Wednesday, August 13, 2008

The right balance between freedom of choice and filtering among those choices creates value for consumers on internet

How to satisfy real needs and thereby create real value on internet is a topic in demand – both among sellers as marketers and entrepreneurs and among consumers. This is an important question when many new services on internet only seem to be variations of earlier ones.

To understand real needs, new services have to understand what relevant problems is for the user on internet. One important problem for the user is the lack of time and attention. These are scarce resources. Sellers who can help save time or extend time, creates real value for users on internet. This is though not so easy as it may seem. Many times services which promise value out of this perspective, only turn out to consume more of the consumer’s time than they promise to save - in other words, they where not able to satisfy the consumer’s real needs.

One way to help the user to save time is by filtering. This is important when information overload increases on internet. The challenge is here then about finding a balance between freedoms of choice and filtering among those choices. By finding the right balance; you as a seller can create a lot of value for the consumer.

If the consumer has too much freedom of choice; they have to consume too much time to decide among the choices. This is not an ideal situation. However, filtering should primarily not be about reducing the variations of possible alternatives to choose between per se. Instead it should more be about making the possible choices clearly visible and comparable for the user. By finding this balance in your business model, the consumer can make rational decisions in a time efficient way.

The Iphone is maybe a good example here. Apple has found a way to empower the customers’ use of time. They have done this by creating a product which on one hand solves a variation of relevant problems (surfing on the net, talking etc) and on the other is easy and simple to use. The product makes the user efficient.

The “price” for this usability is that the consumer has to stick to and like a somewhat closed concept. Apple has filtered by deciding and simplifying a lot of things for the consumer. However, even if one can argue that there are a lot of things which the consumers can not do with an Iphone, the grades of freedom is still large.

Filtering in the Apple case is a balance between giving the consumer freedom of doing a lot of things and to do this with a simple and user friendly product. This value creation is one part in the explanation to the Iphone's success I think.

Ps. If you want a deeper understanding into the complexity of the Ipone's simplicity concept - watch the lecture of Peter Merholz: "Experience is the product".

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