At the end of week 3 of the seminar Consumer Channel Dynamics, we all know that more and more customers are involved in the value creation of a product. Consumers have more options than ever before. This variety of choices gives the consumer a better chance of finding something that fits its needs, personalities etc. But, as in any case, there are possible advantages but also some downsides. In the book ‘The Paradox of Choice: why more is less’ of Barry Schwartz (see the blog of Dimitris) you can read that the choices can be overwhelming. While reading all blogs, I discovered that the fact of ‘more choice for the customer’ is an issue frequently talked about. Will a lot of choice make a customer happy or will it confuse or frustrate a customer?
According to Barry Schwarts, the latter is the case. But, as I was searching on the internet for some more arguments pro or against the more choices, I found an article of Femke Kools which describes a research of Benedict Dellaert and Stefan Stremersch. This article shows that more choices do not have to be a problem for the customer. You can read the article through the following link:
As it is written in Dutch, I will further describe the main conclusions.
Except for mass products, companies nowadays also offer customized products. Pants, shoes, computers: as a consumer you can indicate your preference for every component and the company will make the product exactly as you want. This does not have to be a more expensive production method, so mass customization offers advantages to both consumers and companies. A possible downside is that the customer gets confused about the many choices and is not able to get the product he/she wants. Prof. Benedict Dellaert investigated with prof. Stefan Stremersch what the limits of mass customization are. The most important question of the research was: If you decide to offer mass customization, how do you make it as attractive as possible for the consumer? Variation is possible in the number of choices you offer. It turned out that consumers can handle the choices well. “It does not influence the difficulty which consumers experience. Other factors will”, according to Delleart. The mass customization process gets more easy if you see one price at the end of the choice process. If the customer sees a price for every component it chooses, he/she thinks the process is more difficult. A possible reason for this according to the investigators: the customer thinks he/she has to do something with all the extra information. People which are familiar with the product are less affected by this issue.
There is also variation possible in the number of options offered. According to Delleart, also the number of options offered has not an effect on the experienced difficulty. What does turned out, is that it is attractive for the consumer if the options stay close to the mean. Very often is the mean already shown in the list of choices. If you want to deviate, you actively have to choose another option. “People are most satisfied about the process and the product if they have the option to upgrade. So manufacturers can better set the default at a basis level than at a more advanced level. This also reduces the chance that the customer buys a more advanced product than needed.
Although this article is written in 2005, I still find it interesting to also read something about the contradiction to the fact that more choices will confuse the customer. I hope you will do too!
I came across the following wikipedia page which I find interesting. It is on Prosumers. Which is a contraction of the words professional/producer and consumer. It pretty much distinguishes between the passive consumer and the active consumer.
The term was coined by futurologist Alvin Toffler in 1980 and that meaning is not commonly used today. Loosely, Toffler’s “proactive consumer” prosumers were common consumers who were predicted to each become active to help personally improve or design the goods and services of the marketplace, transforming it and their roles as consumers. Toffler is discussed in depth below.
By far the most common usage of the term describes the consumers, enthusiasts who buy products (almost always technical) that fall between professional and consumer grade standards in quality, complexity, or functionality. Prosumeralso commonly refers to those products. Semiprofessional. “Prosumer” is a well-accepted category for camcorders, digital cameras, VCRs, “and other video playthings.” These advanced product features and higher prosumer expectations lend themselves to increased customizing in Toffler’s product-improvement sense. Continue reading Prosumer→
After seeing the Personal MM’s example during the previous presentation, I was wondering if there were more cases of mass customization and customer involvement regarding food. There is a company which produces nutrition bars which can be fully customized. Customers can select their own prefered ingredients and name their own bar. There is a video of the making proces on their website for those who are really interested in the proces.
Do you have a social network account? then you are already involving a business…
You’ve created a top notch Facebook page, a happening Twitter feed, and an engaging blog. But your customers just aren’t interacting with you the way you hoped they would. How can you improve customer engagement with social media while not wasting marketing dollars or expending more time and effort than you can afford to? Start by changing these four things.
Focus on Relationships, Not PitchesPeople flock to social media venues because they want their voices to be heard. Your target market doesn’t want to know about you per se; they want to know what’s in it for them. Focus on building relationships by responding promptly to customer questions and concerns, letting your personality shine through in your posts, and incorporating new methods and deals that put your customers’ needs and wants first.
When customers point out genuine problems with a product or service, focus on fixing it rather than denying it. You won’t lose a customer over one faulty interaction, but you will lose that customer and all his friends by blaming the problem on him or by downplaying his needs. It’s also important that your followers see you as a real person and not just a business. Include personal touches in your blogs and Facebook posts and respond with a genuine thank you and personal comments to any feedback you receive.
As I was reading the articles, the blog and the information that search engines provide on consumer behavior, mass customization and crowdsourcing I came across many reasons for and benefits of putting the consumer in charge of the decision-making-process. We learn how crowdsourcing reduces risk of failure, boosts brand resonance and even creates word-of-mouth. What an amazingly happy world from the firm’s point of view.
And consumers, they are at least just as satisfied. Now they actually get the chance to design what they want, earn money with their hobbies and feel the fulfillment of consuming their own creations.
Just look at this video of Zazzle. Look at the happy faces.
When I almost started believing that everybody in this world is pleased with the hype of crowd sourcing, I came across the following text. I find it very nice to see more than just one angle of the story.
More and more brands are assigning for brand communities like Facebook, Ning, Twitter etc. but what are the results? If the results of brand communities aren’t that effective for your brand maybe you should consider reading this article. How can I commit more customers to my brand and provide more brand loyalty? Based on the following article;
The Influence of On-Line Brand Community Characteristics on Community Commitment and Brand Loyalty, Heehyoung Jang, Lorne Olfman, Ilsang Ko, Joon Koh, andKyungtae Kim
It’s finally here. Mass customization, or the practice of offering consumers the ability to customize products to their liking before purchasing them, is poised to turn manufacturing on its head and revolutionize business. Hallelujah!
But haven’t we heard this before? Indeed, mass customization’s revolutionary impact was touted as the next big thing in 2000. And in 1993. And also in 1970. That’s right, as early as forty years ago, business thinkers were predicting the dawn of mass customization and extolling its paradigm-shifting impact on industry.
But according to a new report by Forrester, in 2011 we truly are on the verge of seeing mass customization arise and provide a viable alternative to the process of homogenized mass production that has been so prevalent since the days of Henry Ford. And we largely have the Web and related technologies to thank.
Previously, mass customization faced several obstacles to really becoming a viable option for businesses. Incomplete implementations, cost overruns and primitive digital interfaces all made it difficult for mass customization to work.
Recently I bumped onto a very interesting article relative to the mass customization, seen from the perspective of housing. More specifically Noguchi & Hernandes-Velasco (2005) referring to the housing needs in Mexico, they distinguish three categories of homebuilders in Mexico: production, semi-custom and custom homebuilders.
The production homebuilders are organized for high volume production and they produce the ready built homes. They provide a number of standard designs/models and the customers can compare the attributes of each model in order to choose. In this case the high volume work results in low price.
The semi-custom builders combine characteristics of ready built and custom built homes, working, as the previous, on predesigned plans. In this case there is the option based on the pre-existing model to extend it in order to cover the needs of the prospect buyer. But, due to this fact, the high volume work is lost, and as a result the price is higher.
Since the period of Henry Ford’s car industry until late 90’s, product efficiency requires mass production. Companies were using labor divisions, standarisation and automated processes to create products in large quantities. Economies of scale insists emphasising on mass production since it reduces cost massively. Industries rely on mass production to minimise costs. One example of mass production in car industry is Ford model T.
Ford model T – The first car that was mass produced.
However, new technologies such as CAD (Computer Aided Design) and CAM (Computer Aided Manufacturing) are damaging the economy of mass production. Since both allow mass customisation towards the needs of customer. Mass customisation includes flexible production process to create goods and services that are intertwined with each customer. The future of manufacturing was actually started with mass customisation.
Mass customisation offers advantages for both customers and factories. Customers can get the product they want, based with their tastes and needs. For the factory, they create more customer satisfaction, at the same time, improve production efficiency. In some industries, mass customisation method may result in little or no inventory of finished goods or semi-finished, no expired products are full of dust on a shelf or showroom; and require less working capital.
However, there are several weaknesses of mass customisation that I found:
During the last class (Monday January 16th in the morning class) we discussed about the open innovation after the Lays ‘Maak je Smaak’ case. Open innovation has some pitfalls. In the article below you can read about these pitfalls.
I found this article on a Dutch website, so I translated into English. It is about crowdcasting: “Crowdcasting is a problem-solving and idea-generating tactic in which a corporation disseminates details of a specific problem or situation to a carefully chosen group of people for possible solutions. The process is often conducted as a contest. The results may be used to resolve difficult or complex development and marketing issues.”( http://searchcrm.techtarget.com/definition/crowdcasting)
Innovation is for many organisation the keyword of success. The definition is used a lot, but most of the times people do not understand it. Research showed that the biggest successes can be achieved when using open innovation with the help of consumers and other companies. Sometimes it does succeed, sometimes it does not. How is this possible? Below the three most common pitfalls of crowdcasting will be dealt with, crowdcasting is a very popular way of open innovation.
In the world where we live everything must be faster, better and newer. Companies have to innovate and develop products/services faster then ever. With this challenge companies need to think different.
Open innovation is a new way of integrating customers during the research and design period of the firm. This picture below is a simple example of how open innovation works. Because of the new method, firms can choice between the traditional approaches or the new open approaches. The differences between these methods are showed in the table below.
I thought it was a nice example to complement the topic for the UnMe Jeans and the Web 2.0, and also just and interesting article to see how luxury brands are integrating social media and engaging with customers. and especially how the traditional definition of luxury had to radically change in the last couple of years.
The most important thing about this article is that mass customization has always been under construction. Since 1977 it has been an idea but many companies failed to succeed in the strategy of mass customization, or implemented it all wrong.
In my opinion this is the time that mass custimization really comes through and companies have the knowledge to implement this strategy right so it will succeed. Examples of companies that have implemented the strategy just right are: Nike, Spreadshirt, Ponoko and Zazzle.
There are two sources of information. On one side, consumers possess information regarding their needs, preferences, tastes. On the other side, companies have information about their targets, capabilities, budget restrictions. Companies are trying to get access to consumers’ information. they want to know what they want, what they need, in order to offer the best match possible. Although advances in modeling allow for more accurate predictions of consumer choice behavior, there is still a lot left unknown. A lot is remained probabilistic. Continue reading Open Innovation & Lead Users→
We have extensively talked about the advantages of offering personalized product recommendations to consumers. These recommendations increase consumers’ decision quality and save them a lot of effort. There are various approaches in personalized recommendation systems either based on past behavior or based on collaborative filtering techniques (see this article on different approaches of recommendation engines).
However, we have to take into account that sometimes personalized recommendations (especially when we passively receive them) feel quite invasive and consumers at some point ignore or even react. Think about the following situation: you visit a website X and look at a specific red t-shirt. You don’t buy it, yet you move continue your browsing. You send a couple of e-mails, you read the news and finally you log in to facebook. On the right banner, you see an ad with this red t-shirt you inspected 1 hour ago. Next morning, you open your computer, you search information about something you saw n TV last night. Google gives you 1million results in less than a second…plus, a red t-shirt on the right banner of Google ads.
I found this really interesting post and thought that it would be a great idea to share it with you since it is so in line with the content of the “Consumer Channel Dynamics” Seminar. I hope you will also find it interesting and enjoy! It shows that customer co-creation is important not only during the product’s designing but mostly during the every day life, when the product is actually used by consumers. It is during the every-day life that customer co-creation gives value to the customer himself!
Whether shopping for clothes or electronics, books or microwave food, consumers have many more options than ever before. The variety of choices today gives us a much better chance of finding something that exactly suits our needs, our personalities, our activities and our bodies. However, those choices can be overwhelming. In his book “The Paradox of Choice: Why More Is Less,” Barry Schwartz emphasizes the downside of these huge assortments. According to him, as the number of choices grows further, consumers feel overloaded and, as a result, choice becomes a burden rather than a freedom.
However, since we (i.e. the consumers) have easier access to more and more information and alternatives, the chances that there is a product perfectly fitting our preferences exists out there. Traditionally, the rule of 80-20 was overruling all markets. The underlying idea is that 20% of the products make up 80% of the revenues.
One rich source of information on recent and upcoming trends, trendwatching.com, already in 2004 spotted a substantial rising trend regarding the phenomenon of companies working closely with consumers in order to create design, produce, develop or promote their products (Customer Made).
Shifting to the latest consumer trend report of January 2012, we can see that consumers’ active involvement in the value creation process is still thriving. Crowd-based problem solving is expected to be the core source of ideas, especially given that contributing will be more effortless than ever before (Idle Sourcing). One of the facilitating drivers is the increasing capabilities of the available interfaces. Screens are expected to be more interactive and consistently on (and online within “the cloud”) (Screen Culture). Even in situations that were considered difficult to “intrude”, consumers are becoming increasingly active and powerful. Health related mobile applications and online interfaces, gives the opportunity to consumers (patients) to satisfy their implicit desire for control by discreetly tracking and managing their health on their own (DIY Health).