relevant attention is to get customers to find their platforms in the first place.

Another challenge that R2 mentioned was that the wider the channel mixes one has, the more difficult it is to keep track of them and make sure that they are all still worth using. Thirdly, they do not have physical locations people can turn to if they have any concerns about a certain issue. Therefore, they want to make sure that their customer service operates in a way that makes the customers feel close to them and feel like they can easily contact them if needed. R2 added that they aim to have quick replies on social media, and the older generations are also starting to use those platforms more for contacting. Then again, R2 said that technical issues could be a challenge since digital platforms need updating and maintenance as well. Furthermore, one challenge is with the small problems that occur along the way, according to R2. These problems could be technical issues with the site. It is not only about setting up a site and selling clothes, but the site needs maintenance, and one needs to see the full picture. If the site is slow, it will affect brand perception. Keeping all these steps in mind, from content to functionality, is what R2 believes to be the biggest challenge. Hence, it is important to allocate the time right and put together all the small elements in the creation of the full brand image.

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Compared to old media, which required a large budget and where one hoped for the best, paid social media can be used to segment and aim with more accuracy. Furthermore, it is easier with paid social media to track and see where one can get the most out of the money spent.

Table 8. Q7

R2 was asked this question, and it was said that in the beginning, it was about convenience for the owners and to reduce the prices by having no middlemen. R2 said that the outdoor clothing industry is expensive in general, but the owners believed that it is possible to give the customers the same quality at a lower price by starting a D2C firm that only sells through digital channels. Lastly, it was said that everything was in-house, the production and marketing, but since there were no middlemen, it was possible to focus more on marketing, which they believe is perhaps the most important aspect.

Table 9. Q8

Table 10. Q9

RevolutionRace always aspires to highlight the product throughout their social media platforms. According to R1, this way of standing out differentiates them from other brands. This is in contrast to the focus of marketing within the industry where competitors tend to

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instead create a feeling of the outdoor environment, landscape, and mountains. R1 claims that adapting content is a fundamental concept, and firms who are social natives understand this, but it is difficult for firms who have not had this transition and wish to enter social media. RevolutionRace does not have to work as much with adapting their content to the right platforms since they do not have a broad channel mix. They rather directly adjust the material to the platform straight away by working with influencers. An influencer creates content tailored to social media by making it fit their feed, which in turn suits RevolutionRace’s feed as well.

Furthermore, R1 claims that content overall is crucial when working with social media on a large scale. RevolutionRace uses influencer marketing in order to produce content on a larger scale, as content is needed on a day-to-day basis, according to R1. These influencers have an important role as the firm's content creator in range. With the help of influencers, they receive content for all seasons, in different countries, with different themes, from as many profiles as possible. Content in scale is, therefore, important. Today, effective marketing consists of a constant content flow, which becomes particularly important in the context of global brands such as RevolutionRace.

Table 11. Q10

R1 stated that social media marketing comes with very high competition. This means that to stand out through the noise becomes even more important. R1 mentioned that, for example, television commercials and magazine advertisements do not possess the same amount of competition. It is rarely more than ten brands competing for these channels while it is closer to a thousand competitors on social media platforms. With this in mind, competitor analysis becomes essential.

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Due to their business model, which enables them to keep high margins on their products, they have a higher market spend than many other companies. R2 means that this is what gives them an ability to stand out from the noise since it gives them a marketing budget allowing them to show their ads more often than their competitors. R2 makes the point that it might be more beneficial to reach a smaller number of people if it allows for the ad to be shown at a higher frequency.

Table 12. Q11

R1 explained that influencers have a crucial role. They further explain that many of the other e-commerce firms use an agency or an expensive photoshoot to bring forth the product collaboration. On the contrary, influencers work by just going outside wearing the clothes, providing content that is created by the influencer.

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In other words, the influencers are useful when it comes to spreading the concept of cheaper, colorful clothes with better quality compared to competitors. One of the advantages of using influencers is the credibility of it. Additionally, it is word of mouth in scale, which could lead to greater brand awareness.

Table 14. Q13

The most considerable disadvantage of using influencers was, according to R1, like with all other types of marketing, that it can be overused. Marketing is about having the right balance; being too visible can become harmful. Further, the chance of picking the wrong influencer increases parallel to the number of influencers used. The control also decreases in pace with the numbers, more collaborations equals less control. Content creation is the responsibility of the influencers, meaning that they have the control. So, the more influencers one uses, the more likely it is for individuals to go against the brand, which is a risk that must be taken into consideration by the firm.

Table 15. Q14

In the paid context, it is about showing the benefits the product has. It could be the different functions or advantages that the product possesses, such as the price, delivery time, or product characteristics.

29 Table 16. Q15

R2 claims that the first impression of their product plays a vital role in creating better customer relationships. A combination of many positive reviews, low priced products, and a simple website all lay the basis for creating low expectations with the customer. When they then receive the product and realize that the quality is of the same standard as products almost double the price, the experienced value exceeds the expected value, creating improved customer relationships with the brand. Furthermore, R2 attributes much of their strong customer relationships with their customer service, giving customers a fast response and offering the alternative to call. Additionally, R2 accredits their generosity for maintaining and building good customer relationships. For example, when customers call to say that they missed a campaign period and still receive a discount. Customer loyalty is a term that is used within the organization, they try to develop this by sending customized newsletter based upon customers´ purchasing behaviors. They also mentioned the importance of segmentation.

30 Table 17. Q16

The current website is focused on sales and conversion, making it as easy as possible to shop from. By developing their website, they will have greater possibilities to adjust the website for their community. It will involve theme pages, enabling them to customize the website experience depending on the interest of the customer.

Table 18. Q17

R2 responds that customer relationships are everything for the brand. Without returning customers, RevolutionRace would be out of business in no time, as would any other business. R1 discusses unmatched value.

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Due to the company being young and growing at a fast pace, they have not been able to properly use their community in order to understand and become integrated with their consumer, which is something R2 believes in changing as more people are hired. R2 suggests using one’s channels and asking customers directly about these things.

Table 20. Q19

R2 responded that much like their marketing is product-oriented, they also wish their customers to associate them with good products offering high quality, design, and fit with a variety of colorful clothes. R1 wishes customers to perceive RevolutionRace as more fun, colorful, and different from traditional outdoor wear.

Table 21. Q20

32 Table 22. Q21

R2 thinks it is important to consider what message one wants to share and to spend the time to find the right target group for the message and how to speak to the target customers. Otherwise, R2 recommends experimenting to see what works as one successful strategy does not necessarily work for another company. Through the trial, it is essential to learn what works and what does not. R2 points out that, especially in the beginning, it is crucial to have continuity.

Table 23. Q22

R2 claims that they rarely speak about competitors as they differ so much in their marketing opportunities. If they look at competitors in any way, it would be how some competitors in the American market work with their communities, especially in how they reach a younger market as that is where RevolutionRace will focus more in the future.

33 Table 24. Q23

R2 says that they work mostly with direct response, aiming to get a direct response to their ads. By using Facebook optimization, they can position themselves most effectively.

Table 25. Q24

They always strive for having a dialog with the customers, to have two-way communication.

Table 26. Q25

R1 explains that they always try to be pedagogical towards their customers. RevolutionRace believes that outdoor activities are for everyone, and the firm tries to highlight this by placing much weight on being pedagogical. The effect is that the customers receive a better understanding of their products.

34 Table 27. Q26

As an example, when a new product is to be produced, they include the customers by letting them vote on which color the new product should have. The color with the most votes gets produced. This is one way how RevolutionRace tries to engage with customers. On their sites, they could have different activities for customers. R1 explains that in order to engage with customers, it is important to know how to handle the attention. It could be by involving the customers or by giving them directions. Furthermore, R1 gives an example of how they engaged their customers by having an egg hunt during Easter one year. Customers were encouraged to look through the website to find eggs containing discount codes.

Table 28. Q27

R1 explains that the word engagement on social media is, for example, likes, comments, and clicks. This concept is social proof, which R1 mentioned, is a fundamental phenomenon. RevolutionRace uses social proof by collecting reviews by the users. RevolutionRace is one of the most online reviewed companies in Sweden, with around 160 000 online reviews. Furthermore, R1 explains that engagement equals interest.

Table 29. Q28

According to R1, social proof, when it comes to reviews, is the credibility of it. For example, if ten people write something positive, then the chances of people thinking positively about the

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product increases. Social proof is a psychological phenomenon, and it could also, in this review context, be pedagogical. If someone has commented on how a jacket fits perfectly on a certain weight and length, then a person with the same measurements identifies with that particular information due to social proof.

Table 30. Q29

Some information exists on Facebook and Google Analytics, but it is through the customer surveys that they, on a larger scale, receive a clear image of who their customers are. The target customer is 40 years old and likes outdoor activities. According to R1, they do not give themselves the best preconditions to specify their marketing according to individuals, instead, they use mass marketing. It is about segmenting and customizing marketing according to different target groups.

Apart from Facebook, RevolutionRace conducts customer surveys where they send out questionnaires, asking customers to grade their satisfaction. From their customer surveys, they receive an RPS score. R2 believes all online companies work in this manner.

36 Table 31. Q30

According to R1, this phenomenon is new, even RevolutionRace, who is in the forefront of this, has a lot more to learn. What many firms do is to base their marketing on assumptions rather than pure data collecting. R1 thinks that companies assume a lot by creating their ideal customer and aim at that rather than investigate and collect data in order to know for sure.

R1 explains that it is always a good thing to have segmentation and specification, but what RevolutionRace has done initially was to find cheap attention quickly. RevolutionRace was one of the first companies that began to pay for advertisements on Facebook and received tremendous value for their money. However, today, the same strategy could not have been applied since the competition is a lot higher on Facebook. R1 continues to explain that it is about finding the channel that gives the most attention, where the most value is received for the money put into the marketing.