Consumer-to-business and the value of social media

Harry van Vliet, Erik Hekman and I have started a summer writing project with the work title ‘The value of social media’. Eventually, this writing will become a cahier, say, a booklet. We work in a wiki. We write in Dutch. The text will be translated in English once we are done.

One of the topics I discuss is business models. In core of business is trade: You have something to sell, I want it, we trade it (when for money, we call this transaction, when for something, barter). You may also refer to this system as needs relationship. Today we also observe a new form of needs relationship, that of Consumer-to-business (C2B). One of the most common definitions of C2B is that this is an e-commerce business model in which consumers offer products and/or services to companies that pay for it. CB is therefore a 180˚ shift of the traditional (B2C) business models. We also call this the inverted business model. Inverted business models emerge under the influence of two main developments:
1- The rise of the current web (web2.0) with keywords such as interaction, participation, transparency and community building has an impact on two-way communication and value web creation (in contrast to the traditional value chain),
2- The downfall of costs of technology. Individuals now have access to technology and applications that used to be restricted to companies due to the costs.
Due to these developments, people are empowered to create their own digital environment. Consequently, (some) people will use that empowerment to also create a certain commercial environment.

Another way to look at C2B can be found in research, conducted by Chen, Leen and Chuang*: “Compared to the three frequently mentioned models: B2B, B2C, and C2C, which are now very popular, the progress of the other one (i.e., C2B) is far left behind; it is seldom seen on the Internet. A possible reason for this situation is the high transaction cost. It takes effort to unify a group of buyers’ common needs and preferences and to interact between the buyer’s party and the potential venders in order to complete a transaction. Moreover, it is not clear how to do it; there is little research into this problem”.
The authors further state that C2B is mainly a matter of collective buying processes, e.g. participating in organized leisure travel; in this case, the consumer will modify his personal whishes because of the lower price that has been negotiated collectively with the offerer.

In his thesis, Alexander Osterwalder states**: “A business model is a conceptual tool that contains a set of elements and their relationships and allows expressing a company’s logic of earning money. It is a description of the value a company offers to one or several segments of customers and the architecture of the firm and its network of partners for creating, marketing and delivering this value and relationship capital, in order to generate profitable and sustainable revenue streams”.
Strangely enough, it is hard to find definition of C2B that are not company-centered but more consumer-centered. Currently I am conducting a literature study of, what I would like to call, ‘real’ C2B: consumers proposing to businesses, specifically in social media. We’ll see what the values are

* An agent-based model for consumer-to-business electronic commerce, National Sun Yat-Sen University, Taiwan, October 2006.

** The business model ontology, a proposistion in a design science approach, University of Lausanne, 2004.

Building ‘Brandtopias’—How Top Brands Tap into Society

Questing ‘Tap-in’ strategies, I stumbled upon this article about brandtopias. Although it was published in 2002, I believe it has quite some relevance to my research. Currently, I am trying to define my research question. As my lector, Harry van Vliet, put it: “you’ve got slides two till eighty pretty much in your head, now where’s slide one?” Well, it all boils down to my working title: King client. I’ll be writing about it later. Here’s the article which I found on Harvard Business School’s Working Knowledge.

“Customers value some of the most powerful brands in the world primarily for their “cultural value”: They provide imaginative resources that people use to build their identities” say Harvard Business School’s professor Douglas Holt.

These are what Holt terms identity brands—and their market power cannot be attributed to the usual suspects of success: superior business models or cutting edge technology.

Holt is interested in what makes identity brands resonate. In his research, he focuses on the best-performing identity brands—the top 5 percent that have been extraordinarily successful with customers over long periods of time.

What’s the secret of long-running megabrands such as Mountain Dew, Nike, and Budweiser? The magical sweet spot when a brand delivers imaginative stories that are perfectly attuned to society’s desires.

His new research, which he discussed with HBS faculty at a marketing seminar on May 8, is part of a forthcoming book that focuses on identity brands that deliver extraordinary customer value over time.

The most powerful brands are those that are able to transverse disruptive cultural shifts.
— Douglas Holt

“I’m interested in a question that I don’t think we ever really ask or address well, which is, ‘How does customer value work over time?’ How is cultural value created; how is it maintained; how is it destroyed?’”

With the strategic importance of brands climbing, understanding how certain brands achieve so much power in the marketplace is at the center of much discussion. The advice most often provided to managers is to weave the brand into the most potent popular culture trends. Recently, consultants and ad agencies began emphasizing the reverse: recommending that managers seek out the essential “DNA” of the brand. Many brands pursue these two models and do fine, says Holt.

Read the whole story.