Internet and website technologies; Role of unfiltered relationship with customers in product design and creation
Introduction
Today’s consumers have become web-savvy as evidenced by the high rate at which customers have embraced different information technologies (VanRysdam 2010). According to Spenner and Freeman (2012), consumers are progressively using information technology in search for brands or stores likely to provide them with the best deal, which means that consumers can easily shift to a brand that they might consider more appropriate (Spenner & Freeman 2012). This trend has been spurred by growth in the rate of internet penetration and innovation of diverse internet enabled devices. To align with the market changes, businesses have entrenched different information technologies with the objective of improving their productivity. Payne and Frow (2013) identify Web 1.0, Web 2.0 and Web 3.0 as some of the information communication innovations that have transformed business functions amongst them marketing function. Web 1.0 is the first stage of World Wide Web evolution and was characterised by the spread of internet technology while Web 2.0 marks the emergence of social networking technologies. Conversely, Web 3.0 is the third phase of internet technology and is denoted by emergence of internet-based services, or the intelligent Web (Payne & Frow 2013).
Development of Web 2.0 technology has transformed the communication process by eliminating the barriers to communication. Payne and Frow (2013) assert that ‘firms now operate in an environment where anyone can publicly post their opinion anywhere and anytime’ (p. 157). The opinions posted can spread spontaneously globally to potential and existing customers hence reshaping their opinion regarding a firm and its products in real time (Payne & Frow 2013). Businesses can benefit or be harmed by the spontaneous communication through the information technologies depending on whether the opinions posted are either positive or negative. In recognition of the significance of information communication technology, Bradley (2005, p. 150) is of the view that “through the internet and websites … firms now obtain ‘unfiltered relationships’ with customers which are integrated into the product design and creation process. This is a new approach to dealing with customers in various international markets”. This argumentative essay seeks to evaluate this view and to provide examples to reinforce the argument.
Analysis
Marketing communication channels are not only an avenue through which businesses create awareness to the customers on their product offering but are also critical in interacting with customers (Shalom & Yaniv 2015). Businesses have moved away from the traditional one-directional marketing communication approach and embraced a communication approach that provides an opportunity for optimally interact with customers. Social media is one of the multiple channels of communication that has provided businesses an opportunity to generate value from the marketing communication process by using it as a medium for interacting with the customers (Payne & Frow 2013; Kumar & Kumar 2015). Kiendl (2011) asserts that ‘multiple communication channels open the floodgates to multiple sources of consumer and demand information’ (p.245). Rosman and Stuhura (2013) affirm that ‘with the emergence of social media, consumers now have more control over how information is generated, created, organised and shared’ (p.18). Moreover, social media has provided customers an opportunity to develop relationships amongst them.
The relationship between customers can significantly influence the consumers’ perception towards a firm and its products (Rosman & Stuhura 2013). For example, the relative ease with which consumers can shift to competing products highlight the need for businesses to focus on developing relationship with customers. The importance of establishing a relationship with customers is underlined by the increase in their level of knowledge on products and services. Customers can be a critical source of market intelligence. This perspective is supported by Hamzah, Othman and Hassan (2016) who are of the view that customers are a valuable knowledge resource. In light of this aspect, contemporary businesses should focus on exploiting the customers’ tacit knowledge in the quest to achieve sustainable competitive advantage (Nonaka & Nishiguchi 2001).
To make customer relationship meaningful in development of competitive advantage, it is important for businesses to consider leveraging on the ‘unfiltered’ content posted by customers, which calls for development of sufficient information communication capability. Businesses can achieve this goal by implementing online Customer Relationship Management or e-CRM. The e-CRM enables businesses to be effective and efficient in profiling customers’ prospects and understand their needs by bypassing the limitations associated with traditional customer care (Singh & Singhal 2015). Through this approach, the capacity of a firm to provide customers unique experience hence increasing the probability of building customer loyalty (Rosman & Stuhura 2013). Wu (2005) assert that ‘the effectiveness or success of e-CRM includes the ability to tailor goods or services provided throughout the supply chain to the needs of each member using an analysis of ordering and related information’ (p. 303).
Developing ‘unfiltered relationship’ with the customers can improve the chances of a firm gaining an edge in the international market. By interacting with the customers through the e-CRM, a firm gains insight on the customers’ exact product demands and needs. Singh and Singhal (2015) assert that consumers are increasing using social media as a medium to vent their dissatisfaction over products and organisations. A firm can initiate development of ‘unfiltered relationship’ by establishing e-CRM software that provides customers an opportunity to directly share their complaints, complements or opinion on the firm’s products and services with the firm. From the ‘unfiltered relationships’, businesses can generate substantial material, which if well utilised can form the foundation of a firm’s Research and Development effort. For example, a firm may use the information that customers share through the internet and websites to benchmark the market performance of its products relative to competing products (Singh & Singhal 2015).
Involvement of customers in new product design and creation process
Businesses in different industries are experiencing an increase in the intensity of competition, which according to Arnold (2008) might lead to reduction in economic profit. Thus, it is essential for businesses to focus on developing sustainable competitive advantage. This goal can be achieved through effective and efficient product development (Menne & Halova 2013). From the ‘unfiltered relationship’ a firm can gain ‘unfiltered feedback’ from customers, which is a source of critical insight that can be of value in new and continuous product development. According to Tottie, Thomas and Nordqvist (2016), product innovation will continue to play a fundamental role in businesses’ pursuit to develop high quality and functional products and services. Tottie, Thomas and Nordqvist (2016) further argue that ‘in the future, creating improved or radically new products will necessitate not only the development of products concepts resting more on an applied research knowledge base but also collaboration with customers’ (p. 64). This indicates that businesses should no longer consider the role of customers in the product development to be passive but should rather perceive them as co-creators. According to Light (2014), product development is a complex process. Thus, businesses should ensure that every stage is effectively undertaken. This goal can be achieved by entrenching the stage-gate process, which outlines the stages that a product progresses from the ideation stage to product launch. The respective stages include planning, designing, building, testing and production (Kumar 2013).However, Kumar (2013) is of the view that most organisations fail to successfully launch new products because of poor or ineffective implementation of the stage gate process. In his opinion, Kumar (2013) cites failure to engage the customer as one of the major causes of failure in new product development. The stage-gate process largely focuses on the input of internal stakeholders and fails to consider external stakeholders such as customers.
Lamberton and Stephen (2016) identify lack of market feedback as one of the major limitations of the stage gate new product development process. However, this limitation can be eliminated by adopting the co-creation approach in the product development process. Menne and Halova (2013) argue that firm’s Research and Development teams should engage customers in the different product development stages that include, idea generation, product designing, refinement, and testing of the product. This approach will significantly reduce the likelihood of product experiencing market failure during the post-launch period.
Development of internet and website technology has made customers to become virtual co-creators in the product development processes. Fuller (2010) emphasises that ‘the novelty of virtual co-creation compared to conventional customer integration is that consumers are not only asked about their opinions, desires, and needs but are also asked to contribute their creativity and problem solving skills’ (p.98). The internet and website technologies have made it possible for businesses to generate extensive product ideas from consumers. This aspect is illustrated by a case of Swarovski Jewellery Company, which invited designers amongst them customers to be involved in a watch design contest. The contest attracted 1,650 participants globally in which over 2,000 different watch designs were submitted. Additionally, the participants shared over 1,750 qualitative comments. The best watch designs were presented during the ‘Baselworld’ trade fair, which is the biggest jewellery fair globally (Fuller 2010). This illustrates the power of internet technology in generating product ideas. Nevertheless, Fuller (2010) argues that ‘more insight is needed because virtual co-creation platforms are bearing the risk of evoking littler interest in participation and consequently not enhancing valuable consumer contributions’ (p.98). Therefore, businesses should focus on ensuring successful exploitation of the benefits inherent in internet and website technology.
To successfully entrench the concept of virtual co-creation in product development, businesses should ensure that the ideas generated by customers are valued in the product development process. Fuller (2010) asserts that customers are only ready to share ideas on product preferences and how to improve their product only if their opinions are respected an incorporated in the product development process. This outcome can be achieved by entrenching emerging internet technologies amongst them the social networks.
Application of internet and website technology in international markets
Firms are increasingly considering the international market as a source of market opportunity for their goods and services. This trend is evidenced by growth in the rate at which firms are entering the international market in pursuit for profits. The emerging economies are some of the most attractive countries that firms are considering. Irrespective of the business opportunity inherent in the international market, firms’ success in the foreign market depends on the strategy that a firm adopts. Doole and Lowe (2008) assert that international marketing is relatively complex because of cross-border differences compared to domestic market.
Cross-border differences might limit the success with which a firm succeeds in introducing its products in the international market (Terpstra, Sarathy & Foley 2012). For example, the products might not gain market acceptance. Lack or limited market acceptance has a negative impact on the competitiveness and positioning of products in the international market (Fletcher & Crawford 2013). To overcome this limitation, it is important for business managers to consider developing adequate understanding of customers’ tastes and preferences in the target market. The website and internet technology has played a fundamental role in bridging the market knowledge gap that multinational companies might experience. By establishing unfiltered relationship with customers through the internet and website technology, a firm is able to develop adequate market intelligence that informs the product designing and creation process. On the basis of the market knowledge gained, a business is able to determine the most appropriate approach to adopt entering the foreign market. For example, a firm might consider modifying its products in the domestic market and introduce them into the foreign market or develop new products from scratch specifically for the foreign market. Thus, modifying products can increase the likelihood of a firm succeeding in localising its products and services in the international market (Fletcher & Crawford 2013). Doole and Lowe (2008) define localisation as the process of adapting a product or service to the international market by taking into account the cultural aspects amongst other customer requirement. Leveraging on the ‘unfiltered relationship’ established with the customers enables international firms to succeed in customising its products and services during the designing and creation process. Through this approach the likelihood of the firm’s products and services experiencing a high rate of market acceptance is improved considerably (Spire 2016). Some of the firms that have succeeded in leveraging on the ‘unfiltered relationship’ in their product development include the McDonald’s and Volkswagen (Arno 2012). These firms have succeeded in employing the opinions and views generated by customers through different internet technologies such as social networks such as Facebook and Twitter amongst others in their new product development. Volkswagen has developed an automobile that is specifically customised for the Chinese market (Spire 2016). On the other hand, the McDonald’s progressively interacts with customers through the internet technology in an effort to determine the most appropriate approach to adopt in its continuous and new product development process. By evaluating the customers’ product reviews on its website and other internet platforms, McDonald’s has been able to adjust and localise its menus. This move has remarkably improved McDonald’s success in establishing global market presence.
The unfiltered relationship established between a firm and its customers through the internet and website technologies can enhance a firm’s effectiveness in creating an effective marketing campaign (Spire 2016). For example, a firm can succeed in selecting a brand name that fits the target market hence increasing the likelihood of introducing a product in the international market. To achieve this outcome, firms intending to introduce new products into the foreign market should conduct an online survey involving customers on the applicability of the brand name. This aspect will minimise the likelihood of a firm selecting a brand name that is offensive to the target market. In light of this issue, Nokia incorporation has in the recent past experienced challenges in introducing its Nokia Lumia in Spain. The challenge arose from the choice of the brand name, Lumia, which in Spain translates into a ‘prostitute’ (Spire 2016).
Conclusion
Development of the internet technology has greatly transformed the business environment. One of the major transformations relate to elimination of information barriers that limit the effectiveness with which businesses conduct their operations domestically and in the international market. Through the emerging internet and website technology, businesses can now leverage on market intelligence that would have been difficult to access by relying on conventional market communication channels. This aspect has arisen from the fact that the internet technology has provided businesses an opportunity to establish ‘unfiltered relationship’ with the customers. Therefore, businesses can effectively and efficiently access information related to customers’ opinion on products and services.
The evolution of social networking technologies has made it possible for consumers to interact with others globally hence leading to development of an online community that shares different opinion regarding different products and services. To gain competitiveness, it is important for businesses to consider leveraging on the information shared by customers through different internet technologies in their product designing and creation process. Thus, the internet technologies has made it possible for businesses to employ the concept of co-creation by involving customers in the product designing process. From the market intelligence gained out of the ‘unfiltered relationship’, businesses can succeed in undertaking their marketing function in both the domestic and international markets.
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