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As discussed in the last lecture, social influence can have an impact on the behaviour of consumers in the online music community. But, social influence can also have an effect in other contexts. Therefore, Risselada et al. (2014) analyse the effects of social influence and direct marketing on the adoption of new, high-technology products.

Based on previous literature, the researchers expect that social influence will play a role since the decision to adopt a high-involvement product requires information gathering from different sources (Godes, 2011). They study this assumption on the basis of two research questions: (1) ‘What are the effects of social influence variables – in particular, recent and cumulative adoptions – on the adoption of a new product when accounting for the effect of direct marketing?’ and (2) ‘How do these effects and the effect of direct marketing change from the product introduction onward?’ (Risselada et al., 2014)

Figure 1 shows an overview of the conceptual framework. As mentioned, the dependent variable is the product adoption of an individual. In addition to the hypotheses, they control for sociodemographics and relationship characteristics. To study the hypotheses and aforementioned research questions, they used data from a large sample of customers from a Dutch mobile telecommunications operator. This sample was based on random selection.

Main Findings

This study presents a few main findings: First of all, they proved that social influence indeed affects adoption, which is what they expected. Furthermore, they found that the social influence effect from recent adoptions is positive and remains constant from the introduction of the product onward. The same accounts for cumulative adoptions. However, this positive effect decreases from the product introduction onward. Lastly, the effect of direct marketing is positive and decreases from the product introduction onward.

Strengths

Although many studies have already been done about social influence and its effect, several issues remain unexplored. One example is that most studies assume that the effects of social influence remain constant from the product introduction onward (Bell and Song, 2007). This study dives deeper in these unexplored issues by providing new insights into the adoption of high-technology products by analysing dynamic effects of social influence and direct marketing simultaneously. Furthermore, this study discusses and assesses how the social influence effect varies from the introduction of the product onward. Therefore, this study fills a gap in the current literature.

Secondly, this study accounts for homophily and tie strength (the intensity and tightness of a social relationship). This is a strength since these variables could have an influence on the outcomes. They use both homophily and tie strength as weights to construct two social influence variables in addition to the unweighted ones. At the end, this research shows that homophily is an important dimension when it comes to social influence. However, this also creates a weakness, which will be elaborated more on later.

Lastly, they used random sampling for gathering the data. In this way, the sample represents the target population and sampling bias has been eliminated. This makes it more generalizable.

Weaknesses

This study also has few limitations and weaknesses. First, in this paper, they focus on the marketing literature and do not adopt a social psychological view on social influence. As a result, the researchers do not study the mechanisms and processes that cause the influence, such as compliance and identification. They are simply not able to examine this because they do not have access to the required data. However, this could have been interesting to research since it has managerial importance. They could have somehow explained the mechanisms by providing theoretical explanations or by gaining access to more data.

Secondly, as mentioned before, the researchers used one homophily measure. The results showed that homophily has a great impact on social influence. Therefore, this research is too limited in providing a more in-depth analysis about the underlying dimensions. Since the researchers did not expect this, future research could focus more on this aspect.

References

Bell, D. R., Song, S. (2007), Neighbourhood effects and trial on the internet: Evidence from online grocery retailing, Quantitative Marketing and Economics, 5(4), 361-400.

Godes, D. (2011), Opinion leadership and social contagion in new product diffusions, Marketing Science, 30(2), 224-229

Risselada, H., Verhoef, P. C., Bijmolt, T. H. A (2014), Dynamic Effects of Social Influence and direct marketing on the adoption of high technology products, Journal of Marketing, 78(2), 52-68

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.