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Business Case

Coolest Cooler: 21st Century Cooler that’s Actually Cooler!

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Consumer co-creation and crowdfunding go hand in hand. Consumers co-create value by funding the entrepreneur’s project on crowdfunding platforms. These platforms have brought forth awesome products: the Pebble Time watch, the OUYA videogame console, MaKey MaKey and many more! In this blog I would like to go into more depth about another awesome product brought to life through crowdfunding: the Coolest Cooler!

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The Coolest Cooler, sometimes called the most successful campaign on Kickstarter ever, raised 13,285,266 dollar from 62,642 funders during its 52-day campaign. That equals to more than 265 times the projected goal. Pretty impressive!

What is this Coolest Cooler? Yes, it is a cooler, but not your average one. This cooler is ready for the 21st century! “The Coolest Cooler is 60 quarts of AWESOME packed with so much fun you’ll look for excuses to get outside more often.” Its founder Ryan Grepper calls the Coolest Cooler a “portable party”. It contains a lot of practical functions a traditional cooler lacks. With the Coolest Cooler comes a built-in ice crushing blender for those margaritas or smoothies on the beach, a removable waterproof Bluetooth speaker, an USB charger for when your electronics are running low on battery, a cooler divider which can also function as a cutting board, a bottle opener, integrated storage for plates and knives, extra wide easy rolling tires (which makes it easier to use it on sandy beaches), gear tie-downs and built-in LED lights to light up the contents for when it is dark outside.

Given those impressive statistics about the funding this project received, you would think it was an instant success. However, what if I told you that before raising more than 13 million dollar in August 2014, it failed to raise 125,000 dollar in December 2013?

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What turned this failure into a major success? According to the question “What did you do differently this time around?” in the FAQ section on the campaign page it was a combination of multiple factors. First of all, seasonality played a role. People are much more interested in coolers in the summer than in the winter. Naturally, when it is freezing outside, the last thing you will do is spending a day with your friends at the beach or at the park. Secondly, crowding in effects were present. They had a group of passionate supporters from their first campaign, who were willing to actively promote the project. And finally, of course, they learned from the feedback about the first concept and turned it into an improved product. Also, they lowered the bar to 50,000 dollar.

Nowadays, you can sign up for a waiting list to buy the Coolest Cooler when it is for sale to the public.

What do you think about the Coolest Cooler? Do you know any other awesome products created through crowdfunding?

References:

http://coolest.com

https://www.kickstarter.com/projects/ryangrepper/coolest-cooler-21st-century-cooler-thats-actually (all three images retrieved from this page)

http://money.cnn.com/2014/08/29/smallbusiness/coolest-cooler-kickstarter-campaign-ends/

Business Case

Turn customers into brand advocates by using participation marketing!

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Consumer value creation is hot and happening! The successes that can be achieved when crowdsourcing production processes and relying on consumers to create value are plenty: Threadless’s users create and vote on clothing designs that eventually will be produced, Nike offers consumers to design their own pair of shoes, Lay’s challenged its consumers to come up with a new flavor, et cetera. One area in specific – marketing – is interesting when looking at how consumers could create value for a company.

“Participation marketing” or “engagement marketing” refers to a marketing strategy that encourages consumers to participate in the evolution of a brand. This marketing strategy treats consumers not solely as passive receivers of messages, but views them as actively involved producers and co-creators of marketing programs. Two big players are using it with success: Coca-Cola and Yoplait.

With the average person in the United States drinking the equivalent of 275 cans per year, there is no need for Coca-Cola to focus on increasing their immediate sales transactions and acquiring new customers. Coca-Cola is shifting towards creating a more long-term emotional connection with their customers. One successful example is their recent “Share a Coke” campaign, where they replaced their product logos with popular names. This invited consumers to start a big wave of referrals on social medium websites, which resulted, for instance, in a crazy 341,000 posts on Instagram with the hashtag #shareacoke. This is one of the ways Coca-Cola uses to build loyalty and engage customers.

Another example of participation marketing can be found at Yoplait. Yoplait’s annual “Save Lids to Save Lives” program donates 10 dollar cents to a breast cancer foundation for every pink foil yogurt lid that customers mail back to the company. Since 1997, around 35-50 million dollar has been donated by Yoplait and their parent company! This translates into hundreds of millions of customers mailing their yogurt lids to the company! When customers actively engage with the campaign in order to support the cause, they are more likely to purchase Yoplait’s products and encourage others to do it as well. Customers are becoming so-called brand advocates. This way, Yoplait is building brand loyalty whilst also increasing sales.

The lesson companies should take from these two examples is to shift their focus from viewing customers solely as receivers of marketing and buyers. They should engage with them to create value together. This way they will become lifelong loyal customers and brand advocates. Don’t think only big companies with enormous marketing budgets can pull this off: the ALS association created the “Ice Bucket Challenge”, which went extremely viral. This led to increased customer engagement and more donations.

What do you think? Do you know other great examples of companies that used participation marketing?

Articles

The value of IT-enabled retailer learning

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Zhang, T., Agarwal, R., & Lucas Jr, H. C. (2011). The value of IT-enabled retailer learning: personalized product recommendations and customer store loyalty in electronic markets. MIS Quarterly-Management Information Systems,35(4), 859.

The Internet is capable of bombarding its users with information, resulting in an information overload or choice overload. Adapting information to the needs of individual consumers alleviates this information overload. Information personalization is practiced to present the product information that individual consumers want to see in the appropriate manner and at the appropriate time (Pierrakos et al., 2003). Online retailers have widely adopted  personalization as a means to enhance the shopping experience of their customers in order to build and maintain a strong customer relationship. Online retailers can implement information personalization by offering real-time personalized product recommendations (PPRs) to their customers.

This article investigated whether PPRs generate value for online retailers, and if so, how. The authors looked at the effects of online retailer learning (in the form of higher quality PPRs) on consumer store loyalty. In their research they manipulated the quality of the retailers’ learning, resulting in varying qualities of PPRs offered.

Below are the conceptual model of the mechanism through which personalized services affect consumer store loyalty (figure 1) and the research model (figure 2) including the tested hypotheses.

Figure 1

Figure 1.

Figure 2

Figure 2.

H1a: Higher quality PPRs are associated with lower consumer product screening cost.

H1b: Higher quality PPRs are associated with higher consumer product evaluation cost.

H1c: Higher quality PPRs are associated with higher consumer decision-making quality.

H2a: Higher website knowledge is associated with lower consumer product screening cost.

H2b: Higher website knowledge is associated with higher consumer decision-making quality.

H3a: Lower consumer product screening cost is associated with higher consumer store loyalty.

H3b: Lower consumer product evaluation cost is associated with higher consumer store loyalty.

H3c: Higher decision-making quality is associated with higher consumer store loyalty.

The authors designed the experiment as a two-phase task. The subjects’ first task was to rate a list of Amazon.com’s DVDs. Their second task was to pick two DVDs from the website.

The authors’ findings show strong support for the proposed model. They find that, indeed, higher quality PPRs are positively associated with consumers’ online product brokering efficiency: higher decision-making cost and lower product screening cost, and ultimately repurchase intention.

The insights derived from this article could serve as guidelines for online retailers to better adjust their IT strategies to improve customer retention. PPRs have the potential to create a virtuous cycle: the more purchases made by consumers, the higher the level of input to the recommender system, the higher the quality of PPRs received by consumers, the higher the consumers’ online product brokering efficiency, the higher decision-making quality and the lower the product screening cost, and, finally, the higher consumers’ repurchase intentions. This brings sustained competitive advantage, because it becomes increasingly more difficult for competitors to imitate. When consumers switch to another store, their shopping efficiency will suffer.

References:

Pierrakos, D., Paliouras, G., Papatheodorou, C., and Spyropoulos, C. D. 2003. “Web Usage Mining as a Tool for Personalization: A Survey,” User Modeling and User-Adapted Interaction (13:4), pp. 311-372.