1. Online Communities and Consumer Behavior* Min Ding Pennsylvania State University * This lecture is based on POIM, chapter 10.

2. Topics  WineAccess.com  Community goes online  Fundamentals of online community  Launching online communities  Four cycles/components in virtual community

3. Why Online Community?  Are we destined to replicate our offline life format (community) online?

4. Community Goes Online  The arguments for:  New technologies allow new forms of communication between close friends, acquaintances, and strangers  Online communities provide a focus for social interaction  New technologies improve communication between co-workers, customers and suppliers  Online communities enable consumer-to-consumer interaction  Marketers can use community-building technologies to generate customer loyalty, involvement, and repeat sales

5. Community Goes Online  The arguments against:  Private time online comes at the expense of physical interaction with friends and family  Weak ties between strangers replace strong ties between friends and neighbors  Those who spend hours online often test higher on psychological measures of loneliness and depression

6. Defining Online Community  Online communities combine 4 important features  Internet communication tools  Rules that define community membership  Collaborative production of material by members  Repeat use by members  Communication is multidirectional  Users provide material  Users consume information  Challenges faced by community builders  Building traffic  Maintaining member collaboration  Member retention

7. Personal and Extended Communities  Personal communities  Are small in scale  Members know each other  Communication is direct between individuals  E-mail  A shared Web site  Extended communities  Larger in scale and scope  Composed of many smaller areas that allow personal communities to flourish  Rely on a mixture of content and communication tools  Web content publishing  Centrally-managed discussions

8. Fundamentals of Online Community  Online tools  Rules  Collaboration  Repeat use

9. Online Tools  Communication tools are the heart of online community  Two categories of tools, based on the type and scale of communication possible  Communication rings send messages directly between users  Everybody in the ring gets the message  Communication rings don’t scale – they break down as the group gets too big  Content trees are indirect  They use a central gathering point such as a bulletin board or a Web site to collect and store information  Depend on hierarchies that create manageable discussions  Community members go to topic areas and discussion groups that match their interests

10. Online Tools  A shared e-mail list among friends, the simplest form of online community  The rule for membership is friendship  Collaboration is at the heart of shared messages  Message archives become the storehouse of community interaction  E-mail networks demonstrate the structure of a communication ring Communication Rings: E-mail

11. Online Tools  Best for unstructured, quick communication  How it works  Like text-based telephone  An individual has a unique number that can be called  Allows impromptu direct chats between users  Allows one-to-one and one-to-many communication  Uses:  Brainstorming  Sharing thoughts & ideas  Surfing the Web together Communication Rings: Internet Pagers

12. Online Tools  Enables joint creation of community content  Many tools are productivity oriented  Shared whiteboards  Enable file sharing Communication Rings: Groupware Communication Rings: Games and Simulations The shared experience of a game or simulation stimulates communication Immediacy turns an online game into a communication ring

13. Online Tools Content Trees

14. Rules  Strong communities have strong rules  Membership depends on passing through a difficult hurdle that creates shared values and experiences  Interests and opinions are strongly held  Weak communities are easy to join  Examples are fan clubs, shopping club members, frequent flyer programs  Weak community ties are a serious problem for online marketers Strong and Weak Membership Rules

15. Rules  Easily attained membership enables a community to grow rapidly, but ties are weak  Costly membership breeds stronger ties but creates a wall around community  Escalating membership: the practical answer  Attract new members with easy-to-attain membership  Full benefits are only attainable through higher levels of commitment Escalating Membership Rules

16. Collaboration  Low cost:  Member-contributed material is cheap  Results in extensive content areas  Current:  Member content reflects current interests  Active members keep their material current and interesting  Creative:  While quality varies, thousands of users contribute creative content and unique points of view  Credible:  The opinions of community members’ with credentials and expertise are trusted sources of information Member Content Has Desirable Features

17. Collaboration  Heavy users will contribute most of the content  Most members will lurk – read content posted by others  Small groups tend to produce more active members  However, since not everyone in a group will contribute, large groups may be needed to generate a sufficiently large body of interesting and compelling content Observations About Member Content

18. Collaboration  In 1985, the average American had 3 people with whom he felt comfortable discussion important matters  Participation in online communities has changed this  Anonymity can encourage people to share personal concerns with strangers  People don’t have to worry with what their friends might think about their situations Online Tools Expand Discussion Networks

19. Repeat Use  Companies that sponsor online communities on their Web sites  Learn more about the tastes and wants of their members  May receive useful feedback and suggestions from users  Which, in turn, enables better service and product definition  This defines a community of users  The challenge for marketers is to build increasing levels of commitment among users Figure 10.8

20. Launching Online Communities  Building hybrid communities  Mirror existing community benefits  Emphasize growth first

21. Building Hybrid Communities  Successful commercial communities merge sponsor and member content  This can be risky for 3 reasons  Difficult to balance content quality and member freedom: what if members post junk?  Discussions and information posted online may hurt the reputation and brand of the sponsoring organization  Member content may involve the sponsor in legal problems  No control results in off-topic messages, spam, and repetitious postings  Too much control results in stifling member content and material that has been “sanitized” by the sponsor  “Offensive” or damaging postings must be responded to quickly

22. Building Hybrid Communities POIM, Table 10.3

23. Mirror Existing Community Benefits  Online business communities flourish because they mirror and extend the benefits of physical communities  Three types of business-to-business communities stand out  Virtual trade shows  Professional forums  Supply chain networks

24. Emphasize Growth First  To summarize the concept of increasing returns: “Success breeds success”  Increasing returns result when it’s easier to grow the bigger you already are  Increasing returns creates  Successful online communities leverage the effects of four virtuous (positive feedback) cycles in order to grow further

25. Four Increasing Returns Cycles with Virtual Communities Figure 10.15 Transaction Offerings Member Loyalty Online Community Increasing Returns   Draw more members to community Promote member- to-member interaction Build member loyalty to community     Generate member- based content Content Attractiveness   Target products and offerings Member Profiles     Draw vendors and user spending to community

26. Community Metrics Each of the Community Loops Suggests Ways of Measuring the Community’s Strength

27. Summary  Fundamentals of online community  Online communities categories  What are the four cycles/components in virtual community. Sample Final Question:  Explain to me ( a recruiter who are interested in building an online community) the relationships of the four cycles in virtual community.