Value Co-Creation through Communities in Online Business Models -the case of trivago Prof. Dr. Stephan Stubner Chair of Strategic Management and Family Businesses July 2013
Agenda Subtitle 1 2 3 Introduction to the case Research question and design Underlying theories 4 Application and first results 2
Most management research starts with the observation of a phenomenon in practice Subtitle Cycle of Research Model Categories Phenomena Picture Source: Walt Disney 3
Subtitle Picture Source: trivago 4
trivago is the globally leading hotel meta search platform with over 20 million visitors a month in 37 countries Subtitle Company Overview trivago compares and structures the offers of over 670,000 hotels from more than 180 hotel booking sites in order to provide the user with the best offer. Images, detailed descriptions, and more than 30 million traveler reviews from various websites as well as trivago's own community create a comprehensive rating for the user and facilitate the hotel decision. Picture Source: trivago 5
Each Hotel on trivago is presented with a multitude of information Subtitle Hotel information on trivago (selection) Reviews Prices Key facts Pictures Picture Source: trivago 6
The content on trivago is produced primarily through community members Subtitle Sources of content development at trivago trivago employees and service providers trivago community Content breadth Content depth Feedback Content partners, e.g. Expedia, laterooms User experience Picture Source: trivago 7
The presented case study is part of an exploratory research approach Subtitle Research setting Observed Phenomenon Relevance trivago community members show extraordinary effort to build the backbone of trivago Increasing importance of online business models Generally unexplored phenomenon of online platforms Research question Why? 8
The case study is developed in two steps focus currently on phenomenon description and base theories Subtitle Analysis approach 1 Data collection Website Content Analysis Literature review 2 Forum Content Analysis Interviews with stakeholders Own membership experience Exploratory Case Study Current focus Model Categories Phenomena Communities Online Business Models Value Co- Creation 9
Although there is no commonly accepted definition for online communities, suitable approaches exist Subtitle Underlying definition used Virtual communities can be basically defined as groups of like-minded strangers who interact predominantly in cyberspace to form relationships, share knowledge, have fun or engage in economic transactions. (Gupta & Kim, 2004) Why should companies actively nurture communities? 10
Companies can benefit from online communities in a variety of ways Subtitle -Backup - Value drivers for companies (selection) through value co-creation Revenue increases Better understanding customers Offer products with higher value Stronger customer relationships Building of trust Customers feel more appreciated Increases likelihood of purchase Capability development Companies learn to customerize and to build even better products for their customers Cost savings Leverage customer capabilities Cheap and reliable source of idea generation, feedback & problem solving Save workplace costs Customers already bring their workplace (space, table, computer, energy supply, ) Mutual support among customers Asking customers is more popular than hotlines and support forums Saves support resources In addition to increasing revenue and save costs, companies can raise entry barriers for competitors by strengthening customer relationships and they have a self-selected customer group they can address with marketing measures. 11
A superior product is the key competitive advantage in the online business environment Subtitle Success drivers Drivers Impact Result Online Marketing (SEM, SEO, Social etc.) Brand Building Online Visibility User Conversion Visitors & customers Content Building a great product is vital. 12
A clear definition of the term Co-Creation is necessary for clarification of its meaning Subtitle Three types of co-creation Basic Co-Creation is... the co-creation of value during the pure consumption of a product by applying the skills and resources to consume it and create the value-in-use. Example: using hotel search Passive Co-Creation is Active Co-Creation... the provision of information by customers which allow insights to their consumption behavior or opinion. They do usually not address this information directly to the company. develop ideas, can become part of the active value creation chain, can give direct feedback to company and thus can help to improve products. The customer consciously co-creates, improves or changes the companies value proposition. Example: posting reviews Example: Contribute valuable content to an online community, e.g. trivago But: Co-Creation of value is used very flexible (Prahalad/ Ramaswany 2004; Zhang/ Chen 2008; Vargo et al 2008) 13
Users themselves also benefit from online communities Subtitle Community aspects Motivators Types of community users Sleepers Lurkers Tourists/ followers Activists Information Getting access to information Sharing information Integration & interaction Engaging in friendship Feeling of belonging Personal identity Living personal values Gain reputation/ status Entertainment Escape from reality Distraction Perfect world Communities thrive on activists but need to cater to multiple user desires. Sources: Hagel/ Armstrong (2006); Shao (2009); Wolfensberger (2002); Janzik/ Raasch (2011); Nambisan/ Baron (2009) 14
Subtitle Picture Source: trivago 15
trivago members can earn promotions through valueadding activities Subtitle Promotion system Exemplary activities Levels of responsibility Member levels & promotion threshold Writing reviews Uploading photos Inviting friends Rating reviews Adding hotels Writing descriptions Sightseer Excursionist Vacation Enthusiast Tourist Toptraveller Travel addict Globe Trotter Discoverer Trivago gurn Editor 1-3 Administrator 0 1000 5000 20,000 50,000 100,000 200,000 500,000 2,000,000 hand-picked hand-picked Key purpose of level system is motivation and quality assurance Community dashboard, member forum, and live meetings to communicate Source: trivago community dashboard 16
The community system links directly to the two key motivational factors fame and fortune Subtitle Topic interest (Wang & Fesenmeier 2004) Feeling of belonging (Hagel & Armstrong 1997) Interactivity (Wolfenberger 2002) Operators (Wolfenberger 2002) Feeling of being valued (Mühlenbeck & Skibichi 2011) Fame Fortune (Henning-Tharau et al 2004) User engagement 17
So finally my two questions Subtitle 1 Any other theories to look at? 2 Any other examples to integrate? 18