What the consumer wants, the consumer gets.

When a company’s vision is to offer “Earth’s biggest selection and to be Earth’s most customer-centric company”, they’ve got some big shoes to fill. Due to the popularity of the term “customer-centric”, everybody’s been claiming they’re dedicated on the customer, however, are their real-time activities supporting this claim?

Amazon’s Vice President of External Payments, Patrick Gauthier is not in agreement with the statement that everybody is truly focused on the customer, as too many are obsessed by the industry lingo, too fixated on generating the next big cash cow, and repeatedly overlooking who’s voice it is that they are representing, namely that of the consumer and the merchant. Payments and commerce leaders should analyze the situation with a customer-first mentality in this industry in order to enter into true innovation.

“Start with the customer and work backwards.”

Most companies claim they begin their processes with the consumer in mind, however in amidst of the translation, the lingo which is used in the industry – that of the insiders, in essence keeps innovation away from the vision, as the true message appearing in the lingo of the consumer is lost in translation. Gauthier perspective, also shared by payments, commerce and retail experts at Innovation Project 2015, proposes a backward motion of customer-first mentality in seeking what a business model needs to solve. For example, every Amazon product manager is known to write and internal press release, which focuses on the problem of the customer and the current solution they are offering and how this offering fails. Following this, the managers write down every single benefit that the new product will provide to this problem, and will not stop until the benefits will be of interest for the customer. They stay that the money will follow once the company focuses on what the customer truly want. In this new era, having the perspective of a customer-focused company is surpassing having a financial perspective. Starting with the consumer in the back of your mind and going backwards, thus focusing on what a company believes the business model is intended to solve, as this will deliver diverse methods of serving those customer needs. Innovation can occur quickly, but more importantly, instead of focusing on the speeds, it is more significant that innovation happens right as well as for the right target audience.

How to approach this according to Gauthier:

  1. Being part of more dialogues with outsiders
  2. Connecting to the merchant and consumer
  3. Having more conversations that are focused on actual consumer needs
  4. Conversing less regarding payments
  5. Conversing more about the commerce experience

Drop the industry jargon

When the industry jargon is dropped, a focus can be given to consumer identity and true innovation, and in turn enables a full customer experience. Companies can only provide this by forming an open setting of transparency, enabled through conversations. Listen and acknowledge who the consumer is, and it will answers how the consumer prefers to pay will come to the surface. This in turn has the potential to open gateways to a richer commerce experience for the company as well as the customer.


Botch the customer and the merchants in essence want be part of a commerce experience, in contrast to a payment experience. Gauthier states that companies need to focus less on payments and more on the individuals that are making the transactions. He discusses identity and economics in the same sentence, as he believes it is pivotal.

“Who I am [as a consumer] is pretty key to what I’m going to do. Today, the economics is very centered around how I pay. And maybe at some point the economics should be centered, or certainly migrated, not with just so much just how I pay, but who I am. The who I am, and the willingness to share who I am — what I choose to share — should potentially change the economics of a transaction.”

– Patrick Gauthier, Amazon’s VP of External Payments


Both identity and payment experience are part of the commerce experience. Yet, from the merchants’ side, the occurring conversations focus on the payments side. The downside of this occurrence is that it diminishes the key role of the retail and commerce experience during the transaction stage, loosing out on the important achieving merchant-centric experience.

The industry is battling with conflicts due to having opposing viewpoints, on how payments and commerce ought to be engaged into the consumer experience. This tension of sort is a result of commerce innovation is completely being overtaken by payments innovation, similar to the example of a current successful business model Uber.

“The [retail] industry needs to embrace customer-centricity in order to really get to what it can be in the next 10 years.”

– Patrick Gauthier, Amazon’s VP of External Payments

Many views, and opinions from payments-, retail- and commerce sectors as well as managers with innovative perspectives are opening up discussion points. What is essentially needed though is a dialogue regarding what and who these individuals are actually chatting about.


Pymts (2015) “Amazon’s customer-centric Focus.” pymnts.com. 24 Mar. 2015. Web. <http://www.pymnts.com/in-depth/2015/whos-talking-about-innovation/#.VT0yIxOUee4&gt;.

McAllister, Ian. (2012) “What Is Amazon’s Approach to Product Development and Product Management?” Quora.com, 18 May 2012. Web. <http://www.quora.com/What-is-Amazons-approach-to-product-development-and-product-management&gt;.

Bulygo, Z. “Becoming a Customer Centric Company” 9 June 2014. Web. <https://blog.kissmetrics.com/customer-centric-company&gt;

Header image: http://pretiumsolutions.com/wp-content/uploads/2012/02/Customer-Experience-Management-Customer-Centric-Organization-copy.jpg

Infographics: Web. <https://blog.kissmetrics.com/wp-content/uploads/2014/06/how-to-survive-and-thrive-in-the-customer-revolution-exacttarget-infographic.png&gt;

Bringing us together or driving us apart

Nowadays it is common for companies to ask your customers for advice via their online platform, and I am curious if this is the best way to engage your customers. Currently I work at a marketing and communications department, which is at the moment very active and involved in social media. One of my main activities is to manage the social media of our brand, and the last couple of months the focus lies on creating content on the different social media websites to inspire the audience. The question that popped into my mind is if it would not be a better idea to focus on engaging the audience and thus make it a two-way direction communication platform? To summarize our company is still doing it the old way, inviting customers for focus-group meetings in order to collect suggestions and ideas. Isn’t it a much easier and more efficient way to ask for input from customers via your Facebook and Twitter account?

Liu et al (2011) investigated the effect of soliciting consumer input on customers’ tendency to transact with an organization. To better serve the needs of their customers, nowadays more and more businesses are welcoming comments and suggestions from their customers and are trying to build a relationship with them. In the paper the authors take a closer look at relationships and the closeness degree.

Clark et al. (1993) theoretically distinguish exchange and communal relationship. Examples of the latter are friendships, which can be defined as a type of relationship in which one feels a special sense of responsibility for the other’s welfare as if it were it’s own. Exchange relationships can be defined as the interaction in which benefits are exchanged with the expectations of receiving something in return. An example of an exchange relationship is the relationship between a store owner and a customer. Liu et al. (2011) assume in reality relationships are a mix of both.

Besides the concepts of exchange and communal relationships, closeness is a closely related to customer relationship and often implicitly refers to the communal aspect of a relationship and the degree of bonding. The closer the relationship, the bigger the chance the consumer will embrace the business (Liu et al., 2011).

The findings of Liu et al. (2011) led to the conclusion that asking consumers for advice improves the relationship with the accompanied business and tendency to transact. Another conclusion is a decrease in perceived relationship distance between consumers and businesses is an effect of spending time or thinking of spending time with a brand. This in turn leads to changes in one’s engagement with the business.

Concluding, it is a much easier method to ask for input from customers via online platforms and to engage with them, but do watch out for achieving exactly the opposite. As Liu et al. (2011) conclude, soliciting advice tends to have an intimacy effect whereby the customers will feel closer to your business. Soliciting expectations from customers tends to have a contrary effect, as it will drive your customers away from your business. So be careful with what you ask from your customers.

Clark, M.S. & Mills, J. (1993), “The Difference between Communal and Ex- change Relationships: What It Is and Is Not,” Personality and Social Psychology Bulletin, 19 (6), 684–91.

Liu, W. & Gal, D. (2011), “Bringing Us Together or Driving Us Apart: The Effect of Soliciting Consumer Input on Consumers’ Propensity to Transact with an Organization”, Journal of Consumer Research, 38(2), 242-259

Android vs Apple 2.0?

When browsing the internet you normally encounter dozens of news items, blogs and other content. It is no exception that a catchy title usually makes you decide to click through and see what’s out there. And of course when the item ‘Android takes a piss on Apple on Google Maps. Seriously’ popped up on my Facebook news feed I decided to take a look at it.

If you would have searched on Google Maps on the 24th of April for certain coordinates just south of Rawalpindi, Pakistan, a giant Android could be seen urinating on the Apple logo. First thought was that it was an Android developer fuelling the old rivalry again, although later Google released that it was user-created content which was slipped through the approval filter. Because of this item I decided to dig into Google Map Maker, the tool that allows you to edit Maps, which was unknown to me since I had read the blog.

The official goal of Google Map Maker is to share information about places in user’s neighbourhood, like companies or university campuses. Places which are inaccessible with Google street view cars can thereby be edited by Map Maker users. It is actually even more elaborate, because users are also able to add roads, railways or other places and add new languages. Once an edit is sent to Google, it can be reviewed by other users by giving a thumb up or thumb down. This score is considered by the Google algorithm to accept or reject the edit. As we can see with this case users can, with enough peer user support, fool the algorithm.

If we look into the business model of Map Maker more closely we can link it to the first phase of consumer co-creation, namely recommend and develop products. Instead of only browsing through Google Maps to find by Google pre-defined places users can now develop new elements and recommend them to each other. The wisdom of the crowd is the most prominent reason for delegating (crowdsourcing) products. Best known comparable platform that uses this is Wikipedia. At Wikipedia every edit is implemented immediately and can be removed by higher ranked users if they incorrect, offensive or silly.


During our course we learend that controlling quality of submissions can be done by having specific terms and conditions, clear guidelines peer evaluation of content and punishment or public shaming (Tsekouras, 2015). However, the first thing that teenagers do when joining Wikipedia is to make a page about themselves or another try to edit a celebrity’s page. We now have seen that this can also be the case with Google Maps. Google claims that ‘the vast majority of users who edit Maps provide great contributions’, however internet users show that a manipulation is easy to make. What do you think of user generated content on the internet? Should it be better monitored or are we allowed to have a joke every once in a while?


How do you find consumers to create value with? Try automating!

Automated Marketing Research Using Online Customer Reviews

When shopping online, consumers often read several reviews of products they discover and many times base their decisions to purchase on the information provided by reviews. Research covered in class focused on the elicitation of ratings and reviews from consumers and ensuring they are valuable to the consumer. Reviews are not only beneficial for the consumer and there are distinct benefits that companies can extract directly from the information in the reviews.

In their study Lee and Bradlow (2011) use text-mining techniques to automate the analysis of customer reviews, forming valuable information for use in market research. Previous studies have not covered the analysis of market structure through reviews to describe the environment surrounding a business. Market structure analysis is an important part of the market research process, as many of the marketing decisions rely on information about existing the existing market; the potential substitutes and complements for the product. In order to form these market structure analyses, attributes of products are commonly mapped to represent different brands.

The study utilizes simple methodology to suit capabilities of marketers better; by combining techniques commonly used and less complex language processing. The techniques chosen do not require predefined product attributes to be tested which is how current market research commonly approaches eliciting these attributes. The authors’ rationale is to allow the methodology to be used repeatedly, so that analysis “can be done (unlike traditional methods) continuously, automatically, inexpensively, and in real time.”

The authors’ collected all digital camera reviews on the epinions.com platform between  July 2004 and 2007. By clustering attributes detected in product reviews into common attributes, the authors’ were able to compare these attributes to attributes found in expert buying guides. What they found when comparing the opinions of experts, interestingly, was that they have no consensus in what attributes of a product are seen as important. In their comparison study they found attributes from analyzed reviews to be more valuable to the respondents and discovered new attributes.

To prove the use of their methodology in forming overviews of market structure repeatedly, the authors’ ran the analysis on a parallel data set they collected from reviews in between 2005 and 2007. This showed interesting results as the changes in attributes matched the changes seen in the market in terms of company strategies and consumer tastes. When Nikon changed its marketing from promoting technical specifications to a more product benefit focused approach, the attributes used in reviews reflected the change.

Managers can use the findings of Lee and Bradlow to support marketing strategy decisions. By mining customer reviews, the company can see how its brand aligns with competing brands in consumers’ minds. Tracking how the attributes mentioned change over time can be valuable information in determining how successful campaigns have been. New segments can be found by clustering characteristics detected with semantic analysis. Spotting attributes associated with competitors’ products is valuable insight in how competition is performing.

The study showcases how big data can be used in marketing research and brings to light the great value customer review data has when finding the customers to involve in the value creation process. With the current popularity of social media analysis it would be fascinating to compare the effectiveness of analyzing reviews and social media postings.

Thomas Y. Lee, Eric T. Bradlow (2011) Automated Marketing Research Using Online Customer Reviews. Journal of Marketing Research: October 2011, Vol. 48, No. 5, pp. 881-894.

Youtube, Facebook or Twitter?

Which is the most valuable social media channel in terms of user-generated content?

Firms like to engage with customers these days and social media strategy seems to be key in the success of customer involvement. They want to receive comments, likes, tweets, and review vlogs. This gives firms the option to co-create value with customers, but what many are not aware of is the differences in such content across the three major social media.


Smith et al. (2012) tried to determine what aspects of user-generated content (UGC) would be different across Youtube, Facebook, and Twitter. They collected data from two retailers (Lululemon and American Apparel) on the three social media. The main research question evolved around the differences in UGC on six dimensions, which will be discussed in the following paragraphs.

Promotion self-representation
The authors found support for the fact that self-representation actually occurred more often on Youtube compared to Facebook and Twitter. They attribute this finding to the fact that Youtube actually promotes users to be the main character in videos with their “Broadcast Yourself” slogan.

Brand centrality
Brand centrality was found to occur in the highest degrees on Twitter and the lowest degrees on Youtube. Twitter is designed differently where posts have limited word count, thus, the brand centrality is likely to be higher. Youtube highlights the individual self where brands are often only a detail of a video.

Marketer-directed communication
The authors only found partial proof for the fact that marketer-directed UGC would be less likely on Youtube compared to Facebook and Twitter. The first case, Lululemon, indeed showed the lowest market-directed communication for Youtube but American Apparel did not support this hypothesis. Marketer-directed UGC was thought to be lower on Youtube because consumers need to put more effort into that platform (time, resources, technical skill) than in Facebook or Twitter.

Response to online marketer action
Evidence was found for Youtube to have the lowest UGC in response to online marketer action. Again, this difference is attributed to Youtube being a more complex social media.

Factually informative about the brand
Although the authors hypothesized that brand-related factual information in UGC would be equal across the three social media, it was only found that Youtube and Twitter were close. Facebook scored significantly lower on factual information. This difference could have to do with the different levels of actions that firms undertake on social media. For example, American Apparel does not respond to consumer inquiries meaning that other consumers may provide non-factual information.

Brand sentiment
Sentiment in brand-related UGC was also expected to be similar across Youtube, Facebook, and Twitter. Unfortunately, no support was found for this hypothesis. For both firms, sentiment differed across the three platforms and each company had their own particular pattern in this difference. The authors could only conclude that brand sentiment differs per site but that this difference was not predictable.

This paper provides some primary insights concerning the usage of social media by companies that want customers to generate content. The main difference is that Youtube’s videos or comments are less likely to primarily focus on the brand, thus, will not respond as much to marketer action. This does not mean that companies should not invest in Youtube, as this platform might be more useful for other information such as the association with other brands. Twitter is most distinctive from Youtube where brand centrality tends to be higher and tweets can be rather critical. Facebook was found to lie somewhere in between. Companies need to take these differences into consideration when analysing the user-generated content.

A criticism of the paper is the rather limited data, which was collected. The paper only compared two companies in a similar type of industry. Furthermore, the targeted customer segment may also show different types of behavior on social media and this was not included in the study. Lastly, as mentioned in the discussion, the user may perceive their audience on social media in certain ways, which could influence the decision on the type of content to upload.

  • Smith, A. N., Fischer, E., & Yongjian, C. (2012). How does brand-related user-generated content differ across YouTube, Facebook, and Twitter?. Journal of Interactive Marketing, 26(2), 102-113.

Information overload? Use the RA!

When you are browsing the web in order to buy a certain product, you have got to process a lot of information. As we have been taught in class extensively, a website’s Recommendation Agent (RA) can help consumers to make purchasing decisions. Shoppers are loyal to e-stores that enable them to function efficiently.

Before M. Aljukhadar et. al (2012) conducted their research on consumer’s use of an RA to cope with information overload, little was researched about a consumer’s likelihood of using an RA or conforming to its recommendations. Therefore, they investigated several approaches to measurement of product information load; the relationship between delivered information load and perceived information overload; using an RA to indicate occurrence of information overload; effects on information overload on decision strategy while accounting for consumer’s need for cognition; and information overload and decision strategy on several performance measures.

The researchers created a fictitious retailer website that offered laptops. They chose three levels for the number of alternatives as well as for attributes. As consumer’s normally consider many attributes when shopping for complex search goods such as a laptop, the researchers included a high number of attributes. 466 participants were asked to choose a laptop they would seriously consider buying and needed to rate the importance of each laptop attribute. Afterwards, the participants could choose to click on a link to the recommendation according to their preferences.

Participants also were asked whether there was too much information to make a choice on two seven point scales and on two additional scales on how satisfied they were with the choice they made, in order to test perceived information load and choice confidence respectively. The need for cognition was measured by asking to fill in an 18-item scale, e.g. “I find satisfaction in deliberating hard and for long hours”.

The researchers found that overload was actually experienced by consumers and that the relationship between information load and perceived overload was curvilinear. Participants who experienced high information overload, consulted the RA and accepted its recommendation more often than those who did not experience overload. When overloaded, a consumer with low need for cognition is more likely to consult an RA and vice versa. Moreover, as information overload increases, choice quality improves when consulting an RA. Thus, particularly in complex situations, the use of an RA has a positive effect on choice quality.

While using an RA upholds choice confidence, confidence will decrease for a consumer who contradicts the recommendation. The relationship between perceived information overload and e-store interactivity is curvilinear as well. The researches propose two possible explanations for this: first, the use of an RA makes choice accuracy feedback immediate and tangible. Second, rejecting a personalized and accurate recommendation leads a user to face more choice difficulty and cognitive dissonance, which results in less choice confidence and lower satisfaction with the performance of the webstore.

Given these results, it would be advisable to webstores to proactively show product recommendations when information overload is high. Also, RAs should provide accurate advice. Lastly, apply other measures to increase the number of shoppers that conform to the recommendations.

Aljukhadar, Muhammad, Sylvain Senecal, and Charles-Etienne Daoust. “Using recommendation agents to cope with information overload.” International Journal of Electronic Commerce 17.2 (2012): 41-70.

Crowdfunding getting personal.

This week the multinational Philips announced to stop sponsoring the shirts of football club PSV after being there main sponsor for 34 years. PSV and Philips had the longest sponsor relationship in world history. Philips will only step down from their title as main sponsor and  will continue to sponsor the club on other fronts and the PSV stadion will still be called the Philips Stadion. However, for a lot of fans this news came as a shock. Philips has always been the main sponsor of the club and has caused for a lot of brand awareness as well. A great amount of fans were extremely disappointed but also concerned that no one at this point will provide the club with decent shirts.

As a response a group of PSV-supporters decided to try to become head sponsor of the club, simply through crowdfunding. The group of fans tries to include as many other fans as possible. They are currently verifying if the demand for the idea is sufficient. If it is they will further work out there plans.

For the football industry this might actually be a radical innovative idea. If the crowdfunding idea works out it creates opportunities within other football clubs world-wide.

Currently, the group of fans would need about 600.000 fans to spend 10 euros each in order to collect a sufficient amount for the head sponsorship.

Crowdfunding is becoming more and more of a solution nowadays. Another great example of this is the crowdfunding campaign: Scusa Roma.  A woman from the Netherlands that lives in Toscane decided to set up a crowdfunding campaign to raise money for the damage that was done in Rome by football hooligans. As a response other people started campaigns for the same cause.

The following graph shows the development of crowdfunding volume on crowdfunding platforms since 2009. We see an extreme growth since then as people become increasingly interested in alternative forms of investment capital.


(Statista, 2015)

The examples in the football field are merely two out of a huge amount of examples for what people use crowdfunding nowadays. The most commonly known example is startups that need funding for development of their products. However, as in the Scusa Roma example, there are loads of people that also use crowdfunding platforms for a good cause. Another example is the Hakiki – Fight poverty through social enterprises – project. A group of students want to help villages in Tanzania with developing  and decided to run a lot of events as for instance dinners, parties or benefit nights. However, to double the amount they have already raised they decided to start a campaign on Indiegogo.

These examples show that crowdfunding is not only for actual companies or start-ups anymore and not solely focused on investment. In contrast, they are getting closer and closer to our personal lives.










The Effect of Customers’ Social Media Participation on Customer Visit Frequency and Profitability

As people are spending more time on social media sites, firms allocate more of their resources to social media. Social media could be used to acquire and or retain profitable customers. However, it is difficult to measure the direct effect of social media efforts on firm profits. This could make it difficult for managers to justify their promotional budgets and social media spending (Rishika et al., 2013).

Rishika et al. (2013) study firm’s return of investment on social media efforts. Moreover, in their study they investigate how the overall social media activity and customer characteristics affect the customer-firm relationship, which is measured as the frequency that the customer visits the firm’s shop.

The authors verify that participation in firm hosted social media by focal customer will have a positive impact on the intensity of the customer-firm relationship. Moreover, they find that customer’s participation on a firm’s social media site increases customer’s frequency of also visiting the firm’s shop. Also, the firm’s amount of message postings and responsiveness on social media increases the customer’s participation on the social media site. However, these vary for different customers with different customer characteristics.

The CRM literature suggests that there is a positive association between the consumer’s average transaction amount and satisfaction, which results in better behavioral outcomes, such as increased commitment towards the firm. This brand loyalty contributes to an increase in the customer lifetime value (Crosby et al., 1990). Rishika and al. (2013) argue that high value customers feel that they are more important to the firm and that thus they are likely to value a firm’s relationship investments in social media more than low value customers. Indeed, they verify their Hypothesis 3: The impact of participation in firm hosted social media on the intensity of the customer-firm relationship will be greater for customers with a larger purchase amount.

Customers who purchase premium products are often the most lucrative firms, and hence it is in the interest of firms to retain these customers. The authors find that the impact of participation in firm hosted social media on the intensity of the customer- firm relationship is greater for customers who have a greater share of premium product purchases.

The findings of the study by Rishika et al. (2013) have several managerial implications. Firstly, it is that it is important to nurture customer relationships through social media, since active social media efforts could increase the bond between customer and the firm and lead to long term financial performance, due to increasing customer visit frequency. Secondly, since different customers react differently to certain social media efforts, it is important to segment your customers on social media. Managers can create subcommunities or discussion forums customers who are interested in premium/unique products.


Rishika, R., Kumar, A., Janakiraman, R., & Bezawada, R. (2013). The effect of customers’ social media participation on customer visit frequency and profitability: an empirical investigation. Information systems research, 24(1), 108-127.
Crosby, L. A., Evans, K. R., & Cowles, D. (1990). Relationship quality in services selling: an interpersonal influence perspective. The journal of marketing, 68-81.

Using people to predict the future, is this the future?

What will happen in the future? Microsoft tries to answer this question by launching the Microsoft Prediction Lab. The lab is an interactive platform that is partially built around the basis of a game. Users can invest points by predicting the outcome of certain future events. If a prediction is correct, the user gains points and if the prediction is wrong the user looses his or her points. Not only is the prediction lab a game, it is also a lab (off course). David Rothschild, an expert in data driven predictive methodology and researcher at Microsoft, sees the lab as a great laboratory for researchers and a new social experience. The team behind the lab tries to figure out what is the best way of predicting the future, using more than the typical dataset.

Why is this development intriguing? First of all, this platform shows that the wisdom of crowds can be used for making accurate predictions. The users fill in their predictions based on personal expectations as well as earlier predictions made by the crowd. The user adds value to the lab by making these predictions. This can be explained as value co-creation, where the value is equal to the correct predictions. Secondly, this digital platform uses positive network effects for its own benefits. The more users submit their expectations and predictions, the more reliable the overall prediction is.

I think Microsoft’s Prediction Lab is on the right track, if you consider the fact that it gave an 84% change of a ‘No-vote’ for the Scottish independence, and predicted 15 out of the 15 knock-out games on the FIFA World Cup correctly. For now it will focus on political events (such as elections) and sport, but the tech-giant plans to use the prediction technology for far more than that.

Microsoft has plans to incorporate the outcomes of the predictions into its existing products. Cortana, Microsofts’ digital help, could answer questions like ‘what will be the outcome of the next match?’ or ‘who will be the next president?’. I think this ability to use the lab for products is the most valuable contribution of the prediction lab; not the actual outcomes, but the value it adds to the existing products. Where do you think this technology will lead to?


What happens when a new business model becomes a new standard?

Successful new ventures often do something completely different than established companies in the same industry. Uber was founded in 2009 and their most recent valuation is north of $40 billion dollars. That’s an insane amount of money, but Uber is growing rapidly in a huge global industry (transportation). Becoming the standard for a global industry like that is worth a lot of money. AirBnB is a similar story; renting out your home to make some extra cash and bam, they are becoming a serious competitor in the hospitality industry.

Enabling customers to make their lives easier or generate more income; these new customer-focused companies are changing complete industries.

Innovators like these companies develop new technology to allow people to do things in a new way. However their business models aren’t protected by patent law or something similar. This allows other companies to use these new business models, allowing them to either (a) copy the model and compete with the original innovator (AirBnB, for example) or (b) use the new business model in a different industry or industry niche.

Competing with AirBnB and the likes does not seem to be the most logical choice; AirBnB didn’t become the company it is now by copying an existing business model; they created a new one. 

However, it sounds logical that these new business models can be used in other industries as well, and apparently companies have been doing so. Quite a lot.  

A quick overview of some initiatives of AirBnB’ styled businesses:

What this implies is that the innovations from the famous startups (Uber, AirBnB, BirchBox), create a plethora of opportunities for entrepreneurs and businesses around the world. The technology is often a lot cheaper given you’re not the first mover, which would be the AirBnB’s etc, the business model is proven and there’s probably still plenty of industries/niches that.

You’ll probably won’t end up with an Uber valuation when you create an “Uber/AirBnB/Tinder for X” type of business, however it does create a lot of opportunity.

Rather than seeing this as copying or unoriginal, we should start focusing on how we can use these new business models for other categories by looking at them in a more abstract manner. Tinder is a dating app, however Tinder’s user experience provides opportunity for concepts that need a low-barrier, many-to-many type of interaction where photos or short snippets of info are the standard. This can be implemented for content, professional networking etc.



Have you heard of some cool or unorthodox uses of these new business models? Please share in the comments!

Marketingfacts, watch out, the students are coming

We’ve got the content, we can create visibility, let’s go make this blog big!

If you are reading this blog post, great chances are that you are a student at the Erasmus University. If you are not, welcome to the CCDC website, where content is created by students and mostly written by students as well. The idea behind this website is to make long and extensive articles accessible and to highlight the USP’s of consumer driven companies and online networks, like Created on Friday and Skillshare. It is meant to be a learning tool, but if you scroll down the homepage, the generated content could also be compared to that of an online marketing platform, like the Dutch website Marketingfacts.

If you compare the CCDC website to Marketingfacts, two big differences appear. First, the content is created differently. In the case of Marketingfacts, the content generated by a team of professional bloggers (Marketingfacts, 2015), and in the case of the CCDC website, this content is generated by students. Second, the incentive of the content creators differ. Were the professional blogger may want to share his or her knowledge online, the student blogger will be obliged to create content, since they will be graded for the blog posts. That said, traditionally articles created by students will not have a purpose after the articles were graded. Now, their created content will live on as blog posts, what can cause for online visibility, next to serving the student’s graduation.

So why is this proposition, the student driven online marketing and C2C platform, currently so interesting? Why am I dedicating my blog post to a online platform which nowadays only can attract 1000 up to 2000 views a month? Because there are two things which make this platform unique compared to a more traditional online (blog) platform: secured content delivery and worldwide university connections. Since students currently are obliged to create articles, the amount and subject area of content can be determined by the professor, an advantage which is hard for a normal platform to copy. Besides, in-between universities and professor’s alliances are easily made. Professors from multiple disciplines and universities could join, and hereby add students to the creation group, which makes increasing the amount and diversity of the content easily done. These unique advantages make a quite interesting case for becoming a large online platform.

So, if the professor of this CCDC course decides to make this blog to go big, what should he do to control content quality and to create online visibility? Again, let your students do the work. Visibility can be created by individual sharing of the content on social media. Of course a platform account can start sharing the posts, but a large group of students together can cause for even a greater amount of views (LinkedIn, 2015). High quality can be maintained by letting the students rate the newest articles (Hu et al., 2009; Tsekouras, 2015). The ones with high rates stay on the home page for a certain time, making sure they are written, and the silly ones die in silence, so that they will not harm the platforms reputation. All-in-all, the ingredients are there, now we have to execute it right. Marketingfacts, watch out, the students are coming..

Click here to read the former post of this author: “Can we all start drinking beers all day long?”

  • Hu, N., J. Zhang and P. A. Pavlou (2009). “Overcoming the J-shaped distribution of product reviews.” Communications of the ACM 52(10), 144-147.
  • Marketingfacts, (2015). Colofon | Marketingfacts. [online] Available at: http://www.marketingfacts.nl/colofon [Accessed 26 Apr. 2015].
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Are you ready to beat the ‘Snake’ high score again?!

In the past, Nokia has been the dominating player within the mobile phone industry. If you never have seen the 3310 model or played ‘Snake’ on one of the previous Finnish devices, you were probably born after the launch of the 3310 model in September 2000 (Techradar, 2014). In the upcoming years, Nokia’s senior management didn’t believe that the smartphones would conquer the mobile industry. A clear lack of vision: 1.2 billion smartphones were sold last year (NRC Q, 2014). When Nokia finally started selling smartphones, other players were already dominating the market. Nokia’s sales were dropping and the mobile department was sold to Microsoft in 2014.

Last week, Re/code announced that Nokia is planning to return to the phone market in 2016 (Re/code, 2014). Initially, Nokia agreed with Microsoft not to manufacture any mobile phones until 2016. Although this agreement was signed, the Fins are allowed to sell Nokia products if manufactured by another company. Using this loophole, Nokia can start selling phones again (Emerce, 2014).

It will be difficult for Nokia to attract customers when entering the highly competitive smartphone marker. Often marketing spending is invested in sales promotions to influence customers’ buying behaviour and attract new customers (Kim et al., 2014). To determine what the best strategy is for attracting new customers, Kim et al. (2014) compared price discounts and sampling to a more innovative method called pay-what-you-want (PWYW). When using a PWYW strategy, customers are able to determine the selling price themselves.

Kim et al. (2014) found that PWYW is an entertaining way of promoting products to consumers. It can both lead to a higher word-of-mouth effect and more consumers that want to benefit from the promotion. Furthermore, the researchers found that the prices paid in a PWYW situation are significantly different than zero. So, PWYW is not just a fancy name for free sampling; people are more likely to pay for products even when they can get it for free (although the price paid is lower than the original price). PWYW can be an attractive way for Nokia to get in contact with potential customers and to create a positive hype (Kim et al., 2014).

Compared to price discounts, in a PWYW situation consumers tend to pay less for a certain product. But, since PWYW attracts more consumers, Kim et al. (2014) found that this effect was compensated. If Nokia wants to settle in a highly diversified market again, it’s very important to reach a high number of customers. Instead of competing the current smartphone providers using price discounts, Nokia should use a PWYW strategy to reach more people and while earning more money.

Smartphones are expansive products. Therefore, using a PWYW strategy to conquer the market can be risky. Although Kim et al. (2014) didn’t investigate the effect of it, they suggest using PWYW in a more restricted way in these cases. For instance, consumers can determine their discount based on a predefined list of discount percentages. By doing this, Nokia can influence the magnitude of the promotion but still take advantage of the PWYW benefits.

Using a PWYW strategy can provide Nokia with a lot of new, and recurring(!), customers. So, are you ready to beat the Snake high score again?


Kim J. , Natter M., & Spann M. (2014) Sampling, discounts or pay-what-you-want: Two field experiments. International Journal of Research in Marketing, 31 (3), 327 – 334.

http://www.techradar.com/news/phone-and-communications/mobile-phones/nokia-s-3310-the-greatest-phone-of-all-time-1287636 [Accessed on April 21, 2015]

http://www.nrcq.nl/2015/04/19/smartphones-round-the-world [Accessed on April 23, 2015]

http://recode.net/2015/04/20/nokia-plots-2016-return-to-phone-market/[Accessed on April 23, 2015]

http://www.emerce.nl/nieuws/nokia-gaat-weer-smartphones-maken[Accessed on April 21, 2015]

Fire your sales team, Boost e-WOM participation!

Imagine, you’re on a birthday party without a mobile phone, tablet or laptop but you would like to have some information about a certain experience good because you’re considering a buy. I guess you might ask your friends or family relatives about their findings and opinions. Think again how you’re purchase decision looks like after they share a negative story about that related product….

In contrast with the traditional word of mouth ( face-to-face context ) , consumers use blogs, search engines, internet communities, social media, and consumer review systems to gather information and make informed purchase decisions. Due to the rise of internet and the development of phones, tablets or laptops, traditional word-of-mouth interactions are replaced/substituted by electronic word of mouth. So e-WOM, defined as “any positive or negative statement made by potential, actual, or former customers about a product or company, which is made available to a multitude of people and institutions via the Internet” (T. Hennig-Thurau, 2003) is an important source used during the path to purchase or so called customer journey. Upon that, previous research conducted by Bickart and Shindler, show that customers actually pay more attention to the information provided by other customers rather than those of the salesperson or marketers because they have used the product and is considered as more trustworthy.

Understanding the importance of e-WOM, e-commerce sites attempt to encourage their customers to produce more e-WOM because consumer-produced information provides potential customers with a sense of trust. But how can firms (Online retailers), encourage their customers e-WOM participation, what are customers motivations and how does it affects e-Loyalty (customer loyalty in the internet market) ?

Blogpost 1

Research done by Yoo, C.H et al. in order to examine the impact of e-WOM participation on e-loyalty, has shown that both intrinsic and extrinsic motives have an impact on e-WOM participation. Specifically, it was found that internal motivation  most influences customer’s participation (fig 2). Customer’s participation is operationalized as the actual level of involvement and frequency in e-WOM writing and reviews. Customers participation behavior does have a significant impact on formation of Site identification. Site identification can be devided in (1) Personal site identification; the extent to which a customer thinks the image of an online shopping site matches his/ her own image, and (2) Social identification which refers to the identification that a customer feels with respect to interactions, via the e-WOM system, with other customers on the same online shopping site.( C.H, Yoo, 2013)

e-WOM participation behavior enhances social identity among customers. Additionally social identity plays a role in using the e-WOM system. It is for this reason important to maintain an e-WOM system for customers so they can develop a strong social identity on the site through enhanced interaction with other customers.


Finally, both personal and social site identifications have a significant influence on customer e-loyalty. Remarking,  that personal identification has a stronger impact on e-Loyalty.

Conclusive, based on the conducted research, when e-WOM is well managed, it was shown that it has positive effects on the  customer evaluation of the company and on intentions to repurchase.

Created by : Luut Willen

References :

Bickart, R.M. Schindler, Internet forums as influential sources of consumer information, Journal of Interactive Marketing 15 (2001) 31–40.

Hennig-Thurau, G. Walsh, Electronic word-of-mouth: motives for and consequences of reading customer articulations on the internet, International Journal of Electronic Commerce 8 (2003) 51–74.

Chul Woo Yoo, G. L. (2013). Exploring the effect of e-WOM participation on e-Loyalty in e-commerce. Decision Support Systems :DDS (2013)

What Makes a Helpful Online Review?

We have all been there; browsing for too long on Tripadvisor.com or Amazon.com trying to find that one review that could be the decisive factor in buying (or not buying) that specific product. But what exactly is it that we are looking for? What makes one review more helpful than another? The article of Mudambi and Schuff (2010) tries to find the answers to these questions by reviewing almost 1600 reviews on Amazon.com throughout several products and product categories.

When browsing online, individuals are presented an increasing amount of customer reviews; these reviews have proven to increase buyers’ trust, aid customer decision making and increase product sales (Mudambi, Schuff & Zhang, 2014). In addition, customer reviews can attract potential visitors and can increase the amount spent on the website.  Hence, retail sites with more helpful reviews hold greater potential to offer value to consumers, sellers as well as the platform hosting the customer reviews.

In order to increase the helpfulness of customer reviews, several websites such as Amazon.com and Yelp.nl ask the question “was this review helpful to you?” and list more helpful reviews more prominently on the product information page.  Mudambi and Schuff (2010: 186) define a helpful review as a “peer-generated product evaluation that facilitates the consumer’s purchase decision process”.

The article distinguishes between two types of goods when looking for products online: search goods and experience goods. Search goods possess attributes that can be measured objectively, whereas the attributes of experience goods are not as easily objectively evaluated, but are rather dependent on taste. Examples of search goods are printers and cameras; examples of experience goods are CD’s and food products.

Past research showed conflicting findings as to whether extreme ratings (rating very negatively or very positively) are more helpful that moderate reviews; some argue that extreme ratings are more influential, whereas others argue that moderate reviews are more credible. Mudambi and Schuff (2010) argue that taste often plays a large role with experience goods as consumers are quite subjective when rating; hence, consumers would value moderate ratings of experience goods more, as they could represent a more objective assessment (H1).

Next, Mudambi and Schuff (2010 scrutinize the review depth of customer reviews. Since longer reviews often include more product details, and more details about the context it was used in, the authors hypothesize that review depth has a positive impact on the helpfulness of the review (H2). Nevertheless, the review-depth of a review might not be equally important for all products. Reviews for experience goods often include unrelated comments or comments so subjective that they are not interesting to the reader. For example, movie reviews often entail elaborate opinions on actors/actresses that are not important for the reader. On the other hand, reviews of search goods are often presented in a fact-based manner as attributes can be objectively measured. As a result, it is argued that review depth has a greater positive effect on the helpfulness of the review for search goods than for experience goods (H3).

By evaluating almost 1600 reviews (distributed over 6 products; 3 experience goods and 3 search goods) and excluding the ones that did not get any vote whether it was helpful or not, the researchers were able to confirm all three hypotheses. The article teaches us that there is no one-size-fits-all method as to what makes a reviewhelpful. Experience goods prove to be less helpful with extreme ratings, whereas search goods benefit from in-depth reviews.


Mudambi, S. & Schuff, D. (2010). What Makes a Helpful Online Review? A Study of Customer Reviews on Amazon.com. MIS Quarterly, Vol 34 (1), pp 185-200.

Mudambi, S., Schuff, D. & Zhang, Z. (2014). Why Aren’t the Stars Aligned? An Analysis of Online Review Content and Star Ratings. IEEE Computer Science, 3139 -3147.

Be famous and (dramatically) increase your number of followers!

Only then you are credible…

I almost wanted to start with: “You cannot trust product tweets of celebrities…” But if that would be a surprise to you, I have some other shocking news to you: Santa doesn’t exist. However, if everyone knows the tweets are set up by the brands themselves, and the celebrities are paid for such tweets, why would brands still spent million dollars to celebrity social media product endorsement?

Opendorse did research to those product endorsement tweets: a tweet from Cristiano Ronaldo is valued $304.000(!) (See source beneath for more numbers). Note that this is the actual value of the tweet for the brand itself, so it does not say celebrities are really paid that amount.

As we know that those tweets are valuable and that it does not matter that we, actually, all know that those tweets are not “real”, what makes the “fake opinion/tweet credible to us, the consumer. That is what Jin and Phua investigated in 2014: “ Explicate the conditions under which celebrities can be leveraged as effective catalysts for brand-related E-WoM on Twitter.” They created semi-fictious celebrity twitter pages, where after they let students (east coast of US) fill in a questionnaire based on these profiles (which off course included a product endorsement tweet).

Jin and Phau found that high numbers of followers results in higher credibility of the celebrity (more physical attractive, trustworthy and competent). On top of that, positive brand tweets of a celebrity with a high number of followers results in higher product involvement/buying intention. This effect is strengthened in case of a prosocial celebrity. In contrast, a celebrity with a low number of followers does not effect product involvement.

(In order to differentiate between types of celebrity (prosocial/antisocial), participants read an article of the celebrity either engaged in charity work or involved in drug abuse and/or adultery scandal.)

On top of that, it is interesting that “we” are more willing to share a tweet if it is coming from a celebrity with a low number of users and if it is negative about a specific brand/product. Probably because we think that a tweet from someone with a high number of followers will be not new to our own followers.

Concluding, celebrities are more credible than ordinary users towards twitter users. If a brand wants to start with twitter celebrity marketing, they need to focus on the number of followers (not only because of the reach, but also because of the credibility) and the behavior of the celebrity. Maybe it would be even better to contact a not that well-know celebrity and let him upload a negative tweet about a competitor. It will be shared more often by other twitter-users, and then it will maybe get more attention.

However, we must not forget that a celebrity, who will promote a lot of products using twitter, will be less credible in the end. Besides, I doubt if everyone knows how much followers his or her followers have.

Then I got one last question to you: if you had to set up one celebrity tweet for Microsoft surface tablet, who would tweet what text, and tell me why? Besides, tell me why this tweet didn’t worked out well:


In turn I got one tip for Santa to be credible for old and young again: Open a twitter account and dramatically increase your number of followers… You are already famous!

Note: If you didn’t see Oprah’s mistake, take a look with what device she uploaded the tweet.

Seung-A Annie Jin & Joe Phua (2014) Following Celebrities’ Tweets About Brands: The Impact of Twitter- Based Electronic Word-of-Mouth on Consumers’ Source Credibility Perception, Buying Intention, and Social Identification With Celebrities, Journal of Advertising, 43:2, 181-195.


The Consumer Knows Best!!

Currently, organizations are using social media to interact more and more with consumers. One of such examples is the strong interaction that KLM Airlines has with its customers over social media. When the consumer ask for help or make statements, they are one of the fastest corporations to reply through social media. However, Lui and Gal (2011) investigate whether interactions affects the relationship between consumers and organizations. Therefore evaluating whether different types of consumer input can have varying effects on this relationship with an organization.

Through various different experiments, the authors try to analyze whether different types of input have which influence on the closeness of the relationship with the organization. Closeness is the amount of bonding that is felt in a relationship (Liu & Gal, 2011). Firstly, they experimented with the role of giving advice on the non-profit index and whether individuals are more willing to donate. When individuals gave advice to the organization, they had a higher tendency to donate to the organization due to the closeness they felt. Therefore asking for advice could actually influence the individuals willingness to donate.

Then they wanted to see whether these aspects would change if the consumers’ input changed to expectations regarding for-profit organizations. From the results became apparent that giving expectations had a negative effect on intent for an individual to purchase a product from that organization. This remained positive for the category of providing advice. Therefore, when the consumer provides expectations, the relationship between consumer and organization can actually be harmed.

Due to this interesting finding, they evaluated further under which conditions these aspects deviate. Through their third experiment, the authors found that advice giving resulted in the consumer placing themselves in the position of the organization and look for solutions. Therefore these factors resulted in more subjective feelings of closeness to the organization (Liu & Gal, 2011). Whereas stating expectations only resulted in a feeling of distance between the consumer and organization. When giving opinions, there was a mediating effect on the overall closeness, but leaning more to a feeling of distance.

Since giving advice can have such a strong influence on the empathetic relationship between consumer and organizations, their next step was to evaluate whether paying consumers for advice would further strengthen the closeness. They discovered that when consumers were paid for advice, the positive effect was actually eliminated. However this effect was not there with opinions. Thus organizations looking to create a strong closeness with their consumers should actually make sure there is a tendency for them to give advice to the organization.

Therefore companies such as KLM that trying to build strong relationships with their consumers can improve by asking for advice. Through consumers giving advice they can further strengthen their connections. Thus, they should stop asking for the opinions and expectations of consumers, but rather let them give advice on which aspects should be improved.


Liu, W., & Gal, D. (2011). Bringing Us Together or Driving Us Apart: The Effect of Soliciting Consumer Input on Consumers’ Propensity to Transact with an Organization. Journal of Consumer Research, 38(2), 242-259.

The long tail or the short tail: The category-specific impact of eWOM on sales distribution

For a long time business has relied on the well-known Pareto principle for explaining their patterns of sales distribution – the rule of thumb stating that roughly 80% of events would come from 20% of the causes. In business this principle was commonly used in stating that 80% of sales would follow from 20% of clients or 20% of products. Then came along the internet and it became apparent that the 80/20 rule lost its explanatory power for certain online businesses. Due to the lower search and reach costs resulting from an online business environment the, by now well-established, theory of the long-tail was proposed to explain for the newly observed sales distribution. This longer tail of niche product sales naturally meant that a smaller proportion of sales came from the ‘head’ of the distribution graph, as is shown in the figure below.


Now we have quickly refreshed your memory on sales distributions, let’s have a look at what this study did. The authors of the study were interested to see how the shapes of the distributions were affected by the electronic word of mouth present in the product group. In this, a distinction between goods rated according to more objective criteria and goods rated according to more subjective criteria was made. The authors reasoned that consumers may apply similar evaluation standards to products with objective attributes such as USB sticks. In this sense people would show high tendency to follow the eWOM evaluation, driving consumers collectively to the most popular products. As a result, the distribution tail would be shortened while the head would be thickened.

Alternatively, for products with high levels of subjective attributes such as books or movies, positive eWOM does not necessarily mean that you as a consumer would personally like the product as well. Finding a product that may fit your personal preferences is difficult, for such highly subjective products the authors reasoned eWOM would help you find products you otherwise wouldn’t. As a result, the distribution tail would get longer while the head would get thinner. These different effects of eWOM were indeed found when studying Amazon.com sales of products with both objective as well as subjective selection criteria. In addition, it was found that for complex products with multiple attributes, eWOM had a similar effect on sales distribution as for products with subjective criteria. This can be explained as consumers’ preferences will start to diversify the more attributes have to be assessed.

Resulting from this study we can conclude that eWOM can show two very different outcomes on sales distribution, depending on the product type you are looking at. Sellers should be aware of this and can optimize their online shelf sizes based on the product type they are offering. Stimulating eWOM as a firm selling simple products with objective selection attributes could for example decrease the need to keep a large product portfolio in stock. Saving costs by letting consumers chat to each other, now who would have thought!

Lee, J., Lee, J. N., & Shin, H. (2011). The long tail or the short tail: The category-specific impact of eWOM on sales distribution. Decision Support Systems, 51(3), 466-479.

To The Stars and Beyond – A Bright Future For Co-creation


As I recently wrote about Local Motors, an online co-creation initiative to launch the first 3D printed car, I would like to point you to yet another fascinating example of co-creation: Project Dragonfly.

The Dragonfly project aims to explore interstellar flight (a space mission that goes beyond our solar system!) through leveraging not only technologies such as complex computing and the miniaturisation of space flight components, but phenomena such as co-creation, design competitions and crowdfunding as well.

Now, although the technologies involved to get a satellite to travel to other stars is fascinating stuff (the mission enhances a laser-propelled spacecraft that ‘sails’ through space, more information here) I would like to point you to the way the project leverages co-creation, quite the way as local Motors does: through design-based competitions. The difference between Local Motors and Project Dragonfly however is that Local Motors pays royalties on each car sale to successful designers, whereas Project Dragonfly awards fixed sums of money to successful contestants in the form of a prize.

Design competitions are more and more used by new initiatives, but how do they work? First, the initiators define their goals and set up proper design requirements in order to identify so-called ‘performance drivers’ and ‘showstoppers’. Within the limits of these requirements, students, scientist, innovators and entrepreneurs are then invited to come up with innovations. Deliverables of teams participating in such a competition consists of a final design report, which covers all areas that are relevant to makt a mission a success and to return scientific data. With DragonFly for example, a team could report new findings on instruments, communication technology or new usage of power supply. Also, teams have to research economic and technological feasibility. Instead of granting one prize, competitions (as is the case with Dragonfly) offer cash prizes for multiple areas of technological development, allowing multiple teams of people to innovate and succeed in a particular area. Hence, design competitions speed up technological advancement in multiple areas at a given point in time. Finally, design entries are evaluated by industry experts and winners are chosen. The results then could form as a basis for future technology development of a mission. Participants are invited to continue working on their project or could be offered a contract to join the initiative. The design competition itself is financed through a crowdfunding campaign. Funds raised allow the organisation to market, raise awareness about and support the design competition.

It is great to see more and more initiatives leveraging co-creation to make steps in technological advancements. One wonders what potential co-creation beholds for the future. Will it one day enable us to travel beyond the stars?

For more information read the original article from the blog Centauri Dreams.

Crowdfunding: Where people trust random strangers with their money, and smile doing it.

It is hard to not have noticed the immense increase in popularity for crowdfunding. The concept of allowing you, as a customer, to directly influence the creation of a product you always wanted or a company you really like, is very appealing. It gives consumers power. And if anything, people are always interested in power. However, as with every exciting new development there is also a dark side to crowdfunding. Over the few years that crowdfunding has existed, there have been a couple of instances where successful crowdfunding campaigns turned out te be a fraud. A famous example is the Kobe Red campaign on Kickstarter, which promised their funders the world’s first beef jerkey from Kobe Red meat. In the end it turned out the company didn’t even exist. However, apparently enough people were convinced that the campaign was legit, as they managed to raise $120.000.

Now this provides an interesting perspective to crowdfunding. What makes a campaign appear legitimate enough for potential investors to proceed and donate money? This is what Frydrych and his colleagues (2014) have attempted to uncover in their research. They looked at some aspects of crowdfunding campaigns and in what manner it influenced the legitimacy of the campaign. Their main findings:

Funding Target and Final Funding

A moderate funding goal sends the signal that the entrepreneur is cautious and realistic. This is therefore a good sign of legitimacy for funders. Also, when a campaign has already accumulated some funding, this is a big sign of legitimacy towards other funders, who are much more likely to invest then. A report from Seedr, one of the larger equity crowdfunding platforms, mentions that once a campaign hits 30% of its funding goal, the chance to reach the entire goal jumps to 90%.

Reward Structure

An interesting aspect of reward-campaigns are the perks they offer their funders. The perk is often the main motivator for funders to donate. As such, the type of perks might also influence the campaign legitimacy. Frydrych et al. did not find conclusive results for this, however I feel there should be a more in depth look for this topic. For instance, some campaigns offer a perk to meet the team. This might signal legitimacy, as it proves that the team exists. Also, many campaigns offer a pre-order of their product as a perk. Legitimacy might be less important for these type of perks since people simply want the product. Campaigns that focus more on the company, such as musicians raising money for their album, might need more legitimacy for funders to donate.

Team Composition

Finally, it appears that a team of entrepreneurs is considered more legitimate than just a single entrepreneur. This makes sense, as there is usually more expertise present in a team which increases the chances of success for the company. Investors are more likely to invest in companies with high success chance.

Overall the article gives some interesting perspectives, however it did not include all the possible aspects that could affect legitimacy. Mollick (2014) mentions quality signals such as spelling errors, preparedness of the entrepreneurs and social presence of the team, these could all affect legitimacy as well. It would be interesting to see if legitimacy could be used as an overall explanation of funding behavior.

Would you like to make your own fragrance?

Have you ever wanted to have a unique fragrance? Do you think this will be a perfect gift for someone? Well, now you have the possibility to make your own fragrance! The company called Scentcrafters is an online retailer which offers producing a customized perfume according to your own preferences. So, here it how it works.   You are able to mix up to five different scents. These can be already existing perfumes like for instance Guilty by Gucci or Tommy Girl, or you can pick an aroma like vanilla or lavender. If you are not sure which scents you would like to mix, then you can just describe the smell you would like to have, for instance “I want it to be fresh with some flower or fruit tones”. Following that, you can choose the recipe, which will be used to produce the scent, or you can create your own one.  Apart from customizing your own scent, customers of the successful online company have the possibility to give a special name to their newly created perfume. What is more, the bottle can feature a whole personalized message as well, in order to make it even more special and unique. If you would like to have your own logo or picture printed on the bottle – this is no problem, Scentcrafters can do that, while resizing and adjusting your image in order for it to fit perfectly on the bottle. Furthermore, the company offers a great diversity of bottle designs available from which you can choose the one which you like the most, or the one which fits best with the idea behind the scent you are creating. Also there exists the possibility to change the colour of the liquid inside the bottle. This means that your perfume can be clear, pink, light blue or light yellow. The last step of the customization process is filling in your postal address and payment details so that your uniquely created scent can be shipped to your home.

This type of customer empowerment to create new products is one of the most effective ways in which companies can achieve positive effects with respect to customer satisfaction and the image, which companies have created for themselves. The article called “Customer Empowerment in New Product Development” by Fuchs and Schreier (2011) says that customer empowerment can lead to positive effects in three main factors. Firstly, it leads to increase in the levels of customer orientation, perceived by customers. Secondly, customer empowerment in product development results in more favourable corporate attitudes. And finally, it leads to stronger behavioural intentions.

In the case of Scentcrafers, the customer empowerment in new product development is in the core of the business model, therefore, all of its positive effects and risks should be carefully considered. The great opportunity for personalization and creating unique products are a good way to attract the customers who value and want customization. However, sometimes the making of scents requires some expertise since customers do not necessarily know which combinations will be successful and which will not. Moreover, the use of already known brand names as a component of the new mixtures can lead to some problems with patents and rights to use the brand name.

All in all, the idea behind Scentcrafters is very innovative and offers a great opportunity for customization. So, how will your new perfume be called?

Fuchs, C. and Schreier, M. (2011), Customer Empowerment in New Product Development. Journal of Product Innovation Management, 28: 17–32. doi: 10.1111/j.1540-5885.2010.00778.x