Emerald Group Publishing Limited
Copyright © 2011, Emerald Group Publishing Limited
Article Type: Internet currency From: Journal of Consumer Marketing, Volume 28, Issue 6
Edited by Dennis A. PittaUniversity of Baltimore
A new twist in online product design
This issue of Internet currency reports on a development in electronic commerce and provides a description of the state of existing practice and speculation about applying it more broadly. Online product design has existed for more than ten years. However, one company has taken it beyond its existing limits.
One of the principles of sales that is echoed in internet commerce is, adapt to the customer’s preferences rather than forcing him to adapt to yours (Gossieaux and Moran, 2010). The increasing penetration of internet access and internet oriented consumers has presented a competitive opportunity to those who are far sighted enough to act. In the early years of the current century, in the early days of online retailing, a few web sites offered design your own product functions. One web site that was featured in an Internet currency column several years ago belonged to Nike, the footwear manufacturer. The company started with a user friendly design tool that allowed users to customize a basic style of footwear available for men and women. Customization amounted to choosing five or six styles of four basic elements: the sole, upper, custom “Swoosh” graphic and laces.
Exploiting the graphics capability of the internet and the growing availability of broad band access, Nike was able to depict the choices and the combinations very clearly. It appeared, without evidence to the contrary, that Nike was testing the function as a form of consumer research. Initially, one could design a custom shoe but one could not buy it directly. Quickly, Nike added an e-commerce function to allow ordering.
The effectiveness of the original website has not been publicized. However, recent evidence indicates that it must have been successful. As an example, Nike now has a new website which offers seven language choices (English, Spanish, French, German, Italian, Traditional and Simplified Chinese) to accommodate users around the world. It also collects more sophisticated data including the visitor’s home country. Users who choose to read the site’s text in English are asked whether they are from the USA (not North America), Europe, or Asia. Those who choose Europe find a list of 21 countries. Selecting one sets the country location which is tied into a store locator as well as to a preselected group of customizable items.
Moreover, Nike has expanded the items to be customized from a single style of footwear to a large variety of footwear for men, women, and children, as well as items like team shirts and uniforms that consumers can design and order. Sports fans can find official team shirts for sports teams including national and professional clubs. Here a bit of investigation demonstrated the behind the scenes variety that Nike built into the web site. US residents get a selection of rather “American” products. The items include baseball, basketball, football, and “hoodie” (hooded sweat) shirts as well as bags for baseball bats and basketballs. European residents find a different selection that is more appropriate for their tastes.
Investigating the application, we clicked in as English speaking residents of Belgium and looked at the team customization options. We focused on just one Premier League club, Arsenal. One click got us into the club’s customization page on the website. We found a description worthy of a fan. In part it reads “[…] honoring the fierce style of play the Gunner’s have long been known and revered for, the replica Arsenal Shirt inspires brilliant football while subtly reflecting the club’s unique distinguished history […]” Each can be customized by either choosing among a list of team players, or supplying a name and choosing a custom number. Thus, a parent can order an Arsenal official home shirt personalized with a child’s last name and a number. There is even a space for user reviews.
Of course, after a customer made the choices, he or she could order a particular size. The company deliberately did not limit customer creativity. Some of the possible combinations of elements might be termed garish or tasteless by some of us. However, since the customer is always right, their choices are too. This is a good example of supporting customer preferences.
While most of the design your own web sites are aimed at relatively inexpensive items, Toyota recently unveiled a design site for something expensive, an automobile. The approach is an out of the box idea, even though companies like Kelly Blue Book (www.kbb.com) and Edmunds (www.edmunds.com) allow users to price individual car models with specific features. They do not offer e-commerce links.
Traditionally, retail automobile sales in North America have been resistant to a fixed price approach. Dealers offer customers a “price” and astute customers are free to bargain to get a better price. The bargaining is in reality one sided. Professional car sales people are well practiced in the art of overcoming objections and closing sales. They recognize and counter amateur tactics like offering a rather low price in an attempt to split the difference between seller and buyer price points.
Toyota calls its site “Build a Toyota.” After visiting the site, a consumer may customize any of Toyota’s offerings (Toyota, n.d.). In the USA, Toyota lists seven cars and minivans, seven crossovers and SUV’s, and two pickup trucks. The list includes their complete product line. Each one carries a base price and an estimated miles per gallon rating. Consumers can choose a model, for example a Camry, and can select the trim quality, engine size, and transmission. With each selection, consumers can do “what if” analyses to gauge the effects of their choices. The second step is to choose a list of options, each of which is clearly described and priced. The third step requires choosing exterior and interior colors. The fourth step focuses on accessories like alloy wheels, satellite radio, security devices and others. Unlike the Nike site, Toyota relies on its dealer network to complete the sale. The final step is to “Request a Quote.” That action summarizes the consumer’s selection, asks for personal contact information and presents one or more local dealers who can aid the customer in completing the purchase.
An astute marketer might think that by changing the focus from price to features, Toyota reduces customer bargaining. That may be true. However, the absence of a “purchase” option still leaves room for the consumer to bargain. The “Build a Toyota” feature was not intended to be a build and buy e-commerce solution. Instead it is an example of engaging a customer to move the purchase process from awareness to preference. Personal selling can take over to move the customer to a purchase.
Implications for marketers
The Toyota web site is subject to several challenges. They include the importance and high price of the product sold. For some consumers an automobile is a shopping good; for others, a specialty good. For most, it is a purchase of great importance and complexity that benefits from reflection and interaction with a sales person. Issues such as delivery time, vehicle registration, insurance and financing are critical and must be addressed. Notably, Toyota provides an MSRP, Manufacturer’s Suggested List Price not a final guaranteed purchase price.
However, “fixed auto pricing” exists and it promises a price without the need to bargain. A very successful used and new car chain, CarMax, features non-negotiable prices set to be a bit below market price. The appeal to consumers has allowed CarMax to grow appreciably in the last ten years. CarMax competes in a highly fragmented, competitive market with approximately 20,000 automotive dealerships, and 39,000 independent used vehicle dealers. Its service and pricing model have made it largest retailer of used cars by volume. During the fiscal year ending on February 28, 2009. CarMax sold over 345,465 used vehicles through 100 CarMax locations during FY 2009, raising $6.9 billion in net sales (wikinvest, 2010). A guaranteed price would arguably make the dealer interaction more of a selection process that finalizes legal requirements like financing, insurance and registration.
Overall, online customer product design appears to be a promising vehicle to build awareness, commitment, and perhaps sales.
Please forward all requests to review innovative internet sites to: Dr Dennis Pitta, University of Baltimore, 1420 North Charles Street, Baltimore, MD 21201-5779, USA. Alternatively, please send e-mail to: email@example.com for prompt attention.
Gossieaux, F. and Moran, F. (Eds) (2010), The Hyper-Social Organization: Eclipse Your Competition by Leveraging Social Media, McGraw-Hill, Upper Saddle River, NJ, ISBN: 978-0-07-171402-0
Toyota (n.d.), available at: www.toyota.com/byt4/pub
wikinvest (2010), available at: www.wikinvest.com/stock/CARMAX_(KMX) (accessed April 2, 2011).