The impact of new media on internet-based group consumer behavior.

Author:Bhagat, Parimal S.
Position:Report
 
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  1. INTRODUCTION

    The global proliferation of the internet over the last decade has substantively changed the traditional buyer-seller exchange dynamics through its high volume-high speed information flow capabilities. Businesses can now directly communicate in real time with one another throughout their value chains to create value for their consumers. Likewise, the consumers can communicate with businesses, third party independent information providers, actual users and/or potential users of a product across the globe for obtaining better value for their money spent on purchasing products and services. On the consumer side, the internet has provided tremendous access of consumption-related information to consumers worldwide and the global flow of information has therefore given a fresh impetus to allow consumers to participate in obtaining value through several new types of marketing exchanges such as auctions (e.g. Ebay) or reverse auctions (e.g. Priceline). The academic literature is increasingly recognizing the new role of the consumer as the co-creator of value in the buyer-seller relationship (Payne et al., 2008). Vargo and Lusch (2004) argue that the customer is always a co-creator of value: There is no value until an offering is used--experience and perception are essential to value determination.

    The focus of consumer flocking in the internet buying context as discussed in this paper is the tendency for individual consumers to take charge of the online shopping channel and integrate it with their other online communications, especially social communications at sites like Facebook. While still in its rudimentary stage, consumer flocking has promise in creating a win-win economic scenario for consumers and marketers (Sharma, Klein and Bhagat, 2008). For instance, by quickly bringing together large groups ("flocks") of consumers through their communications within existing social networks, marketers can achieve a quick turnover of unsold inventories and thereby lower their production and transaction costs. Likewise, by using consumer "flocks", the service providers can fill up their unsold services during lean periods, thereby smoothening the peaks and valleys of service utilization. Apart from these strong economic benefits, consumer flocking, in principle, can enable the marketers to accelerate the arrival of late-adopters into market. On the consumer side, they perceive victory because they obtain more value for their money than what they could have obtained if acting individually. In effect, consumers would create greater value for themselves--globally.

    The characteristics of consumer flocking appear to be distinctly different from those of the traditional consumer groups as well as former group buying approaches (e.g. Asselin and Chaib-Draa, 2006; Chen et al., 2007). Essentially, consumer flocking is a consumer inspired and initiated process. This process may be encouraged by marketers seeking a critical mass of consumers to liquidate excess inventory. Also, consumer flocking on the internet is not geographically confined unlike traditional group buying (such as consumer cooperatives). Finally, unlike traditional groups that had to stay intact in order for group members to continue enjoying a discounted rate, consumer flocks are fleeting formations of consumers--not unlike the flocking of birds at a certain place and time--they may or may not continue after the fulfillment of the specific exchange.

    We think that a systematic exploration of this new phenomenon has tremendous implications for marketers for value-creation and value-delivery to the consumers--a significant focus of the new definition of the domain of marketing. The focus of this paper is the individual consumers' propensity to flock for creating value for themselves and the process and formation of consumer flocks. Therefore, we first discuss the theoretical background of our premise. Next, we define and characterize consumer flocking and propose factors that influence the consumer's propensity to flock on the internet. We then discuss the role of social media in supporting this behavior and examine the role of certain consumers we call catalyzers in the flocking process. Finally, managerial implications of this unique online behavior in marketing as well as areas for further research in this field will be discussed.

  2. CHARACTERIZING CONSUMER FLOCKS

    Consumer flocking is distinguished from related concepts of group formation and group buying etc (Chen et al., 2002; Anand and Aron, 2003; Klein, 2005). based on the medium, duration, and lead initiator. In our case, consumer flocking is mainly driven by new media (the first dimension) like the internet, which significantly reduces transaction costs, because of its distinctive advantage in communication efficiency on both market sides (e.g. finding flock-participants or meeting the flock's needs) compared to traditional forms of communication channels.

    The second dimension--duration--considers the short- or long-term orientation of the group. A look into current marketing literature shows that long-term oriented groups of consumers--such as consumer cooperatives in agriculture, credit, farm, electric, grocery or housing sector--have existed for a long time (Visit www.ncba.coop for more information). In recent years many cooperatives have an internet presence though still having only a local impact. In contrast to consumer flocking--a short-term random aggregation of people--cooperatives are institutionalized forms of consumer groups and, therefore, less flexible.

    Our third dimension deals with the lead initiator of the purchase process (marketer- or consumer-initiated). Consumer flocking is consumer-initiated. Although this allows for less control on the marketer-side than has been given by former group buying websites, the marketer is able to reduce his marketing costs by tapping into consumers' social networks. In summary, the concept of consumer flocking can now be positioned as an internet, short-term and consumer-initiated phenomenon. The definition of consumer flocking is stated as follows:

    Consumer flocking is a short-term, consumer-initiated aggregation of people on the internet by using their own social collaborations for collectively engaging in a marketing exchange which would provide each consumer with a superior value than obtainable individually. One underlying assumption that needs to be tested is whether a consumer flock may be considered a virtual community or not. Several factors may make a consumer flock more or less like a virtual community. Motivation to come together in a consumer flock may be either purely extrinsic or intrinsic (Waterson, 2006). The presence or absence of the elements of sense of community--membership, influence, fulfillment of needs, and shared emotional connections--would determine an individual's depth of involvement in the consumer flock (McMillan and Chavis, 1986). If the consumer flock fulfils the members' physiological, social, hedonic, experiential, cognitive, and/or psychological needs (Foxall et al., 1998), it would be considered a virtual community. If the members are using the consumer flock to gain knowledge, share interests or goals, experience joy, or validate meaning of exchange to reach a "higher self" (Hemetsberger, 2005), the consumer flock would be special type of a virtual community.

  3. THE ROLE OF SOCIAL MEDIA IN ONLINE CONSUMER FLOCKING

    Wikipedia describes social media as the online technologies and practices that people use to share opinions, insights, experiences, and perspectives with each other. Social media began with personal email communications of the early 1990's to the current social networking communications at Twitter.com, Facebook.com, MySpace.com and Ning.com. Media itself has evolved from broadcast where audiences are assumed to be passive recipients of information and interactive which is less passive and allows for some feedback from the recipients to social where audience involvement is active and are very often cocreators of content, context, and connections.

    Nedelka (2008) categorizes all social media into three groups: content syndication (blogs, podcasts, videocasts), content sharing (user-generated content, wikis, widgets, reviews) and community building (social networks, online communities). However, the context of this paper is more specific: how are group buying communities formed and what are the characteristics of the participants? These group buying communities--here on called consumer flocks--are consumer-initiated, private, user-created sites set up specifically for aggregating buyers, users, and other influencers for an e-commerce exchange. These participants of the consumer flock derive greater economic value (lower prices) than purchasing as individuals. In the past, sites such as mercata.com, accompany.com, letsbuyit.com and mobshop.com have attempted to aggregate buyers though with a professional or business profit motive. A new site, eSwarm.com, intends to provide a similar platform but was not launched as of date. While all social media provide a channel for consumer flocking, social network sites provide a powerful vehicle for consumer aggregation on the internet. The purpose of many-to-many communications is succinctly described thus: a social trend in which "... people using technologies to get the things they...

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