Kiss of Death or Gift from Heaven? – Managing Prosumers

In last week’s blog post “Do You Prosume” I wrote about the Do-It-Yourself trend and introduced the new term “Prosumers”. I have already explained the meaning and the story behind the development of the new group of consumers and now it’s time to finally talk about their impact on management and modern marketing strategies.

The growing need of management to adress a whole new market

(aka. Bye bye good-old management strategies, hello new marketing!)

One thing is clear: the days of the passive consumer are behind us forever. Fewer consumers demand mass-produced goods and services and there will be less interest in brands in exchange for more individuality. That’s the reason why marketers will find it difficult to sell their products using old approaches. Instead they face a challenging (and for some companies, frustrating) future. People are not going to just accept general marketing messages or how the American journalist Marian Salzman explains with a colorful metaphor:

Traditional advertisement is the kiss of death.

Salzman claims that marketing should not focus on presenting the mere beauty of a product or its brand, it should rather underline its value for the consumer and include aspects such as motivation or simply listening to the customer’s needs. Promotion more and more needs to appeal to customers who give high importance to individuation, skill-building and productiveness. It will get harder to sell goods with hedonistic values since people want to follow their own interests and not those of the general mass.

Popular quote by American author Chuck Palahniuk about advertisement

If we take a look at how firms adapt to those changes we can see that the Prosumer Movement can be a blessing or a curse for management. However whether a company is positively or negatively affected by the new trend depends on its type and core values.

The impact of Prosumers on companies

(aka. The Doers, The Followers and The Talkers)

Michael Fassnacht, marketer from Chicago and author of the marketinggeek blog, thought about this issue as well and categorized brands in three different groups in relation to their interactions with the Prosumer concept:

  • Brands like Wikipedia or Firefox which can only exist through Prosumers since their whole business model relies on their contributions
  • Brands like Lego, Häagen-Dazs or Adidas which allow incorporation to their own product design and creative proces
  • Brands like Pepsi or Frito-Lay which open up slightly their brand control to allow consumers to create for example TV spots or naming rights

Sadly Fassnacht didn’t give the three categories names so after some thinking I decided to name them “The Doers”, “The Followers” and “The Talkers“.

In terms of adaption “The Doers” are definitely the most innovative ones. They have realized the potential of Prosumers and even based their profitability on the participation of customers. Instead of fighting the movement they look for opportunities to facilitate prosumption activities by creating better tools for the Prosumers to use. The blog A Teacher’s Theory emphasizes in an article about the economy of Wikipedia how open-source software, blogs or websites such as YouTube, Wikipedia and even the controversial WikiLeaks could not be without the contribution of its users. Steven Thomas, author on “A Teacher’s Theory” explains why the consumers are willing to do it without a financial compensation:

These consumers/users are not paid for their labor, but presumably get satisfaction from the enjoyment or from the social connection or from the usefulness for the common good of society that it possibly facilitates.

The second group, “The Followers” benefits not only financially but also reputation-wise by letting consumers be active in the production process. In my last blog post I mentioned examples such as IKEA or Nike which fit perfectly into this category. Those companies have understood that customers can be a valuable asset and as a matter of fact producer and consumer, feel the positive effects of prosumption. In the case of companies likes IKEA producers save manufacturing costs and work whereas consumers benefit from lower prices. A different model can be found at firms like Nike. Here the producer benefits from higher prices (therefore revenue) which the customers are willing to pay in exchange for more customization. Either way at the end of the day both side are happy.

The only group that hasn’t really embraced Prosumers is the third, the “Talkers“.  Fassnacht argues on his blog that this group of brands is the vast majority on the market and one could argue that they merely pretend to take Prosumers seriously since they only allow them to influence non-core elements. The marketer states that:

There will always be a large role for brands which apply strong control and iron fists in designing brand experience.

Why don’t those companies follow the prosumption trend you might ask? For instance because those firms put a very high emphasis on the importance of their brand and their reputation. Why do people buy a $2000 Mac Book when they could get a netbook with similar quality  for less money? Well because it has that certain apple symbol on the back of the screen! That is exactly the reason why it’s very unlikely for luxury brands or companies like Apple to move into the category of “The Doers”.

More customization for Apple products? – That’s very unlikely.

A lot of participants in the market however have already started moving. They have begun to take part in the Prosumer Movement and if you ask Fassnacht one thing is sure:

Any marketer needs to find right long-term path within these three different strategic options of integrating strongly or lightly the Prosumer all in alignment of what makes a particular brand successful, but no brand can ignore the Prosumer anymore.

So Kiss of Death or Gift from Heaven? That question cannot be generalized for the whole market since we have seen that there are different business models which either allow management to adapt to Prosumers or not. But one thing is for sure: Prosumers are coming and cannot be ignored anymore.

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Still curious? Stay tuned for next week’s blog post where I will introduce a former Berlin Start-up which has made it to the top by choosing a business model which embraces prosumers!

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