The Role of Emotional Marketing and eWOM in Sustaining Competitive Advantage in the Digital Era: A Dynamic Capabilities-Based Strategic Framework

Introduction

Historically, marketers have approached services through a product marketing lens, balancing the well-known 4 P's of the marketing mix: Product, Price, Promotion, and Place (Yudelson, 1999). The optimal combination of these remains crucial. Due to the nature of services in enterprises, however, the additional P's of "People," "Process," and "Physical Evidence" take on a greater significance (Saidani et al., 2019). Due to the delicate nature of services, a unique approach is required during the strategic stage of service offering development. Service marketing aims to establish a bond between a customer and a service provider, but the challenge is reaching a large number of customers, especially in the internet age. This becomes more complex with the rising users and usage of the internet (Alshammari & Singh, 2018; Pandey et al., 2017). Therefore, a service provider should be clear about the changing customer preferences in the digital era and the rationale for the services' relevance (Singh & Thirumoorthi, 2019). It should also emphasize the factors enabling customer satisfaction (Singh & Grover, 2011; Singh & Agarwal, 2011), trust, and confidence (Singh, 2018a; Singh, 2018b; Singh, 2018c) following the use of its digital services (Singh & Alshammari, 2021), such as social media services (Singh, 2013; Singh et al., 2015).

All business units develop, evaluate, and launch new services to offer the proper solutions to the desired target consumers for the appropriate purposes. Numerous well-known companies in the economy have experimented with service marketing to entice customers. Many businesses find it easier to establish a business in today's environment than to attract and retain customers (White et al., 2007). Organizations increasingly realize that establishing an emotional bond with customers can help them survive and succeed, even in saturated markets (Barrena & Sánchez, 2009). Emotional bonding with customers is critical because every business wants to grow its customer base and gain loyal customers. Numerous companies have recognized the strong correlation between the emotional quotient of their customers and the product/service they use. Thus, if companies adequately address their customers' emotions, they may gain more loyal customers. This new approach to service marketing that businesses have adopted is dubbed emotional marketing. Emotional marketing is a paradigm change in marketing in which the management (design, maintenance, and assessment) of the emotional connection between the enterprise and the customer (or other participants) becomes the primary exchange-rousing characteristic (Khuong & Tram, 2015).

In the internet age, increased competition requires marketers to recognize potential emotional incidents associated with their market submissions (Serra-Cantallops et al., 2018). As a result, electronic word-of-mouth (eWOM) has emerged as a novel mode of interaction in the digital age, with customers using it to express their emotions about their interactions with businesses. Historically, word-of-mouth (WOM) was understood as an interactive oral contact between associates that was not commercial in nature (Huete-Alcocer, 2017) and is the earliest offline product and service promotion. This traditional WOM communication has evolved into eWOM. eWOM is any positive or negative assertion regarding a product or business made accessible to a large number of persons or organizations and propagated via the web (Huete-Alcocer, 2017). The concept of eWOM is inextricably linked to the inclusion of user-generated content (UGC) in the mix of digital advertising (Park & Kim, 2008). Indeed, when online community members share content, UGC transforms into e-WOM. eWOM is comprised of blogs, internet reviews, posts on social media, and communications published to online communities. Along with conveying messages, eWOM is critical in conveying customer emotions about products/services in the digital era (Ngarmwongnoi et al., 2020).

Digitization and the proliferation of data-driven technologies have fundamentally altered today's business environments, necessitating transformation and change (Freitag & Brettel, 2017). According to information systems research, successful digital transformation requires organizations to have adequate management of dynamic capabilities (Freitag & Brettel, 2017). Dynamic capabilities, based on managerial capabilities and organizational routines, refer to a firm's capability to incorporate, construct and transform interior competencies in response to variations in the industry environment (Teece et al., 1997, Teece, 2007). Thus, dynamic capabilities are an organizational necessity in a rapidly changing environment and are required for organizational performance (Jantunen et al., 2018) and competitiveness.

In the rapidly evolving current digital environment, we expect organizations’ dynamic capabilities to transform emotional marketing in an eWOM environment and help them sustain their competitive advantage. Accordingly, this article aims to develop a dynamic capabilities-based strategic framework that illustrates the role of emotional marketing and eWOM in organizations' ability to sustain their competitive advantage in the digital era.

Emotional Marketing

Emotional marketing emphasizes the significance of the emotive connection between the business and the customer, who is influenced by the system of contemporary consumers' distinctive values and needs, resulting in the formation of a novel symbol utilization culture. Consumers' emotional response to advertising can be a powerful driving force of purchasing behavior and can significantly influence after-experience mentality and remembrance (Khuong & Tram, 2015). Thus, emotional marketing can be seen as a paradigm change in marketing that places a premium on the emotive development of relationships between the company and the consumer as the primary motivator for consumers' buying, consumption, and exchange decisions (Khuong & Tram, 2015).

Customers respond quickly to emotional marketing as it aims to win their hearts. An emotional customer is perceived to be more responsive than a rational customer. A customer's emotions and needs influence his or her decision to purchase a particular product/service. Thus, businesses should pay close attention to and invest in emotional marketing (Khuong & Tram, 2015). Emotional marketing provides marketers with a competitive advantage by developing meaningful relationships with their customers (Julian, 2008). Emotional connection is an effective metric for determining how customers feel about a company's brand and is the critical consumer factor for increasing their’ possession, holding, and repeat purchases. So, there is a trend among businesses today to present advertisements to elicit emotional bonding in customers' hearts (Tomsett, 2020).

Emotional marketing ultimately results in an association with the advertised brands. The customer's actual purchase can determine the success of emotional marketing. Once a business can keep its promise, it can establish a long-term presence in the customer's heart. In other words, a business can effectively freeze customers by associating them with specific emotions. When marketing managers consider ways to increase brand recall, both in terms of brand awareness and purchase decision-making, they rely on the meaning and style of emotional marketing (Khuong & Tram, 2015). Some marketers have been incorporating an emotional component into their service marketing strategies for an extended period to win over customers' hearts. Most marketers understand that emotional marketing is a critical tool for attracting new customers and converting them into loyal ones.

Another factor contributing to the need for emotional marketing is the company's philosophy. There is an urgent need to align the company's philosophy with the customer's. Understanding the customer's purchasing philosophy is critical for facilitating such coordination (Pauwels, 2004). For example, a customer may purchase a pension plan for financial security and ensure a comfortable standard of living in the future. Nonetheless, customers cannot be categorized as emotional bundles or as objective and rational analytical machines. Research on customer purchase behavior suggests that 80% of purchase decisions are emotional, while 20% are rational (Szymkowiak et al., 2020). Indeed, most purchase decisions are influenced by the customer's emotions, and as a result, the customer's logical mind is used to justify their emotional decisions. Rationality serves only to generate interest; emotion is the ultimate motivator. As a result, marketers embrace the concept of emotional marketing, as it aids in capturing the share of the wallet. When emotional marketing is used strategically, it can mitigate the impact of rational factors and prevent competitors from stealing a business's customers (Hindarsah et al., 2021).

A company can achieve greater success if it can select the appropriate emotion properly and for the appropriate customer to increase revenue. There are numerous emotions that a business can use to pique a customer's interest. However, companies must consider combining relevant emotions and make promises to impact the customer's heart and mind positively. Businesses should bear in mind that eliciting strong positive emotions is helpful to increase loyalty intentions, whereas avoiding strong negative emotions can effectively prevent the erosion of customer loyalty (Serra-Cantallops et al., 2018). In addition, positive emotional experiences improve consumer gratification and a company's reputation and lead to favorable eWOM (Serra-Cantallops et al., 2018).

Electronic Word of Mouth

WOM has evolved into eWOM in the internet age (Alhamad & Singh, 2021a; Singh & Alhamad, 2021). Both WOM and eWOM rely on credible information or referrals from familiar or third-party sources that may influence a person's decision-making or purchase intentions. The primary distinctions between WOM and eWOM are the reachability of the reviews' (the total number of individuals that can be affected) and the pace of communication. Consumers prefer eWOM to traditional WOM in today's internet age due to its trustworthiness, pace, accessibility, fairness, and credibility (Sun et al., 2006; Akehurst, 2008; Flanagin & Metzger, 2013).

Marketers intentionally generate eWOM through a variety of techniques. They attempt to incorporate themselves into the interaction process and attract customers by employing UGC to achieve advertising objectives (Park & Kim, 2008). This is because eWOM has a sizable influence on customer purchasing decisions and influences their satisfaction (Alhamad & Singh, 2021b). These are referred to as eWOM Advertising techniques. eWOM advertising is a term that refers to brands inviting consumers to create product reviews (positive or negative) in order to aid other customers in making purchasing choices.

Exposure to WOM and eWOM messages has been shown to increase consumers' purchasing interest and brand awareness (Serra-Cantallops et al., 2018). eWOM is critical for increasing consumer awareness, attracting traffic, and converting browsers into buyers (Standing et al., 2016). At the same time, it is commonly understood that consumer fulfillment results in positive WOM; it is even more critical to generating positive eWOM (Serra-Cantallops et al., 2018). eWOM is more effective compared to WOM because of its velocity, expediency, depth, and breadth of reach, and lack of face-to-face pressure (Sun et al., 2006). This scope of eWOM's reach can have a more significant impact on a business's performance and competitiveness (Serra-Cantallops et al., 2018).

Theoretical Underpinnings

Given that this research aims to design a strategic framework for organizations to use emotional marketing and eWOM to boost their competitiveness, we begin by examining the most widely accepted theory of competitive advantage, the resource-based view. This is because the strategic management literature indicates that the resource-based perspective is the most frequently used framework for comprehending competitive advantage (Andersén, 2010).

Resource-Based View (RBV)

The resource-based perspective of competitive advantage, which originated in the literature on strategic planning, explains the complexities of innovation adoption, diffusion, and sustainable advantage in competitive environments (Holdford, 2018). According to the resource-based view, sustainable competitive advantage is derived from an organization’s precious, scarce, imperfectly unequaled, and non-replaceable resources and competencies (Barney, 1991; Grant, 1991). These resources and capabilities encompass a business's management capabilities, processes, practices, and the information and expertise it manages (Barney et al., 2001). According to RBV, firms are heterogeneous because they have heterogeneous resources. Diverse resources enable firms to pursue various strategies to maintain competitiveness (Desarbo et al., 2007; Ramachandran, 2010).

The dynamic capabilities perspective broadens the resource-based perspective of businesses. It reflects their willingness to deliberately adjust their resource base to improve their level of environmental fitness and confirm their long-term competitiveness (Schilke et al., 2018). In comparison to the resource-based perspective of the organization, which largely ignores the effect of the external climate, dynamic capabilities place a premium on activities ranging from gradual changes to dramatic reorganizations and changes in response to changing circumstances or needs (Ambrosini et al., 2009). Therefore, we next examine the dynamic capabilities theory to develop the strategic framework for our study.

Dynamic Capabilities Theory

Dynamic capabilities are organization’s capability to amalgamate internal and external capabilities to adapt to evolving environments, emphasizing their importance in organizational development (Teece et al., 1997). According to dynamic capability theory, businesses possess both static and dynamic capabilities. Ordinary capabilities refer to performing managerial, organizational, and governance functions required to complete tasks. Dynamic capabilities refer to higher-level operations that cause an organization's routine operations to be redirected into high-payoff efforts (Teece et al., 2016). By sensing crises, seizing opportunities, and transforming capabilities, dynamic capabilities enable organizations to evolve and adjust to changes in their environment (Teece, 2007).

The dynamic capabilities assist the company in adhering to its business strategy and remaining competitive (Vial, 2019; Correia et al., 2020). Dynamic capabilities enable organizations to create new products, form alliances, and make timely strategic decisions in changing environmental conditions (Eisenhardt & Martin, 2000; Barreto, 2009; Güttel et al., 2018). The literature emphasizes the importance of dynamic capabilities to navigate a firm’s business climate through continuous transition and disruption. As a result, organizations' capacity to develop capabilities that allow repeatable, continual adaptation due to such quick change is a significant concern. Dynamic capabilities may help explain how firms gain a competitive edge in a turbulent business environment (Vial, 2019). When a business lacks dynamic capabilities, it may generate competitive returns for a time, but this type of return is unlikely to last due to constant external changes (Teece, 2007). As a result, we can view sustainable competitive advantage more objectively through the lens of dynamic capabilities theory, i.e., by examining organizations' sense, seize, and transform capabilities (Kabongo & Boiral, 2017; Karman & Savanevičienė, 2020).

Dynamic capabilities can be differentiated from common or operational capabilities (Ambrosini & Bowman, 2009; Wang & Ahmed, 2007). Prior research has shown that organizations with a high degree of dynamic capability perform well (Nieves et al., 2015). Tseng & Lee (2014) discovered that dynamic capabilities improve an organization's performance and provide a competitive edge. Chien & Tsai (2012) found a positive relationship among dynamic capabilities and firm results.

According to Huy & Zott (2018), organizations with dynamic capabilities achieve timing, cost, and learning efficiencies. Dynamic capabilities enable organizations to actuate resources, overhaul status, and even safeguard their survival (Leonidou et al., 2015). Dynamic capabilities result in high-performing organizations and improve firm performance. Dynamic capabilities enable organizations to transform their existing organizational resources, resulting in superior performance than competitors (Pattanasing et al., 2019).

The above discussion shows that the dynamic capabilities theory provides a useful framework for describing how and why organizations adapt and transform their capabilities to remain competitive in a changing environment. Thus, a strategic lens based on dynamic capability theory's sense, seize, and transform capabilities is an appropriate framework for viewing this study.

Strategic Framework

The strategic framework should meet the customers’ expectations in the digital era (Singh, 2017; Singh, 2019). According to Dwivedi et al. (2020), firms must quickly make essential decisions to develop a sense and respond capabilities to remain competitive. Therefore, based on the dynamic capabilities’ theory, we posit the following strategic framework:

• Sense – Emotional marketing acts as sense capability in the current age. Emotional marketing enables businesses to develop an emotional relationship with customers, win their hearts, and foster loyalty. In addition, this sensing capability results in the generation of positive WOM and eWOM for the business. This enables businesses to influence consumer decision-making to enhance brand awareness and increase sales.
• Seize – eWOM acts as a seize capability in the digital era. Businesses can capitalize on the eWOM generated by sense capabilities and improve their future traffic by developing analytic capabilities.
• Transform – Dynamic capabilities of organizations act as a transformational capability. Dynamic capabilities enable organizations to adapt their business strategies to changing consumer purchasing patterns and deal with the rapid change inherent in the digital age to remain competitive. Accordingly, we posit those dynamic capabilities positively moderate the relationship between emotional marketing and sustainable competitiveness and eWOM and sustainable competitiveness.

In a nutshell, sensing (emotional marketing), seizing (eWOM), and transforming (dynamic capabilities) enable organizations to design capabilities that result in a sustainable competitive advantage in the digital age. Figure 1 illustrates the strategic framework developed because of this study for twenty-first-century organizations. We call it the EM-WOM-DC strategic framework of sustainable competitive advantage.

Figure 1. EM-WOM-DC Strategic Framework of Sustainable Competitive Advantage.

The EM-WOM-DC framework provides two significant propositions:

1. P1: Organization’s dynamic capabilities complement the relationship between emotional marketing and its sustainable competitive advantage.
2. P2: Organization’s dynamic capabilities complement the relationship among eWOM and its sustainable competitive advantage.

In the future, we anticipate that the EM-WOM-DC framework will become institutionalized (Singh & Alshammari, 2020) in twenty-first-century organizations and guide them as they navigate digital change.

Conclusions

This study offers managerial implications that could prove extremely beneficial to the current digital era businesses. The study aimed to examine the role of emotional marketing and eWOM in influencing an organization’s sustainable competitive advantage in conjunction with its dynamic capabilities. We believe that firms capable of sensing emotions, seizing eWOM opportunities, and dynamically transforming have a good chance of overcoming the challenges of the digital era and sustaining their competitive advantage. This current study's EM-WOM-DC framework generates two significant propositions that can be confirmed through further empirical research. First, the current study suggests that the dynamic capabilities of firms bolster the relationship between emotional marketing and sustainable competitiveness. Second, the dynamic capabilities of firms strengthen the relationship between eWOM and sustainable competitiveness. Additionally, we expect that the proposed EM-WOM-DC framework will become institutionalized in twenty-first-century organizations in the digital era and guide them as they navigate digital transformation.