Tag Archives: Business model

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.

Airbnb Trips – The Next Move Towards Conquering the World


“The stuff that matters in life is no longer stuff. It’s other people. It’s relationships. It’s experience.” – Brian Chesky, Co-Founder and CEO of Airbnb

What is your purpose of travel? Is it food? Is it fun? Is it meeting new, inspiring people? Is it getting to know new cultures? Travel is about meaningful moments, experiences you make that you will never forget. But how do you find those places for magical experiences? On TripAdvisor? Go to TripAdvisor and search for “Things to Do” in your home town: Hop-on-Hop-off buses, overpriced boat tours, Madame Tussaud’s… Have you as a local, ever done one of those activities? Most likely you will say: “That’s just something tourists do.”

To prevent travelers from stepping into tourist traps, Airbnb recently presented its’ new offering – the world of trips:

Airbnb knows what travelers want – the ultimate local experience. The previous, successful years resulted in a platform offering millions of homes around the entire world to tourists that no longer want to stay in anonymous hotels. But CEO Brian Chesky realized that homes are just one single part of a great journey. A great journey lets you immerse in and join the local community. With the new product Airbnb Trips, also experiences and places will all be available in the app. So, what are those new features?

  • Experiences: The offered activities are not just organized by city, but also by passion, for example Sports, Nature, Social Impact, or Food. The available experiences can take from a couple of hours up to multiple days. Every offered experience is presented in a short video. About half of the trips are offered at a price below $200 (Airbnb: Experiences, 2017).
  • Places: Within this function, local legends list their top things to do in an “insider guidebook”. Additionally, also audio walks and meet-ups are featured.

Business Model Evaluation

What is the value added for the three main parties involved in Airbnb’s business model?

Consumers (travelers) – For travelers, the extension of Airbnb’s offerings provides a great value added, because the platform becomes a One-Stop-Shop for your entire travel. This will reduce the time necessary to prepare trips and give you new local insights during your holidays. Of course, this comes at high costs: 55€ for a sunset bike ride in Tokyo or 98€ for a 3h-cocktail workshop in San Francisco can not be afforded by budget travelers.

Providers (guides) – From now on, you can also become a host for activities. When deciding to become a host, you have to apply and Airbnb checks the experience for certain quality standards. The best experiences offer guests access participation, and perspective (see Figure 1). Next to monetary profit, the benefits are also non-financial: get more exposure for what you love, promote your brand, and meet locals like you (Airbnb: Become A Host, 2017).

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Figure 1. Assessed Quality Standards for Experiences (Airbnb: Quality Standards for Experiences, 2017)

Platform (Airbnb) – With this business model extension, Airbnb wants to become the platform for your entire trip. By embedding new features like restaurant recommendations and an integrated reservation system, Airbnb seems to aim at replacing existing platforms like TripAdvisor and Yelp. Motivation of this move clearly is Airbnb’s transition from a website for booking accommodation to a full-service travel company, which comes along with increasing its user-base and revenue. For Experiences, Airbnb brokers the payment from the user to the guide and takes a commission, similar to how its home-booking service works. For Places, the company has some revenue-sharing deals in place, like a partnership with Resy to book restaurant reservations. Also, the market for travel activities is still underserved and promises large potential. So far, only small vendors like Klook, I Like LocalPeek and Viator offer a comparable service. However, their offerings are very “touristy” and generic. Additionally, Airbnb can leverage its popularity to quickly establish its offering.

Feasibility of Required Reallocations

Internal ArrangementsAirbnb Trips is more or less an extension from providing accommodation to additionally providing activities and tours. However, this requires further administrative effort, especially related to the quality standards assessment. This assessment is necessary to assure a local and personalized experience, so that Airbnb can clearly differentiate from competitors. Also, videos for every experience have to be created.

External Environment – Airbnb already radically disrupted the global hotel industry by applying the principle of the sharing economy (Zervas, Prosperito & Byers, 2014). With its business, the platform did not only antagonize hotels, but also governments that try to proceed against housing shortage (Jefferson-Jones, 2014; Lee, 2016), coming along with several law-suits in major cities like Berlin, New York and San Francisco. The extension of its offering will most certainly not reduce Airbnb’s number of critics. For example, the ‘ownership of an experience’ is very difficult to assess. Who should get the money, when a guide shows you around a market? Don’t the market traders also deserve a proportion for being essential for the experience? Next to legal conflicts, a discussion about the social impact can be initiated. The commercialization of local experiences may destroy the original selling point of unique, original travel impressions.

All in all, Airbnb Trips moves the platform beyond its’ couch-surfing origins. The offering is clearly targeting the “emotionalization” of travel experiences, a next step in the service economy. This is a great possibility for travelers (who have the budget) to make unique memories. However, it comes at the cost of commercializing the local charm for the sake of profits. Airbnb should be careful and hold up high quality standards (e.g. small groups, special experiences) so that it does not destroy it’s newly designed value proposition.


References

Airbnb: Become A Host. Retrieved March 7, 2017 from https://www.airbnb.com/host/experiences?locale=en

Airbnb: Experiences. Retrieved March 7, 2017 from https://www.airbnb.de/experiences/

Airbnb: New. Retrieved March 7, 2017 from https://de.airbnb.com/new

Airbnb: Quality Standards for Experiences. Retrieved March 7, 2017 from https://www.airbnb.com/help/article/1451/what-are-the-quality-standards-for-experiences?locale=en

Jefferson-Jones, J. (2014). Airbnb and the housing segment of the modern sharing economy: Are short-term rental restrictions an unconstitutional taking. Hastings Const. LQ, 42, 557.

Lee, D. (2016). How Airbnb Short-Term Rentals Exacerbate Los Angeles’s Affordable Housing Crisis: Analysis and Policy Recommendations. Harv. L. & Pol’y Rev., 10, 229.

Zervas, G., Proserpio, D., & Byers, J. W. (2014). The rise of the sharing economy: Estimating the impact of Airbnb on the hotel industry. Journal of Marketing Research.

How do you like your shirt? Medium or tailor made?


You are probably familiar with the following situation. You ordered a pair of pants online, and when we the product is delivered, it is too big. Or you see an interesting shirt in a shop, but the sizes which are available are too small for you. Or more specific, you like the jacket you see, but the buttons attached have a weird colour. Mass production in the clothing industry resulted in a lot of different clothes in a few standard clothing sizes. We as customers are dependent on designers which work for specific brands, and we must hope that our size is available when we see something we like. And yes, there are places where you can get tailor made clothes. However, this is expensive.

To deal with these problems, a company called “Shirt By Hand” offers custom made shirts. For the same price as you buy shirts in a regular shop. To do so, they involve active consumer participation. Here is how it works.

The ordering process contains of a few steps. The first one is to make an appointment with one of their employees. They will come to your house or office to measure al your sizes. They will create an account for you, so your sizes are saved. During this meeting, they bring a selection of their shirt fabrics with them, to give you an idea. When they leave your house, you can order shirts online. In the web shop, you choose every aspect of a shirt yourself. Even the thread is your choice.

By doing this, you become part of the value creation process. You will choose how you want each attribute to be which you can understand. And you do not have to worry about the attributes you don’t know about. Hereby, this company can give you as a customer a parameter-based interface without frustrating you to customize attributes you don’t know (Randal et al., 2005).

The joint profitability of this business model is as follows. For customers, this business model means that the product they want, a shirt, is tailored to their needs and size. Also, by designing products yourself the feelings of accomplishment increase (Franke et al., 2010). You are the one who thought about every combination of the attributes, and not a designer who you don’t know. And beside this, it is fun to design your own clothes. The costs for consumers are longer waiting times. To be able to produce the shirts for an affordable price, they are made offshore. A three-weeks delivery time is the standard.

For the company, there are benefits as well. Because consumer design their clothes online, the company doesn’t need a physical store. Cutting their costs and hereby increasing their profits. Also, this company is not dependent on designers to design clothes, customers are creating this value by doing it themselves. Another upside to their business model is the fact that their employees have to go to the customers only a few times, when the customers need to be registered, and when their sizes changed dramatically. And not with every single purchase. Their costs are the investments in machines with very low switching costs, enabling them to produce different shirts, every single time.

Quite an interesting business model. You can create the shirt you want, design and choose all the attributes to your preferences, and get it in the right size. And it is not even expensive.

Franke, N., Schreier, M. and Kaiser, U. (2010). The “I designed it myself” effect in mass customization. Management Science, 56(1), pp.125-140.

Randall, T., Terwiesch, C., & Ulrich, K.T. (2005). Principles for user design of customized products. California Management Review, 47(4), 68.

Hello fellow Fonero, I’m going to use your Fon hotspot!


Back in 2005 the Argentinian businessman Martin Varsavsky came back from a business trip to Japan. When entering his house he found a letter on his doorstep. It was not a “welcome home” letter but a bill from his telecom provider for €5000 for the use of mobile internet during his business trip abroad. As you can all imagine, Martin was not particularly happy. Having an entrepreneurial mindset he decided to find a solution for the costly use of mobile internet and founded a new company in 2006 called Fon (Fon.oeioei.nl, 2014)! Continue reading Hello fellow Fonero, I’m going to use your Fon hotspot!

“Boss, I’ll work from home this morning”


When you turn off your alarm on your smartphone at 6:30 in the morning, it is straightaway clear that it is a better plan to work from home this morning instead of at the office. There are traffic jams everywhere and even the trains are delayed. It is advised that you leave two hours later instead. In case you do not want to follow this advice, because you have a meeting at 9:00 in the morning, then your smartphone gives the fastest route straightaway, considering going by car or by public transport. Later that day, you have to be at the dentist at a specific time, whereby your smartphone notifies you when you have to get in your car.

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People get busier every day and the personal and digital demands are increasing. Systems get integrated more and more, which leads to an optimal ease of use. Those trends can be applied on the travel and traffic industry too. A lot of problem solving traffic applications have been developed, which led to an online overload (Tsekouras, 2015) of applications that can help you on the road. In this blog I provide you with the mechanisms in those traffic applications, and I will provide an analysis of the different applications which are currently popular in the Dutch market.

Travel & Traffic Applications

The aim of travel & traffic applications is to give and advice about how to get from A to B fastest. Nowadays, a lot more functions are possible such as a personal navigation (to avoid traffic jams), a price advice, a sustainable advice etc. To optimize and customize this for each individual, the user needs to put in information in exchange. With this, the users deliver an input for the actual result.

Data Use

Since everyone has different destinations, different travel times, a different budget, and different resources, those traffic applications cannot give a generic travel advice to everyone. The key point of those applications is that travel advices are based on personal data, such as one’s car, one’s agenda, the amount of traffic jams on the highway, and one’s preferred budget. With this, everyone receives an optimal, personal travel advice. Since the user types in the data him/herself, optimal advices are given, instead of a ‘guess’ based on the most likely information. The downside of typing in one’s exact data is that it requires effort, whereas minimal effort is desired. To lower the impact of this downside, most applications can be fully integrated with one’s smartphone and agenda, which decreases effort in turn. However, this raised privacy concerns at the same time (Tsekouras, 2015).

Possibilities

There are endless possibilities that can be integrated in traffic applications. Most traffic applications integrate the following elements:

  • Navigation
  • Real-time traffic notifications
  • Personal schedule
  • Prices (of fuel or public transport)
  • Available parking spots
  • CO2 saving
  • The amount of stop overs
  • Parking

Revenue Models

Most applications have different revenue models, varying from paying for the download to advertisement based. Noteworthy is the fact that a lot of applications are run by the government and some applications are highly subsidized due to the benefit for the whole community.

Market Analysis

In the following table, an analysis of popular traffic applications in the Dutch market is given.

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Sources:

https://vid.nl/app.html

http://www.anwb.nl/mobiel/onderweg-app

http://www.kenneymyers.com/blog/10-iphone-apps-to-help-you-avoid-traffic-on-your-commute/

https://www.waze.com/

http://www.reiskostenblog.nl/blogs/10-handige-apps-die-je-helpen-slimmer-te-reizen/

Tsekouras, D. (2015). Lecture 1: Introduction to Value Co-Creation. Customer Centric Digital Commerce, 18 March, 2015.

Tsekouras, D. (2015). Lecture 2: Information Search & Product Recommendations. Customer Centric Digital Commerce, 25 March, 2015

How Electronic Word of Mouth can be a critical success factor in e-business


This blog is based on the following study: Yoo, C. W., Kim, Y. J., & Sanders, G. L. (2015). The impact of interactivity of electronic word of mouth systems and E-Quality on decision support in the context of the e-marketplace. Information & Management.

EWOM is defined as “any positive or negative statement made by potential, actual, or former customers about a product or company, which is made available to a multitude of people and institutions via the Internet (Hennig-Thurau & Walsch, 2003). One of the best examples of EWOM systems and indeed a prototypical EWOM system is the customer review system. Customers can post text-based comments, insert video reviews, and even respond to other customers’ opinions on the product or service in question through EWOM systems. The emergence of these EWOM systems has changed the way that businesses engage the customers as well as other businesses.

To investigate the impact of the interactivity of EWOM systems and E-quality of a website on decision support satisfaction, Olivers (1997) cognition-to-action loyalty framework is adopted as an overarching theory. Oliver argues that consumers build loyalty toward a brand cognitively first, then affectively, next conatively, and finally behaviourally. Adopting interactivity theory and E-quality is appropriate to represent the cognitive aspect of loyalty phases. When decision support reflects customer needs and preferences, customers feel satisfaction with this support. Hence, adopting this construct, decision support satisfaction is useful in describing the emotional phase of the loyalty framework. Finally, E-loyalty is employed to illustrate the conative phase of loyalty. Based on this theoretical framework the authors explore the relationships of interactivity of EWOM systems, E-quality, decision support satisfaction, and E-loyalty by proposing four research questions that can be found in the figure below.

1

The interactivity of EWOM systems and E-quality are the strong predictors of decision support satisfaction. Therefore, H1 and H3 are supported. The effect of the interactivity of EWOM systems on E-quality is significant, validating H2. Decision support satisfaction is found to influence E-loyalty, thus validating H4. See figure below.

2

These findings indicate that customer perceptions regarding the interactivity of EWOM systems are very influential on their evaluation of an entire website and their level of satisfaction with decision-making support. This study illustrates that EWOM systems and websites with E-quality help customers enhance their decision making process.

When the four aspects of EWOM system interactivity (reciprocity, responsiveness, nonverbal information and speed of response) are well managed, users are likely to experience decision support satisfaction with the e-commerce site. This result indicates that e-commerce sites should be encouraged to provide a better EWOM environment for reciprocity and advanced EWOM system functionality, which enables multiple channel communications as well as quick and proper responses to customer requests.

The authors believe that EWOM has become an important part of the online shopping experience. Understanding the phenomena is essential for the success of electronic commerce systems.

References:

Hennig-Thurau, T., & Walsch, G. (2003). Electronic word-of-mouth: motives for and consequences of reading customer articulations on the internet. Int. J. Electron. Commer. , 8, 51-74.

Oliver, R. (1997). Satisfaction: A behavorial Perspective on the consumer. In M. Sharpe, Satisfaction: A behavorial Perspective on the consumer. NY: Armonk.

Yoo, C. W., Kim, Y. J., & Sanders, G. L. (2015). The impact of interactivity of electronic word of mouth systems and E-Quality on decision support in the context of the e-marketplace. Information & Management.

What the consumer wants, the consumer gets.


When a company’s vision is to offer “Earth’s biggest selection and to be Earth’s most customer-centric company”, they’ve got some big shoes to fill. Due to the popularity of the term “customer-centric”, everybody’s been claiming they’re dedicated on the customer, however, are their real-time activities supporting this claim?

Amazon’s Vice President of External Payments, Patrick Gauthier is not in agreement with the statement that everybody is truly focused on the customer, as too many are obsessed by the industry lingo, too fixated on generating the next big cash cow, and repeatedly overlooking who’s voice it is that they are representing, namely that of the consumer and the merchant. Payments and commerce leaders should analyze the situation with a customer-first mentality in this industry in order to enter into true innovation.

“Start with the customer and work backwards.”

Most companies claim they begin their processes with the consumer in mind, however in amidst of the translation, the lingo which is used in the industry – that of the insiders, in essence keeps innovation away from the vision, as the true message appearing in the lingo of the consumer is lost in translation. Gauthier perspective, also shared by payments, commerce and retail experts at Innovation Project 2015, proposes a backward motion of customer-first mentality in seeking what a business model needs to solve. For example, every Amazon product manager is known to write and internal press release, which focuses on the problem of the customer and the current solution they are offering and how this offering fails. Following this, the managers write down every single benefit that the new product will provide to this problem, and will not stop until the benefits will be of interest for the customer. They stay that the money will follow once the company focuses on what the customer truly want. In this new era, having the perspective of a customer-focused company is surpassing having a financial perspective. Starting with the consumer in the back of your mind and going backwards, thus focusing on what a company believes the business model is intended to solve, as this will deliver diverse methods of serving those customer needs. Innovation can occur quickly, but more importantly, instead of focusing on the speeds, it is more significant that innovation happens right as well as for the right target audience.

How to approach this according to Gauthier:

  1. Being part of more dialogues with outsiders
  2. Connecting to the merchant and consumer
  3. Having more conversations that are focused on actual consumer needs
  4. Conversing less regarding payments
  5. Conversing more about the commerce experience

Drop the industry jargon

When the industry jargon is dropped, a focus can be given to consumer identity and true innovation, and in turn enables a full customer experience. Companies can only provide this by forming an open setting of transparency, enabled through conversations. Listen and acknowledge who the consumer is, and it will answers how the consumer prefers to pay will come to the surface. This in turn has the potential to open gateways to a richer commerce experience for the company as well as the customer.

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Botch the customer and the merchants in essence want be part of a commerce experience, in contrast to a payment experience. Gauthier states that companies need to focus less on payments and more on the individuals that are making the transactions. He discusses identity and economics in the same sentence, as he believes it is pivotal.

“Who I am [as a consumer] is pretty key to what I’m going to do. Today, the economics is very centered around how I pay. And maybe at some point the economics should be centered, or certainly migrated, not with just so much just how I pay, but who I am. The who I am, and the willingness to share who I am — what I choose to share — should potentially change the economics of a transaction.”

– Patrick Gauthier, Amazon’s VP of External Payments

how-to-survive-and-thrive-in-the-customer-revolution-exacttarget-infographic

Both identity and payment experience are part of the commerce experience. Yet, from the merchants’ side, the occurring conversations focus on the payments side. The downside of this occurrence is that it diminishes the key role of the retail and commerce experience during the transaction stage, loosing out on the important achieving merchant-centric experience.

The industry is battling with conflicts due to having opposing viewpoints, on how payments and commerce ought to be engaged into the consumer experience. This tension of sort is a result of commerce innovation is completely being overtaken by payments innovation, similar to the example of a current successful business model Uber.

“The [retail] industry needs to embrace customer-centricity in order to really get to what it can be in the next 10 years.”

– Patrick Gauthier, Amazon’s VP of External Payments

Many views, and opinions from payments-, retail- and commerce sectors as well as managers with innovative perspectives are opening up discussion points. What is essentially needed though is a dialogue regarding what and who these individuals are actually chatting about.

References:

Pymts (2015) “Amazon’s customer-centric Focus.” pymnts.com. 24 Mar. 2015. Web. <http://www.pymnts.com/in-depth/2015/whos-talking-about-innovation/#.VT0yIxOUee4&gt;.

McAllister, Ian. (2012) “What Is Amazon’s Approach to Product Development and Product Management?” Quora.com, 18 May 2012. Web. <http://www.quora.com/What-is-Amazons-approach-to-product-development-and-product-management&gt;.

Bulygo, Z. “Becoming a Customer Centric Company” 9 June 2014. Web. <https://blog.kissmetrics.com/customer-centric-company&gt;

Header image: http://pretiumsolutions.com/wp-content/uploads/2012/02/Customer-Experience-Management-Customer-Centric-Organization-copy.jpg

Infographics: Web. <https://blog.kissmetrics.com/wp-content/uploads/2014/06/how-to-survive-and-thrive-in-the-customer-revolution-exacttarget-infographic.png&gt;

Would you like to make your own fragrance?


Have you ever wanted to have a unique fragrance? Do you think this will be a perfect gift for someone? Well, now you have the possibility to make your own fragrance! The company called Scentcrafters is an online retailer which offers producing a customized perfume according to your own preferences. So, here it how it works.   You are able to mix up to five different scents. These can be already existing perfumes like for instance Guilty by Gucci or Tommy Girl, or you can pick an aroma like vanilla or lavender. If you are not sure which scents you would like to mix, then you can just describe the smell you would like to have, for instance “I want it to be fresh with some flower or fruit tones”. Following that, you can choose the recipe, which will be used to produce the scent, or you can create your own one.  Apart from customizing your own scent, customers of the successful online company have the possibility to give a special name to their newly created perfume. What is more, the bottle can feature a whole personalized message as well, in order to make it even more special and unique. If you would like to have your own logo or picture printed on the bottle – this is no problem, Scentcrafters can do that, while resizing and adjusting your image in order for it to fit perfectly on the bottle. Furthermore, the company offers a great diversity of bottle designs available from which you can choose the one which you like the most, or the one which fits best with the idea behind the scent you are creating. Also there exists the possibility to change the colour of the liquid inside the bottle. This means that your perfume can be clear, pink, light blue or light yellow. The last step of the customization process is filling in your postal address and payment details so that your uniquely created scent can be shipped to your home.

This type of customer empowerment to create new products is one of the most effective ways in which companies can achieve positive effects with respect to customer satisfaction and the image, which companies have created for themselves. The article called “Customer Empowerment in New Product Development” by Fuchs and Schreier (2011) says that customer empowerment can lead to positive effects in three main factors. Firstly, it leads to increase in the levels of customer orientation, perceived by customers. Secondly, customer empowerment in product development results in more favourable corporate attitudes. And finally, it leads to stronger behavioural intentions.

In the case of Scentcrafers, the customer empowerment in new product development is in the core of the business model, therefore, all of its positive effects and risks should be carefully considered. The great opportunity for personalization and creating unique products are a good way to attract the customers who value and want customization. However, sometimes the making of scents requires some expertise since customers do not necessarily know which combinations will be successful and which will not. Moreover, the use of already known brand names as a component of the new mixtures can lead to some problems with patents and rights to use the brand name.

All in all, the idea behind Scentcrafters is very innovative and offers a great opportunity for customization. So, how will your new perfume be called?

Fuchs, C. and Schreier, M. (2011), Customer Empowerment in New Product Development. Journal of Product Innovation Management, 28: 17–32. doi: 10.1111/j.1540-5885.2010.00778.x

https://www.scentcrafters.com/home.php

An alternative to e-mail to improve business productivity


Do we wast too much time on e-mail? Slack can be a solution

Nowadays, a variety of “communication media” on the market pretend to make us more productive. Instead, communication media like Facebook, Twitter, and last but not least e-mail, lead to a productivity-killing communication overload with all its consequences (1).

Research undertaken by McKinsey showed that high-skilled knowledge workers spend on average 28% of their time on managing e-mail. Another 14% of their workweek is spent on ‘communicating and collaborating internally’ (2). Furthermore, research by Gloria Mark, professor of informatics at the university of California, showed that office workers are interrupted approximately every three minutes, where it can take more than 20 minutes before one returns to the original task (3). It goes without saying that increasing the productivity of social technologies, can result in considerable time savings and thus value.

In mid-2013, Flickr co-founder Stewart Butterfield launched a new workplace and collaboration tool called Slack (4). Not coincidentally, Butterfield and his colleagues intended to eliminate the necessity of e-mail as primary communication tool within organization. Slack offers a SaaS-based communication platform that enables employees to communicate through private groups, as well as chat rooms organized by topics and direct messaging (5). The content in the tool is archived (including e.g. Google Drive and Dropbox integrations) and can easily be accessed through several devices and operating systems. Slack for instance provides applications for Mac, iOS, Android and Windows.

All this sounds promising, but does Slack work? If we solely look at the market, one would be inclined to say yes. Shortly after the launch of the start-up, Slack entered the unicorn club – a select group of start-ups that soared to a $1 billion-plus valuation (5). Moreover, last week Slack confirmed that another round of funding raised $160 million, leading to a total valuation of $2.8 billion.

With its 750.000 daily users and customers including renowned companies like The New York Times, Adobe, HBO, PayPal, and the US State Department, Slack seems to work indeed. In contrary to communication media like e-mail, Slack’s technology appears to better fit employees’ tasks resulting in a better task–technology fit – “the degree to which a technology assists an individual in his or her portfolio of tasks” (Goodhue & Thompson, 1995, p. 216) (6).

Perhaps you might get a little too rosy picture of Slack. Of course the $2.8 billion valued startup looks very promising. Market insiders however expect that such a high valuation is not sustainable in the long run, simply because the fact that there are several other high-quality startups providing business collaboration software as well (e.g. HipChat, Yammer) (5).

Even though Slack might not become a big monopolist in the business communication/collaboration-tool market, an overall trend in which companies try to tackle unproductive communication overload, can be seen. One thing is for sure, by reconsidering communication and embracing collaboration tools like Slack, companies can save themselves a lot of time and money.

  1. http://www.forbes.com/sites/groupthink/2014/05/29/email-overload-is-costing-you-billions-heres-how-to-crush-it/
  2. http://www.mckinsey.com/insights/high_tech_telecoms_internet/the_social_economy
  3. http://www.wsj.com/news/articles/SB10001424127887324339204578173252223022388?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424127887324339204578173252223022388.html
  4. http://techcrunch.com/2015/04/16/used-daily-by-750k-workers-slack-raises-160m-to-value-collaboration-startup-at-2-8b/#.kdu0ca:khwv
  5. http://cio.nl/software/85983-waarom-duikt-iedereen-op-slack
  6. Goodhue, D. L., & Thompson, R. L. (1995). Task–technology fit and individual performance. MIS Quarterly, 19, 213–236.
  7. Header image: http://allthingsd.com/20130814/flickr-co-founder-stewart-butterfield-turns-to-workplace-communication-tools-with-slack/

Instructables.com! How to do it yourself!?


Have you also wondered for years how to make a wooden paddleball set, or how to make a rock salt bracelet, but you never found the proper motivation to figure this out? Due to the online trend in customer co-creation it is now possible to find instructions for the most bizarre items online on Instructables.com

One of the leading sites in these ‘how-to’ videos & instructions is Instructables.com. Instructables.com is a website which was originally an inside project from some PhD students from the MIT media labs.  When they weren’t solving complex technological problems like solar panels for highways, they were teaching each other things as 3d modelling, cooking and other stuff through videos and instructions that they posted on this platform. In 2006 they decided to open up the platform to the rest of the world.  The website now is a platform for over hundred thousand how-to instructions, videos and ideas.

That these ideas are very varied is already noticeable in the first moment you enter the website. There is a bike challenge available in which people can post their idea about bikes. These ideas vary from homemade bicycle stand to homemade tandems. The great part of this platform is that it is not only a platform for simple guides like sharing a salad recipe or showing how to sheer a sheep, but it is only a place where creative people meet each other, share ideas and create.

Behind the website is a small team and a huge community of enthusiast people who are constantly sharing their most creative ideas. They can add videos, images and even files with 3d models or photoshop images. An extended review system is available on Instructables.com to rate other users and their ideas.. Besides this it is possible to join groups for people with similar interests. Instructables.com also has a membership available for teachers so they can use these videos in the classroom.

The business model of Instructables.com consists of 2 different revenue-models. The first is based on advertisement. They rent out video space on the video pages to companies for advertising purposes.  The other source of revenue they have is organizing contests for their community. Some of these contests are sponsored by companies. At this moment Microsoft is organizing the “Coded creation contest” on Instructables.com. Big prizes like laptops, tablets and photo cameras are waiting for the winners!

Besides Instructables.com there are literally dozens of these websites that are specialized as video platform for how-to and do-it-yourself videos. Although Instructables.com is not the largest website in this category, they have an advantage with having a large community. So if you feel creative these coming months and have a video camera and some spare time, make sure to visit instructables.com!

References:

http://www.instructables.com

The social buying website


Ever had the experience that you spotted something cool on a social website such as Instagram and Pinterest and you wanted to get it, but more often than not you could not find a shop to buy it from? As a consumption economy we always want new and fancy things in our lives and online shopping has made this much easier.

The website Fancy.com solves this problem by allowing the direct connection between seller and buyer in a social environment. Fancy is the place that allows you to discover and buy amazing things curated by the global community. So how does this business model work?

fancy-app

The website can be compared to many different websites, it allows you to buy high-end things on a website as as good looking as Tumblr/ Pinterst and most importantly as money-driven as Amazon. It is based on a new retail model that allows you to shop by accidentally discover new items instead of you deliberately searching for them. In fact it works much the same way as Pinterest, only the website has a direct purchase button at every product displayed.

It works as followed, you spot something on the internet and save the image because you like it. After that you go to the website and upload the photo of the product including a title, you add a link to the companiy and set it under the correct category. The image is than posted on you Fancy feed and is indexed by the Fancy database. The company is then notified that the product is on the Fancy website and the company can then ad a direct buy link. After this my image, that I uploaded, is visible on my news feed and all my friends are able to buy the product directly on the Fancy website. Fancy business model is taking a 10% commission on each of the products sold,

Naamloos2

This business model is such an success that even Pinterest is planning to introduce a “buy” button that would let users purchase some items from inside the online scrapbooking service. This would mean direct competition with a website that already controls a 23% of traffic to e-commerce sites (Business insider, 2015). Furthermore, the approach used by Fancy can create problems in the institutional arrangements, the user generated content has a lingering problem with liability. Especially copyright infringement is a constant threat for the Fancy website, the wrong content can result in a law suit against the website itself.

However, it can be concluded that this new social buying trend is potentially changing the way we shop, this also means that websites such as Amazon need to compete with a new kind of buying behaviour. After all, for most consumers this trend is a welcoming site, it creates new value in the online shopping experience.

Sources:

Fancy.com

Business insider: http://uk.businessinsider.com/pinterest-buy-button-2015-2?r=US

Help(l)ing Anyone


A dream came true for the start-up Helpling. They had a brilliant but simple idea and after only 1 year they are offering their service in more than 12 countries and 200 cities. But how did they get so successful? What is so special about Helpling?
There is a huge black market out there, a huge market of housekeepers that serves millions of households and a lot of these families have the same questions: Is it legal? Is this for me the cheapest and safest way? How can I find the perfect match? Everyone recognizes the issues. Millions of people need it, but it is difficult to find: a housekeeper that fits your budget, lives around the corner and you can trust. A difficult combination but Helpling has found a way to make everything more legal, transparent and they promise every customer to find the perfect housekeeper in 60 seconds.

Helpling is started in Germany when two guys presented a simple business concept to Rocket Internet. Rocket Internet liked it and one week after the meeting they already started to develop the concept. On March 29th 2014 Helpling is officially launched.
But why is this simple idea so brilliant? Partly probably because of the contemporary business model: co-creation. Nowadays customers want to contribute and support each other more and more. Helpling is making use of this trend.

Helpling is an online platform that matches customers with independent cleaning providers (called ‘Helplings’). Helplings register online, go through a registration process, choose their availability and after that they are able to receive bookings. Households who want to book a housekeeper have to make a booking online by entering their address and making an appointment. Then Helpling is matching a customer with a housekeeper based on location and number of positive reviews. So if a housekeeper is doing a great job, he gets higher rankings and he will receive more jobs since Helpling is offering jobs first to the best-reviewed housekeepers.

Through this way Helpling is supporting the Helpling community to review each other and the Helpling community improves the overall service by doing this. This recommendation-system supports the quality of Helpling.
Because Helpling is matching, also the perceived effort for the customer is becoming less and Tsekouras & Li (2015) found out that this means that the overall perceived quality would be higher. A customer has to put in a minimum effort and gets great results because of transparency and the Helpling’s review-based selection. Besides, because Helpling is helping customers to find the best-reviewed housekeeper, customers are more likely to do something back and are willing to write these valuable reviews as well.

Of course there are also some challenges of co-creation and the Helpling business model. It could be risky to fully rely on the individual housekeepers. They might seem reliable but housekeepers can also ruin the brand-image by misleading honest customers. Therefore, the most difficult part for Helpling is to recruit the cleaners, since one single Helpling can damage the brand, and they are now thinking about how they can safely scale this task. It is important to explore the risks and opportunities of this co-created platform.

“We would never do anything that harms Helpling as a brand. It only works if we can provide a good service. Otherwise you create hype and everyone tries it, and tries it exactly once, and you are in a really bad position.” (Benedikt Franke, 2015)

Luckily for now the quality remains good and there are increasingly more housekeepers and customers that are making use of this simple and helpful platform. If Helpling can live up to the ultimate dream to serve the world with their service? Give them one more year and we will see where they get.


References:

Free WordPress makes $45mil per year, but how?


With more than 74.6 million websites build on it, WordPress is the most used content management system(CMS) in the world. Of all self-hosted websites, 18.9% is build on WordPress and 70% does not work with a CMS. The guy behind this extremely successful system is Matthew Mullenweg and Mike Little. But they did not build all 30.000+ plugins, 100.000+ templates and uncountable custom widgets by themselves. Matthew and Mike co-created: they used the crowd to make their CMS an indispensable building-block in the world of internet. In this blog I will explain how WordPress is generating revenue by the use of its crowd (developers of plugins and themes).

WordPress was released on the 27th of may, 2003.  Back in the days, the internet was still a relatively new environment. Building a website demanded advanced skills in code-languages such as HTML and PHP, in working with hosting accounts and for a fancy webdesign with Adobe Photoshop. You can imagine that relatively a few early-adopters auto-didactically obtained these skills: NERDS. Matthew and Mike wanted to change this status quo. Their initial idea of WordPress was to lower the enormous threshold for normal (non-tech) people to build their own blog. Obviously, they succeeded. But thanks to thousands of developers, WordPress supports countless website-types next to blogs: regular business websites, webshops (WP E-Commerce), social media platforms (BuddyPress) and more.

Nowadays, WordPress itself is an open-source system, does not use any obligated advertisements and is free to download. Matthew and Mike apply four interesting business models on WordPress:

  1. Offering High-End Hosting
    WordPress offers space on the internet on their own servers. In addition, WordPress provides professional service for large multinationals. Customers are among others, CNN, TED, Dowjones, UPS and Times.com. Taking a look on WordPress VIP Hosting, we see prices tarting at $15.000 dollar per month. So, one business model is based on a simple service provider.
  2. Premium Templates (Web-designs)
    If you build a website based on WordPress, it is not necessary anymore to design your entire webdesign yourself. WordPress offers many premium templates, which are easy to install yourself. One template costs approximately $50.
  3. Premium Accounts
    A wordpress blog is free, but extra space for media or a domain (.com/.nl etc) costs money.
  4. Google Advertisements (Google AdSense)
    WordPress has the right to post Google Adsense advertisements on free WordPress blog. However, this is only done under certain circumstances.
  5. And more…
    Next to these major 4 business models, WordPress provides various other paid services. Most of them are linked to a premium model (such as paid plugins).

Interestingly, WordPress positions itself as a free open source CMS system. However, for a small percentage of the users Wordpress is charging fees. Relatively, this might solely be a small part of the users, but taking the numbers mentioned at the beginning of this blog into account, you can imagine that the absolute earnings are huge. The company behind Wordpres (Automattic) made $45 million revenue in 2012 and is growing rapidly (last publicly available data). Knowing how WordPress is born and evolved, Matthew and Mike should thank the user for building their internet-empire.

Tip:
Want to build your own WordPress website? (CHECK VIDEO BY Tyler Moore).

1. Open a WordPress account at www.wordpress.com
2. Install a free theme or download a premium template from e.g. Themeforest.com.
3. Check the plugin page for additional functionalities.

Trick
Want to know whether a website is build on WordPress?
Put the following text behind the internet address: “/wp-admin/”. If you get a login-page, you know the website is build on WordPress.
E.g. www.bijlesmatch.nl/wp-admin/

References:
1) World Bank Database
http://data.worldbank.org/indicator/IC.BUS.NREG/countries/1W-EU?display=graph

2) Manage WordPress
https://managewp.com/14-surprising-statistics-about-wordpress-usage

3) Matt Mullenweg WikiPedia
http://en.wikipedia.org/wiki/Matt_Mullenweg

4) WordPress VIP Stats
https://vip.wordpress.com/stats/

 

Thank god it’s Friday!


A creative gateway to the festival Extrema Outdoor, the design and inspiration for a new buddha to buddha bracelet or the design for a new tattoo for Dré Hazes. These requests or so called Calls for Creation have already been answered, co-created and fulfilled using the Created on Friday platform.

Created on Friday is a video-based platform in which clients, creative minds and followers are connected in Creation Stories. With already 12 co-created final products and 16.000+ creative minds and followers, they are experiencing a promising start. What makes this platform different related to others and how does the consummation look like ?

Creating a Creation story process

1st FridayCall for creation

On the 1st Friday at midnight, the client submit a Call for Creation video. With uploading this video based Call on the online platform, a client opens the request for action towards creative minds. As already presented above, the topic of call for creation can be anything of choice based on the client request for a unique concept e.g. design, art or a new marketing campaign.

During the first week, anyone with a creative mind can respond on a specific Call for Creation by uploading their creative solution. Again this response will be delivered in the format of a video-pitch. The video pitch will be shown to online crowd, to give them a proper feeling and understanding of the solution proposed by the creative mind (person, company). The online public or followers, in turn, will vote for their favorite videos resulting in a dynamic top 5 ranking on the basis of video views and votes during this week.

2nd Friday – Winner gets chosen,  nr 2,3,4,5 announced

On the 2nd Friday the top-5 will be frozen and the client decides which pitch will be awarded as the number one. Interesting fact is that the client still can decide to choose a winner outside of the top 5. Having said that the client’s favorites are presented in a frame on the client’s Call for Creation page. This way the client can influence indirectly followers’ voting behavior. The nr 2,3,4,5 of the video-based pitching contest will be awarded with money. Besides the financial rewarding, the top-5 creative minds and their solutions will be announced on the platform making use of a video. In this way the creative mind talents will be shown to all the followers. On top of that, the winning creative minds will be part of the Created on Friday wall of fame.

During the second week, in a Meet & Making of, the client and winning creative mind co-create, further develop and fine-tune the winning idea into a final creation. Taking into account that the client is responsible for all the resources needed to come up with the final creation.

3th  Friday – Final creation

After 14 days of pitching, voting and co-creating the final product will be presented. Not surprisingly, this will be done using a video message on the Created on Friday platform.

 Success

Using online video content during the creation story, allows both clients, a creative mind and followers to share their findings and ideas towards a large crowd. In my opinion, the use of different social media channels ( YouTube, Facebook, Instagram ), makes Created on Friday a unique marketing “machine”.

Secondly I am really curious about the impact Created on Friday could have on nowadays marketing/design agencies. Noticing that these agencies mostly of the time charge a lot of money and consume more than 2 weeks to come up with a final product.

Since it’s founding by the end of 2014 , already 12 Creation Stories have been created. In my opinion, many more will follow. Top priority will be the supply of new Calls for Creation by clients.

Created by: Luut Willen

References :

Stitch Fix’s value co-creation


In the past it was easy to make a choice due to the lack of options among products. However, this has changed drastically. According to the NY times consumers see around 3,000 to 20,000 marketing messages a day. Moreover, we are bombarded with choices. Choice overload, which happens offline as well as online, exists for all kinds of products and services that we need.

Choice overload also exists when we shop for new clothes. Offline overload could exist when we go into a store and are presented with too many choices. Online overload happens when we browse a web store and experience choice overload. Source overload happens when too many websites and or platforms exist that makes it difficult to choose where to shop.

In 2011 Katrina Lake launched Stitch Fix. Stitch Fix is a fashion retailer that combines expert styling and technology to deliver a shopping experience that is personalized for the customer. It does so by having you first fill out a survey so that your personal stylist knows your preferences. Then it will send you five clothing items or accessories from various brands tailored unique to your taste. You can try all the items at home. You can buy what you want and then return the rest. Shipping and returning items are for free. Hence, Stitch Fix partially solves the choice overload that customers experience when shopping, by filtering the endless amount of choices into five choices.

Online recommendation systems used by companies such as Amazon.com learn from your preferences by tracking your searches and clicks in order to provide you with products that you might want. However, depending whether the algorithm and machine learning works well, this could lead to undesirable outcomes. For example, you could end up getting unwanted recommendations after you buy a gift for a friend or your mother who have different tastes and preferences in products than you have.

What makes Stitch Fix different than other online shopping experiences is that there is a human personal stylist involved in the item recommendation process. Your personal stylist handpicks five items just for you, based on your set preferences. Stich fix charges $20 styling fee for each item that you buy. But if you decide to buy all five items, you will get a 25% reduction on the total price of the shipment. The company gathers data and your feedback on the items that you decide to buy and the items that you decide to return to update your preferences. This will be then used to make better recommendations in the future. Hence, as stated by Stitch Fix, the more you make use of the service the better your personal recommendations will be and greater your satisfaction.

The success of Stich Fix proves that there is indeed a need for personalized recommendations and active customer participation. Furthermore, it shows that customers are willing to pay a premium on top of store prices for services that makes things convenient and or saves time.

References:

https://www.stitchfix.com

http://mashable.com/2014/06/16/unique-business-models/

http://www.bizjournals.com/dallas/news/2015/04/03/stitch-fix-to-open-u-s-distribution-hub-in-dallas.html