[Question 9] Distinction between producer and consumer

ProfessorHuang wrote:The quality/price tradeoff is less relevant to the discussion of "customers as producers" because customers co-create offerings to better suit their needs. Unlike developers in the open source cases, customers do not create the offerings for other people to use. Hence, the purpose of participation is to make the quality better, not to make it cheaper (unless what the customers want are cheaper offerings).

For example in the case of IKEA, this company sells furniture at a low price amd charges transportation costs, but it has a great application on its website where the consumer turns to be the producer of what he/she really wants. In the website there is an option to create your own environment, according to space and measures you may add furniture to design your own bedroom, living room or kitchen. It is really great because the producer gives the consumer the tools to turn in into the producer of its ideal "product" combination and that fully satisfies this consumer. It is a chain of value where everyone turns to be part of the chain and adds value to the product, the only difference is that here the consumer turns into a producer back and forth. This is a really interesting way of applying service-logic innovation strategy.

Reading the discussion above I think we might have to distinguish more between "consumers becoming producers" and "consumer customization". To be honest, I don't really agree that I turn into a producer, just by selecting the components of my Dell PC. From my point of view, the consumer only becomes a producer if he offers the product he creates to others. Everything else is more customization than production.

Accordingly, we should look for industries and products where the entry barrier to become a producer has been significantly lowered, so that consumers can now be (amateur) producers without spending a fortune. Having the book "The Long Tail (Chris Anderson)" in mind, this seems mostly true where the internet can serve as a distribution channel. For example, amateur bands can record their songs and offer it on itunes. Someone might buy it, in this case a new "producer" has evolved.

But I think for the vast majority of (non-media) products the line between producer and consumer is clear and will still be clear in the future. I am especially thinking of items where security is a concern.

Do you agree?

I think there is a more and more common intermediate step between "consumers becoming producers" and "consumer customization" when consumers are getting indirectly involved in product development by sharing their ideas on company's blogs, FB fan pages etc.
More and more companies are developing collaborative platforms where customers can discuss about their passion for a determined product, their expectations, their feeling about the current and futures ranges of product.
This way, consumers are entering somehow the product development chain of the company whereas the company get the consumer more involved and enhance loyalty to the company.

You can take example of starbucks as well. They opened the website where everyone could give opinions about products and suggestions of new ones, special promotions etc. so consumers became as a matter of fact inventors and "think tank". Best thing - the ideas were free (you had to agree that if the idea will be used you won't ask for any profits ), saving a lot of money for the company, and couple of them have been introduced (free coffee on b-day).

This line vanishes quicker I believe - you say what you want, we will produce it. And both sides profit!

BartekWu wrote:You can take example of starbucks as well. They opened the website where everyone could give opinions about products and suggestions of new ones, special promotions etc. so consumers became as a matter of fact inventors and "think tank". Best thing - the ideas were free (you had to agree that if the idea will be used you won't ask for any profits ), saving a lot of money for the company, and couple of them have been introduced (free coffee on b-day).

This line vanishes quicker I believe - you say what you want, we will produce it. And both sides profit!

Bartek, I think you are quite right. I like your term to include consumer as a "think tank." I actually do not agree that only media related products rely on customer's participation, instead, I think the paper points out a consumer-centric view when we design out product. We need to think as the customer. In the past, maybe we only think about the functionality of a product, for example, a cup is a cup, just for drinking. But now many be we will design it according to user's habit, i.e. a sport/portable water bottle. It is we take customer's lifestyle and need more into our consideration in the process of designing a product. I actually agree with the authors' assertion: All innovation is service-logic innovation.

With regard to what Tobias said about the difference between customization and being a producer, plus that business innovation is really just allowing the customer to provide feedback or upfront ideas on design, then in reality the consumer is not becoming the producer, but only a source of information. And isn't that the job of the marketer, to find out what the customer wants? So where is the innovation? It seems the innovation is that companies open up their policies to let the customer participate in the product design, but the user doesn't actually produce anything. The few examples where a customer produces something are music and open source, but not customization or input to a design.

Yann_Gerardi wrote:

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In the text we can find the sentence: “The line between producers and consumers is vanishing”.
How do you think this trend is going to evolve?

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Its true that the line between producers and consumers is vanishing in the online market. This trend will not decrease for certain, but it is difficult to see how it will evolve. My belief is that consumers has still more content that they can place on the internet and also more people will likely be participating. Thats the reason I expect a solid increase in this phenomenon.