Tag Archives: customization

FlavorPrint: Personalizing your recipes through your tastes

February 18, 2018 florisbienfait Leave a comment

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.

Articles

Creating customer loyalty through service customization

February 13, 2017 lucnooren93 1 Comment

Many firms see service customization as a powerful tool, but this application is not well understood yet. The paper (Coelho & Henseler, 2012) developed a model of customer relationship outcomes of service customization and the efficacy of service customization. The main idea about differentiation is to identify profitable market segments and to design products and services that satisfy that segment. Now, the more popular form of differentiation among firms is that of customization; firm’s offering tailored to meet the heterogeneous customers’ needs, aims at satisfying as many needs as possible for each individual customer and an answer to the shifting nature of customer demand for greater variety, more features, and higher quality in products as well as services. Developments in computing power have offered these possibilities and companies will keep investing in these technologies because of the strong need for information.

The methodology used in this paper are two large-scale studies in different service industries based on the European Customer Satisfaction Index framework and applied PLS path modeling to test this model. Customization is a big plus for firms because it increases their service quality, customer satisfaction and with that customer loyalty toward a service provider. It investigates the simultaneous effects of service customization on customer loyalty and other relationships variables and offers new insights relatively to the nature and size of customization effects. The paper found that this customization has both direct and mediated effects on customer loyalty. These findings and service customization is a great instrument for relationship marketing which depends on customer satisfaction and customer trust. Service providers can use this paper’s findings and thus, service customization as an effective instrument for achieving not only higher customer satisfaction, but also higher customer loyalty. Service customization is most effective for companies that have deficits in satisfying their customers, while at the same time their customer relationships are characterized by a high level of trust and could help managers to decide upon resource allocation to enhance customer loyalty.

A business example can be found in the banking industry. By introducing non-banking products or services, banks can cater to customer lifestyles and needs. For example, ‘’banks have begun to offer insurance on items such as mobile phones, travel insurance, identity theft protection and premier event access’’ (zafin.com). Banks can explore lifestyle bundles with Internet services in association with a, for example, home loan. By allowing customers to customize their experiences through various channels, and by allowing banks to offer suitable products and services based on customer data, a bank could create customer stickiness and retention.

Articles, Business Case

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

February 12, 2017 mwilschut Leave a comment

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.

Articles, Business Case

Burberry, the trench has gone digital

April 25, 2014 Kandi.van.S Leave a comment

How to transform a “dusty” old-fashioned luxury brand into a pioneer of the digital world?

There are not many things that could be considered more cult than the trench; the British fashion house’s trademark coat with the characteristic tartan pattern. For most people, Burberry is the ultimate synonym to tradition and heritage. However, since 2009, with the guidance of its former CEO Angela Ahrendts who has now –not surprisingly- moved to Apple as retail chief, the luxury brand has managed to walk and not fall from the runway towards the digital kingdom. Burberry, through its innovative, as far as luxury brands is concerned, approach has managed to relate to the younger generation.

The first step was the realization that brand owners apart from just offering value, they co-create value with inputs and influence from customers and other parties to achieve value sought in terms of exclusivity, recognition, access to privileged information and prestige (Tynan, McKechnie and Chhuon, 2010). But how did Burberry manage to do it a reality? Mainly, by taking advantage of the opportunities that the online marketing offers. With their most popular item, the now iconic, trench coat as the central point and the brand’s website as the vehicle, Burberry applied two well-known techniques; mass-customization and crowdsourcing.

Art of The Trench