I think Starbucks is way ahead of most coffee shops in terms of how they use data and how they retain customers using their app, but what will happen when every coffee shop has the same technologies and is able to do the same as Starbucks is doing right now? How will Starbucks stand out and continue to grow? I think their music partnerships with Spotify and other companies are particularly compelling, but it will be interesting to see how Starbucks can continue to innovate after all of their competitors catch up.
Really interesting post! I wonder if part of Zara’s success is due to the fact that the small initial orders drive heightened demand, as consumers realize that each piece will sell out quickly so they should buy it as soon as they can. E-commerce retailers like Reformation do this well by starting with a small amount of inventory for each piece and then as soon as it sells out, they leave the piece on their website but write that it is “sold out” and ask interested customers to sign up for the waiting list. This increases consumer desire and creates a cycle of high demand and low supply, which keeps people interested. It will be very interesting to see how retailers like Zara continue to use data in the future!
In theory, the FreeStyle machines are an exciting innovation, but yet in practice, they are pretty confusing to use and I have only seen one in the iLab. To be honest, they look much more exciting than they actually are. How many people actually prefer a mix of different drinks? I wonder where they exist and how the data is used in future decisions. I would like to see Coca-Cola address the customer demand for healthier drink options alongside the multitude of carbonated beverages.
How does Quirky protect the IP of its products? What would stop a big company from discovering new product ideas on Quirky and launching their own?
This is such a compelling use for crowdsourcing and I am surprised it hasn’t gotten a lot of attention yet. Especially for rare diseases that are only known to those directly affected by them, this could be an extremely effective way to drive research and development. I can see huge potential for building a platform where researchers can post their projects or ideas and raise funds directly on the site from people all around the world who want to invest in the medical field but do not yet know how. The digital revolution has the potential to democratize crucial research that could lead to new life-saving drugs and discoveries.
What is interesting about Lime Crime and developing an “authentic,” direct relationships with your customers is what happens when things go wrong… Lime Crime recently got a ton of bad press for a warning label the company received from the FDA, which accused the company of using ferric ferrocyanide and ultramarines in their products (as listed on the ingredient label,) which violates the Federal Food, Drug, and Cosmetic Act. Because Lime Crime is a cult brand with a loyal social media following, the company used Instagram to tell their concerned customers that the violation was due to a misprint on the product’s packaging, which is highly unlikely. They also added a formal response on their website stating that the ingredients in question are not in their products:
It is unclear if Lime Crime handled the scandal ethically, but it will be interesting to see how these “authentic,” close-to-the-customer brands deal with scandals that could ultimately create distrust among consumers, threatening “cult” status.
Really good case study! I definitely agree that crowdsourcing beauty is a great idea because you are essentially building out your customer base and engaging them in product development to get them invested in something long before it is on the market. This will help companies figure out what their customers really want, but it is interesting that they are taking creativity directly from the consumer and the consumer gets no credit in the end.
I totally agree @Asaf! Also, your comment is particularly true because we technically “met” in an UberPOOL, traveling from campus to two separate destinations!
Network effects aren’t strong enough for Spotify right now, which I believe is their biggest threat. Their user interface does not allow for the discovery of new songs and artists because it is up to the users to actively seek out the information, by stalking their friends and other musicians. I wish Spotify had an algorithm that would recommend new music to me based on my playlists and the artists I follow. Spotify has the chance to act as an iTunes and Pandora if they figured out a way to use our networks to find us music we would like. I could imagine a program that would compare one user’s playlist with those of their Facebook friends in order to determine any overlap and recommend new music based on what other people like. There is a lot of opportunity here, and I am excited to see what Spotify does next.
I don’t know if I agree with you when you say that network effects will weaken AirBnB if less sophisticated participants enter the system and dilute value. Here the network effects only strengthen the platform when users are able to initiate quality control through accurate, honest reviews of the guests and the hosts. After a few negative reviews from guests, a host’s rating will diminish and future guests will be able to easily defer that the option is unattractive. Regardless of future growth, the network effects should remain strong through consumer-driven transparency and authentic feedback that naturally eliminate less sophisticated participants.
The power of network effects are obvious with the Apple Watch. When hanging out with friends, it is only a matter of time before the Apple Watch owners gather together in an exclusive circle to send one another their heartbeats, compare distances walked and time standing up, and talk about the product like they are dating it. Just yesterday my friend forgot her iPhone in her dorm but was still able to receive texts in a different apartment because she had previously connected to the apartment’s WiFi. As these benefits are increasingly noticed, everyone will want to be a part of the Apple Watch club.
It almost seems like Red Bull is doing all of this to distract customers from its drink. It is amazing how the company has been able to create brand value and customer loyalty without doing anything that directly relates to their product. Do their sports teams actually like the terrible drink? Either way, #winning!
I totally agree! Weiss spent years figuring out what millennials want on her blog, Into the Gloss, and then she applied her insight to a successful business strategy. I wonder what effect the company has on the user experience of her blog, as there are multiple not-so-subtle advertisements for her brand in the form of banners and articles. How does your impact change when you transition from supporting beauty brands to marketing your own? Regardless, I am excited to watch the evolution of Instagram businesses!
@Brandon, a few responses to your points:
The reason why that product is rated a 9 is because it contains synthetic “fragrance,” which is a proprietary blend of up to hundreds of compounds that are typically phthalates– hormone disruptors that have been linked to the feminization of baby boys:
The EWG links to Amazon so consumers can see the actual ingredient deck and product photos. They absolutely do not get affiliate sales from Amazon. Their mission is to convince companies like Aquolina to reformulate. And you can see from the page that the “data is limited,” which I highlighted as an overall industry issue, as companies are not required to disclose their full ingredient list, especially if they use “fragrance,” which is a “trade secret.” This is a major public health threat because if a consumer gets an allergic reaction to a product like this, the “fragrance” does not provide any insight to what caused the reaction.
Also, this product is an antiperspirant, which contains heavy metals and other harsh ingredients to stop us from sweating. We should be scared of some of these ingredients, because they are not regulated or tested for safety. So “chemi-phobia” is valid in this case!
I think the loyalty program is a great start, but how will Starbucks integrate technology and the retail experience to actually keep people in the space? The Harvard Square Starbucks has done an excellent job recreating the upstairs area and transforming it into a traditional coffee shop with specialized drink offerings and less of a “grab and go” environment. I am interested to see how Starbucks continues to innovate and reconnect consumers to their spaces emotionally.