Norms, Moods and Free Lunch

Paper: “Norms, moods, and free lunch: Longitudinal evidence on payments from a Pay-What-You-Want restaurant”

The restaurant “Wiener Deewan” in Vienna is among the 11 existing restaurants allowing customers to determine the price, a.k.a. pay-what-you-want (PWYW). Due to the adoption of the pricing model from the beginning, Riener and Traxler (2011) could study the evolution of payments for PWYW at the restaurant and the corresponding influence of norms and moods. Here are some more facts about the study:


Main findings

The first research contribution of the paper shows patterns found in the collected data:


The revenue was increasing as the number of visitors was increasing, but the average payment declined from approx. 5,5 to 5 euros.

The second research contribution provides an explanation of the previously presented results. Social norms affect long-term fluctuations in payment distributions as regular guests adjust their perceptions of social norms over time. Moods are the main source of short-term fluctuations as people in a good mood are expected to pay more. The number of sunshine hours is selected as an influencer and indicator of mood.



plusThe greatest strength of this paper is the lack of pre-existing payment recommendations such as reference prices or prior prices, which is a rare opportunity and an important prerequisite for the study of norms’ influence. The variance and evolution of the average price also serve as a proof of the gradual formation of social norms as repeating visitors steadily shape their perception of the pricing norm.

plus This study is the first continuous longitudinal study of PWYW as previous studies were conducted for a short-term (e.g. Kim et al., 2009) or for a discontinuous period (e.g. Regner and Baria, 2010). As a long-term study, it provides useful insights into the specific developments and evolution of mean and median PWYW payments, showing that payments’ variance decreased over time as the majority of payments came closer to the mean.
Figure 1. The evolution of daily mean and median PWYW payments

plusminusThe inclusion of both new and returning clients make the study applicable to regular business situations. However, as 81% of the guests visited the restaurant repeatedly (Riener,2010), it would have been interesting to distinguish between the new and returning customers to study behavioral changes after each visit, i.e. if people are (and how) affected by social norms development.
minusAlthough mood has a strong correlation with sunshine and weather, as confirmed by various studies, the research doesn’t provide a convincing explanation and prove that sunshine is one of the main reasons for lower average payments. Sunshine might not influence all visitors equally as mood also depends on other external factors.To confirm the hypothesis, it would have been more useful for the researchers to conduct a survey, and quantify and establish the presence of corresponding mood conditions. 

Insights for businesses and academicians

Businesses might be surprised that PWYW pricing models don’t necessarily lead to clients paying nothing or a much lower price. The examined study shows that PWYW can bring a higher revenue and increase the number of visitors, presenting a long-term business strategy (Greiff et al., 2013). However, it is not clear if the model will be that successful if there were competitors using the same pricing model, which is an idea for future research.

Figure 2.Distribution of payments

Additionally, it will be interesting to observe if there are any differences in the evolution of payments between products and services (and further between commodity and luxury/enjoyable goods) as services have an inconsistent quality (e.g. a dish will taste slightly differently each time) while many products have a consistent one (e.g. a model of t-shirt looks and feels exactly the same).



Greiff, Matthias, Henrik Egbert, and Kreshnik Xhangolli. “Pay What You Want-But Pay Enough! Information Asymmetries and PWYW Pricing.” Management & Marketing 9.2 (2014): 193.

Kim, J., Natter, M., Spann, M.. “Pay what you want: a new participative pricing
mechanism”. Journal of Marketing 73 (1), 44–58.

Photo: Inês Lizard.

Regner, T., Barria, J. Do consumers pay voluntarily? The case of online music.
Journal of Economic Behavior and Organization 71 (2), 395–406.

Riener, G., 2010. How Free is your Lunch? University of Jena, mimeo.

Riener, Gerhard and Christian Traxler. “Norms, Moods, And Free Lunch: Longitudinal Evidence On Payments From A Pay-What-You-Want Restaurant”. The Journal Of Socio-Economics, vol 41, no. 4, 2012, pp. 476-483. Elsevier BV, doi:10.1016/j.socec.2011.07.003.



Customer-centric innovation model a big win for tire supplier Kal Tire

The largest mining trucks in the mining industry can easily handle loads of over 500 tonnes, which means that these trucks need reliable tyres to drive on. The tyres have to be resistant to rocks and possible punctures, since repairs or changes to the tyres are very expensive and time-consuming. Mining Tire Group Kal Tire though they could do much more than simply supplying tyres and providing service for tyres. The company possesses decades of global expertise, that could be used to develop innovative solutions to improve performance and safety (Topf, 2017).

What is customer co-creation?

According to Prahalad and Ramaswamy (2004), co-creation is defined as ‘’the joint creation of value by the company and the customer; allowing the customer to co-construct the service experience to suit their context. In other words, it means that new ideas are produced by the company and the customers working together. Mostly, this increases the customer satisfaction because customers feel the company really listens to their feedback, and uses it to improve their products or services. If customers feel the company is delivering to their specific needs, customers want to be even more engaged with the company (Topf, 2017).

Customer co-creation at Kal Tire

Innovation and R&D manager Nilsson said Kal Tire is asking their customers for feedback as to how it can expand into other areas and become more innovative (customer value proposition) (Topf, 2017). As a result, the Innovation Centre was born in 2015. Kal Tire can develop new tools and processes to increase productivity and safety. Nilsson stated ‘’we are generating ideas from the operations on a regular basis which we then evaluate and see how we can start these ideas”. When looking at innovative servicing, Kal Tire made improvements to service contracts, which are generated from customer feedback or from within.

“Customers are looking for products or solutions that will solve their problems and make their life easier, so customers’ expectations will continue to drive innovation,” Nilsson said. As a result, all members of Kal Tire are encouraged to contribute ideas for projects for the Innovation Centre, in order to promote safety, performance and add value for customers (key resources and process). Finally, this innovation is going to give Kal Tire and their customers a competitive edge (Topf, 2017).

The success of customer co-creation for Kal Tire

Co-creating is very successful for Kal Tire. They use decades of knowledge in the mining/tire industry, to improve customer engagement, as well as customer satisfaction (joint profitability). This structure leads to an influx of new ideas while lowering R&D costs. Currently, the Innovation Centre is comprised of four truck bays with electrical and pneumatic outlets. The Innovation Centre is a way for Kal Tire to develop new tools and processes to enhance customer productivity and safety in the field. Examples include a ram mount tool and a remote-controlled service trolley.


They develop ideas in the Innovation Centre, engineer it, certify it, and perform a three-month field test. After this, the Innovation Centre will get videos, pictures and reports. If successful, Kal Tire will make the new product available to the entire Tire Group. Thus, the feasibility requirement is met since the co-creation concept is implemented and turned out to be successful. The institutional environment is not as relevant, because customers only interact with employees of the Innovation Centre to share ideas (Topf, 2017).


Topf, A. (2017). Customer-centric innovation model a big win for tire supplier | [online] Available at: [Accessed 4 Mar. 2017].

Prahalad, C. K., & Ramaswamy, V. (2004). Co-creation experiences: The next practice in value creation. Journal of interactive marketing18(3), 5-14.

Which way should I go? To the left, where nothing is right or to the right where nothing is left?

In the last couple of years there has been a pricing strategy which is becoming more popular amongst different companies. The ‘pay what you want’ pricing strategy concerns the freedom of consumers to pay any price they desire for a certain product or service. Certain companies who have implemented this pricing strategy include a floor price or set a minimum price for their products and/or services to be able to pay for the costs that they make. Thus, the question that comes in mind is if these companies who use this pricing strategy stay in business as long as other companies who use other pricing methods. I know that, in order to answer this question, different variables need to be researched.

As stated before, there are several companies who use the pay what you want pricing strategy. has offered their products to their consumers with no price attached to the products. The CEO states that the goal of implementing this price strategy is to lower the boundary for consumers to try different products. It interesting to see that managers are experimenting in different ways to encourage their consumer to try different products. Product which a consumer would have never chose in the first place. There are also services in which this pricing technique can be used. Jessica Martin is the owner of a consultancy company who uses this pricing method. For an two-hour business strategy session the customer can pay whatever he/she desires. She states that this pricing method encourages consumers to, early in the problem-solving process, ask for the advice of an experts. From my point of view this pricing method can be very beneficial in this situation. Maybe certain companies who would never ask for the opinion of an expert are more willing to grasp this opportunity with both hands.

Another company which also uses this pricing method is Bonvoy adventure Travel. Although this company let’s their consumers pay a price that the consumer have chosen, the consumers are not completely ‘free’ in determining the price of the trips. Bonvoy Adventure Travel offer different prices for different domestic places that a consumer can chose from.

The company that has impressed me the most is the restaurant Panera Bread restaurant who let their consumers pay any price for each item on the menu. The consumers can also chose to pay nothing at all. Interesting is to see that this restaurant uses the profit to help stabilize the community by helping homeless people finding a shelter, trying to find jobs for the unemployed etc. They attract more people in paying a ‘regular’ amount for the food, by ‘giving’ back to the community. The question that I asked earlier about the longevity if a company that uses the pay what you want pricing strategy is answered by the owner of Panera Bread. He states that his restaurant stays in existence by the community, if they start caring less than there will be an end of the existence of the restaurant.




The Creation of Social Value: Can an Online Health Community Reduce Rural-Urban Health Disparities?

Online communities are growing in numbers, interactivity and therefore, significance. Online social networks, such as Facebook and LinkedIn, undeniably affect our lives more and more every day. However, not always the creation of such an online community serves commercial purposes.

The aim of the article by Goh, Guodong (Gordon) Gao & Agarwal 2016 is to examine the creation of social value by the participation in an online community, created solely for patients of specific health diseases. The specific purpose of the authors is to examine whether the exchange of information on the platform can lead to a reduction of health disparities between urban and rural areas.

According to the literature, rural areas face greater health adversity issues because of asymmetrical access to information and health resources. What deteriorates the situation even further, is the fact that residents of rural areas do not have easy access to support groups. The above-mentioned facts lead patients to a limited number of interactions with healthcare professionals and peer patients, which in turn is the cause of their low health literacy. Therefore, the authors advocate that the participation on an online community will help alleviate those differences.

The main strengths of this study are its dataset, the model used, and the robustness checks that the authors performed. The dataset is focused on patients of a specific disease which according to the authors is the ideal for the purpose of this study. There reasons are, that the disease could be improved by the exchange of information, but at the same time it is relatively rare which makes the exchange of information between patients considerably difficult. The choice of an ERGM model is considered appropriate, since it has been proven to perform better on network data compared to a regression analysis, for instance. Lastly, the robustness checks, such as the elimination of top contributors in the network, improve the reader’s confidence in the results.

The article concludes that there is a net surplus of information transfer from urban to rural areas. Thus, participation of rural areas in online communities improves rural patients’ health capabilities. In turn, these enhanced capabilities lead to a reduction in health disparities which constitutes the creation of social value.

It could be argued, that the biggest weakness of the article lies in its conclusion. This study merely proves that there is a positive flow of information from urban to rural patients within the network. There is no evidence that this flow of information actually leads to a reduction of health disparities between the two areas. The authors base their conclusion on the assumption that improved health capabilities lead to a reduction of health disparities. However, the paper’s aspiration was to prove the creation of social value. In order for patients’ health to improve, the mere exchange of information is not considered enough. There must be a robust check on the quality of the information exchanged on the platform and most importantly on the results on patients’ health. It is only then, that we could come to a safe conclusion that the communication through this online community created significant social value.


Crowdfunding: Why People Are Motivated to Post and Fund Projects on Crowdfunding Platforms

The concept of crowdfunding is rapidly becoming more popular, and people are increasingly turning to crowdfunding platforms such as Kickstarter or IndieGoGo. As such, there has been a growing amount of research focusing on how to increase the chance of running a successful crowdfunding campaign. The focus is on how to optimize elements such as the design of crowdfunding page content or reward building to get the best possible results. However, what is it that motivates people (both creators and funders) to actually use crowdfunding platforms? Gerber, Hui and Kuo (2012) conduct research to determine the motivating factors that draw people to crowdfunding platforms, and moreover explore how these platforms impact the successes of projects in general. Through various interviews with creators, funders and representatives from Kickstarter, IndieGoGo, and Rockethub, the authors gain insights into the motivating factors that stimulate people to use crowdfunding platforms.

Why do creators use crowdfunding platforms?
The findings of the study show that while creators are primarily motivated to raise funds, there are also social aspects that contribute to why they decide to use crowdfunding platforms. Firstly, the community aspect of crowdfunding provides creators with validation regarding their projects. The community can provide feedback in the early stages of the project, which can take away a lot of the uncertainties about how the project is seen by consumers. Moreover, the community validation aspect is shown to actually increase the creator’s perception of his/her own ability, which in turn stimulates increased motivation as well as increased performance in the project.

Secondly, crowdfunding platforms provide creators with the opportunity to connect with their funders and engage in direct collaboration. This shifts the emphasis from a mere financial transaction to engaging in long term two-way interactions with funders, essentially dissolving the line between producers and consumers through active participation.

Thirdly, the results show that creators are actively encouraged to participate in crowdfunding by being able to see successful past projects and the idea that it is possible to replicate those campaigns. In this sense, successful campaigns do not only draw more attention to the project itself, but they also provide social proof and an example to the public on how to become a creator.

Lastly, creators are motivated to use crowdfunding platforms because it provides exposure to their projects through social media channels. Since these platforms are becoming so widely used, they essentially provide a means to showcase a concept to the world without the creator having to spend significant amounts of money on advertising.

Why do funders use crowdfunding platforms?
Similar trends can be seen among funders that use crowdfunding platforms. It is found in the study that while funders primarily seek rewards, there are also social factors that contribute to the appeal of using crowdfunding platforms. Firstly, funders often become intrinsically motivated to engage and contribute to a creative community with similar interests. The idea of being part of a community and collaborating across different projects, strengthens the connections of people within the social network and provides intrinsic motivation.

Secondly, funders often become personally interested in the projects that they follow or fund, and as such become motivated to support the creator in realizing the campaign goal. Personal involvement allows funders to take pride in the achievements and developments of the project, which in turn makes the participation in crowdfunding more rewarding. The implications of perceived involvement in the project could also make funders more loyal towards both the creator and project. This could therefore lead to a greater motivation to create awareness for the project through word of mouth, and a greater motivation to fund future projects by the same creator.

What does this mean for crowdfunding platforms?
The research has practical implications for crowdfunding platforms. By stimulating the features necessary to form interactive communities, crowdfunding platforms can satisfy the aforementioned motivational factors that stimulate people to want to participate. By emphasizing and building on these elements – such as the communication channels between creators and funders, and enhancing transparency in the workings of past successful projects, crowdfunding platforms can increase participation on both the creator and funder sides.

Gerber, E. M., Hui, J. S., & Kuo, P. Y. (2012). Crowdfunding: Why people are motivated to post and fund projects on crowdfunding platforms. In Proceedings of the International Workshop on Design, Influence, and Social Technologies: Techniques, Impacts and Ethics (Vol. 2, p. 11).

Online retargeting strategies

Already looking for a summer holiday? When you are searching for a nice all-inclusive resort in Greece for eight days, good chance that when you are on Facebook the next day ads will appear with offers for holidays. This is an example of so-called dynamic retargeting. Based on your browser history, the advertisement will appear when you are surfing on the internet. Next to that, the specific website also remembers your history and can offer personal recommendations.

It is interesting for companies to find out what kind of online advertisement strategy is most effective and will trigger the highest conversion rate. And from the customer point of view, what does the customer want to see and what kind of information does he or she need? Because retargeting is a relatively “new topic” not much is known about what information re-targeting should actually contain and in what form. The researchers of the paper “When does retargeting work? Information specificity in online advertising” were eager to find out. In their research, they focussed on whether a generic brand advertisement or specific product advertisement works best in dynamic retargeting.

The paper is based on a field experiment conducted by an online travel firm. The consumers that visited the website of the online travel firm and that looked at specific hotels, were randomly targeted with either a generic retargeting advertisement or a specific retargeting advertisement on external websites that were in the network of the company, see figure 1. The experiment ran for 21 days and data was collected for 77937 individual profiles. The measurement of success was whether a consumer purchased a holiday through the website during the field experiment.

Figure 1

The results show that overall retargeting will lead to higher conversion rates. More specifically, using generic adds will create more purchases than specific adds. The study indicates that this depends on whether the consumer is broadly interested in holidays and is still in the orienting phase or that they are already looking for specific characteristics like country, pool, rooms etcetera. (Lambrecht et al, 2013)

The main strength of this paper is that methodology, the field experiment, caused high validity and generalizability of the results. An actual advertising was tested on existing customers. Furthermore, the researchers also performed several robustness checks that provided further evidence of the found results.

An important implication for companies is to use this result in targeting different customers. Customers that are already specifically interested should be retargeted with specific ads and customers that are still in the first phase of orienting should receive generic ads. This outcome can be linked to the customer journey of the consumer.  Companies could, for example, look at research about the customer journey to determine their retargeting strategy. When the consumer is using a laptop, for example, it will be closer to purchase than when using a mobile device. (De Haan, 2015) This implication is of practical use for online companies in deciding upon their most effective advertising retargeting strategy.


De Haan, Evert, P. K. Kannan, Peter C. Verhoef, & Thorsten Wiesel (2015). The Role of Mobile Devices in the Online Customer Journey. MSI working paper series, forthcoming.

Lambrecht, Anja, and Catherine Tucker. “When does retargeting work? Information specificity in online advertising.” Journal of Marketing Research 50.5 (2013): 561-576.

DeWALT and its customer-driven innovation

Firms realize that customers have a significant impact on whether a product or service goes to market successfully. Customer co-creation, the process where organizations and consumers work together to create ideas, products, and services, therefore has become a popular medium (Saarjärvi et al., 2013). Often in this case organizations steer product innovation, but customers have a say in it. One firm that also uses this new medium is DEWALT (BBC, 2016).

The company

DEWALT, is a subsidiary of Stanley Black & Decker and leader in the American professional power tool market for the construction, manufacturing, and woodworking industries. The company is founded in 1924 and since then millions of professionals have relied on the company to produce the latest durable products that solve new challenges on the worksite.

Business model

DEWALT follows a revenue based business model that aims to provide value in delivering optimized professional workhorse solution-tools, accessories, and services to ensure confidence for the toughest jobsite conditions. But besides making tools like utility knives and pliers, DEWALT is also known for making digital products like the TOOL CONNECT and CRIMP CONNECT mobile app that allow you to digitally connect and control DEWALT products. Moreover, DEWALT made an android-powered smartphone designed for building industry workers. The device is designed to survive a two meter drop on to concrete and can operate in temperatures ranging from -20C to 60C (Forbes, 2016).

Co-creation of customers

Because competition is fierce, many industry participants try to launch more tools with beter quality in a shorter time period. To not fall behind, DEWALT needed a fast and accurate assessment tool to be more reactive in the marketplace. Additionally, to understand the direction technology and innovation needed to go, DEWALT realized that launching products that meet the needs of tradespeople requires bringing them into the decision-making process for ideation, product testing and usability, marketing, and packaging. To meet the aforementioned challenges DEWALT launched the DEWALT Insights Forum, an insight community of 12,000 members who share ongoing feedback and which additionally allows invention submission where professional tradesmen and loyal customers submit ideas for new products. This community is built together with partner Vision Critical and includes customers, partners, employees, fans, donors, and alumni. The characteristics of an insight community compared to other communities is depicted below (Visioncritical, 2015) (DEWALT, 2016).


Using a Insight community, DEWALT gets rapid and ongoing feedback that allows them to make easier business decisions. More specifically, the insight community allows DEWALT to engage with customers in an ongoing dialogue that respects members individuality and their humanity, and which complements other data sources, like Big Data, CRM, and social media analytics. This together: builds better products as DEWALT better understands how its products fit and function in the lives of their customers, provides better service, and delivers better results. The advantages of the Insight community are depicted below (Saarjärvi et al., 2013).


While traditional market research can be impersonal, time consuming and expensive, the DEWALT Insights Forum creates relationships with members and saves the company time and money. The company saved more than $1 million in research costs in 2016 and almost $6 million since establishing the Insight community. DEWALT can now use one resource for the entire lifespan of a project and once products have launched they can follow up easily with satisfaction and quality surveys (Dewalt, 2016).

Overall, DEWALT is a business case which shows us that the theoretical advantages of customer co-creation can indeed become reality and benefit an organization significantly.

Hannu Saarijärvi P.K. Kannan Hannu Kuusela, (2013),”Value co-creation: theoretical approaches and practical implications”, European Business Review, Vol. 25 Iss 1 pp. 6 – 19

An Audience of One: Behaviorally Targeted Ads as Implied Social Labels

Online advertisements have become more important than ever and data have helped to make ads tailored to every single individual. Many research has been done about the differences of traditional ads and personal ads. Often, prior work examined the inferences consumers make about firms when confronted with advertisements. However, this paper researches what the inferences firms make about consumers have as consequence for consumer awareness. People recognizing tailored ads will adapt their behavior through social-labeling. Hence, behaviorally targeted ads can influence consumers’ self-perception, and finally their purchase behavior.


In the past, firms targeted people based on customer segments. Variables used to determine to which segment an individual belonged where for example demographics (e.g. gender and ethnicity) or psychographics (e.g. personality and lifestyle). Nowadays, every website collects data about its visitors to track their behavior and to determine specific user profiles. Hence, marketers make inferences about every visitor, based on past behavior. Using behavioral targeting, personal ads can be displayed to consumers to influence their behavior. By doing so, marketers place a certain social label to an individual. This paper examines whether consumers adapt their behavior when they perceive an ad as behaviorally targeted and recognize the implied social label.




How do we measure this?

The paper used different methods to test the proposed hypotheses. In total, four different studies were conducted, using mostly lab experiments. Also surveys and posttests were used to measure the relationships. Testing the hypotheses using multiple studies and different research methods is one of the major strengths of the paper. Every hypothesis is researched individually to examine the impacts in-depth and controlling for influences for every specific case. Another strength is that the effects are measured over time.


What do we find?

The studies result in some interesting findings. Behaviorally targeted ads can act as implied social labels. If consumers identify an ad as personalized, they will adjust their self-perception. According to the self-perception theory (Bem, 1972), people perceive themselves to have certain qualities and will act according these believes. External sources, such as personalized ads, can influence these self-perceptions. As a result, people will adapt their purchase behavior to meet these implied social labels the ads communicate. The studies also show that this not only contains for purchase behavior, but also for other label-consistent behavior (e.g. people labeled as environmental friendly are not only more willing to purchase eco-friendly products, but will also donate sooner to an environmental friendly charity). However, this behavior will only occur if the displayed ads are at least moderately aligned with a person’s past behavior.




What are our limitations?

Even though the study is well designed and executed, there are some weaknesses, limiting the applicability of the findings. The paper mostly tested the hypotheses using lab experiments. People were informed in different manners that ads were personalized or based on earlier completed tasks. This is of course not representative for real-life cases, reducing the applicability. Additionally, the effectiveness of personalized ads depends on the trustworthiness of a firms (Aguirre et al., 2015). The lower a consumer’s trust in a firm, the more suspicious he will be and the more privacy concerns will play a role. Hence, the findings may have limited impact for less trusted firms.


Still, our findings matter

There are some limitations to the applicability of the results. However, managers should still take into account how to target a consumer, since consumer responses to behaviorally targeted ads are sensitive to several variables under managerial control. Managers should disclose that an ad is personalized (e.g. using the AdChoices icon), to influence people’s self-perception. Additionally, the ads should be at least moderately match with a person’s personality.


Influencing someone’s self-perception will not only result in greater sales of the featured product, but also for future sales, and relating product categories. Conclusion, behaviorally targeted ads may be more beneficial for a company’s profits than previously believed.



Aguirre, E., Mahr, D., Grewal, D., de Ruyter, K., & Wetzels, M. (2015). Unraveling the personalization paradox: The effect of information collection and trust-building strategies on online advertisement effectiveness. Journal of Retailing, 91(1), 34-49.


Bem, Daryl J. (1972), “Self-Perception: An Alternative Interpretation of Cognitive Dissonance Phenomena,” Psychological Review, 74 (May), 183–200.


Summers, C. A., Smith, R. W., & Reczek, R. W. (2016). An Audience of One: Behaviorally Targeted Ads as Implied Social Labels. Journal of Consumer Research, 43, 156-178.

Estimating aggregate consumer preferences from online product reviews

Nowadays you cannot find any product category on the internet without anyone giving their opinion on a specific product. There will be practically no products available which have not been rated by consumers through the use of product reviews. This data offers an insight in the perceived strengths and weaknesses of a certain product, also the value of the product as a whole can be obtained. With all this data available, what will be the implications for companies? In other words, how can companies use this wide variety of data to determine what to produce next or to improve their current product?

To begin with, the authors acknowledge that “the basic relevance of consumer preferences, e.g., in connection with new product development processes, is widely confirmed in marketing research and practice.”(R. Decker, M. Trusov, 2010) Therefore it will only be logical to attempt estimating the aggregate consumer preferences in order to produce a product which satisfies these preferences. Furthermore, Zhu and Zhang(2010) found out that 24% of online customers make use of online reviews prior to purchasing a product offline. This implies that the preferences can be used to determine future sales in both online and offline environments. It becomes clear that online reviews have become a major information source for consumer prior to making a purchase. With that in mind, it will be stupid to ignore the importance of online reviews in the development or improvement of products.

Online product reviews typically consist of the perceived strengths and weaknesses; an overall product rating; the formless comments and remarks (full text). One of the main strengths of online reviews compared to traditional consumer preference information; is the fact that the reviews have been written voluntarily instead of being requested. Therefore, companies can expect a high level of authenticity with these reviews. In this paper, the authors created an econometric framework which can be used to aggregate the plentitude of individual consumer opinions into aggregate consumer preference data. The suggested methodology proves to be useful in the collection of consumer preferences and also in reputation analysis.

As with every research, the implications are subject to some practical limitations. The authors assume that the reviews are written by real consumers, instead of professionals of the company itself to boost sales. Furthermore, the available reviews can be biased by self-selection. This means that consumers in a certain product category might be more willing to participate in the creation of reviews.

In conclusion, it would be fair to say that the authors make a useful contribution to the scientific body of knowledge. They provide managers with a framework which can be used to aggregate consumer preferences. This will give managers a handle on which they can build further. As the authors also state; “future research should be devoted to the development of powerful filters for detecting fake reviews and to the further automation of the time-consuming data pre-processing and attribute extraction steps.” (R. Decker, M. Trusov, 2010)

Decker, R., & Trusov, M. (2010). Estimating aggregate consumer preferences from online product reviews. International Journal of Research in Marketing27(4), 293-307.

Zhu, F., & Zhang, X. (2010). Impact of online consumer reviews on sales: The moderating role of product and consumer characteristics. Journal of Marketing, 74(2), 133−148.

Laurel & Wolf brings interior design into the digital age

Ever felt like changing your interior but no time and experience to do it yourself? Worried that it becomes too expensive when allowing stylists design your space? Inspired by all the inspirational boards and images of designs popping up on websites like Pinterest and Instagram? No matter what the exact reason may be, Laurel & Wolf offers the perfect solution for all your designer needs at affordable prices.

Laurel & Wolf – What is it?
L&W, founded in 2014, took advantage of the increasing popularity in interior design, while at the same time recognizing the cost and effort involved in finding and hiring a designer. Due to the traditional pricing system of interior design services, 98% of people could not afford them and L&W found a way to change this radically (L&W, 2017). The company transformed the entire interior design industry by launching their online platform, connecting professional designers with customers, allowing them to design tailored interiors for commercial and residential spaces (Perez, 2015). The platform offers access to worldwide high-quality design partners in return for a one-time flat fee from its customers. As such, the company makes professional interior design available to all.

How does it work?
L&W provides a platform whereby designers can participate in projects demanded by customers. The platform includes communication tools for interaction between designers and customers, and third party manufacturers can offer their products and services to both parties. Customers pay a flat fee and provide personal information to the platform including a style quiz, marking highly desired items and photos of their space (i.e. passive information-based individualization). In return, the platform provides customers with around six 2D digital style boards from professional stylists who created personalized designs for their space (Perez, 2015). From those style boards, customers can select their favorite, and interact directly with the respective stylist to add modifications (i.e. active consumer involvement).

The final result is a shopping list which includes all items of the preferred digital style board (including modifications). This shopping list fits into the indicated budget of the customer.

Efficiency Criteria
L&W is a two-sided personalized platform connecting designers to customers seeking a new, but affordable design (Rysman, 2009). This value system is considered efficient since it maximizes joint profitability of both parties involved (Carson et al., 1999). On the customer side, their unmet need is utilized by allowing for easy, efficient and low cost designs. Customers get served with a small number of designed inspiration boards based on their indicated preferences which reduces choice overload and thus increases efficiency. Moreover, time effort is reduced by using an online platform instead of the need to manually browse and look for design websites or shops. Last, by paying a relatively low, flat flee and indicating a maximum budget on shopping items, costs are minimized. From the designers’ perspective, designers get access to a new customer base, enhancing their career prospects. A designers’ profession can be highly insecure in terms of working opportunities and the L&W platform provides a constant stream of customers. Revenue for the L&W platform is generated by 20% of the flat design fee paid by customers and through affiliate revenues on online sales (Perez, 2015).

Regarding the institutional arrangements, it is important for the platform to guarantee high-quality designs. To assure this, designers are screened and evaluated extensively before being allowed to join the platform. In addition, the platform offers the ability for customers to rate and review designers. Assessing the legal institutional environment, the platform is subject to the threat of misuse of intellectual property. Customers might take advantage of other designers’ work and present it as if it is theirs. To circumvent this, the platform grants intellectual property rights (IPRs) as protection against the creators of designs by letting each participant in the platform sign an ‘End User License Agreement and Terms of Service’ (L&W, 2017). As such, interests between the designers and wider public are balanced and creativity is stimulated (WIPO, 2016).

What’s in it for the Future?
Currently, only 2 years after its foundation, the company grew to over 60 employees with a marketplace of more than 1,000 interior designers. The company is named as one of Business Insider’s ‘Los Angeles Start-ups to Watch’ and published in magazines as Forbes and TechCruch Inc (L&W, 2017). Clearly, L&W has disrupted the traditional model of the interior design industry and this is only yet beginning to pay off..


Carson, S. J., Devinney, T. M., Dowling, G. R., & John, G. (1999). Understanding Institutional Designs Within Marketing Value Systems. Journal of Marketing, 115-130.

Laurel & Wolf (2017). About Us. From: [Accessed: February 25, 2017].

Laurel & Wolf (2017). End User License Agreement and Terms of Service. From: [Accessed: February 26, 2017].

Rysman, M. (2009). The Economics of Two-Sided Markets. Journal of Economic Perspectives, Vol 23 (3), pp. 125-143.

Tsekouras, D. (2017). ‘Lecture 1: Introduction to Value Co-creation. Customer-centric Digital Commerce, Rotterdam School of Management [Accessed: 1 March 2017].

World Intellectual Property Rights Organization (2017). About Intellectual Property. From: [Accessed: 26 February, 2017].


Hola, Bonjour, Ciao, Namaste! Learning a new language has become as easy as 123

Hola! Ciao! Bonjour! Namaste! Salaam!

There are so many beautiful languages out there to learn, but where do you start?

Learning a new language takes time, effort and you need a lot of practice especially by speaking to natives. Through traditional means one would have to find a language institute and hope that their course type and hours relate to their preferences. Most often these courses fail to meet these preferences due to burdens such as location and time. These institutes also often focus on grammar and vocabulary but in order to reach the level of fluent proficiency…

You need to connect to native speakers!

This is where Verbling comes in! Verbling is an online platform where language learners can take lessons with professional teachers to fit perfectly to their learning style. Verbling allows for a cheap, fast and convenient way to learn a new language, either through one-on-one classes or group classes.  Verbling empowers people all over the world to become fluent in a foreign language, and it doesn’t matter where you are located, teachers and students are spread out across six continents (About Verbling).

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How Does Verbling Work?

Verbling’s platform is easy to use. You simply browse through thousands of teacher profiles and bios. Book lessons with the best teachers for your schedule, budget, goals and learning style and log in to Verbling Video and start talking (About Verbling).

Lessons are taken place over video chat, so people can learn wherever they may find themselves and Verblings language teachers are available 24/7 covering all timezones globally. Convenient right? Within no time will you be able to go to Italy and order; “ Posso avere una pizza con prosciutto?” while impressing all your friends.
Next to the virtual lessens Verbling also provides flashcards  as an interactive tool for learning new vocabulary words. Your persnal teacher creates flashcards that you can use between lessons to drill and review, and the  deck of cards get more difficult the more you interact with it.

Lastly, Verbling allows for practice groups to practice your foreign language speaking skills with other students learning the same language (About Verbling).

Screen Shot 2017-03-03 at 23.22.02.pngEfficiency Criteria and Feasibility

Verbling is the online platform that offers everyone worldwide the access to learn a new language, whenever and wherever. The joint profitability criteria is met as the platform maximises the joint payoffs for both the consumer and the teacher. The consumers benefit from learning a new language with a customised lesson plan which perfectly meets their needs, thus eliminating the burden of time and locations of offline language institutes. Furthermore, consumers will be able to enjoy the interaction with other students worldwide who are also learning the same language and improve their new language skills on a whole new social level.

On the other side, the teachers benefit by earning money from teaching their language online, anytime, anywhere. Verbling offers teachers flexibility as they are able to teach in any capacity either full time, part-time, or occassionaly. Moreover, they are not bounded to their geographic location and through Verbling their customer segment can be expanded to every corner of the world. Lastly, teachers gain followers and are able to build a community while building their brand identity.

It’s a win-win situation!  

Verbling’s satisfies the feasibility of required reallocations criteria (Carson et al., 1999). However, the greatest risk for Verbling is the quality of the teachers.The quality of the teachers is insured by Verbling’s application process. Verbling vets applications from prospective teachers and has rigorous standards in order to be accepted, hence ensuring high instruction quality and limiting the quality threat. As a result, the average learner rating for a Verbling teacher is 4.9 out of 5.

All in all Verbling provides a new opportunity for people all over the world to broaden their horizon and learn a new language whenever and wherever they want through a flexible, social and interactive way.

Thank you, Gracias, Grazie, Merci, Arigato!

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“About Verbling”. Verbling. N.p., 2017. Web. 4 Mar. 2017.

Carson, S. J., Devinney, T. M., Dowling, G. R., & John, G. (1999). Understanding institutional designs within marketing value systems. Journal of Marketing, 115-130

Do me a Flavor

Companies will need to interact with their customers so closely that they actually “co-create” value with them on an individual basis (Prahalad, C; ‘’The New Age’’, 2008). Frito-Lay, the foods division of PepsiCo, is taking the management guru’s advice quite seriously and used a Facebook contest (Do us a Flavor) where participants created their own flavor of potato chips with a chance to win $1,000,000 and have their flavor become reality. After participants submit a flavor idea, it is instantly applied to a Lay’s package with an appropriate image. They have also launched a similar campaign last year which asked consumers to vote for the flavour of their choice between the new launches. When talking about the efficiency criteria you must say that these social programs can be a valuable way to both gather insights from your customers and to market the brand in a playful way. As Frito-Lays showed these programs provided an abundance of new ideas that can lead to more insights in to their customer preferences.

I think Frito-Lay has executed this program well and other companies should pay attention when developing their own initiatives. Next to that, they provided instant feedback social sharing which results in people using the platform even more because people like collecting likes. In Do us a Flavor, participants can find out how many people like their flavor and from where in the country interest is coming. They can also share their flavor ideas with their Facebook friends to increase their “likes.” Which gives the customers even a bigger encouragement to use the platform and create more ideas. A big win-win created by Frito-Lay.

An increasing number of companies are doing precisely that to drive up engagement levels and interactivity with consumers to create a customer co-creation. Talking about consumer value creation Frito-Lay has done a great job. When looking at the joint-profitability criteria (CDCC, 2017) they used their consumers to create their own products. Lays profits by producing new type of chips that you know for sure your customers like and on the other hand the consumers benefit by have chips with their own flavor and participate in a social platform with the possibility to receive a large amount of money.