In today’s world of social media, it is easier than ever for businesses to create a conversation with their customers. Yuna Kim, assistant professor of marketing, discusses her research on the potential for a two-way conversation to enhance product development.
Today’s business startups can explore what consumers want by hearing directly from the public and then tailor their product or service accordingly, a concept known as “crowdsourcing.” This two-way communication model has the potential to transform entrepreneurship and marketing. Yet most businesses still rely on a largely one-way communication model, limiting their potential for idea generation.
Mihaylo Marketing Assistant Professor Yuna Kim, working with Rebecca Slotegraaf of Indiana University-Bloomington’s Kelley School of Business, conducted two studies in which undergraduate students were asked to generate new product ideas for the Starbucks brand. In the first study, students were divided between groups that were shown brand information from a Starbucks website and a Twitter feed. In the second study, students were divided between groups receiving information on general Starbucks products and services and personalized information, designed specifically for college students.
Kim discusses her research, which appears in the study, “Brand-embedded interaction: a dynamic and personalized interaction for co-creation,” published in the journal Marketing Letters earlier this year.
What did you learn from your study?
Technological advances, such as the spread of the internet and social media, have empowered consumers, or enabled them to voice their opinions about products and services more effectively. Companies have started to pay attention and are communicating more with consumers, even encouraging them to generate new product and service ideas. Despite these changes, the interaction between companies and consumers is still largely superficial or one-sided. For example, many companies merely post messages on their social media platforms or listen to or provide simple responses to consumers’ comments. However, a true interaction should allow both parties to learn something about each other by exchanging valuable information.
My study shows that when a company interacts with consumers by listening to them and providing relevant responses, which may include important information about the company, such as their strategic objectives, the consumers will be able to generate more constructive new product and service ideas, which are valuable to both consumer and company.
One way companies can do this is to provide a platform where consumers can voice their opinions. Starbucks has a website inviting consumers to submit new product and service ideas. They show consumers that their suggestions matter by actually launching many of the ideas submitted through this site. They also have a dedicated social media manager who interacts with consumers on a very personal and individual level.
Some companies also work with the “advanced consumers,” or the hard core fans to develop ideas. For example, Lego has a community created by its fans. Although this platform was not created by Lego, the company acknowledges it and may even invite members to focus groups.
“When a company interacts with consumers by listening to them and providing relevant responses, which may include important information about the company, such as their strategic objectives, the consumers will be able to generate more constructive new product and service ideas, which are valuable to both consumer and company.”
– Yuna Kim, Assistant Professor of Marketing
What motivated you to undertake this research study?
Many companies started to use Twitter to communicate with their consumers when the microblogging site launched to the public a decade ago. At that time, I was conducting brand-related research, so I frequently visited the Twitter accounts of many brands. I noticed that brands were using Twitter very differently from each other. This was interesting to me since they were all using the same platform with the same restrictions of 140 characters per tweet and the same opportunities of direct contact with individual consumers, yet some were very effective in capturing my attention as a consumer while others were not.
For example, most company social media accounts were simply being used as another customer service outlet or an outlet to post promotions. I thought, ‘if somebody is already sitting in front of a computer and spending the time and effort to reply to a consumer on Twitter, why not leverage the opportunity to interact more effectively with consumers by typing something meaningful?’
The idea of co-creation for new product development is popular with today’s businesses, large and small. What can a small- to medium-sized enterprise or an entrepreneur do to practically incorporate user generated product ideas into their business model?
The biggest problem with user-generated content is that due to a lack of restrictions or guidelines, there is large variability in quality. For example, Starbucks is a company that is good at launching new product and service ideas generated by their consumers. However, before Starbucks can successfully launch 100 consumer-generated ideas, it needs to sift through more than 100,000 ideas that consumers submit to find those that are valuable and feasible for both consumers and the company.
The reason most content generated by consumers offers limited value to companies is because the consumers don’t know what the companies are looking for or what type of products and services they can actually offer. This may depend on the strategic direction of the company as well as the resources and capabilities that they have. An easy solution to this is to provide this type of information to consumers by interacting with them on Twitter. Instead of sending meaningless or automatic responses, companies should provide relevant information. This can become a guideline for consumers when generating new product or service ideas.
More on Marketing
For more on marketing, visit Mihaylo’s Department of Marketing, which provides information on the college’s undergraduate and graduate marketing programs. The department supports the on-campus chapter of the American Marketing Association. Open to all Cal State Fullerton students, the chapter offers networking, industry insight and career development events.
For more advice and resources for developing and executing small business strategies, visit the Center for Entrepreneurship online or at SGMH 3280. The center offers support and networking for business development concepts, speaker events and entrepreneurship resources.