Factors of Affecting Online Game Satisfaction

Factors of Affecting Online Game Satisfaction CHAPTER ONE INTRODUCTION 1.1 Introduction Online gaming is one of the most popular entertainments among the citizen in this world no matter what ages they are. Due to the advancement in the technologies, it has brought lots of growth in this industry since early of 2000s. This growth has been developed online game market into the core of the world cultural industry (Sang, Yung, Jae, and Kyoung, 2004). Hsu and Lu (2003) stated that online game service has been a highly profitable e-commerce application in recent years and its market value has increasing markedly as well as number of player growth at the same time. Now a day, most of the household will owned at least one personal computer (PC) or a laptop and some even more than that due to the cheaper cost to have a computer. Consequently, the demand for computer has been grown rapidly throughout this recent year. The accessibility of internet also is easier with each passing year and the cheaper price to have broadband internet connectivity (Bizymoms.com). Generally, online game service can be categorized as business-to-consumer or B2C in e-commerce and it is also one the videogame and interactive entertainment industry. A strategic market research and consulting firm which focuses on the interactive entertainment and the emerging video game, online game, interactive entertainment and portable game markets namely, DFC Intelligence has made its forecast for worldwide videogame and interactive entertainment industry each year since year 1995. According to DFC Intelligence forecast on year 2008, the worldwide videogame and interactive entertainment industry revenue to reach USD 57 billion in 2009 with no signs of slowing due to the slumping economies and expensive hardware (Androvich, 2008). The rapid growth in videogame and interactive entertainment industry has been attracted lots of entrepreneur who would like to enter this profitable industry. Based on the report of DFC, PC was the top platform for games in 2007, with online game revenue alone eclipsing USD 7 billion on year 2006 and not including retail sales. The DFC also stated the total PC game revenue is expected to reach USD 19 billion by year 2013 (Androvich, 2008). In Malaysia, there were 15 million subscriber of internet and it was 62.8% out of the total population in 2008 (Internet World Stats, 2008). It was more than half of the citizens of Malaysia have used the internet and this has brought a great opportunity to the entrepreneur who would like to join this industry to be one of the online game service providers to share the profit since the number of internet users was increasing each year. It did not showed that the number of the online game subscribers but there is a business opportunity for the entrepreneur to start-up their business through online. Table 1.1: Internet Usage and Population Growth of Malaysia Year No. of Users Total Population % 2000 3, 700, 000 24, 645, 600 15.0% 2005 10, 040, 000 26, 500, 699 37.9% 2006 11, 016, 000 28, 294, 120 38.9% 2007 13, 528, 200 28, 294, 120 47.8% 2008 15, 868, 000 25, 274, 133 62.8% (Source: http://www.internetworldstats.com/asia/my.htm [2009, November 1]) A study showed that customer satisfaction is the immediate factor affecting the consumer retains loyalty (Cronin, Brady, and Hult, 2000). Most of the studies showed that higher levels of customer satisfaction will lead to customer loyalty. â€Å"A minor change in satisfaction could lead to a substantial change in loyalty increment† (Bowen and Chen, 2001). However, most of these studies were in offline environment. Wind and Rangasamy (2001) found that online environments offer more opportunities for interactive and personalized marketing. Eventually, these opportunities may influences customer satisfaction and customer loyalty in the online environment if compared to the traditional market or offline environment (Shankar, Smith, and Rangaswamy, 2003). The main purpose of this study is to identify the factors affects the customer satisfaction towards online game services and which could lead to customer loyalty. It is including the service quality, transaction cost, experience value, and technology acceptance factor. These four antecedents of online game service satisfaction and loyalty will test associations based on the model that has been constructs. 1.2 Background of the Research In this century, computer might be a need for a person if compared to the olden days where there was a limited growth in technologies. Now, computer seems like a tool which can do everything for you such as searching information, payment, shopping, and so on. This powerful electrical appliance has gain a well response from the citizen of the world. It has many functions can perform through computer and one of the most popular functions of computer is gaming. In the earlier 2000s, most of the games were played offline since the limited internet connectivity and expensive prices to have an internet connectivity. However, this situation has changed due to the technologies advancements and the industry has achieved economic of scale. To more understand what online games is, it is a must to brief its history. The very first online gaming activities were introduced in the late of 1960s and early of 1970s. Later, they started gain more popularity within 1970s to 1980s when dial-up Bulletin Boards became popular and the users started playing online game over them. Clyde and Thomas (2008) stated that the development of arcade game in the 1970s, and video and computer games in the 1980s; digital games have become an influential part of popular culture. The bulletin boards provided a multi-user platform which allowed few users to play at the same time. Now, it has been transformed to MMORPG (Massively Multi-Player Online Role-Playing Games) which is popular all around the world presently (Bizymoms.com). At one time, games were used for educational purpose rather than entertainment (Clyde and Thomas, 2008). However, due to the changed in the perception of game role and the culture, it becomes an entertainment but there is still has some of the game designers and educators used it as educational purposed such as learning typing skills and so on. In the year of 1990s, due to the growth of internet technologies of Flash and Java, it has led to the increasing usage of the internet and the millions of new websites mushrooming across the World Wide Web. When enter to the millennium year, technological giants such as Sony, Microsoft and Ninetendo came out with advanced gaming consoles has changed the features of online gaming completely (Bizymoms.com). The people all around can play a same game with each other virtually at the same time. Currently, online gaming industry is growing each year and it has a great expansion in future. The online game service is one of the most competitive industries among the entire industries. The new and the existing online game service provider are delivering their best services to gain more market share to sustain its organization. To penetrate the market, the firm must meet the customer expectation which may lead to customer satisfaction. Eventually, it may bring customer loyalty. 1.3 Research Problem Customer is the one who contribute the profit to the firm because they are the one who are using the product or services. However, consumers are becoming wisely now a day when they would like to use certain product or services. They will tend to purchase the product only if the product can meet their expectation which might lead to satisfaction. To meet the customer expectation, it is a biggest challenge for the firm. Other than that, the growth of the online game has brought some a major problem to the service provider which is how to retain the existing online game users and will not shifting to other service provider or loyalty to the current provider (Yang, Wu, Wang, 2009). In order to survive in this competitive industry, many practitioners and academicians in this field have focused on how to improve online services to attract potential buyers as well as the current customers (Jun, Yang, and Kim, 2004). There are some of the factors to achieve customer satisfaction. However, the key factors especially in online game services which are able to make the customer satisfied with the products and services still under study or unknown (Dick, Wellnitz, and Wolf, 2005). If the key factors have been determined, the provider might be able to gain the competitive advantages which trying to meet the customer expectation. This research is emphasizing the customer satisfaction and loyalty in online game service. Specifically, it is trying to identify the key factors affects online satisfaction and online loyalty in order to guide the online game service provider to improve their service quality to garb more potential customers and retain the existing one. 1.4 Research Objectives The objectives were formed based on the research problem and there are formulated to achieve the main goal of this study which is to examine the factors of affecting the online game satisfaction and loyalty. To determine service quality has a positive impact towards online game satisfaction. To determine transaction costs has a positive impact towards online game satisfaction. To determine technology acceptance factor has a positive impact towards online game satisfaction. To determine experience value has a positive impact towards online game satisfaction. To determine online game satisfaction would have a positive impact on online game loyalty. To determine service quality, transaction cost, technology acceptance factors, and experience value will affect online game satisfaction and eventually online game loyalty. 1.5 Justification of the Study This study is significant for several reasons. First, it can identify the gaps between customer expectation and perception about online game service provider in order to guide them to provide better services. â€Å"It is commonly known that there is a positive relationship between customer loyalty and profitability† (Bowen and Chen, 2001). It is correct once the customer is loyal to the company because they will visit the firm after a purchase and some even recommend to their friends. In the online environment, the online satisfaction also grabs much attention from all of the researchers because to meet a customer expectation is the toughest challenges to the company. Also, it brings the profitability and the survival of the company. Online game service provider should concern about the medium which may influenced the online game satisfaction and online game loyalty. The importance of the study is to keep the online game service improvement in order to achieve the customer satisfaction from time to time. In online environment, the customer can easily compared the alternative than offline customer especially products and service (Shankar et al., 2003). As in online environment, the user is free to search the information to the product that they demand. As well as online game, there is large amount of online game service provider. Therefore, the user can easily compared the features of the game and service quality that provided by the firm. Once the factor has a positive impact on online satisfaction has been determined, the service provider is able to strengthen their weaknesses in order to sustain its market share. Besides, the study is providing guidelines for the service provider to develop their future or long-term plan. The importance of the online game satisfaction will give a direction to the service provider to plan for their future such as strategic plan. It also helps the company to gain competitive advantages in this industry. Commonly, most of the studies regarding to customer satisfaction and loyalty were did for offline environment and only limited for online environment. However, consumers still have some same characteristics in making decision when they would like to purchase a product. As the study has identified the factors affect the customer satisfaction and loyalty, the firms are able to fulfill the users need and wants. This action is trying to meet the customer satisfaction and eventually customer loyalty. Once the customer become loyal, the company may survive in this competitive market. On the other hand, it is also will benefit the user to gain a better service from the online game service provider once they have responded to what they are percept towards the online game service provider that they currently subscribed. Also, the service provider is able to understand what kind of service quality that the users perceived and expected. It will leads to a win-win situation if both of the parties could perform what they are request and give. 1.6 Definition of Important Terms There are some important terms in this study: Online satisfaction, online loyalty, service quality, technology acceptance factors, transaction cost, and experiences value. Online Game Satisfaction Online game satisfaction is customer satisfaction towards online game service. Oliver (1980) defines customer satisfaction as customers evaluation of a product or service with regard to their needs and expectations. It is just in virtual environment perspectives. Online Game Loyalty Online game loyalty is customer loyalty towards online game service. It can be defined as â€Å"a deeply held commitment to rebuy or repatronize a preferred product or service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behaviuor† (Oliver, 1997). Service Quality Parasuraman, et al., (1988) defined service quality as â€Å"a global judgement, or attitude, relating to the superiority of the service†, â€Å"and explicated it as involving evaluations of the outcomes (i.e., what customer actually receives from services) and process of service act (i.e., the manner in which service is delivered)† (Jain, and Gupta, 2004) Technology Acceptance Factors It is also known as technology acceptance model (TAM). Davis (1989) proposed TAM to explain and predict user acceptance of information systems (IS) or information technology (IT). In short, it is explaining â€Å"intention to use a technology† (Schepers and Wetzels, 2007). Transaction Cost It is a theory â€Å"seeks to explain why firms exist and how firm boundaries were determined† (Watjatrakul, 2005). Experience Value It refers to â€Å"shopping efficiency and making good product performance and functionality† (Wu and Liang, 2009). Wu and Liang (2009) added â€Å"its perceptions are based on interaction involving either direct usage or distant appreciation of goods or services†. MMORPG (Massively Multi-Player Online Role-Playing Games) It is known as a virtual environment where it allows multiple geographically distributed users interact with each other at the same time (Papargyris and Poulymenakou, 2005). Besides, it is â€Å"offering an alternative channel for players to communicate, share experiences, socialize, and eventually from virtual communities† (Chee, Zaphiris, and Mahmood, 2007) Online Game Service It is a service provider who provides a server for the online game user to get into the network to interact with each other by playing games. 1.7 Organization of the Report This study will be constructed into five different chapters and there are: Chapter 1 is presenting the introduction and a brief overview of the study. The problems of the study, objectives of the study, significance of the study, and the chapter outline of the research are stated in this chapter. Chapter 2 provides an extensive review of international journals, reports, and articles from online and offline resources. Besides, all the reviews in this chapter are related to the problem of the research that will guide to construct the conceptual foundation and hypothesis of the study. Chapter 3 is describing the methods used in conducting this study in detail. Besides, it also presents the development of the research framework which proposed the relationship between dependent variables and independent variables. Next, the methodology applied is provided, sampling procedures, hypothesis development, data analysis and measurement. Chapter 4 presents the findings and data analysis of the research. It analyses and discussed the data collected in the research using the research instrument which has been developed in chapter 3. The hypothesis will be tested and it is also presents the results of statistical analysis used in this study (t-test, ANOVA, and etc.). Chapter 5 is presenting the conclusion and recommendation. There is also discussion of the studys implications, recommendations, limitations and suggestion for the future research. CHAPTER 2 LITERATURE REVIEW 2.1 Introduction Chapter 1 has discussed and highlighted the important issues which related online game service satisfaction and loyalty. All of these issues that mentioned in the chapter 1 are playing an important role for online game service industry in order to understand the expectation of the user and eventually grab more market share. As a result, to more understanding these issues, an examination of literature on related study were carried out. Generally, literature review provides the theoretical basis for the development of the research framework of this study, which will be discuss in the next chapter Chapter 3. This chapter consists of the following subject areas: (1) Definition of key terms; (2) online game satisfaction; (3) online game loyalty; (4) the factors might affect online satisfaction and loyalty; and (5) summary of literature review. 2.2 Definition of Key Terms 2.2.1 Online Game Service As technologies have became more advance, people have more rely on the technologies and they even expect technology will do all the things for us. Now, most of the people are prefer online rather than offline when they would like to purchase or acknowledge a transaction. In the olden day around 1980 where the technology has a limited growth, people can only play games in offline environment such as TV and handheld game console (Nintendo). In the late 1980s computer game was invented and started popular. Currently, computer games have been transformed into MMORPG (Massively Multi-Player Online Role-Playing Games) which is popular all around the world (Bizymoms.com). Besides, the multi-player online role-playing games also known as Net games (Lo, Wang, and Fang, 2005). Generally, net game can be divided into three which is web games, network games, and online games. The below is the definition of this three types of net games. Table 2.1 Types of Net Games Types Definition Players Web games Games which use a website as an interface. Players must register to play. Network games Games which allow multiple players to use their own PCs to interact via Local Area Networks (LANs) or the internet. Also, many of these closely resemble PC games. Players must purchase and install game software. However, it does not require any fees beyond those for internet connections. Online games Games where require players to connect to the service provider and log in to a server. Player must subscribe to the service provider and select a role to interact with other virtual roles. Source: Lo, 2008 Online game is requiring player to log in to a server in order to play the games. It is means that the players must have internet connection to connect with the service provider. After the player subscribe to the games, the user has to select a role to interact with the rest of the subscribers. The special characteristic of online game is the user can continue to play their role after they have log out for few days. The player can keep continue playing where they have stopped when they have log out last time with the experiences and assets are remain. Online game user must install a client program for internet connection and online game providers to attend the online game (Lo, 2008). This program is inexpensive and sometimes even free. However, there are some need additional fees are paid to the Internet Service Provider (ISP) (Lo, 2008). Commonly, the charges of online game is based on the time where the player spent to playing games and usually it is prepaid which pay before they play the games. Due to the technology advancement and the cheaper price for paying the internet connectivity, consumers are more easily to connect to the internet and playing online game. This golden business opportunity has been attracted lots of firms entered to this industry. Online game service is the company which provides a server for the players in order to play game with others. The company main activities is improve the performance of the online game also maintenance of the server to avoid any shut-down or system down of the server. There are some features have attracted lots of people subscribe to online game and the number of players is keep increasing each day. The online games allow the player to build the role based on their preference, beliefs, goal, or other factors and most of the time the players play it in a team (Klang, 2004). The features in the online games has play an important role in order to gain more subscriber and also some other factors. 2.3 Online Game Loyalty In general, loyalty can be defined as faithful. However, in terms of customer loyalty, it is hard to define (Bowen ad Chen, 2001). Dennis (2003) stated that loyalty is the feeling where a customer has about a brand. This could be explained as the customer has a positive perception about the brand and this brand will always come in the first of the mind of this particular consumer if compared to the other firms which have offer the same service or product. Edvarson, Johnson, Gustafsson and Strandvik (2000) define loyalty as a customers intention to repurchase from the same firm again. On the other hand, loyalty can be measured in three distinctive approaches and there are behavioural measurements, attitudinal measurements, and composite measurements (Bowen and Chen, 2001). Behavioural measurements can be defined as consistent, repetitious purchase behaviuor as an indicator of loyalty. For example, if the customer is often and repeat visit the same firm and purchase the product from the firm can be said as loyalty under the behavioural measurement. Next, attitudinal measurements can be defined as used attitudinal data to reflect the emotional and psychological attachment inherent in loyalty. Lets put it in a situation where a consumer holds a favourable attitude toward an online game service provider, but it is not necessary that consumer will subscribe o this service provider. It might be expensive to the consumer but the consumer will recommend it to others since he holds a favourable attitude towards the service provider (Toh, Hu, and Withiam, 1993). Composite approach is the combination of the first two dimensions and measure loyalty by customers products preferences, propensity of brand-switching, frequency of purchase, recency of purchase and total amount of purchase (Pritchard and Howard, 1997). This approach is valuable tool to understand customer loyalty in several fields such as retailing, upscale hotels and airlines (Pritchard and Howard, 1997). Many of the researchers and also in common think that loyalty is generating positive and measurable financial results (Dennis, 2003). In short, there is a positive relationship between loyalty and profit (Bowen and Chen, 2001). When a company is able to retain 5 percent more of its customers, consequently, profits will increase 25 percent to 125 percent (Reichheld and Sasser, 1990). The impact of loyalty has played an important role for the profit of the company. Based on the reasons mentioned above, online game loyalty (customer loyalty) is the independent variable for this study. On the past studies showed that online customer loyalty is result from customer satisfaction with the e-commerce channel. Also, the online satisfaction has the positive impact on online loyalty is the proved in the context of electronic commerce (Anderson and Srinivasan, 2003; Rodgers, Negash, and Suk, 2005. As proposed by Yang et al. (2009), online loyalty is the final result of their study. For this study, online loyalty is defined as a customers favaourable attitude and commitment towards online game service provider that results in sustaining in the same service provider which based on the study of Yang et al. (2009). Hence, this study is proposing online loyalty as the dependent variable. 2.4 Online Game Satisfaction Satisfaction is the â€Å"overall customer attitude towards a service provider† (Levesque and McDougall, 1996). Oliver (1980) defined customer satisfaction as customers evaluations of a product or service based on their needs and expectations. In the other way, it is an emotional customer anticipates and what they receive (Zineldin, 2000). Customer satisfaction could be the big challenges for all the firms and to satisfy the customer expectation is not an easy job because customers are human being who has a complex mind. As a human being, we have different characteristics and different expectation. Some people might expect a basic service from the service provider but some might expect a high service from the service provider. When people would like to defined something which involve human attitude, it is hard to find a common or universal definition. Gerpott, Rams, and Schindler (2001) proposed satisfaction is based on the customers estimated experience of the extent when the service provider is able to fulfill customers expectations. There are some benefits of customer satisfaction and the major benefits of customer satisfaction is stay loyal longer (Zineldin, 2000; Hansemark and Albinsson, 2004). Besides, Hansemark and Albinsson (2004) stated that satisfied customer are relatively less price sensitive, tend to purchase additional products, and they are relatively hard influenced by the competitors. They proposed many company view customer satisfaction as the crucial to a companys survival and must be satisfied those customer all the time as the company has been promised them. In general, much research no matter in offline environment or online environment, customer satisfaction is not really a new concept and lots of research efforts have been made to understand its antecedents and consequences (Bai, Law, and Wen, 2008). To assess a firms productivity and its marketing performance, the measures of perceived quality, satisfaction and loyalty was being used (Cortina, Elorz, and Villanueva, 2004). Besides, the great number of study of customer satisfaction is because its potential influence on consumer behavioral intention and customer retention (Cronin, Brady, Hult, 2000; Yang et al., 2009). A study of online retailing stated that satisfied customer tend to have higher usage of service and have stronger repurchase intention (Kim, Jin, and Swiney, 2008). Also, this particular customer will often recommend the product or service to their friends than those who are not satisfied (Zeithaml, Berry, and Parasuraman, 1996; Kim et al., 2008). Anderson and Srinivasan (2003) have investigated the impact of satisfaction on loyalty in the context of e-commerce. They concluded that online satisfaction has an impact on online loyalty. However, they also stated that the relationship is just moderated both by consumers individual factors and firms business factors. However, the relationship between online satisfaction and online loyalty also has been found in numerous studies (Yang et al., 2009; Kim et al., 2008; Anderson and Srinivasan, 2003; Rodgers et al., 2005). Hence, this study is going to propose online satisfaction might have a positive effect on online loyalty. 2.4.1 Online game satisfaction as a mediator Online game satisfaction will be the mediator between the online game loyalty and its determinants which are service quality, transaction cost, technology acceptance factor, and experience value. As proposed by Yang et al., 2009, service quality, transaction cost, and experience value will influence on online game satisfaction. However, this study is going to propose another antecedent which is technology acceptance factors which based on the studies of Lin and Sun, 2009; Hsu and Lu, 2003. In this model, online game satisfaction is a function of the four antecedents operating in a situation and helps to explain the influence of the antecedents on online game loyalty. As prior mentioned that online satisfaction has an impact on online loyalty, but, there are some factors might influence online satisfaction before it comes to online loyalty. To achieve the online satisfaction, the online game service providers have to meet the expectation of the consumer in some of the aspects as the four antecedents. Yang et al., 2009 stated that rare research examines the moderating effects of customer satisfaction in an integrated loyalty model and less formally tests that online game satisfaction in the online game service environment. Therefore, in this study, it proposes online game satisfaction as the mediator between the four antecedents and online game loyalty. The below table is to shows that the selected empirical research on determinants of customer satisfaction and loyalty (online). Table 2.2: Selected empirical research on determinants of customer satisfaction and loyalty (online) Independent Variables Key References Context Service Quality (SERVQUAL) Yang et al., (2009) Lin and Sun (2009) Lee and Lin (2005) Santos (2003) Online Game Service Online Shopping Online Shopping e-Service Quality Technology Acceptance Factors Lin and Sun (2009) Hsu and Lu (2003) Online Shopping Online Game Transaction Cost Yang et al., (2009) Liang and Huang (1998) Online Game Service Electronic M Factors of Affecting Online Game Satisfaction Factors of Affecting Online Game Satisfaction CHAPTER ONE INTRODUCTION 1.1 Introduction Online gaming is one of the most popular entertainments among the citizen in this world no matter what ages they are. Due to the advancement in the technologies, it has brought lots of growth in this industry since early of 2000s. This growth has been developed online game market into the core of the world cultural industry (Sang, Yung, Jae, and Kyoung, 2004). Hsu and Lu (2003) stated that online game service has been a highly profitable e-commerce application in recent years and its market value has increasing markedly as well as number of player growth at the same time. Now a day, most of the household will owned at least one personal computer (PC) or a laptop and some even more than that due to the cheaper cost to have a computer. Consequently, the demand for computer has been grown rapidly throughout this recent year. The accessibility of internet also is easier with each passing year and the cheaper price to have broadband internet connectivity (Bizymoms.com). Generally, online game service can be categorized as business-to-consumer or B2C in e-commerce and it is also one the videogame and interactive entertainment industry. A strategic market research and consulting firm which focuses on the interactive entertainment and the emerging video game, online game, interactive entertainment and portable game markets namely, DFC Intelligence has made its forecast for worldwide videogame and interactive entertainment industry each year since year 1995. According to DFC Intelligence forecast on year 2008, the worldwide videogame and interactive entertainment industry revenue to reach USD 57 billion in 2009 with no signs of slowing due to the slumping economies and expensive hardware (Androvich, 2008). The rapid growth in videogame and interactive entertainment industry has been attracted lots of entrepreneur who would like to enter this profitable industry. Based on the report of DFC, PC was the top platform for games in 2007, with online game revenue alone eclipsing USD 7 billion on year 2006 and not including retail sales. The DFC also stated the total PC game revenue is expected to reach USD 19 billion by year 2013 (Androvich, 2008). In Malaysia, there were 15 million subscriber of internet and it was 62.8% out of the total population in 2008 (Internet World Stats, 2008). It was more than half of the citizens of Malaysia have used the internet and this has brought a great opportunity to the entrepreneur who would like to join this industry to be one of the online game service providers to share the profit since the number of internet users was increasing each year. It did not showed that the number of the online game subscribers but there is a business opportunity for the entrepreneur to start-up their business through online. Table 1.1: Internet Usage and Population Growth of Malaysia Year No. of Users Total Population % 2000 3, 700, 000 24, 645, 600 15.0% 2005 10, 040, 000 26, 500, 699 37.9% 2006 11, 016, 000 28, 294, 120 38.9% 2007 13, 528, 200 28, 294, 120 47.8% 2008 15, 868, 000 25, 274, 133 62.8% (Source: http://www.internetworldstats.com/asia/my.htm [2009, November 1]) A study showed that customer satisfaction is the immediate factor affecting the consumer retains loyalty (Cronin, Brady, and Hult, 2000). Most of the studies showed that higher levels of customer satisfaction will lead to customer loyalty. â€Å"A minor change in satisfaction could lead to a substantial change in loyalty increment† (Bowen and Chen, 2001). However, most of these studies were in offline environment. Wind and Rangasamy (2001) found that online environments offer more opportunities for interactive and personalized marketing. Eventually, these opportunities may influences customer satisfaction and customer loyalty in the online environment if compared to the traditional market or offline environment (Shankar, Smith, and Rangaswamy, 2003). The main purpose of this study is to identify the factors affects the customer satisfaction towards online game services and which could lead to customer loyalty. It is including the service quality, transaction cost, experience value, and technology acceptance factor. These four antecedents of online game service satisfaction and loyalty will test associations based on the model that has been constructs. 1.2 Background of the Research In this century, computer might be a need for a person if compared to the olden days where there was a limited growth in technologies. Now, computer seems like a tool which can do everything for you such as searching information, payment, shopping, and so on. This powerful electrical appliance has gain a well response from the citizen of the world. It has many functions can perform through computer and one of the most popular functions of computer is gaming. In the earlier 2000s, most of the games were played offline since the limited internet connectivity and expensive prices to have an internet connectivity. However, this situation has changed due to the technologies advancements and the industry has achieved economic of scale. To more understand what online games is, it is a must to brief its history. The very first online gaming activities were introduced in the late of 1960s and early of 1970s. Later, they started gain more popularity within 1970s to 1980s when dial-up Bulletin Boards became popular and the users started playing online game over them. Clyde and Thomas (2008) stated that the development of arcade game in the 1970s, and video and computer games in the 1980s; digital games have become an influential part of popular culture. The bulletin boards provided a multi-user platform which allowed few users to play at the same time. Now, it has been transformed to MMORPG (Massively Multi-Player Online Role-Playing Games) which is popular all around the world presently (Bizymoms.com). At one time, games were used for educational purpose rather than entertainment (Clyde and Thomas, 2008). However, due to the changed in the perception of game role and the culture, it becomes an entertainment but there is still has some of the game designers and educators used it as educational purposed such as learning typing skills and so on. In the year of 1990s, due to the growth of internet technologies of Flash and Java, it has led to the increasing usage of the internet and the millions of new websites mushrooming across the World Wide Web. When enter to the millennium year, technological giants such as Sony, Microsoft and Ninetendo came out with advanced gaming consoles has changed the features of online gaming completely (Bizymoms.com). The people all around can play a same game with each other virtually at the same time. Currently, online gaming industry is growing each year and it has a great expansion in future. The online game service is one of the most competitive industries among the entire industries. The new and the existing online game service provider are delivering their best services to gain more market share to sustain its organization. To penetrate the market, the firm must meet the customer expectation which may lead to customer satisfaction. Eventually, it may bring customer loyalty. 1.3 Research Problem Customer is the one who contribute the profit to the firm because they are the one who are using the product or services. However, consumers are becoming wisely now a day when they would like to use certain product or services. They will tend to purchase the product only if the product can meet their expectation which might lead to satisfaction. To meet the customer expectation, it is a biggest challenge for the firm. Other than that, the growth of the online game has brought some a major problem to the service provider which is how to retain the existing online game users and will not shifting to other service provider or loyalty to the current provider (Yang, Wu, Wang, 2009). In order to survive in this competitive industry, many practitioners and academicians in this field have focused on how to improve online services to attract potential buyers as well as the current customers (Jun, Yang, and Kim, 2004). There are some of the factors to achieve customer satisfaction. However, the key factors especially in online game services which are able to make the customer satisfied with the products and services still under study or unknown (Dick, Wellnitz, and Wolf, 2005). If the key factors have been determined, the provider might be able to gain the competitive advantages which trying to meet the customer expectation. This research is emphasizing the customer satisfaction and loyalty in online game service. Specifically, it is trying to identify the key factors affects online satisfaction and online loyalty in order to guide the online game service provider to improve their service quality to garb more potential customers and retain the existing one. 1.4 Research Objectives The objectives were formed based on the research problem and there are formulated to achieve the main goal of this study which is to examine the factors of affecting the online game satisfaction and loyalty. To determine service quality has a positive impact towards online game satisfaction. To determine transaction costs has a positive impact towards online game satisfaction. To determine technology acceptance factor has a positive impact towards online game satisfaction. To determine experience value has a positive impact towards online game satisfaction. To determine online game satisfaction would have a positive impact on online game loyalty. To determine service quality, transaction cost, technology acceptance factors, and experience value will affect online game satisfaction and eventually online game loyalty. 1.5 Justification of the Study This study is significant for several reasons. First, it can identify the gaps between customer expectation and perception about online game service provider in order to guide them to provide better services. â€Å"It is commonly known that there is a positive relationship between customer loyalty and profitability† (Bowen and Chen, 2001). It is correct once the customer is loyal to the company because they will visit the firm after a purchase and some even recommend to their friends. In the online environment, the online satisfaction also grabs much attention from all of the researchers because to meet a customer expectation is the toughest challenges to the company. Also, it brings the profitability and the survival of the company. Online game service provider should concern about the medium which may influenced the online game satisfaction and online game loyalty. The importance of the study is to keep the online game service improvement in order to achieve the customer satisfaction from time to time. In online environment, the customer can easily compared the alternative than offline customer especially products and service (Shankar et al., 2003). As in online environment, the user is free to search the information to the product that they demand. As well as online game, there is large amount of online game service provider. Therefore, the user can easily compared the features of the game and service quality that provided by the firm. Once the factor has a positive impact on online satisfaction has been determined, the service provider is able to strengthen their weaknesses in order to sustain its market share. Besides, the study is providing guidelines for the service provider to develop their future or long-term plan. The importance of the online game satisfaction will give a direction to the service provider to plan for their future such as strategic plan. It also helps the company to gain competitive advantages in this industry. Commonly, most of the studies regarding to customer satisfaction and loyalty were did for offline environment and only limited for online environment. However, consumers still have some same characteristics in making decision when they would like to purchase a product. As the study has identified the factors affect the customer satisfaction and loyalty, the firms are able to fulfill the users need and wants. This action is trying to meet the customer satisfaction and eventually customer loyalty. Once the customer become loyal, the company may survive in this competitive market. On the other hand, it is also will benefit the user to gain a better service from the online game service provider once they have responded to what they are percept towards the online game service provider that they currently subscribed. Also, the service provider is able to understand what kind of service quality that the users perceived and expected. It will leads to a win-win situation if both of the parties could perform what they are request and give. 1.6 Definition of Important Terms There are some important terms in this study: Online satisfaction, online loyalty, service quality, technology acceptance factors, transaction cost, and experiences value. Online Game Satisfaction Online game satisfaction is customer satisfaction towards online game service. Oliver (1980) defines customer satisfaction as customers evaluation of a product or service with regard to their needs and expectations. It is just in virtual environment perspectives. Online Game Loyalty Online game loyalty is customer loyalty towards online game service. It can be defined as â€Å"a deeply held commitment to rebuy or repatronize a preferred product or service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behaviuor† (Oliver, 1997). Service Quality Parasuraman, et al., (1988) defined service quality as â€Å"a global judgement, or attitude, relating to the superiority of the service†, â€Å"and explicated it as involving evaluations of the outcomes (i.e., what customer actually receives from services) and process of service act (i.e., the manner in which service is delivered)† (Jain, and Gupta, 2004) Technology Acceptance Factors It is also known as technology acceptance model (TAM). Davis (1989) proposed TAM to explain and predict user acceptance of information systems (IS) or information technology (IT). In short, it is explaining â€Å"intention to use a technology† (Schepers and Wetzels, 2007). Transaction Cost It is a theory â€Å"seeks to explain why firms exist and how firm boundaries were determined† (Watjatrakul, 2005). Experience Value It refers to â€Å"shopping efficiency and making good product performance and functionality† (Wu and Liang, 2009). Wu and Liang (2009) added â€Å"its perceptions are based on interaction involving either direct usage or distant appreciation of goods or services†. MMORPG (Massively Multi-Player Online Role-Playing Games) It is known as a virtual environment where it allows multiple geographically distributed users interact with each other at the same time (Papargyris and Poulymenakou, 2005). Besides, it is â€Å"offering an alternative channel for players to communicate, share experiences, socialize, and eventually from virtual communities† (Chee, Zaphiris, and Mahmood, 2007) Online Game Service It is a service provider who provides a server for the online game user to get into the network to interact with each other by playing games. 1.7 Organization of the Report This study will be constructed into five different chapters and there are: Chapter 1 is presenting the introduction and a brief overview of the study. The problems of the study, objectives of the study, significance of the study, and the chapter outline of the research are stated in this chapter. Chapter 2 provides an extensive review of international journals, reports, and articles from online and offline resources. Besides, all the reviews in this chapter are related to the problem of the research that will guide to construct the conceptual foundation and hypothesis of the study. Chapter 3 is describing the methods used in conducting this study in detail. Besides, it also presents the development of the research framework which proposed the relationship between dependent variables and independent variables. Next, the methodology applied is provided, sampling procedures, hypothesis development, data analysis and measurement. Chapter 4 presents the findings and data analysis of the research. It analyses and discussed the data collected in the research using the research instrument which has been developed in chapter 3. The hypothesis will be tested and it is also presents the results of statistical analysis used in this study (t-test, ANOVA, and etc.). Chapter 5 is presenting the conclusion and recommendation. There is also discussion of the studys implications, recommendations, limitations and suggestion for the future research. CHAPTER 2 LITERATURE REVIEW 2.1 Introduction Chapter 1 has discussed and highlighted the important issues which related online game service satisfaction and loyalty. All of these issues that mentioned in the chapter 1 are playing an important role for online game service industry in order to understand the expectation of the user and eventually grab more market share. As a result, to more understanding these issues, an examination of literature on related study were carried out. Generally, literature review provides the theoretical basis for the development of the research framework of this study, which will be discuss in the next chapter Chapter 3. This chapter consists of the following subject areas: (1) Definition of key terms; (2) online game satisfaction; (3) online game loyalty; (4) the factors might affect online satisfaction and loyalty; and (5) summary of literature review. 2.2 Definition of Key Terms 2.2.1 Online Game Service As technologies have became more advance, people have more rely on the technologies and they even expect technology will do all the things for us. Now, most of the people are prefer online rather than offline when they would like to purchase or acknowledge a transaction. In the olden day around 1980 where the technology has a limited growth, people can only play games in offline environment such as TV and handheld game console (Nintendo). In the late 1980s computer game was invented and started popular. Currently, computer games have been transformed into MMORPG (Massively Multi-Player Online Role-Playing Games) which is popular all around the world (Bizymoms.com). Besides, the multi-player online role-playing games also known as Net games (Lo, Wang, and Fang, 2005). Generally, net game can be divided into three which is web games, network games, and online games. The below is the definition of this three types of net games. Table 2.1 Types of Net Games Types Definition Players Web games Games which use a website as an interface. Players must register to play. Network games Games which allow multiple players to use their own PCs to interact via Local Area Networks (LANs) or the internet. Also, many of these closely resemble PC games. Players must purchase and install game software. However, it does not require any fees beyond those for internet connections. Online games Games where require players to connect to the service provider and log in to a server. Player must subscribe to the service provider and select a role to interact with other virtual roles. Source: Lo, 2008 Online game is requiring player to log in to a server in order to play the games. It is means that the players must have internet connection to connect with the service provider. After the player subscribe to the games, the user has to select a role to interact with the rest of the subscribers. The special characteristic of online game is the user can continue to play their role after they have log out for few days. The player can keep continue playing where they have stopped when they have log out last time with the experiences and assets are remain. Online game user must install a client program for internet connection and online game providers to attend the online game (Lo, 2008). This program is inexpensive and sometimes even free. However, there are some need additional fees are paid to the Internet Service Provider (ISP) (Lo, 2008). Commonly, the charges of online game is based on the time where the player spent to playing games and usually it is prepaid which pay before they play the games. Due to the technology advancement and the cheaper price for paying the internet connectivity, consumers are more easily to connect to the internet and playing online game. This golden business opportunity has been attracted lots of firms entered to this industry. Online game service is the company which provides a server for the players in order to play game with others. The company main activities is improve the performance of the online game also maintenance of the server to avoid any shut-down or system down of the server. There are some features have attracted lots of people subscribe to online game and the number of players is keep increasing each day. The online games allow the player to build the role based on their preference, beliefs, goal, or other factors and most of the time the players play it in a team (Klang, 2004). The features in the online games has play an important role in order to gain more subscriber and also some other factors. 2.3 Online Game Loyalty In general, loyalty can be defined as faithful. However, in terms of customer loyalty, it is hard to define (Bowen ad Chen, 2001). Dennis (2003) stated that loyalty is the feeling where a customer has about a brand. This could be explained as the customer has a positive perception about the brand and this brand will always come in the first of the mind of this particular consumer if compared to the other firms which have offer the same service or product. Edvarson, Johnson, Gustafsson and Strandvik (2000) define loyalty as a customers intention to repurchase from the same firm again. On the other hand, loyalty can be measured in three distinctive approaches and there are behavioural measurements, attitudinal measurements, and composite measurements (Bowen and Chen, 2001). Behavioural measurements can be defined as consistent, repetitious purchase behaviuor as an indicator of loyalty. For example, if the customer is often and repeat visit the same firm and purchase the product from the firm can be said as loyalty under the behavioural measurement. Next, attitudinal measurements can be defined as used attitudinal data to reflect the emotional and psychological attachment inherent in loyalty. Lets put it in a situation where a consumer holds a favourable attitude toward an online game service provider, but it is not necessary that consumer will subscribe o this service provider. It might be expensive to the consumer but the consumer will recommend it to others since he holds a favourable attitude towards the service provider (Toh, Hu, and Withiam, 1993). Composite approach is the combination of the first two dimensions and measure loyalty by customers products preferences, propensity of brand-switching, frequency of purchase, recency of purchase and total amount of purchase (Pritchard and Howard, 1997). This approach is valuable tool to understand customer loyalty in several fields such as retailing, upscale hotels and airlines (Pritchard and Howard, 1997). Many of the researchers and also in common think that loyalty is generating positive and measurable financial results (Dennis, 2003). In short, there is a positive relationship between loyalty and profit (Bowen and Chen, 2001). When a company is able to retain 5 percent more of its customers, consequently, profits will increase 25 percent to 125 percent (Reichheld and Sasser, 1990). The impact of loyalty has played an important role for the profit of the company. Based on the reasons mentioned above, online game loyalty (customer loyalty) is the independent variable for this study. On the past studies showed that online customer loyalty is result from customer satisfaction with the e-commerce channel. Also, the online satisfaction has the positive impact on online loyalty is the proved in the context of electronic commerce (Anderson and Srinivasan, 2003; Rodgers, Negash, and Suk, 2005. As proposed by Yang et al. (2009), online loyalty is the final result of their study. For this study, online loyalty is defined as a customers favaourable attitude and commitment towards online game service provider that results in sustaining in the same service provider which based on the study of Yang et al. (2009). Hence, this study is proposing online loyalty as the dependent variable. 2.4 Online Game Satisfaction Satisfaction is the â€Å"overall customer attitude towards a service provider† (Levesque and McDougall, 1996). Oliver (1980) defined customer satisfaction as customers evaluations of a product or service based on their needs and expectations. In the other way, it is an emotional customer anticipates and what they receive (Zineldin, 2000). Customer satisfaction could be the big challenges for all the firms and to satisfy the customer expectation is not an easy job because customers are human being who has a complex mind. As a human being, we have different characteristics and different expectation. Some people might expect a basic service from the service provider but some might expect a high service from the service provider. When people would like to defined something which involve human attitude, it is hard to find a common or universal definition. Gerpott, Rams, and Schindler (2001) proposed satisfaction is based on the customers estimated experience of the extent when the service provider is able to fulfill customers expectations. There are some benefits of customer satisfaction and the major benefits of customer satisfaction is stay loyal longer (Zineldin, 2000; Hansemark and Albinsson, 2004). Besides, Hansemark and Albinsson (2004) stated that satisfied customer are relatively less price sensitive, tend to purchase additional products, and they are relatively hard influenced by the competitors. They proposed many company view customer satisfaction as the crucial to a companys survival and must be satisfied those customer all the time as the company has been promised them. In general, much research no matter in offline environment or online environment, customer satisfaction is not really a new concept and lots of research efforts have been made to understand its antecedents and consequences (Bai, Law, and Wen, 2008). To assess a firms productivity and its marketing performance, the measures of perceived quality, satisfaction and loyalty was being used (Cortina, Elorz, and Villanueva, 2004). Besides, the great number of study of customer satisfaction is because its potential influence on consumer behavioral intention and customer retention (Cronin, Brady, Hult, 2000; Yang et al., 2009). A study of online retailing stated that satisfied customer tend to have higher usage of service and have stronger repurchase intention (Kim, Jin, and Swiney, 2008). Also, this particular customer will often recommend the product or service to their friends than those who are not satisfied (Zeithaml, Berry, and Parasuraman, 1996; Kim et al., 2008). Anderson and Srinivasan (2003) have investigated the impact of satisfaction on loyalty in the context of e-commerce. They concluded that online satisfaction has an impact on online loyalty. However, they also stated that the relationship is just moderated both by consumers individual factors and firms business factors. However, the relationship between online satisfaction and online loyalty also has been found in numerous studies (Yang et al., 2009; Kim et al., 2008; Anderson and Srinivasan, 2003; Rodgers et al., 2005). Hence, this study is going to propose online satisfaction might have a positive effect on online loyalty. 2.4.1 Online game satisfaction as a mediator Online game satisfaction will be the mediator between the online game loyalty and its determinants which are service quality, transaction cost, technology acceptance factor, and experience value. As proposed by Yang et al., 2009, service quality, transaction cost, and experience value will influence on online game satisfaction. However, this study is going to propose another antecedent which is technology acceptance factors which based on the studies of Lin and Sun, 2009; Hsu and Lu, 2003. In this model, online game satisfaction is a function of the four antecedents operating in a situation and helps to explain the influence of the antecedents on online game loyalty. As prior mentioned that online satisfaction has an impact on online loyalty, but, there are some factors might influence online satisfaction before it comes to online loyalty. To achieve the online satisfaction, the online game service providers have to meet the expectation of the consumer in some of the aspects as the four antecedents. Yang et al., 2009 stated that rare research examines the moderating effects of customer satisfaction in an integrated loyalty model and less formally tests that online game satisfaction in the online game service environment. Therefore, in this study, it proposes online game satisfaction as the mediator between the four antecedents and online game loyalty. The below table is to shows that the selected empirical research on determinants of customer satisfaction and loyalty (online). Table 2.2: Selected empirical research on determinants of customer satisfaction and loyalty (online) Independent Variables Key References Context Service Quality (SERVQUAL) Yang et al., (2009) Lin and Sun (2009) Lee and Lin (2005) Santos (2003) Online Game Service Online Shopping Online Shopping e-Service Quality Technology Acceptance Factors Lin and Sun (2009) Hsu and Lu (2003) Online Shopping Online Game Transaction Cost Yang et al., (2009) Liang and Huang (1998) Online Game Service Electronic M

Online marketing vs Traditional marketing Essay

Traditional marketing have many advertisement methods that have been used in the past. By saying this, we can assume business cards, print ads in magazines or newspapers, posters, radio, television commercials, brochures and billboards. Traditional marketing uses anything as long as is not digital to â€Å"brand† your product or company logo into the minds of people. People sometimes can find you or your business in a network or referrals and they will definitely come to trust you and the work you are doing. And digital marketing also still evolving and will be updating as long as technology continues to make advancements. Digital marketing includes things such as a website, banner ads, social media mentions, or YouTube videos for example. The goal of digital marketing is for people to find you. They might find you or your web-site through an organic search, paid search, social networking or by reading a post or comment that you have published online it can be an ad or an article. Once they become familiar with your brand through your online presence, a trust will develop. With the help of traditional marketing a business can reach a specific target audience that may not have access to the internet and this can be the only way to reach certain people. Certain customers may also prefer a physical printed piece to view. On the other hand, a key digital marketing objective is engaging customers and allowing them to interact with the brand through servicing and  delivery of digital media. This is achieved by designing digital media in such a way that it requires some type of end user action to view or receive the motive behind that media’s creation. 2. CONTENT a) Digital Market When is it used? Some companies have some big goals that they want to achieve, in order to make that happen they try to get customers from everywhere. In this case, digital marketing is going to be very effective for them as they want to advertise in the whole country/continent or world. Using internet or smart phones as a medium to advertise your product will be nothing difficult for a digital marketing strategy. Why using digital marketing: Digital media is so deep that consumers have access to information any time and any place they want it. Forgotten are the days when the messages people got about your products or services were sent by you and having info about only what you wanted them to know. Today, we use digital marketing because it makes our business life easier and faster. We can also consider saying that more effective because people do not use the old method as much as they used to do. How to use digital marketing: Marketers use digital marketing to make more people know about their product. Sending info out about your product trough internet in some famous web-pages such as Facebook, Hotmail, Yahoo or Twitter, makes it easier for people to see it and put some interest if they find it interesting. Just open a web-site and expose or advertise your business and all the product you offer. You must make it look interesting and colourful to attract visitor’s attention so that more people will know about your business. Big companies such as Amazon and a big name as EMIRATES use digital marketing and that helps those companies to be known by a lot of people worldwide. b) Traditional Markets When to use it? How to use it? Direct Mail: When it comes to your direct mail strategy, here’s the thing: Shift your mind-set dramatically. If you’re used to direct mail, I think you’ll find the easiest transition into more friendly people turf in email marketing. It will help promote new products or services in a similar way to direct mail. One piece of content for one person, but allows you to personalize your messaging more easily, and more efficiently, than personalized print marketing. These efficiencies will enable you to reallocate budget to other aspects of your marketing strategy. Most importantly, it’s measurable. Direct mail is often feast or famine, but email marketing is easier to track and improve upon. By analysing open and click through rates, you can more effectively make the necessary adjustments to increase conversion rates. Email Blasts to Purchase Lists: Before you consider ditching your entire email strategy, make sure that a lot of people are already utilising it. According to a study by Pew Research Centre, 90% of people use the internet to send and receive email at least occasionally. Print and Advertising: As people focus more their attention to a second screen, so should you. There are lots of video online that people are watching. Find out where, and look into methods of advertisement there†¦ or better, yet creating your own online videos and showing up your YouTube presence. The same applies to print, people prefer digital subscriptions to the touch and feel of paper. Considering the nature of your product or service, shift your budget away from physical media as much as possible in order to attract a more digital, multi-screen generation of buyers. 3. ADVANTAGES AND DISADVANTAGES OF TRADITIONAL AND DIGITAL MARKETS. a) Advantages of Digital Marketing: Reduced cost: a business can develop its online marketing strategy for very little cost and can potentially replace costly advertising channels such as Yellow Pages, television, radio and magazine. Simple to measure: One can see in real time what is or is not working for your business online and you can adapt very quickly to improve your results unlike in the traditional method. Brand Development: A well utilized website with quality content targeting the needs and adding value to your target audience can provide  significant value and lead generation opportunities. The same can be said for utilising social media channels and personalised email marketing. b) Advantages of Traditional Marketing: New marketing methods do work and can increase a company’s client base, completely replacing traditional marketing with the latest marketing techniques can prove to be dangerous. Traditional methods have a high success rate and that is proven. Internet methods are subject to clients or customers having access to an online medium and being Internet savvy. With traditional marketing, anyone with a newspaper, mail service, television or radio can learn of your business or service. Rather than customers going online to find your business or service (and possibly stumbling on your competitor’s website), you bring your business or service to potential customers with print advertisements and other traditional methods. c) Disadvantages of Traditional Marketing Price: Traditional media buys are usually more expensive than newer forms of advertising. In addition to the cost of buying TV spots, you may need to pay for the development of your commercials. Harder to Target Audience Print and broadcast outlets provide media kits with audience demographics, but once a magazine is mailed, a paper is delivered or an ad is broadcast, you don’t know who actually read, saw or viewed your ad. Less Information The message you can deliver with traditional advertising is much more limited compared to newer forms of communications. If you can get people to your website with the click of a banner ad or link, you have almost unlimited opportunities to deliver page after page of information to customers. With print and broadcast, you must communicate your message within a few square inches of space or in 30 seconds. d) Disadvantages of Digital Marketing Lacking an actual presence: The customer struggles to actually feel or decide to try on the merchandise which may be a restriction for several products. Nevertheless a study of customers of cosmetics services and products suggests that e-mail marketing may be used to interest a customer to search  well for a shop to get one of these solutions or even to consult with sales representatives. Hard to tell if individuals are lying: There’s too much informative data on the World Wide Web today, it’s often difficult to differentiate between quality and garbage. Lots of the garbage is directed at newcomers. Lots of Information: Once more we reach the section of their being truly a large amount of info on the World Wide Web. It might be too much good data as well. There is a lot of competition for a business, this can make a person more troubled than if there have been given lots of garbage. You will possibly not have the ability to tell whom to choose. CONCLUSION Traditional marketing and digital marketing are two different ways of advertisement that have been applied for marketers since the old ages till the current time. Considering the points we have covered above, we come to conclude that each type of marketing is effective depending of the person we are advertising it to. REFFERENCES: 1. http://www.businesszone.co.uk/blogs/robbo75/totally-digital-marketing/10-benefits-digital-marketing-v-traditional-marketing 2. http://digital-marketing-strategy.weebly.com/digital-marketing-vs-traditional-marketing.html 3. http://smallbusiness.chron.com/advantages-disadvantages-traditional-marketing-25573.html Valencia Higuera, n.d

Chiquitas Global Turnaround Essay

Executive Summary This report details several international management problems that Chiquita has been faced with over the past two decades. Many of these problems are to do with the company’s previously poor image when it came to Corporate and Social responsibility. Over the years Chiquita faced many accusations about the conditions workers were faced with at many of their facilities in Latin America and have also had their environmental policies questioned many times in the press. The company has made great strides in recent years in improving their public image with regards to corporate and social responsibility. In particular Chiquita’s commitment to the Better Bananas Project has helped improve their public image along with the continued work they are doing with the South American communities who farm their bananas. The Company also faced a significant legal and regulation of trade problem when the EU’s 1993 integration program saw tariffs on the company imports to Europe gre atly increased and their market share halved almost overnight. This report recommends that instead of going through a costly legal battle to gain re-entry to the European Banana market the company instead focuses on newer emerging markets such as Asia. Introduction Chiquita Brands International is a multinational producer, distributor and marketer of bananas, sourcing many of its produce from developing countries in Latin America. Banana industries have long been tarnished as having unethical business standards forcing companies such as Chiquita to take on ‘Corporate Social Responsibility’ (CSR). CSR has been an essential element for Chiquita to take into consideration for a global turnaround. Vital aspects Chiquita had to consider were commitment to legal, ethical, environmental and social standards. These factors are at the most forefront to resolving CSR issues. Another key issue affecting the organisation was its struggles with access to a free market in the EU. The trade regulations the company faced through quotas and tariffs not only cut the company’s market share by over 50 percent but also negatively affected their ability to compete in the EU. These issues are seen as critical for the firm as it weakened its compet itive edge considerably. Chiquita has taken actions against these issues in the past several years however there are several solutions that could strengthen the company even further so that they remain the worlds leading supplier of bananas. Key Issues Issue #1: Corporate Social Responsibly After analysing the case in full depth it has come to our knowledge that corporate social responsibility (CSR) is a major international business issue affecting Chiquita. CSR is becoming a huge business venture in today’s corporate world. People are becoming more aware of business ethics and practices that don’t coincide with what they agree is morally correct and right. (Anglo American, 2012) Business practices have therefore moved from being profit maximisation focused to having social, cultural, technological and political focal points; or a ‘quadruple bottom line’ approach in order to create a company that is socially correct with a positive image. (LGAM, 2013) In 2003 Chiquita had 19,000 workers in its banana division with over 100 farms across Latin America. These countries are typically developing countries that have struggled with poverty, literacy and access to health care. The banana industry has long been for its support of child labour, unsafe w orking conditions, sexual discrimination and low wages leading to Human rights groups organising campaigns against all banana companies to improve social conditions on their plantations. (Luthans, F., & P. Doh, J. 2012). CSR is stated as â€Å"the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large†. (Business Respects, no date) Therefore Chiquita’s image in the 1990’s of being a company that was â€Å"cold, uncaring, and indifferent, frustrated with mediocre returns, a lack of innovation, and a demoralized workforce† lead to the company becoming considerably unpopular with the public and business partners, which contributed to a decrease in growth rates. For example, in 1998 Chiquita fell a victim of an undercover investigation into dangerous and illegal business practices. The Cincinnati Enquirer, a paper based in Kentucky, accused the company guilty of â€Å"labour, human rights, environmental and political violations† in central America, leaving an â€Å"unsavoury impression of our company† according to Jeff Zalla, current corporate responsibility officer at Chiquita. (Luthans, F., & P. Doh, J. 2012). The centre of the debate about the CSR is the nature and extent of corporate obligations that extend beyond the economic and legal responsibilities of the firm. â€Å"The idea of social responsibilities supposes that the corporation has not only economic and legal obligations, but also certain responsibilities to society which extend beyond these obligations† (McGuire, 1963: 144). The issue is therefore critical for the firm as it is in the business’s long-term self-interest to be socially responsible. If Chiquita wants to have a healthy climate in which to function in the future, it must take actions now to ensure its long-term viability. Ultimately it will benefit the company by â€Å"winning the public† because the public believe firms should take on social responsibility. Issue #2: Tariff Regulations from the EU Another international business issue that had a significant effect on Chiquita’s day to day operations was the European Union’s (EU) decision to impose significantly higher tariffs and quotas on Chiquita’s imports from Latin American countries, in favour of their former colonies in the Caribbean and Africa, beginning in 1993. These new Tariff’s not only cut the company’s market share by over 50 percent but also significantly affected their ability to compete in the EU’s $6.7 Billion USD banana market. (Luthans, & P. Doh, 2012). This was a massive regulation of trade issue for Chiquita as they believed the EU’s decision to grant their former colonies preferential tariff rates was in direct violation of the fair trade principles specified in the WTO. These principles stated that countries must not discriminate against one another in their trade relations. (Luthans, & P. Doh, 2012). One of the key sub-issues that caused this issue for Chi quita was the EU’s 1992 integration program which saw the 12 member nations of the EU do away with their previously separate banana import regime’s and implement one uniform set of tariffs for the whole EU. (Patterson, 2001) This important change in international law saw Chiquita go from only having some quotas to deal with when exporting to the EU to now having to pay an extra 33% tariff than their rival importers from ACP countries. (Patterson, 2001) Although the EU’s new regime was immediately protested by the U.S.A and many Latin American countries this presented another significant legal international management problem for Chiquita. Not only had their market share been halved, drastically cutting into their profits, but they also now faced the prospect of a lengthy and expensive legal battle to be able to once again import their bananas to Europe at a fair rate. (Luthans, & P. Doh, 2012). Strategic options Corporate Social responsibility Chiquita began to initiate corporate social responsibility projects in 1992 but initiated projects aimed at implementing its CSR efforts on a global scale in 1998, (Luthans, & P. Doh, 2012). By 1999 Chiquita had adopted four key values, integrity, respect, opportunity and responsibility, which now guide all business decision-making worldwide, (Luthans, & P. Doh, 2012). In 2000 Chiquita appointed a full time officer responsible for all aspects of Chiquita’s CSR. This implementation as well as the four core values has helped drive a responsible change throughout the entire company, (Chiquita – Social Responsibility Is How We Conduct Business, 2013). It has meant all business decisions have had to be evaluated through the corporate responsibility policies, (Luthans, & P. Doh, 2012). Chiquita’s development of social responsibility efforts has developed significantly by expanding on the businesses code of conduct to outline the responsibilities and practices of the or ganisation, as well as adopting legal agreements to establish business standards, (Luthans, & P. Doh, 2012). Chiquita’s have resolved social conditions on all their plantations by using both these strategies. They expanded their code of conduct in 2000 to include Social Accountability 8000, followed by signing a worker rights agreement in 2001, (Luthans, & P. Doh, 2012). This covered areas such as food safety, labour standards, employee health and safety, environmental protection, and legal compliance, all which have been a long tarnished image in the banana industry. It has been proven to be a very effective tool for measuring and improving business practices to better serve the communities and individual consumers, (Chiquita – Social Responsibility Is How We Conduct Business, 2013). In order to adhere to the organizations core values, Chiquita routinely performs audits, to plan corrective and future actions using the firms core values and code of conduct as decision- making guides. This implementation has contributed significantly to allow Chiquita’s to maintain better CSR practices. An alternative solution for Chiquita is to contribute to local communities in an interactive way. Chiquita’s could set up programs to promote healthy living, particularly that educate children on nutrition and encourage them to lead healthier lives. Chiquita employees could do this by visiting local schools, events or other business firms in the community. To promote healthier living to people they could give out produce to the community to encourage eating healthier foods and give tips to men, women and particularly children about nutrition enforcing the idea of healthy living. Chiquita could also allow schools to visit their farms on an education basis. This gives the opportunity for Chiquita employees to get involved in supporting the community and has the added benefit of portraying a great social responsibility effort for Chiquita. Furthermore on the idea of allowing people to visit their farms, Chiquita could alternatively charge people a small dona tion, where a percentage of the profit could be given to charity or an ongoing event in the community. Tariff Regulations from the EU From the time that the new regime was put in place in 1993, Chiquita, along with the United States, filed complaints to both the General Agreement of Trade and Tariffs (GATT) and the World Trade Organization (WTO) implying that there were violations of free trade from the EU (Doh & Luthans, 2012). There were two complaints made to GATT the first, issued in February 1993, outlined that the new regime (Mark II) was ‘protectionist, discriminatory and restrictive’. While the second; was initiated by five Latin American plaintiffs on the first of July, 1993 (Read, 2005). While the GATT panel ruled that the Mark II regime violated GATT commitments, the EU refused to adapt the ruling made by GATT. In May 1997, the WTO ruled that the EU’s Mark II regime violated WTO obligations under the GATT on trade and services and the agreement on import licensing procedures (Doh & Luthans, 2012). Some of these licensing procedures included: Operator categories, activity functions, ex port certificates and hurricane licenses (Read, 2001). The EU was then required by the WTO, to bring its banana regime compliance by January 1999. This was brought about by the various amounts of import licenses that the EU used in which the WTO panel found that these licenses breached the GATT and the General Agreement on Trade in Services as it prevented competition in the EU (Read, 2005). However, the EU did not comply and so, the United States was allowed to enforce regulatory tariffs onto specific EU imports as a response towards the EU’s failure to implement the WTO rulings as well as the violations of the GATT trade rules (Read, 2005) It was not until April, 2001 that the United States and the EU announced that they had resolved their dispute but reaching an agreement. The agreement took effect on the first of July, 2001 during which the United States suspended retaliatory sanctions and the import of bananas from Latin America returned to the levels it was at before the 1993 regime change (Doh & Luthans, 2012). Final Recommendation An alternate option that Chiquita could have undertaken is that rather than focusing on regaining the European market, they could have looked towards expanding to a new regional market such as Asia. Evidence from the Chiquita’s website shows that they have yet to expand to the Asian market (Chiquita Homepage, 2013). Four out of the top five countries for banana consumption in the world come from Asia; these countries being: India, China, Indonesia and the Philippines (WolframAlpha: Banana Consumption, 2007). Upon entering the Asian market, Chiquita should approach with either a polycentric or regiocentric predisposition. Polycentric and regiocentric predisposition is, respectively; â€Å"a philosophy of management whereby strategic decisions are tailored to suit the cultures of the countries where the multinational corporation operates† and â€Å"the philosophy of management whereby the firm tries to blend its own interests with those of its subsidiaries on a regional basis† (Doh & Luthans, 2012). These two approaches would be good for entering into the Asian market as Asian cultures tend to be high context cultures in which negotiations are slow and ritualistic; whereas for and American-based company such as Chiquita, are used to low context cultures where negotiations are made efficiently as possible (Cavusgil, Freeman, Knight, Ranmal & Risenberger, 2012). These two approaches will allow for Chiquita to become more compatible with the Asian market. Implications of this however, is that the time and money spent on developing and researching strategies on entering the Asian market could cost either the same, or more than the legal costs that Chiquita faced while regaining the rights to exporting to the EU. However, if Chiquita looked towards expanding into the Asian market while dealing with legal issues regarding the EU quotas and everything went well, Chiquita would then be exporting to both Europe and Asia which would bring them more profit than if they were just shipping to one or the other. References Anglo American, (2012), Business Ethics and Corporate Social Responsibility, Retrieved from: http://businesscasestudies.co.uk/anglo-american/business-ethics-and-corporate-social-responsibility/introduction.html#axzz2cMnSxmvE, Accessed 17/9/13 Business Respect, (no date), Corporate Social Responsibility- what does it mean? Retrieved from: http://www.businessrespect.net/definition.php, Accessed 17/9/13 Cavusgil, S.T., Freeman, S., Knight, G., Ranmal, H.G., & Risenberger, J.R. (2012). The Cultural Environment of International Business, International Business (pp.88- 122). Frenchs Forest, Australia: Pearson Australia Chiquita (2013). Chiquita.com – Social Responsibility Is How We Conduct Business. Retrieved from http://www.chiquita.com/The-Chiquita-Difference/Social-Responsibility.aspx, Accessed 13/9/13 Chiquita Homepage. (2013). Retrieved from http://www.chiquita.com/Home.aspx, Accessed 13/9/2013 Doh, J.P., & Luthans, F. (2012). Chiquita’s Global Turnaround (Case Study), International Management: Culture, Strategy and Behaviour. (pp.138- 165). New York, United States of America: McGraw Hill. European Commission (2011). Corporate Social Responsibility. Retrieved from http://ec.europa.eu/enterprise/policies/sustainable-business/corporate-social-responsibility/index_en.htm, Accessed 13/9/13 LGAM, (2013) Quadruple Bottom Line, Retrieved from: http://lgam.wikidot.com/quadruple-bottom-line, accessed 17/9/13 Luthans, F., & P. Doh, J. (2012). International Management (pp. 560-566). (8th ed.). New York, America: McGraw-Hill, Accessed 13/9/13 McGuire, J (1963), The Business Case for Corporate Social Responsibility, retrieved from:

Marx and Moore - 744 Words

The biggest difference between the views of Marx and Davis and Moore resides in the issue of the distribution of resources. While Marx believes that there is an inequality in the distribution of resources between the bourgeoisie and proletariat classes, Davis and Moore theorize that inequality has to happen so that the most important positions are filled by the most qualified. Marx perceives society made up as two classes, the powerful and exploitive higher class known as the bourgeoisie and the industrial wage earners that must earn their living by selling their labor known as the proletariat. The bourgeoisie is known as the private property owners and the proletariat works for the bourgeoisie. There is an inequality between these two†¦show more content†¦Therefore, it can be simplified down to this: the proletariat is always working not for himself but for the bourgeoisie in order to survive, producing products that will not only be taken away from them but decrease their human value as well. If one is to assign a monetary value to a proletariat’s life, for example a hundred dollars, each time the proletariat works, a dollar will be decreased from his total value and in the end he is basically left with nothing. However, since the bourgeoisie is the capitalist, he gains from the products produced by the proletariat and increases his own wealth as well. This inequality is why Marx believes there should be a classless society because the bourgeoisie will continue to exploit the hard working proletariats until they void themselves of any human value. It is unfair to have a minority ruling wealthy class over a majority class of working laborers. However, Davis and Moore disagree with how it is unfair to have a wealthy class ruling over the working class. Davis and Moore believe a society will function properly only if it instills certain individuals to certain positions, such that the more important positions are fulfilled by those that are most c apable. Stratification is thus filling different levels of prestige with individuals that are qualified. Since higher positions require more talent and/or training, the individuals that fill those positions areShow MoreRelatedCapitalism Is A Way Of Organizing An Economy875 Words   |  4 PagesIn the Michael Moore documentary Capitalism a Love Story examples what capitalism is and how it hurt so many citizens. Capitalism is a way of organizing an economy so that the things that are used to make and transport products are owned by individual people and companies rather than by the government. The documentary teaches viewers the impact that big corporations have on americans. At the beginning of the film Moore is showing middle class people get there houses taken from them because ofRead MoreContemporary Theory: Stratification Essay examples1245 Words   |  5 Pagesservices unequally† (Grusky, Ku, and Szelenyi 2008; Tumin 1953). Kingsley Davis and Wilbert Moore (1945) est ablish a main function of stratification; which can be explained by the â€Å"requirement faced by any society of placing and motivating individuals in social structure[s]† (242). Through this, the basis of stratification arises from the fundamental works of the forefathers of sociology, Marx, Weber, and Durkheim. Marx, Weber, and Durkheim each establishes a foundation as â€Å"almost all contemporary stratificationRead MoreCompare and Contrast Marxist and Weberian Theories of Stratification1525 Words   |  7 Pagesand perspectives of both Karl Marx and Max Weber. O’Donnell (1992) defines social stratification as â€Å"the division of a society or group into hierarchically ordered layers. Members of each layer are considered broadly equal but there is inequality between the layers.† Functionalist Durkheim (1858-1917) argued that the reason for the existence of stratification was because it was functional or beneficial to the order of society. According to Browne et al (2009), Karl Marx (1818-83) theorised that classRead MoreSocial Stratification Of A Modern Day Society1224 Words   |  5 Pagessocial stratification is described in various manners by classical theorists Marx, Durkheim, and Weber. While there are certain drawbacks of social inequality theories, the pioneer sociologists have adequately tried to describe the reasons and solutions for social stratification of society. The theorists have changed the knowledge on dynamics of economy and society by giving their different perspective on the topic. Marx considered the economy as the basis for determination of all social structuresRead MoreCompare the Functionalist and Marxist Views on Social Stratification1740 Words   |  7 Pageswas accepted as a part of society since he felt that those in authority used their power to pursue collective goals which derive from society’s central values. The most famous Functionalist theory of stratification has been put forward by (Davis Moore ,1998 in Haralambos Holborn, 2004). They felt that stratification existed in every known human society; they argued that all social systems share certain functional prerequisites which must be met if the system is to survive and operate efficientlyRead MoreCompare the Functionalist and Marxist Views on Social Stratification1734 Words   |  7 Pageswas accepted as a part of society since he felt that those in authority used their power to pursue collective goals which derive from society’s central values. The most famous Functionalist theory of stratification has been put forward by (Davis Moore ,1998 in Haralambos Holborn, 2004). They felt that stratification existed in every known human society; they argued that all social systems share certain functional prerequisites which must be met if the system is to survive and operate efficientlyRead MoreSome Principles Of Stratification By Kingsley Davis And Wilbert E. Moore1672 Words   |  7 PagesIn this paper I will discuss â€Å"Some Principles of Stratification† by Kingsley Davis and Wilbert E. Moore. Their work focuses on stratification, social class, positional rank, and their effects on individuals and society. The second work â€Å"Classes in Capitalism and Pre-Capitalism† by Karl Marx, highlights inequality in society regarding the relationship between the oppressor and the oppressed or the bourgeoisie and the proletariat, and methods of production and their effects on society. Finally, inRead MorePrinciples Of S tratification On Society1547 Words   |  7 PagesThis paper will be discussing â€Å"Some Principles of Stratification† by Kingsley Davis and Wilbert E. Moore, â€Å"Classes in Capitalism and Pre- Capitalism† by Karl Marx, and â€Å"Who Rules America?† by G. William Domhoff. Davis and Moore examine stratification, social class, and positional rank and their effects on individuals and society. Marx examines inequality in society, the relationship between the oppressor and the oppressed or the bourgeoisie and the proletariat, and methods of production and theirRead MoreStructural Functionalist And Marx And Engels s Theory Of Stratification1238 Words   |  5 Pagesmeaning rock layers. Throughout this paper I will touch base on ways structural functionalist and Marx and Engels view stratification in society, different way exploitation take place in capitalist society according to Marx and Engles, the basic elements of exploitation, the forces that keep society f rom rebelling, and a few ways Davis and Moore critique Marx and Engels’ model of stratification. Both Marx and Engels agree that stratification is unnecessary within society. They both believe that stratificationRead MoreThe Utopia Of Communism : Why No Communist Country Has Been Successful1613 Words   |  7 PagesThe Utopia of Communism: Why no Communist Country has been Successful After it was conceived from the mind of Karl Marx, a Communist form of government has appealed to many societies, especially before and during World War II. Some of the strongest countries were built on the principles of Communism, such as the USSR. It came to become an enemy of American values, and challenged the political and civil ideas of that time. However, it quickly dropped out of popularity, and has come to only being