Personalized offers without compromising the privacy of personal information


Searching on the internet for information is one of the most common activities these days. This behavior varies from searching for the closing time of your favorite shop, to finding out how cognitive processes work. Consumers are generating and sharing data when they search on the web. The knowledge of this process is not always present. Even if consumers knew their steps were being followed, would it change their daily behavior? Privacy is not a new term. Yet, it disclosed itself more than ever the last couple of decades, together with the introduction of the Internet. The general definition is the right to be let alone. It is based on the principle of protection of the individual in both person and property (Warren & Brandeis, 1890). However, this definition is too broad. Informational privacy fits more in the context of these days. The definition is the right to control of access to personal information (Moor, 1991).
It is clear that privacy concern is an issue for companies. Companies want to use personal information to offer personalized adverts which is often considered as something positive by the consumers. A business example is Amazon.  The well-known E-commerce company continually updates the user’s personal page to create more tailored experiences. This is done based on past purchases and browsing history and the objective is to stimulate impulse buys (Reverte, 2013). However, personalization has some concerns.

Amazon

 

Sutanto, Palme, Tan and Phang (2013) wrote an article in which they study the so called personalization-privacy paradox. This is the tension between how IT developers and marketers of applications exploit personal users’ information to offer personalized products or services and these users’ increasing concern regarding the privacy of that information. Eventually, this may restrain the use of these applications. The purpose of this paper is to study whether a personalized privacy-safe application works. This application stores and processes information within the user’s smartphone, but does not transmit it to the marketers. This way, personalized information can be offered, without compromising the privacy of personal information (Sutanto, 2013).

Personalized privacy-safe application
To understand the personalization-paradox, the authors build on two theories; the use and gratification theory (UGT) and information boundary theory (IBT).  UGT suggests that consumers use a medium either for the experience of the process or for the content it offers. These two dimensions are called process gratification and content gratification (Sutanto et al., 2013). While the latter refers to the messages carried by the medium, the first one relates to the enjoyment of using the medium.

Next, IBT gives a better understanding in which factors influence process and content gratification.  This theory suggests that consumers form so-called physical or virtual information spaces around themselves. These spaces have boundaries and an attempt by third parties to cross these boundaries will be considered invasive which makes consumers uncomfortable.   In case of an intrusion, consumers will apply a risk-control assessment, weighting the risk of disclosing personal information and the benefits they gain when doing so (Stanton, 2003).

This study conducted a field experiment with three mobile advertising applications. The first mobile application broadcasts adverts generally (i.e. non-personalized application). The second application filters and displays adverts based on the profile information of users, stored in a central server (i.e. personalized, non-privacy-safe application). The last application filters and displays adverts on the profile information of users, stored on their smartphone (i.e., personalized, privacy-safe application). In this context, process gratification is measured with the number of application launches.  On the other hand, if a user is interested in the content offered by the application, they are more likely to save the advert with the purpose of retrieving it later, thus content gratification is measured in terms of the frequency of saving adverts (Sutanto et al., 2013).

Personalized application

The results of the field experiment showed that there is indeed a difference in process and content gratification between the three different applications.  Process gratification increased by 64.5% when the adverts were personalized compared to when adverts were general. However, there was no significant difference in content gratification. This may be explained by the fact that saving adverts explicitly indicates interest in a specific product, thus it requires the user to reveal deeper levels of information than their own boundaries allow. It is likely that this situation causes an uncomfortable feeling and which eventually will lead to a hesitation to save adverts.  Next, the local privacy-safe personalization design increased both process and content gratification. Application use increased by 9.6% compared to personalized, non-privacy-safe application and by 79.1% compared to the non-personalized application.  Respectively, advert saving increase by 24.5% and 55.1%.

However, there is an important limitation in this paper. There is a possibility that some users launched the application, but already were interested in a certain ad. This makes it more difficult to disentangle process gratification from content gratification.

Concluding, this article proposes a personalized privacy-safe application. The results show significant differences between the three applications in favor of the local privacy-safe personalization application. Thus, offering personalized adverts without compromising the privacy of personal information is possible.

References:

Moor, J.H. (1991) ‘The ethics of privacy protection’, , pp. 69–82

Reverte, C. (2013) Personalization Innovators: Amazon, Netflix, and Yahoo! | Available at: https://www.addthis.com/blog/2013/08/28/personalization-innovators-amazon-netflix-and-yahoo/#.WomB3OciHIU. [Accessed 18 February 2018].

Stanton, J. M. (2003). Information technology and privacy: A boundary management perspective. In Socio-technical and human cognition elements of information systems (pp. 79-103). Igi Global.

Sutanto, J., Palme, E., Tan, C. H., & Phang, C. W. (2013). Addressing the Personalization-Privacy Paradox: An Empirical Assessment from a Field Experiment on Smartphone Users. Mis Quarterly, 37(4).

Warren, S.D. and Brandeis, L.D. (1890) ‘The right to privacy’, Harvard Law Review, 4(5), pp. 193–220. doi: 10.2307/1321160

Made.com – a unique business model


made.com

 

Made.com is an online furniture retailer that was founded in March 2010. The company is UK based and has expanded to Ireland, France, Italy, Germany, Belgium and The Netherlands in eight years (Sunderland, 2016). Even though Made.com primarily operates through their online channel, they do have great relationships with a large network of experimental showrooms across Europe, in which they showcase their furniture and designs (Milbrath, 2016). With a sales growth of nearly 50% annually, Made.com has become quit a success. Their unique business model has disrupted the supply chain and revolutionized the playing field of furniture retailers for good (Cassidy, 2017).

How does Made.com create value for their customers?
Made.com has a customer centric business model, in which their customers are put in the center of everything that goes on. The customers get full control when it comes to deciding which furniture goes into production. By giving their customers this power, they have addressed and filled a void in the existing furniture market. Other companies, such as Ikea, have addressed the need for functional and affordable furniture. Made.com however, disrupted the market by successfully addressing the need for unique and affordable furniture (Aba Research, 2017). The customers get to decide, by voting on their favorite designs, which design ideas go from sketches into production. Furthermore, Made.com organizes a yearly “Made Emerging Talent Award” contest in which upcoming designers get to submit their unique designs and Made.com’s Unboxed online community get to vote on their favorite designs. If a design gets enough votes and wins the contest, the item gets produced and sold on Made.com within a period of approximately 12 months. The winning designer(s) get the well-deserved attention, which boosts their beginning careers, and more importantly, the designer(s) get royalties for their item(s). The unboxed community also allows for the customers to feel more connected to the brand and find likeminded peers. For unboxed community member, the ability to ‘co-create’ is a way for them to express their creativity and to incorporate their personal style into the product line of an existing company (Milbrath, 2016).

Efficiency Criteria
Made.com has been able to set itself apart from other (online) furniture retailers. They have a close relationship with several independent designers, and in addition also have an in house design team. An advantage of their business model is that it allows them to quickly react to new trends and allows for trial and error. As a result of the designs being crowdsourced, the company is able to tailor their supply to customer demand. All of this enables the company to release new collections often and quickly. It also allows them make quick decisions with regards to the discontinuation of certain collections if they do not live up to the company’s expectations. In addition, the company tries to minimize its costs by primarily operating online, outsourcing their production and by creating close relationships with their suppliers. Also, the pieces that are sold by Made.com have a longer lead-time. This allows Made.com place orders in bulk, which further reduces their costs.

Another great way in which the company was able to set itself apart is by establishing their Unboxed community. It started off with Made.com contacting their customers and asking whether they were allowed to ‘come over and take pictures of the unique items in their houses’. Now it has turned into their own equivalent of Pinterest, in which their customers can upload pictures of their Made.com pieces. This is a great strategy that Made.com has to create user generated buzz and strengthen the community ties (Aba Research, 2017; Made.com, 2018). In addition, it is extra and free promotion of their products, because potential buyers can see the items in more real life settings and get even more inspiration.

In conclusion, by creating a customer centric business model, Made.com has been able to set itself apart from other furniture retailers. Made.com provides the consumer and independent designers with a platform that allows them to out their creativity and express themselves. The company has changed the game by not just focusing on functionality and affordability, but by putting the customer in the middle. By involving them with design ideas and giving them a community of likeminded peers they proof that they have been really listening to the needs of their customers.

 

 

 

 

References
Aba Research (March 22nd, 2017). ‘Made.com – carving out a distinctive furniture-business model’. Retrieved from: https://www.abaresearch.co.uk/single-post/2017/03/22/Madecom-%E2%80%93-carving-out-a-distinctive-furniture-business-model

Cassidy, A. (September 18th, 2017). ‘Made.com founder: ‘We want to be the new Ikea’’. Retrieved from: https://www.theguardian.com/small-business-network/2017/sep/18/madecom-founder-we-want-to-be-the-new-ikea

Milbrath, S. (August 5th, 2016). ‘Co-creation: 5 examples of brands driving customer-driven innovation’. Retrieved from: https://www.visioncritical.com/5-examples-how-brands-are-using-co-creation/

Sunderland, R., ( July 6th, 2016). ‘Online furniture boss gunning for Ikea: He set up shop just six years ago, but man behind Made.com is thinking big’. Retrieved from: http://www.thisismoney.co.uk/money/markets/article-3677591/The-online-furniture-boss-gunning-Ikea-setting-shop-London-just-6-years-ago-man-com-thinking-big.html

 

 

 

 

FlavorPrint: Personalizing your recipes through your tastes


How amazing would it be if you knew every meal you cooked would fit your tastes? McCormick & Company, a major player in the flavor industry, is reinventing traditional FMCG business models through its data-driven, customer-focused offerings. While the company generally manufactures and distributes spices, seasonings, and other products over 125 countries and territories (Amazon Web Services, n.d.), a shift has occurred from a product-centered company to a business model in which the entire customer value is achieved through a comprehensive consumer journey.

McCormick is continually moving towards innovative solutions to reach customers relative to competitors or FMCG companies in other sectors. The expected sales target of $5bn by the end of 2019 will come from e-commerce, innovation through platforms, and acquisitions of other companies (Nunes, 2017); evidently, digitization is driving the company’s growth. In 2014, McCormick created a spinoff company named Vivanda, through which a transformative product called FlavorPrint was developed (Nash, 2015).

FlavorPrint

FlavorPrint is ‘a technology that matches people with food they love’ (FlavorPrint, 2017). When users sign up to McCormick’s recipe platform, they are asked to fill out initial questions about their food preferences. Their recipe search behavior on the platform will continuously adapt the user’s ideal taste palate to recommend recipes that fit the user perfectly. FlavorPrint ‘combines sensory science and culinary science’ to ‘offer personalized recommendations for recipes, meals, and eventually wine pairings’ (Amazon Web Services, n.d.). FlavorPrint is able to change a person’s cooking habits by offering exciting alternatives that are customized to the user (while promoting McCormick’s products) (FlavorPrint, 2017).

Value to Consumers

Vivanda’s FlavorPrint follows a number of mass customization (MC) drivers while requiring little to no investment by the consumer, and consumers participate in the service because it offers them significant product utility. The extra costs for consumers are low; the quality of recommendations is high, no financial investment is necessary to use the service, and the effort of signing up to the platform is relatively low (Tsekouras, 2018). Furthermore, the FlavorPrint service works automatically, meaning that the consumer does not have to take any specific action to use the service, other than signing up to the platform. In short, FlavorPrint’s predictive analytics technology has made recipe selection much easier and more likeable, while demanding little time and effort from consumers.

Efficiency Criteria and the Future of Predictive Analytics in Food

In 2013, McCormick initiated a small beta program for its new technology. While a 1% increase in sales is very large in the industry, FlavorPrint quickly grew to 100,000 participants (while still in beta mode) and drove sales up by 4.9% (Amazon Web Services, n.d.). This was a sign that the company needed to ensure scalability for its platform, to allow millions of users to participate.

While financial data and statistics regarding platform usage have not been published, Vivanda has officially spun off from McCormick. In 2016, Vivanda announced a strategic partnership with and investment from German software giant SAP. This collaboration will ‘help our food industry partners to grow profitably by delivering increasingly personalized experiences and outcomes directly to customers’, according to E.J. Kenney, SVP Consumer Products Industry at SAP (SAP, 2016). The partnership indicates that Vivanda has shifted its strategy from focusing on McCormick customers to delivering its service to various players in the food and beverage industry; by targeting a wide range of food and beverage customers, Vivanda’s growth seems inevitable.

Drawbacks

It will be interesting to see what the future will hold for Vivanda and the use of predictive analytics in food. McCormick evidently derives great value from the technology, but one has to wonder if the technology has its criticisms pertaining to a possible lack of understanding of consumer behavior or privacy issues. For example, while the technology takes into account various contextual factors such as consumer budget and nutritional objectives while recommending foods, changing lifestyle situations may prove it difficult for the technology to adapt fully to consumer’s lives.

Conclusion

Although FlavorPrint does not directly offer a new revenue stream, the new possibilities for consumer packaged goods firms to reach customers indicate a potential for significant impact on future sales for Vivanda clients. Customization/personalization lies at the heart of the service, which is why the business model provides companies with a way to target consumers much more directly than through traditional marketing.

Will you use FlavorPrint to find new recipes? Does the company have a bright future? Let me know in the comments!

 

References

Amazon Web Services. (n.d.). AWS Case Study: McCormick. [online] Available at: https://aws.amazon.com/solutions/case-studies/mccormick/ [Accessed 18 Feb. 2018].

FlavorPrint. (2017). FlavorPrint. [online] Available at: https://www.myflavorprint.com/ [Accessed 18 Feb. 2018].

Nash, K. (2015). Tech Spin-off from Spice Maker McCormick Puts CIO in the CEO Seat. [online] WSJ. Available at: https://blogs.wsj.com/cio/2015/04/01/tech-spin-off-from-spice-maker-mccormick-puts-cio-in-the-ceo-seat/ [Accessed 18 Feb. 2018].

Nunes, K. (2017). Innovation central to McCormick’s growth strategy. [online] Food Business News. Available at: http://www.foodbusinessnews.net/articles/news_home/Business_News/2017/04/Innovation_central_to_McCormic.aspx?ID={CD115D1F-0E2B-4AE5-8295-8ED5DD8C1516}&page=1 [Accessed 18 Feb. 2018].

SAP. (2016). SAP and Vivanda Serve Up FlavorPrint Technology. [online] Available at: https://news.sap.com/sap-and-vivanda-serve-up-flavorprint-technology/ [Accessed 18 Feb. 2018].

Tsekouras, D. (2018). CCDC Lecture 3.

The online community co-creation of Movember


It all started as a joke; 30 Australian men decided to undertake a fundraising activity to raise money for prostate cancer, testicle cancer and depression amongst men. The fundraising activity entailed the following: not shaving your moustache for 30 days during the month November. Movember was born. The fundraising activity transformed into a yearly event raising donation for prostate cancer, testicle cancer and men’s health in general. By 2014 the Movember foundation managed to raise more than 409 million euros.  By stimulating men to participate with Movember, the foundation tries to encourage early discovery of cancer and reduce the number of preventable deaths due to these types of cancer and other health issues.

When thinking of successful business models, charity foundations are not the first things that pop into mind. However, the enormous success of the Movember foundation is too striking to go unnoticed. One could say it has transformed into a global movement. How does this foundation differentiate itself from other annually re-occurring charity events? Let’s start with how it works:

First, to participate in the challenge, participants have to register to the foundation’s online platform. After that they can opt to grow a moustache for 30 days or to set a distance goal that the participant can either run, cycle, walk, row or swim towards. Another option is to host a Movember event, this can be anything from sports competitions to music events. The last two options also allow women to participate.

And what exactly is the success factor behind this strategy? It’s hard to pinpoint a single factor, especially because of the lack of research that has been done in the field value co-creation campaigns like Movember. Rather it is a multitude of factors combined that has made the Movember campaign such a thriving success.
The campaign is mainly reliant on the community participation and conversation through social media and worth of mouth, and hardly uses different sources of marketing such as above-the-line advertisements (Ogrodnik, 2014). By empowering its participants, Movember has handed the control over to the community. Instead of funding a campaign, participants run their own campaign (Meade, 2013). The Movember foundation makes use of so called “ value co-creation” (English and Johns, 2016).
As described by Nelson et. al 2014: “Value co-creation positions customers as consumers and producers alongside multiple actors within a network of continual, contextually contingent interdependent exchange” (English and Johns, 2016).

Firms or foundations are not longer the sole producer of value, rather they increasingly let the consumers participate in the creation of the value. Rather than approach consumers as end-consumers, they let consumers actively engage, creating mutually beneficial circumstances in which value is jointly created. Often this value is much greater than the company/foundation could ever have achieved alone (Darmody, 2009).

the Movember foundation would never have managed such an enormous reach by undertaking all its advertising itself. Instead by creating a platform for participation, it allowed its participants to playfully interact and create a social community, which ultimately led to Movember going viral with world-wide exposure.

So when the clock hits 23:59 on the 30th of November, does that mean that Movember is over? No it does not. After the yearly campaign has finished, it’s time to focus on all the achievements and the results that come from the raised funds and to think about possible new causes that Movember can support.

So what are the downsides of Movember’s strategy? One of the key challenges of such a viral campaign is to stay consciously linked with the cause. There is a large amount of people that have heard from Movember, and know that it is about growing a moustache in November, but are not aware of the charity message behind the campaign.  Furthermore, some big corporations actively promote the campaign, however the foundation has to be careful not to be taken advantage of. Sometimes the line between social corporate responsibility and the corporate’s brand building can be very thin, as some are earning on “moustache merchandise” and do not donate anything to the foundation (Beanland, 2014). Critics say that Movember is a good example of how egocentric charity has become, that participants use it as a public display for promoting their moral values, a form of exhibitionism (Brussen, 2012).

In my opinion, if using people’s exhibitionism to raise money works, it works. I’m very curious to see what the future for Movember will hold.

 

Sources:
Beanland, C. (2014). Take a punth on it: From Veganuary to Decembeard – How each month of. [online] The Independent. Available at: http://www.independent.co.uk/news/uk/this-britain/take-a-punth-on-it-how-each-month-of-the-year-became-a-charity-endeavour-9033226.html

Brussen, B. (2012). ‘Beste snordragers van Movember, jullie actie is smakeloos, kinderachtig en pathetisch’. [online] Volkskrant.nl. Available at: https://www.volkskrant.nl/opinie/-beste-snordragers-van-movember-jullie-actie-is-smakeloos-kinderachtig-en-pathetisch~a3352020/

Darmody, A. (2009). Value Co-Creation and New Marketing. [online] Timreview.ca. Available at: https://timreview.ca/article/302

 English, R. and Johns, R. (2016). Gender considerations in online consumption behavior and Internet use.

Isaac, A. (2015). How Movember is outgrowing moustaches. [online] the Guardian. Available at: https://www.theguardian.com/voluntary-sector-network/2015/dec/02/how-movember-is-outgrowing-moustaches

Meade, A. (2013). Movember: from grassroots to global growth. [online] the Guardian. Available at: https://www.theguardian.com/voluntary-sector-network/2013/nov/01/movember-grassroots-to-global-moustaches

Ogrodnik, I. (2014). What makes the Movember movement so successful?. [online] Global News. Available at: https://globalnews.ca/news/1637616/what-makes-the-movember-movement-so-successful/

 

GoMetro – Real Time Passenger Data for Public Transportation Systems


Cape Town, South Africa.

Three million commuters use the metro rail on a daily basis in South Africa. The underdeveloped public transportation system has frequent delays, however there are no notifications of cancellations or changes in the schedule due to the fact that there are no sources of real time travel information. The South African startup, GoMetro, provides commuters with mobile services through the mobile web, apps, socials networks and sms-services and thereby they connect transit operators with commuters who are at the center of the platform. Commuters in their turn log on to the platform and share their real time location, stops, delays and any cancelations. In return GoMetro can provide and exchange real-time arrival and departure information, current locations of vehicles, early notifications of operational breakdowns and travel disruptions of the public transportation system. Hereby, GoMetro, transit operators and commuters co-create value through the sharing of real time data information creating a platform using a customer-centric approach.

Although GoMetro started in South African cities with underdeveloped transportation systems, the scope of the business model reaches much further. Personal mobile devices are being used and have changed information distribution paradigms, however they have not yet been used in the public transportation domain (Nunes, Galvao and Cunha, 2014). When consumers interact with service providers, in this case GoMetro, a win-win situations is created. This business model incorporates three different roles for the commuters in the co-creation of value; they need to use the information, provide real time information and validate given information (Nunes, Galvao and Cunha, 2014). This business model can be used in many different countries and cities, as the use of mobile devices has risen substantially over the recent years and will continue to do so (Emarketer.com, 2018).

The three parties involved in the platform of GoMetro are the commuters, the transit companies and GoMetro itself, each creating value with each other as to create joint profitability. The commuters create value through sharing the real time travel data and use the travel data of others, thereby creating value for the platform as a whole. The transit companies can provide incentives such as discounts on travel fares for the commuters, as to incentivize them to share their travel data. GoMetro contributes by the creation of the platform and bringing all users together so they can co-create value, in return they make money through advertisements on the platform. The creation and development is done in cooperation with Intel, who provide technical support and insights. All these elements are linked to the customer-centricity of the platform and the interaction between the parties creates joint profitability for all players involved.

The institutional environment GoMetro faces in South African cities has been positive ever since GoMetro started with the idea. With millions of people commuting each day in South Africa and many cannot afford a car themselves, efficient public transportation could be a lifesaver. GoMetro helps to improve the efficiency and commuters adopt the platform in large numbers, as already near to a million people are registered users. Looking at the support the company is getting from both governmental institutions as well as private companies the platform seems to be beneficial for all. Increasing the use of public transportation in the big South African cities helps to reduce the use of private cars, air pollution and frees up space in the cities, as less cars enter the urban areas. All these elements contribute to a more efficient infrastructure of large cities. Having no legal boundaries or complications, makes the institutional environment even more advantageous for the platform of GoMetro.

One drawback is the issue of privacy concerns. Sharing real time personal travel information reveals where you are at a given moment in time and this captures valuable information which can also be used for undesirable purposes. Consumers have to consider whether sharing their real time travel data is worth the costs of sharing private information with the platform. As long as the benefits outweigh the costs, the platform has a sustainable business model and a bright future (Karwatzki et al., 2017).

The extent to which the business model of co-creating value by customers sharing their real time travel information with a platform can reach is yet to be determined. The need for a more efficient public transportation system and the willingness of commuters to share their real time travel data are the least requirements for the business model to succeed. ‘As cities grow, they are in need of a flexible mobility platform to service their mobility needs’ (Justin Coutzee, Founder of GoMetro, 2016). Big cities in Africa, Asia and the Middle East are likely to adopt such business models as they want to improve the way people move within their urban areas.

 

 

 

 

References:

Nunes, A., Galvao, T. and Cunha, J. (2014). Urban Public Transport Service Co-creation: Leveraging Passenger’s Knowledge to Enhance Travel Experience. Procedia Social and Behavioral Sciences, 111, pp.577-585.

Emarketer.com. (2018). Mobile Phone, Smartphone Usage Varries Globally – eMarketer. [online] Available at: https://www.emarketer.com/Article/Mobile-Phone-Smartphone-Usage-Varies-Globally/1014738 [Accessed 13 Feb. 2018].

Karwatzki, S., Dytynko, O., Trenz, M. and Veit, D. (2017). Beyond the Personalization–Privacy Paradox: Privacy Valuation, Transparency Features, and Service Personalization. Journal of Management Information Systems, 34(2), pp.369-400.

SponsorKliks: A new way of fundraising


Introduction

How many of you donate money to charity? And if so, how much? In 1999, on average, Dutch people donated 0.96 per cent of their income on charity. In 2015, this has dropped to 0.77 per cent (Pama, 2017). This shows a clear trend that people in The Netherlands are spending less and less on charities while the charities still need donations. Companies such as 4MORGEN and Sponsorkliks try to solve this problem by providing a new way of fundraising. These companies are examples of affiliate websites which donate part of the received commission to charity. 4MORGEN was founded in 2015 and went out of business earlier this year. Sponsorkliks still exists which makes the business models interesting to examine.

How does it work?

As mentioned, the business model of Sponsorkliks provides a new way of fundraising for charities. Sponsorkliks works with affiliate marketing which is defined as ‘a type of performance-based marketing in which a business rewards an affiliate for each visitor or customer brought by the affiliate’ (Murray, 2017). In this case, the web shops pay a certain commission for every order that gets placed via Sponsorkliks. In other words, if an individual clicks on the link that is shown on Sponsorkliks.nl and buys something on the linked website, Sponsorkliks receives a commission. This commission is often a certain percentage of the total purchase amount. Next, part of this commission (75%) is donated to a charity and the other part is revenue for Sponsorkliks (25%) (Sponsorkliks, 2017). The customer can decide which charity they want to donate to. In this way, people can donate money and support a charity without it costing them any money.

Efficiency Criteria

The business model of Sponsorkliks is based on joint profitability since both the company and the customers benefit from the platform. Of course, Sponsorkliks receives part of the commission as revenue for every order placed. However, the revenue is not the only benefit Sponsorkliks receives. The company is a social enterprise. A social enterprise is a business that applies a commercial strategy to maximize improvements in social, environmental and financial well-being. Furthermore, social enterprises can be structured as for-profit or non-profit. In this particular business case, for-profit applies since they keep part of the commission (Martin & Osberg, 2007). Since it is a social enterprise, Sponsorkliks contributes to the social well-being by motivating their customers to donate. This results in a positive feeling of contribution to society. Besides, the business model also provides value for their customers because donating money to charity will make them feel better. Therefore, the joint profitability is considered to be high.

Furthermore, Sponsorkliks meets the feasibility required arrangements criteria. If we look at the institutional environment, Sponsorkliks mainly corresponds to the social dimension since they actively participate in providing more donations to charity.

 Future

As mentioned, there are benefits for all the parties involved in the platform. However, 4MORGEN unfortunately went out of business this year. Sponsorkliks still exists but what about their future? A potential risk that could be seen at 4MORGEN is the low revenue if there are only few customers. The platform is a two-sided market where each side attracts more of the other. If there are more customers that buy via the website, more charities and web shops will join. If more web shops and charities join, it will attract more customers. Therefore, a low number of customers will result in little revenue. Besides, some customers of 4MORGEN showed concerns about the money actually arriving at the charity. If Sponsorkliks wants to succeed, they should be very transparent and clear in the way the donating works.

Concluding, there are still some challenges to overcome but the business model definitely provides value for all the parties involved. If everyone would shop via such a website as Sponsorkliks, the current lack of donations to charities could be resolved.

 

References

Martin, R. L. and Osberg, S. (2007). Social Entrepreneurship: The Case for Definition. Retrieved from: https://ssir.org/articles/entry/social_entrepreneurship_the_case_for_definition

Murray, J. (2017). Affiliates and affiliate agreemens in business. Retrieved from: https://www.thebalance.com/affiliates-and-affiliate-agreements-in-business-398119

Pama, G. (2017). Nederlanders geven steeds minder uit aan geode doelen. Retrieved from: https://www.nrc.nl/nieuws/2017/04/20/nederlanders-geven-minder-uit-aan-goede-doelen-8274772-a1555259

Sponsorkliks (2017). Hoe werkt Sponsorkliks. Retrieved from: https://www.sponsorkliks.com/products/howdoesitwork-sk.php

4MORGEN (2017). Het verhaal van 4MORGEN. Retrieved from https://qa.4morgen.org/overons

 

Betting on your Footsteps: App lets users earn money through exercise


While fitness trackers and other health-technologies are on the rise, the global obesity rate is still increasing (NCD Risk Factor Collaboration, 2016). One of the main reasons for the increase in obesity is the general lack of physical exercise, often caused by a lack of motivation. To combat this, a variety of apps and fitness trackers have introduced the combination of social aspects of a community with physical exercise. People often find themselves more motivated if they can share their results afterwards or engage in a (subjective) virtual competition (Chen & Pu, 2014). A startup called StepBet takes these incentive-based activity apps to the next level by including financial compensation for the number of steps you set outdoor.

mobile sand walking wall spray color shadow couple paint prague graffiti art cool image m temple photograph praga 50 republic i leica 240 summilux czech bohemia cesko praha praag prag addiction antisocial ancient history

How does it work?

StepBet (currently in beta) is an app for smartphones that allows users to bet on their own behavior using their existing activity tracker. After joining a game, users bet around 50 euros on a personalized goal of daily steps to complete for a few weeks. If their goal is met after the specified period, they receive a cut of the total stake in the game. If users don’t meet their goals, the money they put in is distributed to the other players. The business model of StepBet tells us that StepBet retains 15% of the total pot, unless the game only consists of paying premium users (Stepbet, 2018).

Although not all the money goes towards the players, StepBet has been proven to be very effective in motivating players. Past research has shown that long-term motivation and engagement is increased by providing a combination of user interface elements, financial- and social incentives for exercise (Mitchell et al., 2013). Next to central financial incentives, the online community potentially influences the participation rate of StepBet by motives such as enjoyment or reputation in the community (Hamari, Sjöklint, & Ukkonen, 2016). The feeling of connectedness is both present in the community and within the games, although the players within the game could be less positive due to the competitive nature of the game. After all, the more players fail to meet their goal, the more profit the succeeding players receive.

Efficiency Criteria

The business model of StepBet is quite unusual, yet it seems that both the company and the connected users benefit from the system. StepBet receives revenue of participating users or paid memberships, but their business model also encourages physical activity. While StepBet does take a share of the profit that is actually meant for the ones that accomplish their goals, those users don’t really notice. Simultaneously, the users do reach their goals while potentially earning some money and participating in a rising community.  Therefore the joint profitability is considered high.

Although the benefits are clear for the parties that use StepBet, the future is not that clear. Because the business model is new in a sense that users bet money for their own physical activity, the final version of the app should maintain a strict policy. Some examples of risks that StepBet is facing are cheating users and the appropriate penalties,  the security of financial resources, and legal issues. According to the law, users StepBet are not officially gambling, but the company is undoubtedly subject to strict regulations. The current terms and agreements are extensive, but it is very important to reevaluate them regularly.  A final potential risk is the high competitiveness within the community of the platform, which may cause contrary effect of an online community as discussed before (Hamari et al., 2016). However, the social-political environment could provide opportunities since it helps to increase the worldwide activity levels of the populations and similarly, the people using the app seem to be very satisfied with the results (according to the online reviews; 4,5 star rating on Google play and Apple store). Concluding, the institutional environment is not as favorable as the joint profitability due to some risks and the subjugation of regulations, but should not block the growth of StepBet as a whole.

References

Chen, Y., & Pu, P. (2014, April). HealthyTogether: exploring social incentives for mobile fitness applications. In Proceedings of the second international symposium of chinese chi (pp. 25-34). ACM.

Hamari, J., Sjöklint, M., & Ukkonen, A. (2016). The sharing economy: Why people participate in collaborative consumption. Journal of the Association for Information Science and Technology67(9), 2047-2059.

Mitchell, M. S., Goodman, J. M., Alter, D. A., John, L. K., Oh, P. I., Pakosh, M. T., & Faulkner, G. E. (2013). Financial incentives for exercise adherence in adults: systematic review and meta-analysis. American journal of preventive medicine45(5), 658-667.

NCD Risk Factor Collaboration. (2016). Trends in adult body-mass index in 200 countries from 1975 to 2014: a pooled analysis of 1698 population-based measurement studies with 19· 2 million participants. The Lancet387(10026), 1377-1396.

Stepbet (2018). Walk More. Win Money | StepBet for iOS. [online] Stepbet.com. Available at: https://www.stepbet.com/faq/ [Accessed 18 Feb. 2018].