July 31, 2014

Customer motives as online co-creation partners: a research paper

The discussion about innovation engaging the customer as co-creator (often described by terms like co-innovation, crowdsourcing, peer production customer, crowd-based outsourcing etc) is not new to many of us. One of the new and interesting aspects of co-creation is engaging customers in co-creation process using online tools (and social media in particular) as interaction platforms. There are several issues to be addressed here, one of them is finding the best persons / customers and get them on board. Motivations of customers to engaged in such processes are of vital importance. This was the topic of our latest research paper (co-authored by Carlota Lorenzo-Romero and Leonine Brünink) titled "Customer Motives and Benefits for Participating in Online Co-Creation Activities". The article that was accepted and will be published soon in the International Journal of Internet Marketing and advertising  attempts to give an answer to this issue. Based on a survey conducted among 239 young Internet users in Holland and Germany the factors described in the Uses and Gratifications Theory (and tested earlier by Nambisan, S., & Baron, R. A. (2009) for "traditional co-creation). We tested whether the benefits described int the Uses and Gratifications Theory (i.e. Personal Integrative Benefits, Hedonic Benefits, Social Integrative Benefits and Learning Benefits) are motivators for online co-creation and this seems to be the case. We  found out that about 28% of the participants have taken part in co-creation activities with businesses online, something in line with findings of our previous research.  We also identified two profiles of online co-innovators and found that males and Dutch are in general more motivated than females and Germans to participate in such activities. The differences based on ethnicity might have to do with the fact (and this is a personal observation) that in the Netherlands there are more opportunities for online co-creation activities than in Germany. With some caution for generalizations due to the sampling method we think that this study provides some
For those interested the abstract of the paper below:

Abstract
The widespread adoption of Web 2.0 applications, commonly known as Social Media, has brought about a new generation of empowered customers. Empowered customers are well-informed, knowledgeable and certain about their specific product and service needs; they are often willing to share their experiences, product knowledge and innovative ideas with producers, providing input for new product designs and enhancements. Such customer attitudes often labelled as co-creation, are forcing many companies to step away from the traditional firm-centric view of innovation and take a more customer-centric view by actively integrating customers’ ideas and knowledge in their new product and service development processes. Co-creation presents businesses with an interesting challenge: how to identify and recruit the innovative customers who willing to cooperate and share their knowledge as the basis for successful online co-creation activities.
This study identifies the various motivators for customers to participate in online co-creation. Based on the uses and gratification approach a pilot questionnaire is employed and its practical applicability is tested. The results indicate that customer participation in co-creation projects is motivated by four distinct types of benefits and  that co-creators differ in their motivational level. Finally, recommendations on how to adapt the questionnaire for future research and suggestions for further research issues are provided. 

References

Nambisan, S., & Baron, R. A. (2009). Virtual customer environments: Testing a model of voluntary participation in value co-creation activities, Journal of Product Innovation Management, 26(4), 388–406.

Constantinides E., Brünink L., Lorenzo-Romero C., 2014, Customers Motives and Benefits for Participating in Online Co-Creation Activities, International Journal of Internet Marketing and Advertising (forthcoming).

April 15, 2014

Is it time for a Stupidity Filter help preventing Social Media blunders and dramas?

This week two airlines got again involved in social media related controversies, the latest in an endless series of social media issues/dissasters related to customer attacks, blunders and human stupidity:
The US Airways attached an "inappropriate" (see pornographic) picture to a tweet written by its customer service department as answer to a customer tweet. The damage control is difficult in such cases since the picture was more than half hour online, enough time to create a cloud of jokes, irony and angry reactions (search for example with the term "US Airways Tweet" to get an idea). The airline was quick to apologise but some reputation damage has already happened. The sad thing is that the airline (or every other business for that matter) has nothing to do with this which again was an action of an individual; we do not know yet what the motives or reasons for such a thing are but there are a lot of explanations from self-proclaimed psychologists in Twitter posts.
The second case was the twitter post of a 14-year old girl in Rotterdam with a threat to American Airlines. Again the action of an irresponsible (who expect so much responsibility from a 14-years old?) in combination with stupidity. The airline was of course not amused with the (irresponsible) joke and contacted the FBI; this resulted in the arrest of the girl by the police.

I wonder if it is time for a "Stupidity Filter" for Twitter or other Social Media where irresponsible or anti-social persons are exposing their stupidity and complexes to the whole world putting even themselves in danger. No new technology is necessary for such a filter, we have already text analysis software available; algorithms detecting sentiment are getting better and better and it is not a big deal to check words used against a list of "sensitive" terms and block the text. In the case of pictures there are also solutions, the other days I came across picture analysis software that can be used to identify our behavior on the basis of pictures we publish in our social networks.
How such a "stupidity filter"should work? Blocking content is of course against the free (online) speech and expression but in analogy to the physical word, which we tend to forget in such ethical discussions, people can do things online that bring them in troubles as you see in an old example of such a case involving Dominos Pizza. I think a simple solution id the filter observes something "inappropriate" that is about to be posted in social Media a pop-up with a warning can appear and inform the user that the content he intends to post will bring him/her maybe in troubles.
The idea is simple yet not easy to implement because of several ethical and free speech aspects: such filters would be also interesting for various dictators or leaders allergic to ideas different than their own, eager to block the voices of their people exposing their crimes or illegal actions. So such filters must be exclusively under the control of the social media operator (Twitter, Facebook, YouTube etc) and beyond the reach of the varous modern sensors.
We must come back to this some time, for the time being good luck to all trying to repair reputation damages.
 

February 26, 2014

Potential and problems with Big and Smart Data

An interesting post in the MIT Sloan web site about the problems around Big Data. Needed: a new generation of executives who can work with Big Data and extract relevance from it. http://sloanreview.mit.edu/article/better-decisions-with-smarter-data/?utm_source=WhatCounts+Publicaster+Edition&utm_medium=email&utm_campaign=DA+Enews+Feb+25+2014&utm_content=Read+more

February 21, 2014

Forecasting innovation success and the O(ther) Information


I came across a recent article of professor Itamar Simonson and Emanuel Rosen titled “Market research can no longer predict what consumers will like”. 
An interesting remark in the article, not unfamiliar to many of us who follow the developments in the increasingly “social” marketplace: The changing consumer behavior and the increasing complexity of the decision making process due to the influence of Social Media content on consumers have changed dramatically the marketing landscape. This is something I keep repeating to my students and everyone else who follows my lectures on social media Marketing.  I usually explain the new situation in this domain using a well known and simple buyer's decision making model, something we find in every standard marketing textbook.   
My additions to the standard textbook model (see figure) are the elements C and D representing two new market information inputs that affect the customer decision: The information from the “broadcasting” web i.e. information about products, services or businesses poster in corporate web sites and the information from the “interactive” i.e. user generated content (UGC) in social media. What I underline always is the importance of this last element and its impact on customer decision making today. By all means this is a major influence factor of this process today. 

The article of Simonson and Rosen touches on a very important point that seems to confirm the view that the customer feedback in the form of social media voice is the most important part of this equation. They write the following trying to find an explanation for the inability of market research to predict the success (or failure) of an innovation like the iPhone when it was about to be launched:
“It’s easy to blame the market research firm for this, but this is not our point. We are trying to explain the inherent difficulties in assessing consumers’ reaction in this new era. First, more decisions today are impacted by what we call O sources of information—“Other” information sources, such as user reviews, friend and expert opinions, price comparison tools, and emerging technologies or sources—whereas market research measures P sources—“Prior” preferences, beliefs and experiences”.
The O sources are therefore a factor bringing instability and disrupts a well-grounded  method of producing information  needing in decision making namely the traditional market research.
What now? All hope is gone? I wouldn't say that, it is simply a question of adopting a new thinking and approaches to the marketing research issue. Together with my colleagues in the University of Twente and other colleagues abroad we are for some time now brainstorming on this specific issue: What is the way to create or predict successful innovations today. We set out to searching for other sources of customer information and sources of behavioral clues that can provide  much better input for predictions and guidelines for innovation than the traditional market research.  You can guess that we consider the social media as a major source of such information but this is not the only source we look to.  Since this discussion and our research design is still in progress I will not expand on this at the moment but I will keep you informed as our research progresses.

November 11, 2013

Changing technology and market context: Theoretical (and Practical) Issues for further research

As someone trying to follow the developments in the field I often wonder whether some of the old wisdom and time honored theories are still valid today and whether it is responsible nowadays to teach some of these theories to our students. In my domain, the Marketing, I clearly see (together with others)  the dramatic shift in marketing power that makes the old and trusted traditional approaches less and less effective. Marketing is in an identity crisis at the moment as already many ofus realize that the customer empowerment has drastically and for ever changed the rules of the game.

There are however other management domains that there is less attention and criticism. Take for example the area of Industry structure where the 5-forces theory of M. Porter dominates the thought and practice since the 70’s. Looking a bit closer to this classic management holy grail one can wonder how relevant are the 5 forces today for defining the industry attractiveness and structure: In many of the globalised, online and 24/7 industries most analysts would have a great difficulty to identify who are the customers exactly let alone assess their relative strength to the business. Most industries, mainly (but not exclusively) in the information-based domain, are not any more able to keep track of competitive threats and even follow substitute products that can be produced and offered online outside any established and controlled channels. Next to inability to effectively protect products and intellectual property in some industries it is very difficult if not impossible to predict new entrants or identify even strategies that secure competitive advantages. In the era of the social media and customer empowerment only very clear mono-strategies like low price are giving a (temporary) competitive advantage before a cheaper competitor appears. All other claims and operations of businesses are under continuous scrutiny and review by customers who do not accept any more anything that they perceive as unethical, secret or push.
Another area that conventional academic wisdom seems to ignore is the area of innovation. The good old theory of Evert Rogers (first proposed in 1962) on innovation diffusion is still a standard element of every marketing management handbooks. But is in 2013 innovation following this curve in its diffusion? The increasing customer participation in the innovation process (often described as co-creation or crowdsourcing) and the often hyped adoption of innovations have substantially disrupted the innovation diffusion, making it a short and intensive process rather than a S-shaped process that reaches various segments in different time intervals. Innovation adoption depends to a great extend today on (social media ) influencers and user networks: Having the right influencers talking (not pitching) your product to the right networks or social media communicators will produce quick and low cost results in introducing a new product or service.
There can be more areas where a critical review of the theory is necessary offering quite a few opportunities for open-minded researchers. Hopefully we will hear about them more in the future.

November 4, 2013

How to deal with the empowered customers when they misuse their power


I usually start my talks on Social Media marketing with showing to the audience a list of questions marketing practitioners have on the impact of technology on their business, markets and marketing practice.
One question of my list is "How to deal with the empowered consumer". I am especially interested for this question because customer empowerment is one of the most important (side-) effects of the internet and social media boom, a phenomenon that will shape the marketing thought and practice in the coming years: as academics and practitioners already realize the market power migration will change not only the rules of the marketing (from pushing to collaborating, from broadcasting to engaging, from talking to listening to name some important ones) but also the focus of it. One of the new focus areas will be reputation management and preventing customer  attacks. If you want to know more about this I suggest the book of Gillin and Gianforte "Attack of the Customers".
During my talk last week in the E-Travel Summit I had again the opportunity to talk about such issues. After the speech I was approached by the management group of a hotel who wanted to have my opinion on how to deal with customers who make a (discounted) non-refundable booking in the hotel and do not show up or cancel the booking and ask their money back because there was a "serious" reason that they cancelled their booking.
While some of these customers are persuaded by talking that what they ask is not possible some insist to have their money back otherwise they will wreck  the reputation of the hotel in the social media.
Of course no business that has invest to good service and reputation is happy about such a possibility; the people I spoke were really concerned about the  issue and eager to have some advice.
What is the right strategy in such cases? Should the business give up to threats to protect its reputation or keep a firm position and face the possibility of a reputation damage?

I told them that there are different levels where one should deal with such practices in this particular case.
The first level is during the booking process: In this stage it is important to be absolutely open and transparent with the customer.
How can you do that? Be sure for example that the customers before pressing the button for closing the deal see a last screen or pop-up reminding  them that they buy a non-refundable ticket and mentioning their options: To accept that there is no possibility to have the booking refunded for any reason, to buy a travel insurance covering refund in case of unexpected events or buy a refundable booking. If the customer clicks that he is aware of these facts and still prefers the non-refundable option, be sure to inform them with a confirmation email about their option again and possibly offer the possibility to change the booking within 24 hours to a refundable one.
Such an open yet water-proof attitude and deprives customers from much ammunition when they change their mind.
But what should you do with customers who despite such clear and binding agreements still threaten with reputation damage? The next step is to engage in a direct discussion with the customer outside the social media space: by phone, email or personally if necessary. Most customers will give up in this stage if you show that you are interested and take the customers seriously but also remind them their own commitments.
For the few that despite all this will insist and threaten I have another piece of advice: Ignore them if they are irrelevant or invisible in the social media: you do not need to worry about someone without any presence at all in the social media or someone with 20 Facebook followers. If the person has a serious social media presence then you have two options: either try to make him/her forget the issue by offering something as compensations (like a discount in the following booking) or follow closely their posts on the social media and respond professionally, being prepared at the same time to spend some time on the case. I do not think that giving up to threats is an option, maybe another option is to scrap the discounted non-refundable options altogether.
Is there, despite all these measures, any guarantee of avoiding such problems completely? I am afraid  the answer is no. Consumers are now aware of their power and some of them will be eager to misuse it. We must not be surprised by this, this is in human nature and businesses have done this often in the past (and still do it in some cases). The issue is that reputation management will be a topic in the next years, not only for large multinationals but also for any business big or small.

October 9, 2013

Social media: the silver bullet of marketing strategy?

It is a fact that most businesses are by now convinced about the potential of the social media as marketing tools and the need to integrate them into their marketing strategy. Many do this already: Look for example to the Social Media Monitor (report5): In the Netherlands the adoption of social media marketing strategies by the top 100 businesses* was 92% in 2012  up from 14% in 2008. 70% of these companies have a Social Media Manager while this position din not exist 4 years ago. In any similar report you read you see the same picture emerging: the social media is hot!

These positive news however should not detract those who are seriously working on this topic either as academics or practitioners from the real issues:
-          Do marketers really know how to exploit the full potential of the social media as marketing tools? And do they use them the right way?
-          Is social media marketing the comprehensive answer to the challenges of the marketing field today? Some of these challenges: empowerment and techno-savvy consumer, depletion of effectiveness of the traditional marketing tools, market globalization and increasing technological progress bringing new techniques and technologies to the market every day. Some of these techniques and technologies are: mobile computing, Internet of Things, wearable technologies, RFID, cloud computing and Neuromarketing.

My answer based on my personal observations to both these questions is simply “No”. I think that businesses have gone some way on the social media strategy arena but they have to go much further. Next to this I do not believe that social media marketing is the single answer to the challenges facing today’s marketers: there are many more issues to be addressed.
What these challenges and issues are and what are my personal views on the future of marketing strategy? This will be the subject of my talk in the E-Travel Summit on 30 October in Almere.
 *Based on their advertising budget

August 30, 2013

The end of Banner Advertising?

Banners were once considered as a revolution on communication due to their interactive character and direct effects. They formed the basis of new forms of marketing like display advertising, affiliate marketing and online campaigns. The last years though more and more studies and reports are arguing about the limited value of this form of communication because of low (between 0,01 -0,04% of click through rate (CTR).
A study just completed by our Master student Frederike Dauwe titled "Effects of city targeted banner ads on user engagement" confirmed the low CRT of banners but also concluded that city targeting banners are scoring worst than country targeting ones. The study will be soon available in the University of Twente publications site and in the site of SOMERE.

April 21, 2013

Departure to Athens For Eurotrip 2013: Free Wifi in the airport

Just arrived in the departure terminal of Schiphol Airport for the trip to Athens. Our Eurotrip 2013 students are already there and seem to have (at least some of them) a nice view to Acropolis from their rooms.
The Wifi in the area I sit is overloaded at the moment but fortunately I can use my smartphone as station; you can get 1 hour internet connection for free in the airport so it seems that everyone is using this possibility at the moment. I must say that more and more businesses in the hospitality sector realize now how important is free internet access for their customers. This is something different than even 5-6 years ago when such free online access was very limited in public spaces and you had to pay 10 Euro per day in the hotel to get a slow internet connection through a cable.

The overload system at this moment here in Schiphol indicates that some extra capacity is needed in busy areas but I am sure the airport will listen to some complaints about it and react. I will send a tweet also soon.
For the rest nice weather here, in Athens seems to be a nice weather too, only much warmer!




April 20, 2013

EuroTrip 2013: What are the effects of the Euro crisis on Greek businesses

With a group of 22  of our 2nd and 3rd year students we start from Monday the EuroTrip 2013, a study trip that is part of our Business Administration curriculum on the University of Twente organised by the study association STESS. A busy program with one lecture in the Athens University of Economics and Business and 7 business visits the students will try to figure out what are the effects of the crisis in the country worst hit by it on their strategy and marketing activities.
It promises to be a very interesting and educational trip
Details in my Twitter and this blog the most interesting news from the trip.

April 18, 2013

The Airline Cookie Conspiracy Part II

One of the most popular posts for the visitors of this blog is the post about the Airline Cookie Conspiracy. To groups of my students are working on writing a paper where the methodology and results of our experiment will be documented in detail, we hope also to publish at least one of the papers in a scientific journal or conference.  The papers will be also available as working papers as soon as they are ready (around the end of May). If anyone is interested for a copy send an email to e.constantinides@utwente.nl

February 6, 2013

Collaborative Marketing issues


From McKinseey Qarterly

Making internal collaboration work: An interview with Don Tapscott
https://www.mckinseyquarterly.com/Video?vid=4505

November 2, 2012

Co-Innovation, The Customer as Innovation Motor

In the SOMERE web site you can read my white paper on Co-Innovation. What is this? Co-Creation by means of Social Media platforms
http://www.somere.nl/wp-content/uploads/2012/10/Innovation-21-white-paper-final-Constantinides-1.pdf

Accidental message

My apologies to colleagues or contacts who received an email about a new blog post, the email was not intentional and was sent accidentally.

October 9, 2012

Co-Innovation: The customer as innovation motor White Paper

INNOVATION IS A WAY OF FULFILLING changing customer needs by developing new and better solutions; it is also one of the most extensively discussed issues in the academic literature and field practice. Innovation has been identified as a necessary condition for survival and growth in an ever changing global world. Many corporations have based their market success on a continuous and consistent market leadership based on their innovative power and potential: IBM, Apple, Intel, Amazon and Google are well known pioneers in their markets. Under increasing competition and market pressure the innovation process has been subject to important transformation during the last 30 years; from being traditionally a “closed’, internal process, based on internal organizational expertise and structures (R&D, New Product Department, New product Management etc.) the innovation process is increasingly becoming externally oriented. Chesbrough (2003) popularized the trend of externalizing the innovation process by engaging innovation partners in what he called the Open Innovation model...  Read the rest in my new White Paper by downloading it in the SOMERE.nl web site or clicking to the New Publications--->

September 19, 2012

Marketing in crisis: what's the way out?

In his 2004 book Marketing As Strategy Nirmalya Kumar expressed his views on how the marketing profession can escape from the destructive route it is riding the last years and transform to a business activity that will regain the respect of the public and CEOs. If we believe the latest findings of the study conducted by the of the Fournaise Marketing group in 2011 not much has changed since: Marketers are still not seen by the majority of CEOs as a a real asset: "73% of CEOs think Marketers lack business credibility: They can't prove they generate business growth".
This is a worrying fact and a red flag that field marketers and academics should take seriously. We academics must realize that there seems to be a gap between what we teach our students in college, what they will be asked to do when they enter the field and what their CEOs expect from them. Field marketers on the other hand must understand the big change in the marketplace called customer empowerment. One of the symptoms of this change is the fact that the public is mistrusting marketers, mainly those insisting on monologues, one way communication and those who still think that they know better than their customers what they need and want.
One of the interesting issues highlighted in the report is the perception of  the majority of CEOs that "They (Marketers) are focused too much on the latest trends such as social media, because they believe they represent the new marketing frontiers - but can rarely demonstrate how these trends will help generate more business for the company".
Interesting remark but it should not surprise us, there are very few marketing activities that can really and clearly demonstrate how they help generate more business for the company, so in fact we do not talk about a new problem here.
To my opinion the whole issue is simple, many marketers never learned to be critical of themselves and were also never critical of trends and hypes. In a number of earlier posts in this blog I highlighted the Social Media "experts" explosion threatening to derail the social media marketing. The social media is indeed an important marketing landmark as well as an important social phenomenon; it is also a major challenge to marketers who have to learn new ways of dealing with the new customer. This simply means listening to the customer's (social) voice, engage customers and stop broadcasting; the customer is now the powerful party and the sooner marketers realize this the better.
Douglas McGregor wrote in 1960 book The Human Side of Enterprise where on the basis of the X - Y theory he urged organizations to pursue their objectives by engaging their personnel rather than managing it. That means to look for ways to develop and use the potential of their employees rather than trying to manage them by means of control and punishment. Marketers should in analogy look for ways to help their customers to meet their objectives and needs by listening to them, getting them involved in their business processes and becoming their advocates. This will be The Human Side of Marketing that the empowered customers expect to experience today.

So if we talk about a way out of the crisis in Marketing theory and practice the best course to follow is to get back to the basics: Listen to the customer voice and try to understand who the new customer is. This will help us marketers to transform our picture based on the mass marketing era and device ways to communicate with the customer on personal, individual level. A basic requirement here is to understand that we are not the powerful party any more and that our brand is not our property any more either. Successful business of the future will be those finding ways to engage the customer successfully, address the individual customer needs and use the customer intelligence as a source of innovation.

Back to business

This is the second week of the 1st semester here in the University of Twente and things go well: Many students (our International BA in Business Administration program has more than 250 first-year students in its third year from start). Together with the class Marketing for the Industrial Engineering and Management and the Minor Business Administration I have about 400 students to teach in this quarter. The program includes also workshops and guest lectures.
This week we kicked-off the Marketing Assignment: about 70 groups of students from 3 classes will put all their creativity and enthusiasm to work in order to develop the best strategy for the online presence of the Rijksmuseum Twenthe. Traditionally this project is always about online marketing of cultural, non profit institutions: We started with the Acropolis Museum in 2010, in 2011 we had the LVR-Archaelogical Park Xanten in Germany (the ancient Roman city of Colonia Ulpia Traiana) as subject.
Regarding research, our new focus on E-Marketing lays on Co-Innovation: Innovating together with your customers in Social Media platforms. I thought to use the term Social Innovation yet but a Google search indicated that this term is already used for other purposes. So Co-Innovation is the term that my colleagues and myself will use from now on.
The organization of the Social Media Practice congress on the 6th of November is another activity that keeps me busy, we as University of Twente participate in this with a survey that is conducted now aiming at the identification of social media strategies among Dutch firms in the North and East of the country, The "most social" company will receive also the congress award.

June 8, 2012

Co-Innovation: A subject for the Digital Agenda for Europe?

Since a week or so I participate in the forum of the Digital Agenda for Europe http://daa.ec.europa.eu/group/8/content.
In the issue of Innovation and Entrepreneurship I argue for including the issue of Co-Innovation in the Digital Agenda. My comment on the forum was meant to address the question if Co-Innovation is the same as Living Labs and whether there are successful examples. Also whether the issue is interesting enough for the EU Digital Agenda. My comment below:

The Co-Innovation has a number of common elements with Living Labs but it is in many respects they are different: while both are focused on innovation the Living Labs are commonly seen as mostly structured, institutionalized projects often having at societal or technical innovation focus. We consider Co-Innovation primarily as a marketing strategy aiming at engaging the final customer in product or services innovation processes taking place in digital environment and often making use of social media tools. The central question is how to effectively tap the customer creativity in order to innovate faster, cheaper, more efficiently i.e. reducing the ratio of unsuccessful products / services. In this sense the co-innovation goes one step further than the concept of the Open Innovation (Chesbrough, 2003) that propagates innovation in cooperation with the supply chain partners.

In the very heart of the Co-Innovation concept (also known as co-creation, crowdsourcing, or distributed co-creation to mention some of the most common terms) lays the empowered and sophisticated consumer who understands the effects of the democratization of technology and feels powerful enough to require participation in new product development processes. The sources of the customer empowerment are the new ICTs and more importantly the social media. The modern consumer furthermore is quite individualistic and willing to pay more for products tailored to his/her specific needs or having a very personal character. The industry response to this trend is known as Mass Customization; this is often seen also as a form of co-innovation.
While the co-creation is not by any means a new concept) in the marketing literature and practice (Prahalad and Ramaswamy, 2004) it is interesting to analyze and understand how this phenomenon develops in digital and networked environments. A primary focus in our research is to provide conceptual clarity around this issue and develop theories and models useful for the business operating in increasingly open, global and customer dominated environments. In that sense a prime objective is to develop a typology of co-innovation practices since there are different types of it; these types are characterized by different scope, different motives and different rewards for the participants. Next to this a number of interesting research issues require more research, experimentation and practical applications in order to fully understand the issue. The bottom line is to provide businesses with sustainable competitive advantages through efficient innovation processes based on customer creativity and engagement.
Regarding successful corporate examples there are many of them. Examples range from businesses who seem to have no need for R&D anymore since all new product ideas and development comes from the customers. Examples: The t-shirt producer Threadless http://www.threadless.com/ and LEGO http://mln.lego.com/en-us/network/status.aspx?ReturnUrl=/Default.aspx are known and typical examples.
Other companies use co-innovation approaches in order to collect new product ideas like P&G https://secure3.verticali.net/pg-connection-portal/ctx/noauth/PortalHome.do ,
Ford Motors http://social.ford.com/your-ideas/technologies/performance/ , Starbucks http://mystarbucksidea.force.com/ , Dell Computers http://www.ideastorm.com/ and NOKIA http://www.developer.nokia.com/Community/Discussion/content.php ).
In some cases co-innovation is about incremental, yet important innovations like customized packaging (Heineken http://www.facebook.com/heineken?sk=app_256849211027281 ) using social media as interaction platforms. Often attracting customer creativity takes the form of marketing actions (OSRAM http://www.led-emotionalize.com/ ) or it is focused on creation of communication concepts at low cost using amateur creativity (HEINZ http://www.youtube.com/watch?v=uh2FBhPGcHg ).
In some cases co-innovation is focused on finding solutions to technical problems arising in the process of innovation; such efforts to engage third parties as problem solvers include often a financial reward. There are many examples of “knowledge brokers” who facilitate such processes. www.innocentive.com . Another related area where co-innovation practices apply is the practice of engaging company employees in solving complicated management problems; these practices are known as Prediction Markets.
Finally plenty of mainly anecdotal evidence indicates that the concept is successful, yet relatively a very small percentage of businesses are open to the idea of engaging the customer in the innovation process that they see always as a proprietary one. To my opinion Co-Innovation can become a source of competitive advantage for European companies (and maybe European institutions and governments). I think that the EU should promote the concept or at least discuss it; the more opinions the better. In the University of Twente the issue in any case is on our research agenda.


Chesbrough, H.W. (2003) Open Innovation: The New Imperative for Creating and Profiting from Technology. Cambridge, MA: Harvard Business School Publishing
Prahalad, C. K., & Ramaswamy, V. (2004) Co-creation Experiences: The next practice in Value Creation. Journal of Interactive Marketing, 18(3), 5-14.




April 17, 2012

The impact of Social Media on top brands in The Netherlands

The Dutch Magazine of Marketing (Tijdschrift van Marketing) publishes in the April edition the results of a study conducted among the top 100 brands in The Netherlands based on their advertising budget. The study conducted by Greenberry analysed more than 1.8 million messages during a period of 3 months.As sources were used channels like Twitter, Facebook, Hyves (a popular Dutch social networking site) YouTube and various weblogs.
The results are quite interesting for a number of reasons; this is one of the few studies in the area to begin with. Furthermore (and maybe surprisingly) the well known 80/20 rule of thumb seems to apply also here : The 25 bigger brands are good for 80% of the total message volume. The top 25 brands had on the average 627 messages about them in the social media per day. Another finding is that the most "Social" brand is the Dutch Rail with 274.000 messages in 3 months (almost 3.000 per day) followed by the telecom KPN. The supermarket chain Alber Heijn is nr. 3 followed by the bank ING. Interestingly in the top 10 are included two more telecoms: T-Mobile (nr 5) and Vodafone (nr 7).
The picture is a bit different if we look to the reach of the messages: The average reach for the top 10 brands was 41 million users in the period of 3 months with the Dutch Railways (NS) on the top with 121 million. Interestingly the KPN who is nr 2 in the number of total messages is surpassed by T-Mobile as to the reach.
The sentiment of the messages was also analysed and here I think some of the toppers in the list of social activity and reach were less happy about the findings: The NS, Vodafone, KPN and T-Mobile are among the top 10 as to the negative sentiment of the messages! Being a social brand is therefore not the silver bullet. It seems that some of the most online social brands in Holland are social for the wrong reasons! The customer is talking about brands online but it seems that most of the talk is negative.

March 27, 2012

Time for a new definition of the term MARKETING?

The latest definition of the term Marketing by the American Marketing Association (AMA) dates from 2007. Marketing is defined as " the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large".
In a post of this blog in 2008 I commented on the fact that this definition replaced another one, just 3 years after its introduction in 2004. The 2004 definition was obviously heavily criticised for its myopic view on marketing.
While many traditional marketers (and other stakeholders) were obviously pleased with the 2007 AMA definition of Marketing - it is found today in almost all marketing textbooks - I think that this definition is again at the end of its life cycle; most young people entering today the marketing domain as professional would have problems to accept it.
This because a few things have dramatically changed since 2007, most important one being the staggering growth of the social media domain and the subsequent customer empowerment as a result of it. While the 2007 AMA definition is underlining the role of marketing for creating, communicating, delivering and exchanging offerings it completely ignores the customer domination of the marketplace and a number of other facts that the social media explosion has introduced to the marketing reality.
There are two main drawbacks in this definition: The first is that it is still based on the one-way, broadcasting type of thinking that still dominates the thinking of older marketers. In a customer-dominated market the broadcasting attitude must be replaced by an interactive one based on listening and engagement.
The second issue here is that two basic elements of the definition have been transformed today in something completely different than what they used to be: the creation and the communication.
  • "creation" is rapidly replaced by "co-creation". Businesses failing to tap the customer creativity in developing new products, services and communication concepts will be the laggards of the future.   
  • Old fashion "Communication" by means of mass media is rapidly losing ground and influence. Looking to a billboard this morning on the way to the office I suddenly realised that the only function of the ad displayed there was to inform me about a product and nothing else! My customer journey will actually start behind my laptop, iPad or smartphone where I would go searching about the product I saw by reading reviews and opinions of those who already bought it. The message is not anymore the  medium: The Customer is the medium (and the message).
These simple realities make the latest Marketing definition obsolete. I could fill pages explaining this further but I think the bottom line is that Marketing academics must bend again over the drawing board and redefine the term marketing. We are already late with this: our students and the field are waiting.