swoon editions winning product selection project

Swoon Editions Business ProjectLSE MG489 Presentation19 February 2014

The Team

Gence Emek!Undergrad: BA Hons. Philosophy from University of Nottingham"Future job: Tech Entrepreneur"Favorite Chair: #14 Bistro chair for its simplicity

Anne Hooper!Undergrad: BA in Economics from Brown University "Future job: Business Development, Marketing, or Management Consulting"Favourite Chair: Stephen Swift wooden stools

Philipp Ebsworth!Undergrad: MA Hons in International Relations and Management from St. Andrews University"Future job: Graduate Trainee Program in Pharmaceuticals or Car Industry"Favorite Chair: My father’s leather adjustable armchair with massage function

Unna Hallikainen!Undergrad: BA Hons in International Business and French"Future job: Business Development"Favorite Chair: Charles & Ray Eames lounge chair

Daniela Ukrainski!Undergrad: BA Hons International Business with Russian and Chinese from Regents College London"Future job: Marketing or Business Development in a tech start-up "Favorite Chair: Our metal swing dining room chair at home

Daniil Auvinen!Undergrad: BA in Economics and Business from University College London"Future job: Financial Services"Favorite Chair: Alvan Aalto’s Lounge Chair 400

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Swoon Editons Overview

Swoon Editions is a small online seller of select, limited production of furniture, more specifically chairs"

Currently specializing mostly in classical designs with while aiming to provide several unique advantages "

By eliminating the middle man Swoon is able to sell at a highly discounted price compared with traditional high street retailers"

High quality of overall product �3

01

Product Selection

Theory from Kotler and Keller (Marketing

Management, 2012)"For Swoon

Ensures marketability"Creates favorable profit margins"Is trendy and has appealing style "Has representable quality"Deals well with competition

Smaller and start-up company in nature and as such product selection is key!"

Finding a winning formula which helps them find their next big seller is essential to their success.

Project Procedure

Task: Develop product identification strategy and process with" benchmarks and case studies

Delivered initial brainstorm of ideas – everybody came up with 10 examples of company case studies (not all relevant)

Split into individuals to deliver best processes and then concentrated on literature due to lack of reliable and varied company processes available

Delivered weekly progress through mini-‐presentations at the Swoon Of<ices

Settled on 5 processes – all different but with backing in academic literature and case studies

Current Product Selection Method

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Current Products

Expert Designers

Prototype

Sales Figures

Customer Opinion

01

Roadmap

Discovering the benefits of market research

Assessing a blogger approach

Collaborating with designers

Research into customer perceptions

Creating a hybrid approach

Market Research & Conjoint Analysis

01

Discovering Market Research

“From crowdsourcing to conjoint analysis”!!

Analysis of successful crowdsourcing campaigns included initiatives such as VitaminWater’s ‘Flavorcreator’ to Dell’s ‘Idea Storm’ "

Aimed to determine how these companies utilized crowdsourcing as a means to creating the winning products "

Unsatisfactory information and lack of true applicable to Swoon given the differences in organizations size and scale"

Yet it set us on the right course and made us look for alternative methods

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Conjoint Analysis

Conjoint Analysis is one of the most widely used pre-launch product design forecasting tools"

Famously used to help determine the design of Courtyard by Marriott Hotels, Stanford’s MBA Program or E-Z Pass design and pricing"

As such, could also have great potential for Swoon Editions

An Example From Courtyard Marriott:!

“Conjoint found that business travelers (primary core target audience) didn’t sufficiently value traditional hotel attributes like an “action” lounge, upscale restaurant, bellman, or airport transportation. !

Instead, targeted business travelers valued items like a room that is slightly larger than most (1 f, sink in a separate area, coffee maker, and décor similar to new Hiltons” - create a Hotel “designed by business travelers for business travelers”

Conjoint Analysis Process

Determine how customers value specific, different features of a product (e.g. type, color, style, size, price etc)"

Gain insight into which combination of features is most influential for customer’s decision/purchase making process"!How it works:!

Two or three images"

Style and other key features mentioned"

Customer make trade-off decision "

Done for all variants - can be several 100

Conjoint Analysis Process

!!!!Style 1!Price: £250"Colour: Beige"Material: Oak and Wool cover"Size: Medium"Arms: No

VS.

!!Style 2!Price: £300!Colour: Black"Material: Oak and suede leather !Size: Large"Arms: Yes

How the results could look !(taken from slide on pervious page)

Pros & Cons of Conjoint Analysis

Very accurate and implementable

insight into ideal, winning product

More complicated and extensive than surveys and may need professional analysis aid and

could increase costs

Blogger’s Product Selection

Procedure

Case Study of a successful outcome in blogger collaboration in product selection

Drawing on academic literature and empirical research for further understanding

Using customer data and research to create an example of how Swoon Editions could experiment with blogger collaboration

01

Company Case Study

Scandinavian online clothing store Bootz.com collaborated with an established Swedish blogger for product selection"

Blogger’s audience overlapped with the website’s target audience"

Blogger did not design clothes, only selected pieces to be sold "

Chosen products reflected her personal taste and became winning products because of her tastemaker status

Academic Theory

Theory of Status Consumption!!Trickle down effect of social behavior

The home—its location, style, features, and decor—is central to consumer identity construction

Mimicking elite tastes: acquiring goods that have been ‘consecrated’ by tastemakers

(Ustuner and Holt, 2009)

Empirical research on blogger influence!Role of influential bloggers in developing

innovative business opportunities: the influentials are often market-movers: they influence buying decisions "

(Agarwal et al, 2012)"

Bloggers’ seen as more reliable and valuable than commercial information "

(Wu, 2011)"

Based on social capital perspective, a person with a good social relation online can establish a reputation that affects others’ purchasing behavior "

(Hung and Li, 2007)

Process

Analyze Customer Data

Age"Gender"Socio-economic"Sales data

Identify blogger and make

collaboration contract

Online Research"Audience demographic overlap"Sector overlap, non-competitor"Image match"Contact and agree terms

Blogger chooses chair within

Swoon’s existing design framework

Blogger able to contribute within chosen dimensions"Work with Swoon’s design prototypes, select color of fabric and wood type"Select favorites from inspiration board

01

Process

Set criteria for blogger! Swoon customer data shows target audience to

be female, in their 40’s, single, in long term-homes, above average income"

Blogger’s audience should match/overlap with Swoon’s target audience and be in a related industry (interior, lifestyle, home) but not a competitor"

Established niche, stable reader base and preferably interactive "

!Research to find blogger!!

Online research resulted in a list of approximately ten potential collaboration candidates with one being the most suitable match

Ideal match

Next Steps

Approaching chosen blogger and suggesting collaboration,

making a contract

Blogger contributes to

product design process

Chair goes through an audition or goes

directly to test production "

(small edition, followed by full

edition if successful)

Pros & Cons of Blogger Approach

In addition to product selection this process offers

marketing and sales opportunities

The subjectiveness of taste both

blogger’s and customers’ in terms of what constitutes a winning product

Collaboration

Procedure

Case study of several different companies selection method

Researched and looked into academic theory for explanation of how it was successful

Conforming the idea to Swoon’s specific case and considerations for how it could develop

Examined Opening Ceremony closely and then found several other examples with a similar process

01

Case Study

Opening Ceremony is an international retailer specializing in fashion for men and women"A key draw is hand-picked and stylistic nature of all the items and has strong and cohesive style throughout"Collaboration with both well-known and small time designers is at the heart of their business structure "

Process produces unique one-of-kind items exclusively for Opening Ceremony"Typically take a company’s very well established item and then morph and design an item that fits their style

01

Case Study

Have done several well known collaborations such as:"!!They use products/brands that have their own identity and then apply their own design aesthetic and turn it into something original that fits OC’s brand and customer’s style"Several other clothing company’s have done similar things such as: H&M, Target, K-Mart, and many others

OC & Muppets"OC & Kegs

OC & Adidas"OC & Pendleton

Academic Theory

Comparative Advantage! Task efficiency and effectiveness will largely vary among firms and will ultimately result in

trade" Ricardo (1817)"

Competitive Advantage! Firms can develop certain attributes that allow for increased competitiveness in the market " Often seen in established brand name, technology special knowledge, or unique relationships "

Porter (1985)"

Collaboration Research Findings! Collaboration is increasingly found to be helpful as has been proven to lead to

innovation, increased creativity, and economics benefits for both parties "Increased teamwork and structured network has been shown to improve innovation output"

Ahuja (2000) & Uzzi and Spiro (2005)" Due to specialization of companies, collaboration can often open products to wider market

share and provides mutual benefits to help both parties succeed"Jap (2001)

01

Process

Swoon holds a competitive advantage in their ability to manufacture smaller batches of furniture at a significantly lower cost than other furniture makers"

Collaboration with designers would effectively outsource much of the time-consuming and costly design process while the firm can capitalize on production advantages"

Firm provides designers with production limitations and defines what is feasible in production"

Designers get free advertisement and an opportunity to highlight their own style (monetary compensation also recommended)

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Process

Swoon cannot yet attract very large name designers so propose to use student designers who have more to gain from partnering with Swoon

Design competition according to current

needsMajors to advertise to include architecture, fashion, textiles, interior design, industrial design

Advertise competition to London design

schoolsSwoon then selects

winning design to be produced

To include specific design limitations for production requirements

Winner gets CV boost and a free final product

Next Steps

Further research production limitations

Select universities to run the

competition & speak with

administrations on how to access

students

Assess which needs Swoon wants fresh, unique designs for

(could be fabric designs for current chairs, tables, ect.)

Pros & Cons of Collaboration

Ability to capitalize more on competitive advantage; easy way

to get unique exclusive products

Doesn’t completely outsource product selection; consider

relying on other methods to access demographic

considerations

Industrial Design Research on Customer Perceptions

Procedure

Looked into examples of successful companies and some of their innovative product selection procedures

Came across industrial design research on customer perceptions towards durable goods

Applied the ideas from research to design a survey and elicit responses on Swoon products

Explored ways of creating a an actionable process for Swoon to find the winning pieces

Research

Overview: !How do consumers perceive a durable good’s

appearance? !! From a total of 130 different descriptions, J. Blijlevens, et al. (2009) used PCA to identify 3 main attributes that consumers use to distinguish the appearance of durable products. "!

The appearance attributes together provide the consumer with an overall impression of the product and are considered to be more abstract than separate physical aspects.

The 2-step model of product appearance perception

Product Physical Properties:!

Colour, shape, texture, surface, size, contrast, symmetry,

orientation, weight

1Consumer’s

perceived appearance attributes:!

Modernity, simplicity, unity"

2

The three main attributes

Source: J. Blijlevens, et al. (2009)

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Modernity:"modern, old-

fashioned, classical, oldish, sleek, futuristic, kitsch and retro

Complexity:"simple,

functional, plain, boring, unusual and minimalistic

Playfulness:"playful, funny

Relevance to Swoon

When the product meaning that is communicated is not clear to the consumer, (s)he will appreciate it less. "

In practice, designers often face the difficulty of how to incorporate an intended meaning in a product design."

Thus, it is valuable to provide designers with actionable guidelines that can be used in the pre-production evaluation process.

Researchers find that these attributes are: Universal - Stable across several consumer groups Generalizable and not product specific -

validated across several product categories.

Eliciting responses from customers: !

Is there a link between the good’s appearance attributes and the consumer’s willingness to purchase?"

Can we use these perceived attributes to help Swoon choose the winning products?

Detailed Process

Decide on how to elicit WTP

Direct (easier)"Indirect"Other ways?

Finalize the survey and send

it out

Online (Web, e-mail)"Survey design to maximize response rate"Risk consideration"Customer demographic considerations

Analyze the dataRegressions with WTP as DV"Attributes as IVs"Choose designs that score highly in most important dimensions

Test Survey Results

Ran a short survey among students"44 responses, 57% male, 43% female, Ages 20-27"Questions asked: "

Would you consider buying this chair? " Please rate this chair on a scale of 1 to 5, along these three dimensions: "

Old-fashioned - Modern" Simple - Complex" Serious - Playful

Limitations:!Small sample size"Homogenous sample"

Young, educated, urban people in their 20s"Low-quality pictures"Low number of chairs surveys (6)

Main takeaways! Some interesting results; for this sample: "

Respondents seem to prefer the chairs they perceive to be “Modern”"

If it was “Modern” –looking, then complexity and playfulness seemed to add to desirability"

However, if the chair is perceived “old-fashioned”, then complexity and playfulness seem to reduce willingness to purchase."

Thus it would be interesting to see how Swoon customers, or demographically similar people, would rate these chairs.

Next Steps

sIntroduce price into the model

Collect responses

Analyze results choose the winning designs

Consider additional research on perceptions

Research suggests

atypical designs are more

appealing

Is there an optimal level of “typicality” and

“arousal”?

and/or

Pros & Cons

Pinpoints desirable characteristics, "

Provides actionable guidelines, "

Establishes connection between attributes & WTP,"could yield indicative price

ranges"

Response rate 3%,"May not translate into purchasing behavior,"

May not reach a representative sample"

Hybrid Approach

Procedure

Looking at companies with innovative product selection such as Quirky, Kraft, BMW, and Zazzle

Identified Mookum as implementing a successful collaborative process with expert scouts as central to product selection

Found that collaborative processes are an emerging trend

Try to find a way of implementing the expert scout methodology for Swoon

Hybrid Approach

Combines qualitative and quantitative methods Limitations of one type of data can be balanced by the strengths of another (Tashakkori and Teddlie, 1998)

Expanding scope & improving analytic power of the study (Sandelowski, 2000)

!! Literature Review of each component of the Hybrid approach!

Theory of Expert Competence" Behavioral Decision Science" Netnography" Validity

Literature Review

Expert Decisions!!

Theory of Expert Competence (Shanteau, 1992)"1. Knowledge of the domain"2. Psychological traits associated with

experts"3. Cognitive skills necessary to make tough

decisions "4. Ability to use appropriate decision

strategies"5. Task with suitable characteristics"

!Experts often rely on heuristics to make their decisions which can lead to cognitive biases (Simon, 1987)

Behavioral Decision Science!!

Building choice criteria that deal with informational complexities involved in choice."Overcoming choice overload and getting to the substance (Edwards & Fasolo, 2001) "Structuring preferences in a meaningful yet simple way (Carlson & Bond, 2006)"Eliciting values inherent in the structure (Fischhoff, 1991) "

Literature Review

Netnography!!Defining choice criteria through Netnography."Criteria not yet defined: qualitative research

techniques allow for a deep dive into the situation to establish real meaning, appropriate for exploratory research (Seale, 1999)."!Benefits of using netnogrpahy as a qualitative

method (Kozinets,2002):"!It is naturalistic"It is immersive"It is descriptive"It is cheap"It is adaptable

Validity!!

Using quantitative methods to check the extent to which results from the process are representative of real-world customer preferences"!Concurrent Validity: measuring a new test or procedure against a gold-standard benchmark (Craighead & Nemeroff, 2004)"

!

Methodology

Exploring Forums

Building Criteria

Expert’s Pick

Process Validation

Select website with rich qualitative data (forum discussions)"Track discussion topics and messages

Identify commonly occurring categories important of selection"Provide decision criteria

Swoon provides decision expert for chair selection"

Expert ranks each chair on a scale of 1-7 for each of the 6 criteria

Compare with existing sales data"

Compare data with survey results from random sample"!

Exploring Forums

Interested in people’s preferences and buying behavior in relation to chairs and sofas"

We identified 6 websites which focus on furniture and related items"

In these 6 sources we identified 56 topics constituting 239 messages that contained information about people’s requirements, tastes and decision-making processes

1.http://www.styleathome.com/shopping/buying-guides/buying-guide-sofas (1 topic: 4 messages)"2.http://www.myfurnitureforum.com/ (11 topics: 49 messages)"3.http://furnish.co.uk/search/posts/chair (7 topics: 101 messages)"4.http://interiordec.about.com/ (7 topics: 7 messages)"5.http://furniture.about.com/ (5 topics: 5 messages)"6.http://ths.gardenweb.com/forums/furniture/ (15 topics: 67 messages)"

http://www.styleathome.com/shopping/buying-guides/buying-guide-sofas

Building Criteria

Affinity with space Fit with interior design "Multipurpose pieces sell more on mass

Dining vs. Living Room

Separate discussions depending on dining or living room chairs" Need for clear divide between types of chairs" Dining chairs (bought in 4s/6s) vs. living room chairs (more multipurpose)

Physical Size Some chairs too big for people’s space

Comfort Height, leg length, how firm or soft the cushions should be, if they want to sit straight or relax"

Must offer a range of pieces with different fillings and posture characteristics

Accent furniture pieces

Neutral pieces can be boring" People want “IT furniture pieces”, “one of a kind pieces”, “unique, vintage pieces”, “brightly colored pieces” and “pieces with piping detail”

01

Expert Questions

1. Is there a general affinity with the interior design of people’s homes?!

2. Does it match the living room?!

3. Does it match the dining room?!

4. Will the chair physically fit into the space?"

5. Does the chair appear comfortable?"

6. Is the appearance of the home enhanced?

01

Findings

Experts pick Amelie in Oatmeal Linen as the winning product!

Expert Results Item No. 1 2 3 4 5 6 7 8 9 10

Chair name the milly in oatmeal line with stripe

sylvie in sand linen

milly in grey linen

chiswick in true grey check wool

the marlow in oatmeal linen

the panama in grey linen

windsor carnaby in oatmeal herringbone wool

Amelie in oatmeal linen

louis in mocka brown linen

Rat

ing

Interior design 3 6 4 6 4 3 5 5 6 4

Living room 5 7 5 2 2 1 2 5 5 3

Dining Room 1 6 6 6 5 4 7 5 7 6

Size 6 6 6 1 4 5 1 3 7 6

Looks comfortable 3 3 2 6 2 3 7 4 5 4

Enhance appearance 3 5 3 5 2 3 6 5 7 3

Total 21 33 26 26 19 19 28 27 37 26

Validation - Sales Data

Sales data

Item Chair name No. of Chairs sold

Edition (Weeks)

No. sold / week

Rank

1

the milly in oatmeal line with stripe 119 15 7.93 1

2


16 14 1.14 10

3

milly in grey linen

60 14 4.29 3

4

chiswick in true grey check wool 25 18 1.39 9

5


22 10 2.20 6

6


19 10 1.90 7

7

windsor

36 11 3.27 4

8

carnaby in oatmeal herringbone wool 17 12 1.42 8

9

amelie

26 10 2.60 5

10


92 12 7.67 2

0"5"10"15"20"25"30"35"40"

1" 2" 3" 4" 5" 6" 7" 8" 9" 10"

Exper

t

Sales

Expert Results and Sales Data

Weak positive correlation between ranking based on sales data and expert ratings"!

r = 0.22

Validation - Survey

Strong positive correlation with sales data:" !

r = 0.71

0"

2"

4"

6"

8"

10"

12"

1" 2" 3" 4" 5" 6" 7" 8" 9" 10"

Sale

s

Survey Results

Sales Data and Survey

Survey'Results'Item No. Chair name Total Score Ranks

1

the milly in oatmeal line with stripe

537 2

2


418 8

3

milly in grey linen

536 3

4

chiswick in true grey check wool

450 6

5


385 10

6


386 9

7

windsor

498 4

8

carnaby in oatmeal herringbone wool

472 5

9

amelie

447 7

10


550 1'

Pros & Cons of Blogger Approach

Strong correlation between sales data and survey results"Method is easy to implement"Good feedback loop

Expert Competence?"Sales data is gold standard?"Questions representative of established choice criteria?

Conclusion

Concluding Roadmap

Conjoint Analysis

Blogger Approach

Collaboration

Industrial Design Research

Hybrid Approach

Effectively determines key attributes which together make a desirable product

Use tastemaker that appeals to customer base for product selection and continuity of items

Outsource design process to capitalize on production advantages

Use as framework for understanding what customer perception of products are and to guide future designs

Provides deep insight into customer needs and behavior; allows for feedback loop through validation

Next Steps

Need to clearly define current customer base versus desired customer base

Implement an iterative learning cycle into product

selection

Set up in-house or local design and

prototype capabilities

Thank you for your attention.

References

Agarwal, N., Liu, H., Tang, L. and Yu, P.S. (2012) Modeling blogger influence in a community, Social Network Analysis and Mining, Vol. 2(2): 139-162"!Ahuja, G. (2000). “Collaboration Networks, Structural Holes, and Innovation: A Longitudinal Study.” Administrative Science Quarterly. Vol. 45, No. 3, pp. 425-455"

Blijlevens, J., Carbon, C.-C., Mugge, R., & Schoormans, J. P. L. (2012), "Aesthetic appraisal of product designs: Independent effects of typicality and arousal." British Journal of Psychology, 103, pp. 44–57."!Blijlevens, J., Creusen, M., & Schoormans, J. (2009), "How consumers perceive product appearance: The identification of three product appearance Attributes." International Journal of Design, 3(3), pp. 27-35. "!Breidert, C., Hahsler, M., & Reutterer, T. (2006), "A review of methods for measuring willingness-to-pay." Innovative Marketing, 2(4), pp. 8-32. "!Bryman, A. (2012). Social Research Methods. 4th edn. Oxford: Oxford University Press."!Carlson, K. A. & Bond, S. D. (2006). Improving Preference Assessment: Limiting the Effect of Context Through Pre-exposure to Attribute Levels. Management Science, 52(3), 410-421.

References

Clemen, R. T. and Winkler, R. L. (1993). “ Aggregating Point Estimates: A Flexible Modeling Approach,” Management Science, Issue 39 No 4, pp. 501-515."!Edwards, W. & Fasolo, B. (2001). Decision technology. Annual Review of Psychology, vol 52, pp 581–606."!Fischhoff, B. (1991). Value elicitation: Is there anything in there? American Psychologist, 46, 835-847. "!Hsu, C., Lin, J.and Chiang, H. (2012) The effects of blogger recommendations on customers’ online shopping intentions, Internet Research, Vol. 23(1): 69-88"!Hung, K.H. and Li, S.Y. (2007) The influence of eWOM on virtual consumer communities: social capital, consumer learning, and behavioral outcomes, Journal of Advertising Research, Vol. 47(4): 485-495 "!Jap, S. (2001). “’Pie Sharing’ in Complex Collaboration Contexts”. Journal of Marketing Research, Vol. 38, No. 1 (Feb., 2001), pp. 86-99"!Kotler, P. and Keller, K.L. (2012). Marketing Management. 14th ed. Pearson."!Kozinets, R.V. (2002). The Field Behind the Screen: Using Netnography For Marketing Research in Online Communities. Journal of Marketing Research, 39 (February), 61-72.

References

Kozinets, R.V. (2002). The Field Behind the Screen: Using Netnography For Marketing Research in Online Communities. Journal of Marketing Research, 39 (February), 61-72."!Liebowitz, J. (2001). Knowledge Management – Learning from Knowledge Engineering. Florida: CRC Press LLC. "!Porter, M.E. (2008). “The Five Competitive Forces that Shape Strategy”. Harvard Business Review, January: 78-93"

Ricardo, D., (1817). “The Principles of Political Economy and Taxation”. London, John Murray"!Sandelowski, M. (2002). Combining Qualitative and Quantitative Sampling, Data Collection, and Analysis Techniques in Mixed-Method Studies. Research in Nursing & Health. Volume 23, Issue 3, pp. 246-255"!Seale, C. (1999). Quality in Qualitative Research. Sage Publications. Qualitative Inquiry, Volume 5 Number 4, 1999 465-478"!Shanteau, J. (1992). Competence in experts: The role of task characteristics. Organizational Behavior and Human Decision Processes. Volume 53, Issue 2, November 1992, Pages 252–266

References

Simon, H. (1987). Making Management Decisions: the Role of Intuition and Emotion. Acad Manage Perspect February 1."!Tashakkori, A. and Teddlie, C. (1998). Mixed Methodology – Combining Qualitative and Quantitative Approaches. London: SAGE Publications. "!Ustuner, T. and Holt, D. B. (2009) Toward a Theory of Status Consumption in Less Industrialized Countries, Journal of Consumer Research , Vol. 37, No. 1 (June 2010) , pp. 37-56"!Uzzi, B. and Spiro, J. (2005) “Collaboration and Creativity: The Small World Problem” American Journal of Sociology, Vol. 111, No. 2 (September 2005), pp. 447-504"

Wu, C.M. (2011) How quality influence user’s continuance of the recommendation blog, Key Engineering Materials, Vols 474-476: 1132-1136