Are business models in social media very different from ones prevalent before emergence of social media as we know it today?

Social Media is a platform to help people connect with each other, share thoughts, data and contents and carry discussions with people across the geographies. The technology includes social media sites such as Facebook and LinkeIn, micro blogging sites such as Twitter, user content generated sites such as YouTube, Flickr and Wikipedia and many more. These tools have influenced the changes in the business models in today’s era. The possible categorization of the changes can be in the area of Co-Creation, Marketing and Innovation.

Co-Creation

Every enterprise strives to grow and to do so it is very important for an enterprise to understand what the customer needs and what product/solution/services can cater to its needs. The emergence of social media has completely changed the product/service development process. Today the marketing team focuses more on how it can leverage social media to enable the customers to contribute directly to the value creation. The contribution of social media can be as extreme as content generation as in case of a community based T-Shirt company, Threadless that allows people to create and submit designs which is later voted upon to the best designs. Other examples are of E-commerce sites such as Amazon, Flipkart and Snapdeal. These sites allow the customers to give feedback about the sellers. The feedback received in this process is shared will all the customers to help them decide whether to purchase or not from a given seller.

Marketing and Innovation

How often did you receive telephone calls from banks asking you to accept the new credit card service or calls from call centers selling you some products or services? These hard selling techniques are dying because of the transformations brought into marketing by social media. The companies today try enabling customers such that these customers become the sales people or promoter of the products. Their contributions in term of feedback on website/market place/social media about the product directly adds value to the sales force. The enterprise can also leverage on the network of the customers as they can be the potential influencers for its products in customer’s network. Social Media have become a new channel to reach people. The organizations have now taken a leap to use social media not just for marketing but also to enhance business interactions through innovation and in the product development processes. The introduction of social media in innovation and product development has helped the organization in creating new product/ideas, the time to reach market has been reduced and the rate of adoption of products has improved significantly. Apart from that social media has also enable the organization to connect with people and share ideas to innovate. It is given that many time the best people are not working in your organization and that there is a high probability that the problem that you are facing is already solved by somebody else. Social media can help in this case to connect to the best people or people with the solutions to your problem. One such example of use of social media for solving its problem is when Evonik Industries, a specialty chemical company and one of the largest producers of hydrogen peroxide in the world, wanted to generate some new thinking about applications for hydrogen peroxide and so in addition to its usual pool of expertise it turned to social media. This online engagement with social media followers proved fruitful. A number of applications were suggested that the company would not have received otherwise, and they included such ideas as a formula for gold recovery, as an agent to remove mildew stains from walls, and a fuel for DIY helicopters.

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