Collaborative Consumption and its implications for consumer behaviour

Written by  Sarah Ammerman

With more than 2 billion people using the Internet worldwide, the world has moved together and become a more connected global village (www.internetworldstats.com). Implications of this ever-progressive movement towards interconnection are to be found on a personal as well as economic level. Companies have exploited the Internet for its own benefits ever since it had emerged (Walsh & Godfrey, 2000). Naturally, this circumstance had effects on many different aspects, one of which is the field of consumer behaviour.  

Online retail stores and especially social networks and real-time technologies emerging in the era of Web 2.0 and Web 3.0 (www.thepaisano.wordpress.com) have had its impacts on how consumers consume and what they consume (Barnes, J. & Cumby J., 2002). Considering those new insights, old paradigms implying straightforward consumer buying processes entail gaps regarding a newly born consumer in the Internet era.

In this respect, collaborative consumption is a rapidly approaching phenomenon addressing the new consumer and representing a reinvention of old market behaviours (www.collaborativeconsumption.com). With this, a new variable, which is ‘sharing’, has entered the marketplace and disrupts old paradigms based on buying by introducing old models of sharing, trading and bartering in a new light adjusted to the prevailing era.

The rise of this so called sharing economy elucidates the need to fundamentally change views on consumer behaviour itself and adjust its outdated models for future research.

Question and Purpose

Considering the recent developments towards a sharing economy, the question for marketers is how the conventional perception on consumer behaviour has changed. Thus, the purpose of this paper is to examine available consumer behaviour models and discuss them by considering the emergence of collaborative consumption.   

This will contribute to the field of consumer behaviour by providing newly acquired insights in the form of theoretical frameworks of ‘buying behaviour’ and secondly by examining empirical examples in the field of collaborative consumption.  

Theoretical Framework

This paper starts with a discussion of the concepts of collaborative consumption and consumer behaviour. Ensuing from those concepts, a case will be represented followed by an analysis and implications for businesses and future research.   

Collaborative Consumption

Collaborative Consumption describes an economic model that relies on the idea of sweeping, trading and sharing across the globe instead of pursuing an economy of what Botsman (2011) calls Hyperconsumption. This has developed over time and come to a peak within the past years. Collaborative consumption is seen as a growing global movement that fosters peer-to-peer (P2P) dynamics and reinvents how people consume and what they consume (Botsman, 2010).

The reasons for this recent shift are mainly attributed to the rise of the Internet and particularly social media and real-time technologies. These enable people in this connected age to engage in systems based on collaboration. Unresolved environmental concerns and the global recession as well as a renewed belief in the importance of communities are as well drivers for the new phenomenon (Botsman, 2010). According to Botsman (2011) there are three different types of systems that emerged within collaborative consumption:

Product service systems: It allows people to make money by renting their properties to, for instance, neighbours (Botsman & Rogers, 2011).

Redistribution Markets: They are forms of sustainable commerce. ‘Redistribution’ becomes a supplement to the four R’s reduce, reuse, recycle and repair (Botsman & Rogers, 2011).

Collaborative Lifestyles: It allows people with similar needs to connect with each other and share or exchange intangible assets such as time, space, and skills (Botsman & Rogers, 2011).

Those three systems allow people to share resources without sacrificing their lifestyles. Instead, people rather feel the urge to experience than own certain products or goods (Botsman & Rogers, 2010). Rifkins (2001) already predicted in 2001, that we are entering the age of access instead of maintaining to follow traditional forms of buying and ownership. This view coincides with Botsman’s notion of collaborative consumption.

The movement itself had not really appeared nor manifested before Airbnb’s breakthrough in 2010/2011 (Wauters, 2011). However, recently it has created an international stir. Implications of the sharing economy, as it is also referred to, include, for example, topics such as trust issues between strangers (Brokaw, 2011). 

Among Botsman and other authors Gansky (2010) introduced the term ’mesh business’. Her guideline implies businesses to offer physical goods that can be shared and provide web and mobile data networks in order to augment offers, news and recommendations through social networks (Gansky, 2010).

As to infer from those facts, implications for consumer behaviour studies can be drawn.

Consumer Behavior

As the phenomenon of collaborative consumption is of peculiar interest for consumer research, the nexus of both becomes highly relevant for marketers and research companies. The knowledge gained from consumer behaviour studies is a crucial asset for any organization. According to Kotler et al. (2008) six questions remain central when analysing consumer behaviour: “What do consumers buy? Where do they buy? When do they buy? Why do they buy? How do they buy? Who buys?” (Kotler, et al., 2010, p.240)

Those questions Kotler et al. (2010) perceive as essential when analysing consumer behaviour are to be answered in the ‘Buyer Decision Process’. This illustrates how consumers actually make decisions. The conventional model shows five different stages. Starting with need recognition and information search, moving to evaluation of alternatives, the purchase decision phase and finally the stage of post-purchase evaluation (Kotler et al., 2010).  

Considering the new paradigm of collaborative consumption as part of a consumer’s decision, the ‘Buyer Decision Process’ has to be aligned as follows:

Fig. 1: Adjustment of the Buyer Decision Process considering collaborative consumption

Fig. 1: Adjustment of the Buyer Decision Process considering collaborative consumption

The first two stages of the conventional model maintain the same. Starting off with need recognition and moving to information search.

The information search leads the consumer to providers that offer collaborative services or products. Especially for high involvement products consumers find it important to obtain first hand information; beyond that they appreciate the benefits of, for example, not having to own a product themselves or borrowing it from another person. Here the point of separation is reached.

The consumer has chosen to either buy or trade. If trading was chosen, the next stage – evaluation of alternatives – includes the assessment of different options. In general a decision between the three systems of collaborative consumption has to be made. After that, consumers have the option to choose between different providers as in companies as well as in other peers offering their skills and services. This is done according to the consumers’ wants and needs.

After evaluating all options the consumer trades, shares or barters during the sharing decision phase. Compared to conventional processes, there is no hazard in terms of financial losses to be expected.

The last phase – post-sharing evaluation - becomes an essential part of the process when engaging in collaborative consumption. It is of high importance to rate or evaluate other users on respective platforms in order to gain or hold up trust in the system.

Companies should deploy the stated insights in order to assure adequate enhancements of business and marketing strategies. As exemplified in the following case discussion, these should incorporate decent actions towards collaborative behaviour.

Case Discussion

To elaborate on the theoretical discussion, the shift from conventional hyperconsumption to the new collaborative consumption is exemplified by a mini-case, showing how consumers used to and prospectively will consume an IKEA writing desk.

Conventionally, customers went into tangible stores, bought their sought-after product, had to transport it home and assemble it themselves.  

With the Internet and newly emerging technologies coming up, people were able to stay at home, buy a sought-after product online and have it delivered to their home. However, assembling should mostly maintain to be a straining in-house production.

Now that the economy is increasingly turning towards an approach based on sharing, consumers stay at home and choose to trade or share a sought-after product in redistribution markets as in online communities like Gumtree (www.gumtree.com). Further they benefit from people who engage in collaborative lifestyles as well and offer their time and skills to, for example, transport and assemble IKEA desks. These types of services can be found in online marketplaces for small jobs and tasks such as TaskRabbit (www.taskrabbit.com).

Fig. 2: Simplified Buyer Decision Process from conventional to collaborative consumption, using the example of an IKEA desk

Fig. 2: Simplified Buyer Decision Process from conventional to collaborative consumption, using the example of an IKEA desk

Analysis

As the world is turning into a so called global village by being more connected than ever before, the currently growing phenomenon of collaborative consumption is leaving imprints in economies and cultures.

In a study by Latitude in collaboration with Shareable Magazine, 75% of respondents stated they believed in sharing while as much as 85% claimed to believe that online and mobile technologies ascribed importance in building sharing communities (Gorenflo, 2010), and even in becoming a whole own industry.

The phenomenon is addressing a whole new consumer that has emerged simultaneously with the implementation and establishment of online as well as mobile technologies.  Additionally this new consumer is empowered to interact not only with companies but also, and in this context even more important, with other consumers (Christodolidous, 2009).

As a consequence of this, Botsman (2011) talks about the reinvention of old market behaviours and Seraj (2012, p.209) states that “online communities have turned out to be the new form of socialization platforms for fulfilling certain needs”.

As the phenomenon of collaborative consumption has such big impacts on market behaviours, it is plausible that effects on consumer behaviour are most likely as well. Available models in the field of consumer behaviour do not approach the recent developments in the market and hence create a gap in, for example, the model of the ‘Buyer Decision Process’ as laid out in the former discussion. In order to evaluate and exploit the market to its full potential, market researchers must consider peer-to-peer networks. The suggested model adds a new variable to the former sole option of buying and thus takes into consideration recent movements towards a sharing economy, which will disrupt old paradigms and conventional mindsets.

By depicting the opportunity that collaborative consumption represents for consumers, and interlinking it with the field of consumer behaviour, the importance of rethinking and adapting to the given situation becomes a prerequisite.  

The demonstration of the case discussions further exemplifies, that a revised model in the field of consumer behaviour could serve as valuable contribution for the entire field of consumer research. The pictorial examples likewise reveal possible threats even for global organizations, like IKEA, in the event of them not embarking on newer, more advanced forms of consumption.

For marketers this means to once more become proactive - but this time, on a whole other level. When a company wants to successfully join in collaborative systems, they have to “establish a new ‘points across time’ relationship with consumers instead of a transaction defined by a ‘point in time’ (Franz, 2012). The suggested model of the ‘Buyer Decision Process’ is a first approach to advance the extensive field of consumer research.

From a consumers point of view collaborative systems represent substantial added value in many respects. The case discussions illustrate that not merely money but especially time as well as other resources can be saved. The engagement in collaborative consumption from a consumer perspective is therefore a reasonable and environmentally friendly issue. Beyond that the benefits of collaborative consumption have a rather social character. In times when fragmented families are not particularly uncommon, it becomes highly important to make meaningful connections – even with neighbours or strangers (Walsh, 2011).

To sum up, it can be said that a general tendency towards collaborative lifestyles can be identified, and researchers as well as companies need to react on this change.

Conclusion and Future Research

To relate back to the starting point of this discussion, and revisit Kotler’s et al. (2010) six questions for analysing consumer behaviour, it appears that they are not appropriate by itself anymore. Simply asking about what, where, when, why and how consumers buy or purchase goods and services does not fully reflect contemporary consumer behaviour any longer.

This specific topic has been addressed throughout the paper and insights were drawn from the underlying concepts of collaborative consumption and recent consumer behaviour trends. They show that the issue of consumer behaviour has become far more complex than it used to be. In order to be able to conduct proper research, a new variable must be added to existing consumer behaviour models. Trading then becomes an essential part of buying behaviour.

As the underlying concept and the rise of collaborative consumption as well as the case studies show, conventional perceptions on consumer behaviour have to be changed. The fact that 75% of a study’s respondents stated to believe in the idea of sharing further supports the belief that collaborative consumption already has and prospectively will comprehensively change structures in consumer behaviour.

It follows from the foregoing that a new consumer has evolved. One, which appreciates old, traditional forms of sharing and trading, and enjoys combining these with technologically advanced applications, that primarily emerged through the internet.

As this paper is based on a short literature review as well as one mini-case it does not deliver profound insights into the nexus of collaborative consumption and consumer behaviour. In order to make the findings more reliable more cases as well as interviews should be examined in detail.

In addition, further research needs to pay attention to the specific role of, for example, different age or social groups. Consequently, comparative research needs to be conducted focusing both on various consumer groups and, for instance, online or offline settings.  

References

Botsman, R. and Rogers, R. (2011), Whats mine is yours: The rise of collaborative consumption, HarperCollinsPublishers: London.

Gansky, L. (2010), The Mesh: Why the Future of Business Is Sharing, Penguin Group: New York.

Kotler, P., Armstrong, G., Wong, V. and Saunders, J. (2010), Principles of Marketing, Prentice Hall International, 5th Revised edition.

Lehmann, S. and Crocker, D. (2012), Designing for Zero Waste: Consumption, Technologies and the Built Environment, Earthscan: UK.

Rifkins, J. (2001), The Age of Access: The New Culture of Hypercapitalism: The New Culture of Hypercapitalism, Where All of Life Is a Paid-for Experience, Penguin Putnam Inc.: New York.

Journals

Barnes, J.G. and Cumby, J.A. (2002), Establishing Customer Relationships on the Internet Requires More Than Technology, Australasian Marketing Journal, 10 (1).

Botsman, R. and Rogers, R. (2010), Beyond Zipcar: Collaborative Consumption, Harvard Business Review, p.30.

Brokaw, L. (2011), Collaborative Consumption: Drivers, Systems, Implications, MIT Sloan Management Review.

Christodoulides, G. (2009), Branding in the post-internet era, Marketing Theory, 9, 141.

Seraj, M. (2012), We Create, We Connect, We Respect, Therefore We Are: Intellectual, Social, and Cultural Value in Online Communities, Journal of Interactive Marketing 26, 209–222.

Walsh, J. and Godfrey, S. (2000), The Internet. A New Era in Customer Service, European Management Journal, Vol. 18, No. 1, pp. 85-92.

Newspapers and Magazines

Franz, L. (2012), Collaborative Consumption: Should Marketers Be Afraid? Forbes Magazine, March 2012, Available from: <http://www.forbes.com/sites/onmarketing/2012/03/12/collaborative-consumption-should-marketers-be-afraid/> [Accessed 16 February 2013].

Gorenflo, N. (2010), The New Sharing Economy, Shareable Magazine, December 2010, Available from: <http://www.shareable.net/blog/the-new-sharing-economy> [Accessed 16 February 2013].

Walsh, B. (2011), Today’s Smart Choice: Don’t Own. Share, Time Magazine, March 2011, Available from: <http://www.time.com/time/specials/packages/article/0,28804,2059521_2059717_2059710,00.html> [Accessed 17 February 2013].

Wauters, R. (2011), Airbnb Hits 1 Million Nights Booked As European Clone Emerges, TechCrunch, Available from: <http://techcrunch.com/2011/02/24/airbnb-hits-1-million-nights-booked-as-european-clone-emerges/> [Accessed 18 February 2013].

Internet

Gumtree (2013) [Internet] Available from: <http://www.gumtree.com> [Accessed 16 February 2013].

Internet World Stats. Usage and Population Statistics (2013) [Internet] Available from: <http://www.internetworldstats.com> [Accessed 16 February 2013].

TaskRabbit (2013) [Internet] Available from: <http://www.taskrabbit.com> [Accessed 16 February 2013].

The Paisano, Webtimeline (2008) [Internet] Available from: <http://thepaisano.wordpress.com/2008/03/08/web-20-vs-web-30/> [Accessed 14 February 2013].