Monthly Archives: April 2016

What is the importance of online brand communities in product design?

The concept of community has been defined as a group of persons that build through different signs or actions a sense of identity and belonging to such group. This definition has taken new connotations since the emergence of the web 2.0 and the rise of virtual communities.

Within the fabric of meanings that describe virtual communities, the “online brand communities”, have spawned great interest among product engineers and marketing professionals as the interaction generated in such spaces have become significant sources of market intelligence.

Some theoretical principles of digital anthropology, suggest that if a group of consumers admire and follow a brand in a virtual community, a process of class consciousness is developed through multiple rituals that reproduce the sense of belonging to the community and foster the affective bonds among members and the brand.

For some companies, learning about online brand communities’ rituals and traditions has been crucial in order to gather key customers’ behavior information. Moreover, such learning approaches have helped companies to exploit the affective bonds that connect community members with the brand, generating dynamics of active participation with mutual benefits for both parties.

How can brands interact in online brand communities to design products?

A successful business case of active participation happened between the Danish manufacturer of plastic toys, Lego Corp. and the followers of the brand who interact in the online community; Lugnet (www.lugnet.biz). The interaction between Lugnet and LEGO Corp. is determined by LEGO’s necessity to know what kind of products Lugnet members would like the company to produce and buy.

In order to capitalize the interactions created with Lugnet, LEGO corp. designed a strategy aimed to encourage Lugnet members to participate in a contest to design different products that they would like LEGO corp. to produce.

During the contest, LEGO provided a software of prototypes to the community so members could design a specific product online and share the design with other members. Once the leaders of Lugnet in partnership with the engineering department of LEGO Corp. choose the winning model, the company developed the product, rewarding the most active members in the contest.

LEGO strategy of empowering Lugnet members to take part of its product design process was beneficial for both parts: On the one hand, LEGO benefited from gathering key business information that improves product sales and customer satisfaction. On the other hand, Lugnet members buy products designed by themselves while reinforcing the affective ties with the brand and with other community members.

How is consumer behavior in ecommerce websites determined?

The business to consumer (B2C) e-commerce model is described as the most used business approach by companies and entrepreneurs when undertaking different digital marketing strategies. Therefore, some economists have tried to demonstrate the positive effects this business model have on consumers’ purchase decisions, arguing that consumers can process in a rational manner, large volumes of commercial information in order to choose the most logical option.

On the other hand, some consumer behavior experts dispute such theory explaining that in e-commerce platforms developed under web 2.0 interfaces, buying experience is determined by tactics of behavioral stimuli which trigger emotional reactions.

For instance, several e-commerce websites employ psychological motivators that exploit users’ feelings of fear or perceived risk with the idea of creating multiple interpretations of the situational reality at the moment of buying something online. Thus, these psychological motivators give a single subjective connotation to every purchase experience and therefore influence websites’ conversion rates.

Rationality or psychological stimuli when buying online?

A particular case, in which the paradigm of “rational purchase decision” might be challenged, happens in airlines websites. In these e-commerce platforms, the time factor (urgency) determines tickets’ price fluctuation, which most likely will be increased if the user performs a second search in the same website using the same device.

The aforementioned marketing strategy is based on a psychological stimulator called: “time-limited scarcity” and is supported by the installation of cookies in the users’ device by the airline website.

The implementation of different business to consumer (B2C) e-commerce models by some companies, have allowed users to access large volumes of relevant commercial information before buying a product in a website. However, users’ behavior follows a dynamic of psychological stimuli rather than the rational choice, “analysis – comparison” on the available information.

Psychology and conversion in e-commerce

Why is it important to generate trust for consumers in e-commerce stores?

E-commerce is an important enabling tool that helps businesses to expand their commercial operations beyond local markets. Throughout the world, small and medium-sized enterprises (SMEs) develop e-commerce platforms based on different business to consumers (B2C) strategies. However, the main challenge these SMEs might face when exploring markets overseas, is the trust perception of their e-commerce websites.

According to a survey carried out by the British digital consulting firm digital econsultancy.com about transaction credibility in SMEs’ e-commerce websites, 61% of the respondents, answered that they decline their intention to buy in SMEs websites, due to the lack of safe instruments that ensure reliable transactions.

How can ecommerce companies improve users’ trust perception in ecommerce websites?

Security certificates and safe electronic transaction check mark: These instruments are distinctive symbols that increase the perception of being in a place for safe commercial transitions, giving at the same time legitimacy to the e-commerce site. Companies such as Pay pal, McAfee or VeriSign offer handy and affordable security software to ensure safe SMEs’ e-commerce transactions.

Contact Information: This feature is an indication that there is a real person beyond the virtual environment that can help users in case something goes wrong with the electronic transactions on the e-commerce web site. A contact form, an email address, a phone number, and mailing addresses can help to increase the level of customer trust.

Consumers’ reviews and discussion forums: These two mechanisms give social legitimacy to the interactions that take place in the e-commerce site. When users’ comments and ratings are deployed, the level of trust and authenticity increases. Good and bad reviews help to build relationships of reliability with consumers and to improve the site reputation.

Trust perception might not be an issue that represents a risk for companies such as Amazon, ebay or Alibaba. However, the future of many SMEs that base their e-commerce business models on B2C strategies can be determined by their decision to implement mechanisms that enhance users’ perception of performing safe transactions in their websites.

trust in ecommerce image

Why is the concept of culture important when creating usable e-commerce websites?

The correlation between web usability and ecommerce is of greater significance as more companies from the developed world, seek to expand their operations into emerging markets.

According to internet usage data published by Nielsen//NetRatings, during the year 2015, 37.4% of the world’s e-commerce activity took place in the Asian market, followed by North America with a 31.7.9%, Europe with a 25.9% and Latin America with 6.3 %. Nevertheless, in the year 1996 most of the ecommerce activity took place in North America with 83% of the world total.

It is clear then, that the largest growth in e-commerce transactions occurred in emerging economies that are also more diverse in terms of cultural identity.

Similarly, with the overall growth of ecommerce business transactions in emerging markets, many companies are adapting their web sites to “local” versions. Such adaptation means a specific web design for each market niche that takes into account language and cultural context, preserving at the same the brand integrity.

For example, some studies explain that culturally adapted web sites crafted for each specific market reduce users’ cognitive efforts to process web information, making navigation easier and improving consumers’ attitudes toward the goods and services offered in such ecommerce site.

Why most companies are not adapting their ecommerce websites to each specific market?

The high costs of testing cultural-tailored websites, the obstacles to find key ethnographic elements that effectively contribute to the site’s visual layout and the propensity to cultural ambiguity are some of the reasons why most companies are reluctant to implement culturally adapted ecommerce websites. For instance, in nations such as China and India, the large number of languages and the different connotations images have in each region, may induce designers and web developers to make mistakes in the interpretation of cultural elements.

Even though the above mentioned issues can deter some companies to adapt their websites design to the cultural identity of each specific market, when companies undertake a comprehensive cultural analysis strategy, their ecommerce websites will become more profitable increasing at the same time, users’ satisfaction levels.

The local web

Why our societies are technologically deterministic?

Technological determinism is a reductionist theory that explains how society’s structure and cultural values are driven by technology. This concept, has gained relevance in the last two decades since most of the basic human social skills such as meeting new people or fostering existing bonds of friendship, have become activities highly mediated by technology.

According to some technology analysts and the companies that develop social network platforms, these technologies are effective tools that help to resolve the subjective necessity of promoting friendship or to seek new relationships. Their main argument states that people’s lack of time, society’s cultural changes, people’s new life styles and the growth of the migratory flows, have triggered the use of these social networks.

However, other authors claim that factors such as the lack of a real communicative interaction beyond virtual platforms, the low levels of trust created in online relationships and the e-commerce interface of the “matchmaking apps” for example, have created a technology with multiple flaws that can hardly address such social needs.

We are consumed by a technological deterministic rhetoric.

Considering the above mentioned arguments, some relevant questions might help us to put the concept of technological determinism into context:

Should we assume a neutral point of view on the social, economic and cultural changes, social networking technologies are creating in our societies?

Should we be more critical about the implications social networking technologies might have in our daily lives and in the way we construct our relationships with other people using such technologies?

Are societies aware that the development of these technologies happens because societies organize themselves to give support and expand these technologies once they have been introduced?

Are companies such as Facebook, Apple and Google delivering a technological deterministic discourse that leads us to believe that their technological developments have positive effects on society inherent to themselves?

Is Twitter a viable business?

Since its foundation in 2006, Twitter became one of the most useful tools companies have to communicate with their customers. By the year 2014, Twitter was the second most used social network service by companies in several markets.

However, different technology analysts have expressed their concerns about Twitter business viability due to current financial issues that are undermining investors’ trust in the future of the company.

In the year 2012, Twitter had 500 million subscribers who wrote an average of 340 million “tweets” per day. Most of the traffic is generated in highly globalized markets such as the United States (40%), Japan (23%), Spain (7%), England (6%) etc. That same year, Twitter search engine made 1.6 billion searches each day.

Yet, in the year 2015, eight years after its foundation, Twitter Inc. had not yet reached a break-even point (BEP) or the point at which cost or expenses and revenue are equal, even though for the same year the opportunity costs had been paid and capital has received the risk-adjusted expected return.

Twitter financial uncertainty

Although, Twitter financial statements show annual profits, the uncertainty about its future as profitable business is still unclear. For instance, in the fiscal year 2013, Twitter’s net revenue were US $400 million, its shareholders investments during the same period was US $ 1.16 billion and its brand value was about US$ 8 trillion. Such numbers have made many financial analysts to believe that the company is highly overvalued.

It is important to remember that Twitter’s main source of income is the sale of advertisement spaces within their site platform and the sale of the so-called “promoted tweets”. Therefore investors might be asking:

Should Twitter Inc. implement a business model that can help to increase the company’s profits? What alternatives can Twitter Inc. explore in order to improve its business efficiency from a financial point?

Which managerial strategies that have been used by other internet social networking service companies’ and that have proved to be successful, could Twitter Inc. undertake as an opportunity to redirect their financial statements?

Are Twitter Inc. future financial goals unattainable in the highly competed market of internet social networking services? Should Twitter Inc. consider the possibility of a business “take over” by other technology companies such as Facebook Inc. or Google Inc. in order to survive?

Twitter Business Model