BEICK: Done with the traditional and dull city bikes? build your OWN!

April 3, 2015 322232pp Leave a comment

Do you recognize the feeling that finding your bike in the city depots is like finding a needle in a haystack? Or do you feel like traditional black or grey bikes are just not that cool anymore and you feel the urge that you want to express yourself in any way possible? If the answer is yes, BEICK is maybe the ideal solution for your problem!

Beick is a Dutch company who offers their (potential) customers the possibility to create their own unique bike. From a large offer of different ‘standard bikes’ BIECKS makes is possible to customize your bike to match your own preferences and needs. They want to approach the customer segment that feels that riding a bike is more than a functional activity and/or people who wants to express and share their creativity in every activity they during the day.

How does it work? Beick offers the customers the possibility to customize their bikes by using an online toolkit (based on DPI) on their website which guides the customer through a process to build his own ‘unique’ bike, step-by-step. You start from scratch by choosing the ‘basics’ as the type of gear used in the bike, the colour and size of the tires, the type of seat and so on until you reach a fully operational bike. Assuming that there will be questions raised how changing these functionalities can lead to an assurance that your bike is YOUR bike and that it is unique, Beick has developed step two. This step will be done by deciding which colours are used on the different parts of your bike. After choosing and customizing ‘your’ bike it is possible to finalize your bike by offering a large variety of accessories that will be attached to your bike. Think of different type of bells, baskets or lock that is used on your bike. At the end it should lead to a unique bike, which is according to Beick affordable, durable and delivered with a high quality service. The service on the bike is five years, on the accessories two years and any possible reparations or modifications is done at your home by a qualified bicycle repairer.

The customer input is used actively and they function as co-creators for mass customization of the bikes of Beick. Although the customers mainly benefit themselves from being a co-creator, Beick also shows the last sold customized bikes and the ten most popular ‘standard’ bikes which is also beneficiary for others. They can gather inspiration or even purchase the same bikes as others did before them. Beick has done a good job to minimize process complexity by offering a clear and easy step-by-step method to finalize your bike and not offering too many variations in design. Although this has a positive outcome on the perceived ease-of-use of the online toolkit I think it also hinders the product utility of the bikes of BIECK. It is not possible to choose any possible colour, but only some standard colours. Also the accessories could be more refreshing in terms of creativity. For example they could work together with a company as Veloretti which offers unique accessories to really let your bike stand out a biking country such as the Netherlands.

In my opinion Beick has a big potential in a country as the Netherlands, where 34% of the daily trips shorter than 7.5km is done by making use of a bicycle. Combine this with the current trend of being different and potential high revenues and high premiums. However, the current concept of Beick has some flaws that hinders to reach his full potential. The website is only offered in Dutch, which already cuts a share of the population in the Netherlands, which do not understand the language sufficiently to order a bike at Beick. Assuming that their potential customers mainly live in the bigger cities in the Netherlands such as Amsterdam and Rotterdam, where extrovertness is more accepted and present, translating the website in different languages will be highly advised for increasing revenue. Furthermore, the customization is not that intensive enough to fully exploit the creativity of the user and warrant the uniqueness of the bike, something that is promised by Beick and is their main value proposition.

Concluding,Beick is a creative way of involving customers in the creation process and offering them mass customization of bikes. However, at the moment the base for selling a unique bike is implemented well, but they should innovate themselves to protectBeick from competition and devaluation of the bikes. When the amount of bikes increases and customers will notice a lot of similarities among bikes, will probably makes them feel less ‘unique’, which is a high risk forBeick and should be handled immediately.

References:

* http://www.beick.com/ontwerpen

* http://veloretti.com/nl/ons-verhaal/

* http://www.fietsersbond.nl/de-feiten/fietsen-cijfers#1

Business Case

Introducing The World’s First 3D printed Electric Vehicle – The Strati

April 3, 2015 joostmartijndekok 1 Comment

One of the world’s most exciting open source co-creation initiatives is Local Motors. Part online platform, part physical business, Local Motors combines co-creation and micro-manufacturing to bring hardware innovation to market at unprecedented speed. The platform consists of a global co-creation community made up of enthusiasts, hobbyist innovators and professional. Besides the online platform, the organisation operates an international network of so-called micro-factories.

The way it works is as follow. On the Local Motors Platform, users are able to share and evaluate ideas, prototypes and projects for motor vehicles with a global community of like-minded innovators. Through a voting process, users decide what projects get continued and developed. If a prototype is chosen, it will be produced in a micro-factory in low volume. As it is brought to market for sale, Local Motor’s sales team and e-commerce platform help to sell the product. Finally, if successful, each one’s contributions get rewarded. A percentage of sales revenue for each co-created product is paid to the community members who made a contribution to the vehicle.

The use of micro factories is revolutionary in its own right. A micro-factory refers to a small factory able to produce small dimension products. Such micro-factory’s main advantage is to save great amount of resources in terms of space, energy, materials, money and time. Micro-factories are highly automated, containing automated systems such as tools, assembly systems, quality inspection, replacement and material input. Each of Local Motor’s micro-factories is a place where innovators could develop their own projects and consumers are welcome to visit, watch progress and potentially buy their products.

Local Motor’s motto is “We make the coolest machines together.” And hell, they do. In 2015, the company is expected to launch the world’s first 3D printed electric car, named the Strati. As the company puts it, “There is nothing conventional about this car, the way it’s made, or the company behind it.” First to note is that the Strati is fully functional and is aimed for (small) production for the road. The car is developed according to Local Motor’s principles of designing and developing open source with a global community. It is made from ABS plastic in combination with carbon fiber. In order to get the material right, the company has been through a process of extensive material testing, sponsored by SABIC. All car parts that could be brought down to a single material piece have been 3D printed, including the frame, the exterior body and interior features. Mechanical components such as batteries, motors and wiring, however, come from the electric powered Renault Twizy. Currently, the Strati takes about 44 hours to print, although the organisation aims to bring printing time back to 24 hours. As soon as the Strati is cleared by US regulations later this year, it will enter public roads.

The Strati is an amazing outcome of open source co-creation. The automobile shows that a global community of innovators could complete the design and development of complex products. Interestingly, the business model of paying royalties according to one’s role in the development process works motivating enough for engineers to participate in these projects. One wonders what this may behold for the future.

What else will we be co-creating in the future according to Local Motor’s principles?

Business Case

Creativity of the Crowd – Pornhub’s Ad Contest

April 3, 2015 joostmartijndekok Leave a comment

“Do you have what it takes to be the Creative Director of the world’s No.1 adult website?”

Last year, the YouTube of Porn, otherwise called Pornhub, challenged creative enthusiasts to come up with non-pornographic advertising concepts to advertise the platform to a wider audience (Adweek.com). The adult website coined its search for ad material a hunt for SFW (Suitable For Work) advertising. As the contest stated, “Traditionally, porn has been a taboo subject – but the fact is, over 35 million people visit Pornhub.com every day. How do we reach the next 35 million? We need a national advertising campaign that can be channelled through mainstream media (Pornhubcampaign.tumblr.com).” In order to succeed, contestant had to come up with family friendly ideas that still manage to convey the nature of the site (Huhmagazine.co.uk). The person with the best idea would be awarded with a one-year contract to be Pornhub’s creative director.

Through the use of wordplay and subtle imaging, designers and ad creatives all over the globe submitted brilliant and subtle images and videos. One entry displays a bus stop outside of a university campus, displaying a two meter high white poster ad with the copy Where are you getting off?, subtly accompanied with the Pornhub logo. Another image displays typical male and female toilet symbols in combination of male-female, as well as female-female, female-man-female and many others, accompanied with the quote We’ve got it all. Yet another minimalist ad shows the shadow of a bare hand with the text America’s Largest Do-It-Yourself Website.

This crowdsourcing describes a new web-based business model that harnesses the creative solutions of a distributed network of individuals through what amounts to an open call for proposals (Howe, 2006). According to some, the creative industry increasingly relies on crowdsourcing to find solutions to problems. Mau (2004) states that problem solving is no longer the activity of the individual genius, but he is hesitant to a business model in which problem solving is radically distributed beyond the boundaries of professionalism. Clearly, he is not the only one convinced of the power of crowdsourcing over professionalism. As one commenter on the Adweek.com article notes, “So does Pornhub specialize in amateur? Pay for great ideas, work with people or agencies with a track record or success, you might just get great ideas (Adweek.com).” As Brabham (2008) notes, “where design teams and other group collaboration rely on collections of experts, the wise crowd insists on the presence of non-experts, on the presence of amateurs.”

In the case of Pornhub, I think their quest for creative ads is the perfect example of consumer value creation. Even though the contestants might be amateurs, they have come up with some pretty unique ways to communicate the brand to a wider audience. Besides the results of the contest, the company Pornhub has profited from the PR of the competition, it has managed to actively involve its consumers in its business and has found itself a new creative director.

Now, judge for yourself. What do you think of Pornhub’s contests that challenges the crowd to come up with subtle ad’s to reach a wider audience in a family friendly way while still conveying the nature of the website? For one, do you think professional ad agencies could have come up with better ideas than the contest results?

Sources

Howe, J. (2006) ‘Crowdsourcing: A Definition’, Crowdsourcing: Tracking the Rise of the Amateur .
Adweek
Brabham, C. 2008. Crowdsourcing as a Model for Problem Solving. The International Journal of Research Into New Media Technologies.
Mau, B. with Leonard, J. and The Institute Without Boundaries (2004) Massive Change. New York: Phaidon.
Pornhub Campaign Tumblr (SFW)
Huhmagazine.co.uk
Daily Dot

Articles

Make money in the supermarket!!

April 3, 2015 343519mo Leave a comment

Are my products placed in the right shelves? Is my in-store activation plan executed perfectly across all super markets? These are questions marketers of major brands face on a daily basis, and Roamler may have found the most innovative solution to answer them so far!

Major consumer goods enterprises have always relied on field teams to evaluate whether their designed marketing strategies were well-executed in-store. A rather time and resource intensive endeavor, seeing as these would have to travel between all different supermarkets present in our country. The Dutch start-up Roamler noticed how this was causing a problem for major brands and thought up a creative solution to simplify the process. Seeing that most people have smartphones with cameras these days, why can’t we let consumers themselves do the work?

Roamler has made smart use of a number of trends including the power of crowdsourcing, the mobile trend, the trend of gamification and the fact that apps can now operate location based. These features are built into a slick looking mobile interface in order to bring the concept of value co-creation to the retail industry. In principle, Roamler allows for consumer goods organizations to ask questions or set out tasks to users of the platform. The users closest to the task’s location will get an update and may opt to complete the task in return for either money, points or badges. Typically, such tasks will include evaluations of the shelf backed up with a photograph.

According to Saarijärvi et al. (2013) it is important in any value co-creation effort to have a clear picture of what value is created for whom. In this scenario it is the information that is of value to the companies. Companies can use this real-time information to quickly assess where the retail execution could be improved, and mobilize their field employees to make quick adjustments accordingly. For the users it is the monetary reward as well as the possibility to ‘level up’ and unlock new features that creates value to them. In short, the company quickly gets the information it needs, while the user earns some instant benefits for a minor effort. A classic win-win scenario.

Not surprisingly, this simple but effective use of co-creating value between consumers and consumer goods brands was not left unnoticed. In 2011, the year Roamler started, the start-up won the Accenture Innovation Audience Award in the category Media, Communication & High Tech.

Having read about this easy way to earn some extra cash, you may have already whipped out your smartphone and opened up your appstore. Unfortunately, Roamler follows a rather strict entry program and only users who have received a personal invite may participate. Such an invite can only be sent by Roamler users who have at least reached ‘level 3’. When selected, Roamler offers a training program which the new user needs to complete before being sent out on real tasks. This way, Roamler tries to build an exclusive community of high quality Roamlers which can be chartered to participate in tasks of the various clients.

http://www.accenture.com/Microsites/innovation-awards/2011/mcht/Pages/index.aspx

http://www.marketingfacts.nl/berichten/20120120_roamler_altijd_toegang_tot_een_mobiele_workforce

http://www.roamler.nl/Join

Saarijärvi, H., Kannan, P., & Kuusela, H. (2013). Value co-creation: theoretical approaches and practical implications. European Business Review, 6-19.

Articles

Aren’t we free-riders after all?

April 3, 2015 359268hh Leave a comment

Nowadays, many online public goods rely on the input of the users. In fact, co-created open source software communities (e.g. Linux, Firefox, and Apache), content sharing networks (e.g. YouTube, Instagram), and open content productions like Wikipedia entirely rely on voluntary user contributions (Zhang & Zhu, 2011).

The group size of a particular community plays an important role in the incentives of users to contribute. For years, the free-rider hypothesis has been the dominant focus in the literature on private provision of public goods. This theory implies that when the size of a group grows, the contribution level of individuals declines (Olsen, 1965). However, over the years, researchers have renounced this pure altruism based view. It appeared that there was more than just the utility from total provisions of the public good that affected contribution incentives in public goods.

The importance of impure altruism made its appearance. Multiple studies (e.g. Ribar & Wilhelm, 2002; Andreoni, 2006) disproved the free-rider hypothesis that solely takes pure altruism into account. For instance, they showed that when the group size becomes sufficiently large, the importance of pure altruism disappears and on the other hand social benefits become the main motive for users to contribute.

Unlike the many experimental based studies on the effect of group size on individual-level contributions, Zhang and Zhu (2011) used field data in the form of the Chinese-language edition of Wikipedia to study the relationship.

Between October 2002 (the start of the Chinese version of the site) – July 2008, the website has been blocked and unblocked 5 times (see figure 1). In these blocked periods, people from mainland China could not access Wikipedia and thus not contribute to the site.

Zhang and Zhu (2011) focused their empirical analysis on the third block since it was the longest of the five blocks (nearly a year) and it received most publicity. This last mentioned point took away the concern that individuals were unaware of changes in the environment, something that impacts contribution levels.

By examining contribution levels of users, the researchers found out that the contribution levels of non-blocked users had significantly reduced (42.8% on average) during the block. Contributors who value social benefits more, reacted more strongly on the change by contributing even less in the blocked period. The idea behind this decline is that contributors receive social benefits when they contribute to the public good. The shrunken group size subsequently reduced these benefits.

Overall, the theoretical contribution of this research is the on field data based support that, in a setting with a large group size, social benefits indeed dominate the free-riding incentives. This outcome provides an explanation of the existence of many public goods with a large base of contributors. Furthermore, this paper helps to explain the observation that people prefer contributing to large online communities.

This outcome can be of practical relevance for users and administrators of other public goods available on the internet, since it emphasizes the importance of social effects in the provision of (online) public goods.

References

Andreoni, J. (2006) “Philanthropy,” in Serge-Christophe Kolm and Jean Mercier Ythier, eds., Handbook of the Economics of Giving, Altruism and Reciprocity: Applications, Vol. 2, North Holland, 2006, chapter 18.

Olson, M. (1965). The logic of collective action: Public goods and the theory of group (p. 176). Cambridge: Harvard University Press.

Ribar, D. C., & Wilhelm, M. O. (2002). Altruistic and joy‐of‐giving motivations in charitable behavior. Journal of Political Economy, 110(2), 425-457.

Zhang, M. and Zhu, F. 2011. Group Size and Incentives to Contribute: A Natural Experiment at Chinese Wikipedia. American Economic Review 101(4) 1601-1615.

Photo: Wikipedia.org, accessed 03-04-2015, http://upload.wikimedia.org/wikipedia/commons/1/1f/Wikipedia_mini_globe_handheld.jpg

Articles

Getting paid while doing nothing at all!

April 3, 2015 336085 Leave a comment

Throughout the world people join forces to build the kind of economy that we want to see. We share our homes, our cars, our knowledge, our time and our money. SnappCar is a Dutch platform offering a mediation service for those who want to rent their car to others and for those who want to rent a car. With this service SnappCar creates more consumer value, but it also asks for active consumer participation. Ronald Kleverlaan of CrowdfundingHub indicated SnappCar as the number one amongst all crowd-funding projects last year. The crowd-funding yielded more than half a million Euros through crowd-funding!

According to SnappCar, every day 23 million cars are not driving for 23 hours a day in Europe. This is waste of products, space and money, especially because a lot of people cannot afford to have a car themselves. SnappCar’s mission for 2018 is to have 1% less cars in Europe, which will lead to a reduction in CO2-emision as a result of the production of cars. SnappCar thinks they can make this impact by letting car owners earn money by renting their car to others for shorter periods of time.

They idea is very simple, you have something that costs a lot of money and you only use it for a small amount of time, so why not rent this product to others, to earn some money back? Besides the money you earn, you also help others by providing them your car for a lower price then the traditional car rental agency. As stated on Snappcar’s website “You will live a more conscious life and you meet friendly people in your neighborhood.” SnappCar provides all-risk insurance, 24/7 road assistance, contracts, payments and a trustworthy community, as to ensure that participants do not have to worry paperwork and other negative side effects.

SnappCar is a user-friendly platform as it provides all the information you need when renting a car. As you can see below on the images, it has information about the car owner, the average rating, the price per day, some images of the car itself and the specifications of the car. It is also possible to read some reviews or post a review yourself after borrowing a car. These reviews and ratings help other users make their decision to rent a car more easily. In the United States, SnappCar just received as one of the first Dutch companies a B Corporation certification. B Lab awards this label to companies that achieve solving social and environmental goals.

A major negative effect of the car sharing platforms is that traditional companies such as car manufacturers, car dealers, but most of all car rental agencies will face a potentially huge decline in sales. This counts for other sharing platforms such as Airbnb as well, but in the end the big winners of the sharing economy are the consumer as they can easily get cheaper products and services. But in order to achieve this result renting the products should be as easy as owning the product!

http://www.nu.nl/weekend/3905769/de-deeleconomie-wordt-deelmaatschappij.html

https://www.snappcar.nl/snappcar-in-het-nieuws

http://www.telegraaf.nl/dft/ondernemen/socialezaken/23819780/__SnappCar_goed_op_weg__.html

http://feb.kuleuven.be/eng/ew/Articles%20press/2013/JK_DeStandaard_250513.pdf

Articles

Do Recommander Systems Manipulate Consumers Preferences?

April 2, 2015 fbevelander Leave a comment

Recommender systems are important in the decision making. Those systems provide the customers suggestions. As a result of this, firms can better serve their customers. This will also lead to an increase in sales. Research has focused on the development and the improvement of recommender systems. But there is not quite much studied about the behavioral implications of using recommender systems. Are those recommender systems manipulating the customers?

Most recommender systems use the consumers ratings items as input. Those recommendations the system provide present an expectation of how well a customer will like an item. There is also a feedback loop, those are the actual ratings of the customer after the purchase has been made. The recommendations are based on the actual ratings of a customer who already has tried this product or item.

There is a possibility that people are influenced by elements in the environment when they make a decision. The first one is the anchoring issue. People are maybe consumed drawn, because the system is presenting an item to them and they choose it. It is important to know if a customer really likes it or just chooses it because it is presented in a advantageous way. It is difficult for people to see if an item is reasonable for them. It could be presented as a advantageous choice, but it will maybe be the opposite!

When there is uncertainty, a customers seeks for the most plausible item. The suggested item is viewed as the ‘correct’ answer, therefore a lot of people will choose this. The users belief that the recommender system will choose the right option for them, therefore they choose what the systems presents to them.

Users that will receive a high recommendation from the recommender system, will also give higher rating after they bought/used it and vice versa. What they saw as a rating, has influence on their own rating. They are biased. This is although not symmetric.

There is an significant effect when the recommendation is raised, but not when the recommendation is lowered. It is notable that this effect is not only taking place when the uncertainty is high, it also operates at the point of consumption.

Also is the reliability of the system important. When the system is known as reliable, the customers’ ratings will be more close to the recommendation the customer has seen before. When the system is thus less reliable, the ratings given by the customer will be less close to the recommendation.

Sources

Adomavicius, G., Bockstedt, J. C., Curley, S. P., & Zhang, J. (2013). Do recommender systems manipulate consumer preferences? A study of anchoring effects. Information Systems Research, 24(4), 956-975.

Cosley D, Lam S, Albert I, Konstan JA, Riedl J (2003) Is seeing believing? How recommender interfaces affect users’ opinions. Cockton G, Korhonen P, eds., CHI 2003 Conference, Fort Lauderdale FL (ACM, New York), 585–592.

Articles, Opinion

The number of Facebook friends on crowdfunding success

April 2, 2015 joostmartijndekok Leave a comment

(*This entry is based on the research article ‘The Dynamics of Crowdfunding – An Exploratory Study’ by Ethan Mollick)

In order to make something work, one aims to find a recipe for success. This principle holds for crowdfunding, too, in which founders of all sorts of projects request funding from many individuals, often in return for future products or equity (Mollick, 2014). Many crowdfunding projects, however, fail. Therefore, it is of importance to find out the underlying dynamics of success and failure among crowdfunding ventures. This is exactly what Ethan Mollick, Professor of Management at Wharton University of Pennsylvania and author of The Dynamics of Crowdfunding – An Exploratory Study, has done. By analysing a dataset containing 48,500 crowdfunding projects with a combined funding over $237 M, Mollick researches the effects of a fund seeker’s personal network, underlying project quality and geography on successful fundraising. In this post, I will focus attention on the effect of a fund seeker’s personal network through the notion of one’s number of Facebook friends. Then, I’ll show how this looks like in practise on Kickstarter.com. Finally, I suggest a way in which the power of an entrepreneur’s personal network could be even better put to use.

(Professor Ethan Mollick)

Social capital

Social networks have long played an important role in the funding of new ventures (Hsu, 2007; Shane and Cable, 2002). An entrepreneur’s social network influences the succes of raising capital, as it provides (1) connections to funders and resources as well as (2) endorsements of project, its product or service, and the initiator (Shane and Cable, 2002; Sorensen and Fassiotto, 2011; Stam and Elfring, 2008). Actually, an entrepreneur’s social network is the initial source of funding, called friends and family money (Agrawal et al, 2010). As Mollick found, about one in three Kickstarter.com accounts are linked to social network Facebook. Hence, the author looked at Facebook friends of founders (FBF) for the project initiator, as this number is less likely to increase as the project progresses. Here, FBF is a measure of the size of a founder’s social network. Models 2 and 5 in Mollick’s results (see table below) show that social network size predict success. According to the author, the link between social network size and crowdfunding succes could be compared to the following. Having just 10 Facebook friends leads to 9% chance of succes, whereas a 100 Facebook friends lead to 20% of success. With 1000 Facebook friends denoted on Kickstarter.com, a fund seeker has 40% change of success. However, Model 6 in Mollick’s results (see table below) shows that having no Facebook account coupled to Kickstarter.com is yet better than just having few online connections. This suggests that, although larger networks generally lead to more success in fundraising, entrepreneurs yet need to strategize on whether or not linking their social network to their fundraising, based on the number of friends they have on Facebook.

If you are interested in how the number of Facebook friends is depicted on Kickstarter.com, visit:

https://www.kickstarter.com/projects/snappower/the-snaprays-guidelight-illuminate-your-life?ref=nav_search.

Here you see the SnapRays project on Kickstarter.com by entrepreneur Jeremy Smith. Click on Jeremy’s photo on the right to view his profile. The number of Facebook friends is depicted on the right.

A suggestion

Could an entrepreneur’s social network be leveraged more as to earn more trust among investors and hence raise more capital? In addition to stating the number of the fund seeker’s Facebook friends, the crowdfunding platform could enable the fund seeker to show the number of steps and the actual relations between him or her and a particular potential funder the way LinkedIn depicts the relations between you and someone else. To get an idea, see the mock-up I made below. To my belief, this would give a potential funder a feeling of being ‘more connected’ to the fund seeker, hence it would raise trust and it might lead to more funding.*

*Note: I e-mailed Professor Ethan Mollick about this suggestion. I’ll update this post if he replies.

Your turn

Now, could you think of other reasons why the number of Facebook friends is a quality signal to potential investors? And could you imagine different ways in which a fund seeker’s personal network could be leveraged more on crowdfunding platforms? Let me know you thoughts in the comments below.

References

Agrawal, A., Catalini, C., Goldfarb, A., 2010. The geography of crowdfunding. SSRN Electronic Journal.
Hsu, D., 2007. Experienced entrepreneurial founders, organizational capital, and venture capital funding. Research Policy 36.
Mollick, E., 2014. The Dynamics of Crowdfunding – An Exploratory Study. Journal of Business Venturing 29, 1-16.
Shane, S., Cable, D., 2002. Network ties, reputation, and the financing of new ventures. Management Science 48, 364.
Sørensen, J., Fassiotto, M., 2011. Organizations as fonts of entrepreneurship. Organization Science 22, 1322–1331.
Stam, W., Elfring, T., 2008. Entrepreneurial orientation and new venture performance: the moderating role of intra-and extra industry social capital. Academy of Management Journal 51, 97–111.

Articles

Can co-creation help in service recovery?

April 2, 2015 402446ta Leave a comment

This post is about understanding the co-creation effect: when does collaborating with customers provide a lift to service recovery? By Roggeveen, A., Tsiros, M. and Grewal, D. (2011)

Co-creation is the process of jointly producing a mutually valued outcome. This means that consumers can help shape or personalize the content of their experience, in other words, it can affect satisfaction of a recovery. A recovery is required when equity of a customer-company relationship is damaged. The research investigates the impact on equity for service delays outside the company’s control in the airline industry.

Study 1:

The first study demonstrates that using co-creation during severe and less severe delays yields different results. When consumers face a sever delay, co-creation improves the evaluation of the company, whereas less severe delay evaluations are not affected. Furthermore, the study demonstrates that co-creation works as good as compensating customers for severe delays. When faced with less severe delays, co-creation performs just as well or even better than compensating a customer.

Study 2:

The second study expands on the first study by expanding the knowledge on repurchase intentions, after co-creation recovery. The study demonstrates that recovery extends beyond the increased evaluations, it increases consumers repurchase intentions as well. This relationship is however mediated by equity, which is the difference between what consumers have received and what they expected to receive.

Study 3:

The third study looks at the perception of consumers of the recovery task. When consumers view the recovery strategy negatively, hence if the view it as akin to work, co-creation can harm evaluation. This is especially the case when consumers are asked to co-create during less severe delays.

Study 4:

The fourth and final study is the most interesting. The researches explore what happens when a company does not meet or exceeds the customers’ expectations after a recovery or compensation. As expected, companies that do not meet a customer request achieve lower evaluations. However, when a company exceeds customer expectations, the customer does not evaluate the company higher than when meeting customer requirements.

Especially the last study has large managerial implications. Consumers evaluate a business the same as when a company meets or exceeds the requirements set by the customer, which means that it is far more economical to only meet the necessary requirements. From this study we can therefore learn that using a co-created recovery for severe problems achieves good results for both customer evaluations and repurchase intentions. As noted by a manager: “if a guest perceives a failure to be just horrible, then they want to be more involved in rectifying the problem. If they perceive that it’s a minor inconvenience, then they don’t want so much input on it.”

Reference:

Roggeveen, A., Tsiros, M. and Grewal, D. (2011). Understanding the co-creation effect: when does collaborating with customers provide a lift to service recovery?. Journal of the Academy of Marketing Science, 40(6), pp.771-790.

Source:

Heading picture: Travelsort.com [Accessed on 02-04-15] http://travelsort.com/blog/getting-united-to-pay-eu-compensation-for-a-flight-delay

Articles

Why do people fill in reviews on online platforms?

April 2, 2015 343924mb Leave a comment

With the new Internet technologies, traditional word-of mouth communication has been extended to electronic media, such as online discussion forums, electronic bulletin board systems, newsgroups, blogs, review sites, and social networking sites. Everyone can share their opinion and experience related to products with complete strangers who are socially and geographically dispersed this new form of word of mouth, known as electronic word of mouth (eWOM). This research is about eWOM which has become an important factor in shaping consumer purchase behavior. In early research is found that information provided on consumer opinion sites is much more influential among consumers nowadays.

For instance, eMarketer revealed that 61% of consumers consulted online reviews, blogs and other kinds of online customer feedback before purchasing a new product or service. In addition, 80% of those who plan to make a purchase online will seek out online consumer reviews before making their purchase decision (Infogroup Inc, 2009). Some consumers even reported that they are willing to pay at least 20% more for services receiving an “Excellent”, or 5-star, rating than for the same service receiving a “Good”, or 4-star rating (Comscore Inc, 2007).

Cheung et al. (2012) stated that we do not fully understand why consumers spread positive eWOM in online consumer-opinion platforms. Among the few existing publications, eWOM behavior is primarily explained from individual rational perspective with the emphasis on cost and benefit. Consumer participation in online consumer-opinion platforms depends a lot on interactions with other consumers. But why do people participate and are what stimulates consumers eWOM intentions?

The following variables were defined in this research as influencers of consumers’ eWOM intentions: Reputation, Reciprocity, Sense of Belonging, Enjoyment of helping, Moral Obligation and Knowledge Self-Efficacy. To test their theoretical framework they conducted a research using a sample of online consumer-opinion platform users from OpenRice.com. In total they collected 203 usable questionnaires.

After this study three variables were found significant: Reputation, Sense of belonging and Enjoyment of Helping. Sense of belonging had relatively the most impact on consumers’ eWOM intention. The result is consistent with previous eWOM marketing literature, where sense of belonging is an essential ingredient that creates loyalty and citizenship in a group. Also enjoyment of helping others is crucial in affecting consumers’ eWOM intention. Intentions to write about dining experiences in OpenRice.com demonstrate enjoyment of helping others. Consumers can benefit other community members through helping them with their purchasing decisions. Reputation is a small factor affecting consumers’ eWOM intention. This can be explained by some consumers want to be viewed as an expert by a large group of consumers.

The results of this research can be practical relevant in different ways. Online consumer-opinion platform could allow consumers to create their own personal profile to create a stronger sense of belonging to the group. Also platforms could apply reputation tracking mechanisms, so ‘’experts’’ can be found more easily. And last, the platform could provide a mechanism for contributors so readers can show their appreciation for the received reviews, like a chat.

References
– Cheung, C. M., & Lee, M. K. (2012). What drives consumers to spread electronic word of mouth in online consumer-opinion platforms. Decision Support Systems, 53(1), 218-225.

– ComScore Inc., Online consumer-generated reviews have significant impact on offline purchase, http://www.comscore.com/Press_Events/Press_Releases/2007/11/Online_Consumer_Reviews_Impact_Offline_Purchasing_Behavior2007.

-eMarketer.com., Online review sway shoppers, http://www.emarketer.com/Article.aspx?R=10064042008Last accessed.

– Marketingonline.nl, http://www.marketingonline.nl/nieuws/word-mouth-marketing-blijft-last-houden-van-roi-issues

Articles

Individual Self-Design vs Community Self-Design

April 2, 2015 344068lb Leave a comment

The customer as a co-creator is becoming more important. Self-design is a new trend. Nowadays customers can customize anything; from self-designed skis (e.g. Edelwiser), to suggesting preferable food flavours (e.g. Lays). Many companies offer their customers a so-called Mass Customization (MC) toolkit to design their own products online. But isn’t it extremely inefficient and difficult to create all these self-designs separately? Isn’t it extremely costly in terms of time and money, for company and customer, to make use of this isolated, dyadic interaction process between an individual customer and the Mass Customization toolkit?

When you are less experienced in designing your own product, you will cope with a lot of difficulties. If you lack experience and/or creativity, you have to create ideas by brainstorming with other people and get inspiration from existing designs on the Internet. If someone asks an inexperienced person to design its own product, and they have to start from scratch they would definitely have a hard time figuring out where to start and what their actual preferences are. This is mainly because there are a lot of possibilities. Many people would start with designing different alternatives but this trial-and-error method is really time-consuming and not effective.

Above-mentioned statements and arguments are reasons for Franke, Keinz and Schreier (2008) to do some research about the Mass Customization toolkit. They thought about how to improve these toolkits, and they did some research whether it would be useful to include user communities.
They found out that peer-generated design solutions and peer-based feedback should be included in the existing MC toolkits because it would influence self-designs positively. More customers are able to design their own products by either adapting or getting inspired by other designs. Other users’ designs can be a great starting point for the less experienced designer. Think about the customized shoes from Nike or Vans. Before you create your own design, you will see a few designs that already have been created. There is an option to adapt these models or adapt a professional design. In other words, Nike/Vans creates a starting point for the less experienced designers and this will help customers to get a better outcome.

The peer-input can also be used as an external feedback channel. Through this way customers are able to show their preliminary product to others, who can help to improve the product. An example is SoundCloud. Anyone can upload their sounds and music and at the same time people are able to criticize and comment each other’s music. One of the community guidelines of SoundCloud is ‘Criticize, but do it constructively’. Because of the user community feedback, anyone can improve their songs. Figure 1. ‘Write your comment on SoundCloud’ (SoundCloud, 2015) https://soundcloud.com/claptone/gregory-porter-liquid-spirit-claptone-remix-preview

By integrating user communities in the MC toolkit, it is proved that customers are better able to create a more systematic problem-solving behaviour and it leads to self-designed products that meet the preferences of the customer more effectively.

Finally, there is one perfect example of a company that is making use of the integration of a user community: Threadless. When a potential customer starts to create their self-design, he has access to all the designs that have been created in the past. He is allowed to use and adapt other designs. After that the self-designer can ask the ‘Threadless community’ for help: ‘Do they like your design?’ and ‘Do they have any tips for improvements?’ Threadless is integrating both existing solution chunks and external feedback in the problem-solving behaviour. In the end this will lead to a more satisfied customer and the customer will value the product higher based on the perceived preference fit, purchase intention, and willingness to pay.

References:

Franke, N., Keinz, P., Schreier, M. (2008) Complementing Mass Customization Toolkits with User Communities: How Peer Input Improves Customer Self-Design. Product Innovation Management: 546-559.
NIKEid (2015). http://www.nike.com/nl/nl_nl/c/nikeid?ref=https%3A%2F%2Fwww.google.nl%2F
SoundCloud Community Guidelines (2015). https://soundcloud.com/community-guidelines
Vans, custom shoes (2015). http://www.vans.com/custom-shoes.html

Mini Cases

Customer Empowerment at the University-Spar!

April 2, 2015 342466sm Leave a comment

One way to involve active consumer participation is to let the consumers vote.

The supermarket Spar uses this consumer empowerment strategy at our very own university. Hereby, the Spar selects a product and visitors of the Spar can “like” or “dislike” the product by means of pressing a button at a touch screen. When the product receives over 50 likes, the Spar will add it to their assortment. When looking at the customer empowerment matrix by Fuchs & Schreier (2011), this strategy falls in the lower right corner.

Since the Spar gathers information and opinions about their customers, this strategy could be considered as a way of data gathering by means of crowdsourcing. However, I think this tool is mainly used as a marketing tool instead. To investigate whether consumers would like this product or not, Spar could also do a pilot by adding the product for a limited time to their assortment and after that looking at the sales figures whether this product is desired by the customers or not. Besides that, there is a possibility that consumers “like” the product without actually buying it.

The marketing aspect of this tool unfolds in two ways. Firstly, it functions as a promotion campaign for that specific product, since the product is given extra attention in the store. Customers of the Spar may buy it now, because the product is put in a spotlight, whereas they may not have bought it if it was, just like the other products, regularly in the shelves. This is a typical example whereby a store pushes the product towards the consumer (Balugly & Uysal, 1996). Secondly, this marketing tool can have a favorable impact on the image of the Spar as a supermarket itself. According to Fuch & Scheier (2011), (even passive) consumers perceive a higher level of customer orientation, more favorable corporate attitudes, and stronger behavioral intentions when firms empower their customers in such way. Even if consumers do not like the product or do not use the tool, it can still have a positive impact on the brand image of Spar, since consumers feel that Spar integrates consumer’s opinion in assortment selection. Interesting to see is, that there is no marketing found online about this tool. The only place where one can know about this campaign, is by being in the store physically. This is something that Spar could improve, by making this campaign more visible, as Claire Gilby (2012) E.ON executive of stresses: The biggest mistake E.ON could make was to not be visible.

To conclude, with having such a tool with already existing products, I would think that its aim is more for marketing purposes, instead of gathering data about the product or consumers. However, purposes and outcomes could be different with new product development.

Sources:

Baloglu, S., & Uysal, M. (1996). Market segments of push and pull motivations: A canonical correlation approach. International Journal of Contemporary Hospitality Management, 8(3), 32-38.

Fuchs, C., & Schreier, M. (2011). Customer empowerment in new product development. Journal of Product Innovation Management, 28(1), 17-32

http://www.research-live.com/features/tapping-customer-energy-sources/4008187.article

Articles

Electronic Word of Mouth and Amazon.com

April 2, 2015 annedegroot123 Leave a comment

Figure 1: ‘Understanding’ online star ratings

Amblee and Bui (2011) have researched the effect of electronic word of mouth (eWOM) on the sales of digital microproducts. They studied amazon.com ‘shorts’: short stories (e-books) that are made available for a set price of 49 cents. They classify these shorts as digital microproducts.

This article focusses on their study on de effect of social commerce on product reputation and sales (hypothesis 1). Amblee and Bui (2011) studied this effect from three different perspectives: Valence (how positive or negative a rating is), the presence of a rating versus no rating and volume (thus the amount of ratings). Interestingly, they do not find a significant correlation between valence of the rating and sales. Amblee and Bui (2011) suggest that this might be due to the generally positive ratings, and thus a low variance between positive and negative ratings. Second, they also find that the presence of a rating is a good predictor of higher sales, as compared to no ratings. Furthermore, they also find a significant correlation between the volume of ratings and the volume of sales.

In their discussion, Amblee and Bui (2011) propose a better scoring system which allows users to score the e-book on different dimensions such as content, writing style and so on. While this suggestion might lead to a bigger variance between ratings, I wonder if it would have a positive effect on sales in the end. Amblee and Bui (2011) point out that the majority of past research on valence suggests that valence is not a reliable predictor of sales. However, by including more ratings to fill in like Amblee and Bui (2011) suggest, you might achieve a negative effect: that customers are no longer willing to fill in the rating. And the importance of the presence of the rating, and moreover the volume is exactly what is found to be so important to spark sales by Amblee and Bui (2011).

Fast forward to 2015. Did Amazon.com change the rating system? I went to Amazon.com and I filtered on short stories and on kindle editions. This is what I found:

Figure 2: Average customer review of shorts on Amazon.com, 2015

Figure 3: Layout of customer reviews of shorts on Amazon.com, 2015.

This shows that the great majority of the ratings is still very high (roughly 84% of the ratings are 4 stars or more). However, it seems like Amazon has added some space for customers to motivate their rating. Furthermore customers can also identify reviews as helpful, and Amazon shows me the most helpful reviews first. By using this system, Amazon.com leaves it up to its customers if they want to motivate their rating (and spend more time rating a book) or not. What do you think, has the system improved? Do you think it will lead to more sales? Please comment below!

References:

Amblee, N. and Bui, T. (2011) ‘Harnessing the influence of social proof in online shopping: The effect of electronic word of mouth on sales of digital microproducts’, International Journal of Electronic Commerce, Vol. 16, No. 2, pages 91-113, DOI 10.2753
Featured image: GTP Headlines, accessed 31-03-2015, http://news.gtp.gr/2014/11/25/amazon-com-launch-travel-service-enter-the-world-online-booking/
Figure 1: quora.com, accessed 01-04-2015 http://qph.is.quoracdn.net/main-qimg-80cd8d435bc1eed5a48d8732857f5aa7?convert_to_webp=true
Figure 2: Amazon.com, accessed 31-03-2015, http://www.amazon.com/s/ref=sr_nr_p_n_feature_browse-b_2?fst=as%3Aoff&rh=n%3A283155%2Cn%3A%211000%2Cn%3A17%2Cn%3A10300%2Cn%3A10307%2Cp_n_feature_browse-bin%3A618073011&bbn=10307&ie=UTF8&qid=1427828706&rnid=618072011
Figure 3: Amazon.com, accessed 31-03-2015,http://www.amazon.com/When-Fall-Love-Blue-Series-ebook/product-reviews/B00HE1PEZO/ref=cm_cr_dp_see_all_summary?ie=UTF8&showViewpoints=1&sortBy=byRankDescending

Articles

The Dark Side of Customer Co-Creation

April 1, 2015 rsmstudent Leave a comment

In this blogpost I will talk about the article “The dark side of customer co-creation: exploring the consequences of failed co-created services” by Heidenreich, Wittkowski, Handrich and Falk (2014).

Co-Creation
Co-creation becomes more and more common. Co-creation can take place in product development and service development. The authors focus in this article on co-creation in services, whereas in services “innovation always starts with customers’ unmet needs” (Ostrom et al. 2010, p. 16). Co-creation is beneficially for both firms – which are able to adapt changes better to customer needs – and customers – who will be more satisfied because of more empowerment. However, more involvement asks for more contact points between the firm and the customer, which in turn leads to higher complexity of the process and service. And as we all know, higher complexity increases the risk of failure.

Whereas current literature emphasizes the positive effects of co-creation, this article highlights potential negative influences of co-created services. The authors conducted four studies to investigate this dark side of customer co-creation. In this blog post I will highlight the outcomes and implications of these four studies, without mentioning all methodological and statistical characteristics.

Study 1 + Study 2
The authors show that in case of service success, highly involved customers are more satisfied than customers who barely participated in co-creation. However, in case of failure, co-creation triggers a greater imbalance between customers’ expectations of delivery and the actual outcome. As a result, negative disconfirmation is enahnced, leading to a decline in satisfaction.

Service Recovery
After failure of service delivery, a firm must make up for its mistakes. The process of fixing failures is referred to as service recovery. Current literature even shows that sometimes customer satisfaction, customer loyaly, and customer repurchase intentions are higher after successful service recovery than if the service delivery was successful in the first time. The authors now include the degree of customer co-creation.

Study 3 + Study 4
The outcomes of studies 3 and 4 indicate that consumers who experience a mistake in the service delivery of a highly co-created servicetend t oblame themselves for the flawed outcome and thus feel a sense of guilt. In such cases it is best to have no recovery process at all to restore customer satisfaction.

The outcomes of this study lead to some interesting implications for managers. First it highlights the importance of awareness of the potential negative consequences of offering highly co-created services. However, because of the high potential positive influences, firms might want to offer highly co-created services. Therefor, firms should implement measuring indicators to minimize the change of co-created service failure caused by human mistakes. Because not all failure is inevitable, managers must focus on higher customer satisfaction along with the overall service. This can mitigate negative effects in case of failures. The importance of a proper recovery system is highlighted in this research.

Finally, even though there exists a dark side in customer co-creation, managers must try to overcome these difficulties and create light in the darkness…

References
Heidenricih, S., Wittkowski, K., Handrick, M. & Falk, T. (2014). ‘The dark side of customer co-creation: exploring the consequences of failed co-created services’. Journal of the Academic Marketing Science.
Ostrom, A. L., Bitner, M. J., Brown, S. W., Burkhard, K. A., Goul, M., Smith-Daniels, V., et al. (2010). ‘Moving forward and making a difference: research priorities for the science of service’. Journal of Service Research, 13 (1), pp. 4 – 36.