Complaints, compliments or insights can lead to a creation of completely new services and products. He goes on to explain, “…that the failure rate of new products is between 40 and 75 percent, firms should be particularly concerned about what their customers say they want and need. If firms can utilize their customers’ knowledge, the failure rate of new products can be greatly reduced.” A reduction in failure rate would help a firm’s bottom line.
Social media allow firms to easily obtain consumer knowledge in the masses and similar to that of the informative focus groups but at a fraction of the cost. Bhagwat explains, “Firms do not have to chase customers for their feedback but instead have attentive customers coming to them voluntarily.” Unlike traditional market research methods, social media enables consumer and firms to communicate in real time, consumer are more likely to give valuable insights since they believe they are being …show more content…
For example, Brewtopia a beer brewing company “created an online community in which members voted upon every last detail of the beer, from alcohol content to the packaging. The beer was then brewed according to the customer specifications.” The members were compensated with “viral equity” and given dividends based on how well the beer sold. The members were motivated to help develop the best quality beer. The unique customer feedback driven beer created demand before it was even released. This high level of knowledgeable participants help develop a successful