I came across this presentation about the top 10 business models of 2010.
Some of them are quite known by now, like Groupon, Spotify.com, Flattr.com, while others are less known, like PatientsLikeMe.com and paywithatweet.com.
Interesting to see is that quite lot of them actively involve the consumer. For instance at PatientsLikeMe.com people can give feedback about their expierence, and other people can learn about that through the forum, simple as that. Only thing provided by patientslikeme.com is the forum and the network.
Quirky.com offers a co-creation platform, where it pays out all the influencers.
The presentation gives an example for all the business models, and describes the rationale behind the model (how it makes money in the end).
Can you think of the most innovative business models of 2011?
One of the topics discussed in session 2 was “collaborative filtering”. Collaborative filtering is the process of filtering for information that customers help to make the right choice on a website based on previous user experience.
The system has benefits and also drawbacks. Some consumers appreciate the fact that they can order products others recommend, others get the feeling they are getting tracked.
A website that has collaborative filtering integrated is not hard to notice. There are lots of websites that don’t let you notice that they are tracking you. The most used system is the “cookie system”. Simply it means that every website leaves a “cookie” on your computer that tracks all action you do on the web. Also it registers when you are returning to their website.
What most users don’t know is that tracking starts with the startup of Google. Almost 19.1 billion search queries are entered yearly, in the Netherlands only. All of them are getting tracked.
With the combination of Google + and a Gmail account every ad on Google.com and their partner websites is based on the content of the mail, page visits, and clicked ad content.
Below you find an example of a Google tracking partner website link. It is a news article about a falling crane.
I see an advertisement below that has an advertisement for hiring a crane (webpage content based). But I also see an advertisement about hiring an apartment in Rotterdam (search preference based). The system let every user see a different ad, based on their previous internet behavior.
Google + initially started with the idea of having friends recommend other pages so that Google can show the results recommended by your friends at the top of the page. ( collaborative filtering with Google search results ).
Below you find an article about how consumers turn against tracking behavior. It was in the USA Today. The article also shows the tracking behavior Facebook uses. It also tells you how to avoid tracking. The writer concludes that people will accept tracking if it becomes really beneficial instead of annoying.
And if you always thought that you only used Google as an online search engine and I didn’t affect you online consumer behavior. Please watch the following link:
New technologies will give mass customization a big boost. The days that mass customization is restricted to alternating standard designs or add some different colors to an item are long gone. One particular new technology that will definitely be the future is the 3d printing technology. This technology literally gives mass customization another dimension. The opportunities with these 3d printers are enormous for both consumers and companies in various sectors. The technology is still developing, so there is yet more to come. These videos give an impression of the capabilities of 3d printer technology. Pretty cool stuff if you ask me!!!
The video that is posted hereunder deals with the fact that some companies make the attempt to check-out from their website really difficult for their customers.
Take for example Ryan Air: you find a ticket for 30€ from London to Rome, for instance. You think what a great deal! I will book this ticket. However, what the customers, if he is a first time user of Ryan Air, does not know is that the price of the ticket does not take into account insurance, luggage costs, etc. In other words, at the check-out, the customer will end up with a ticket with all the additional extra costs that, for example, will costs him 100€. This means, during the check-out, the consumers has to carefully check all the boxes for the features he needs and uncheck all the boxes for the features he does not need. This demands a lot of effort from customers’ point of view. Personally, I could understand that some customers would switch to a different brand. Especially, due to the fact that the other brand offers the same product, maybe for higher price premium, but offering a user-friendly interface that enables an easy check-in, search and check-out on the websites.
To conclude, companies can create value for their customers when they design the communication plattform as such that it facilitates the flow of information between them and makes the usage of the website as easy as possible.
According to a study by eMarketer in 2012, for the first time in US history, the ad spendings on online advertisement will surpass the spendings on printed ads in magazines and newspapers. Since we had a slight discussion during the UnMe Jeans roleplaying part in class about different media types to use as promotional tool I thought it might be interesting to share some of this study’s findings with you all, my dear companions.
Expected for 2012 $39.5 billion will be spent on online ads, which is an 23,3% increase compared to the spendings in 2011 ($32 billion). This while spendings on printed ads are expected to be $33.8 billion, according to the great analysts over at eMarketer. A +23,3% change in online ad spenditure is quite a lot, especially because the fact that a year before (2010 vs. 2011) the same rate was calculated at +23%. Looking at the upcoming years eMarketer expects the online advertisement spendings to keep growing up to $62 billion in 2016.
Taking a look at the printed ad spendings, the study expects a 10,3% downfall by 2016 compared to 2011. While in 2011 these spendings were $36 billion in 2016 they’re expected to be $32.3 billion. Compared to the online growth, i think this decline isn’t that bad actually. Reading the article i expected much more. Here’s the graph..
In an interesting article Connecting to a sustainable future (written by Ernie Hood, 2003) I read that mass customization could be a key driver of sustainability. Mass customization could generate environmental benefits through the different parts in the process such as production, stocks, transportation and reduced use of materials.
The use of recycled materials in the production makes the product not only environment friendly but could also create a unique product for a specific type of customer. I found a nice example on www.freitag.ch, the company FREITAG mass customizes all kinds of bags produced of used truck sail. The production of the bags is also environment friendly by saving water and energy.
FREITAG is a nice and inspiring example of sustainable development by mass customization.
To buy new products, a lot of consumers do not go to the shop anymore but buy products on the internet. To sell more products, companies offer different approaches on recommendation techniques, because in general, product recommendation leads to more sales.
The first approach is Rule based non compensatory, which can be based on Elimination by aspects (EBA)and lexicographic. Rules based non compensatory on Elimination by aspects is showed through the red lines in the picture of bol.com.
Consumers first make a choice between different products and then make a choice in the product category. In this example consumers first choose books (instead of DVD’s, toys, games etc.) and then which languages, like English, Spanish or French.Rule based non compensatory on lexicographic is showed through the red lines in the other picture. It is the same as elimination by aspects but in this case people can fill in what they think is most important. So if they think a low price is important they get camera’s with low prices.
Drawbacks for non-compensatory technique are that it makes it complex for more options, because consumers has eliminated a lot things to come where the want to be. It’s easy to imitate for other companies and it passively provides information, which mean that inexperienced consumers don’t know what to with it. As example the pixels from the camera, what are 6.5 pixels?
May be some of you are already familiar with this website, but for those who doesn’t know it I think it will be interesting to see. The website is called http://www.decide.com/ and it is designed to help you with big electronics purchases at the right price at the right time.
In other words, Decide.com uses clever prediction algorithms to warn you if the price of any given electrical product is about to drop, increase, stay the same, or if a new model is about to be released. So you’ll know exactly when to buy the camera, laptop, smartphone or plasma TV that you want to have. It’s a great tool, in my opinion, may be according to some not so practical in your decisions, but it is always fun to check future prices. They give a 77% of accuracy in their price predictions, so go and see if they are right ?
Do you think you would trust it and use it for some future electronic purchases ?
Nowadays it has become more important for companies to be in touch with their customers. We already learned that the social media is a perfect channel to interact with your companies customers, you can exchange ideas and get usefull feedback through social media like Facebook and Twitter.
But what are the key factors that determine the succes of a well organized page for a company?
It’s important to create a sufficient profile page, the following link(.pdf) illustrates how to structure and use a Facebook-profile to get your customers involved with your company. It could be usefull for later.
Brand Equity – Brand equity stands for: the added value that a brand gives to a product. In the perspective of a firm toward the consumer, it’s also called consumer-based brand equity
1) Cognitive psychological view of brand equity:
Brand association
Brand awareness
Perceived value
Brand loyalty
2) Informational economic perspective
– Assets based on asymmetrical informational structure of the market
– Credibility: value signaling toward consumer
Product quality – there are three main ways companies can ensure their reputation and investments for high quality
NOT cheating: If companies cheat with information about high and low quality, they will lose return on their brand investments and the total reputation of the company.
Marketing mix elements as signals: most companies uses advertisements and packages to provide quality signals toward the consumers who doesn’t know enough information about a product
Umbrella branding: same name used for many products as a signal that new launched products have the same quality as other products of the brand.
Brand as signal – A brand becomes a signal when the marketing strategies of firms in the past and present are symbolizing the firm. An importance of a signal is also characterized by credibility and clarity.
Clear brand signal : Decrease information costs
Decrease perceived risk by the consumer
Increase the consumer utility
Brand community – A community formed on the basis of attachment to a product or marquee. Recent developments in marketing and in research in consumer behavior result in stressing the connection between brand, individual identity and culture.
Community Characteristics:
Consciousness of Kind – the existence of a common enemy against whom to unite makes this brand community particularly strong.
Rituals and Traditions – sharing brand stories and celebrating the history of the brand
Moral Responsibility – include looking out for and helping other members in their consumption of the brand as well as retaining old members and integrate new ones
JuJups is a co-creation platform that enables designers and non-designers to enjoy design and create things that they like. In JuJups they allow their customers to create their own designs by mish mashing. Some basic designs can be mish mashed by customers according to their wish. The firm delegates the creation of the products to customers. Or as they put it:
“JuJups lets you create your own designs – they make it easy and fun. You don’t have to be a designer to create what you want. You can now enjoy creating and sharing your own designs based on stuff created by designers.”
Because customers have different needs and wants and these needs and wants can change over time. This information is sticky. In the case of the customers of jujups it’s very difficult to get insight what the customer really want without delegating the idea creation to them. Jujups saves on costly consumers surveys and customers get the things they really want. By trial and error customers discover what they really want and even get more insight. They invest money and effort and in reward they get products they really want at the moment. They even can go beyond that. Jujups gives their customers a platform where they can display and sell their creations and get a percentage of the units sold. The firm profits by saving money on high cost customer surveys. They do have more costs because of the flexible production.
But how can a company involve their customers in the product development process if the products that company produces can’t particular be customized? This is the case for Proctor & Gamble (P&G). P&G has been credited for having the first written plan for Quality Function Deployment (QFD) process already in the sixties. Which they called: “ 12 steps to test market” process. QFD is a method to transform user demands into design quality, to deploy the functions forming quality, and to deploy methods for achieving the design quality into subsystems and component parts, and ultimately to specific elements of the manufacturing process. Through test market tests P&G got insights on what consumers wanted. Lately there has been a global movement towards customization. P&G however produces and sells products that have some restrictions with respect to customization. That’s why P&G came with their version of open innovation. They provide a platform for everybody that comes with a solution for the problems they encounter. They invite individuals, companies, independent entrepreneurs, the Government, laboratories, research institutes, financial institutions etc. On the P&G’s individual brands websites there is a reference to http://www.pgconnectdevelop.com/ . On this websites people can explore and get involved with open innovation process.
Consumer Value Creation 