Whether carpooling with strangers or reading restaurant reviews, we have largely come to embrace today’s sharing economy and its ability to enhance our daily tasks. Many of these services run on some form of crowdsourcing: the recruitment of consumers and innovators for their ideas and products to complete a specific task.
According to Mark Lang, Ph.D., Saint Joseph’s University assistant professor of food marketing and expert in marketing and research, crowdsourcing can benefit more than just consumers — it can also accurately predict market outcomes and trends that affect profitability for major companies.
“The superior accuracy of crowdsourcing has been attributed to its ability to collect and combine widely dispersed information and opinions from a large group of participants, focus them on specific marketing questions, and have them predict a single common outcome,” says Lang, who conducted a study on crowdsourcing in market-oriented outcomes recently published in the top-ranked Journal of Business Research. “This new way of collecting, aggregating, and using information and knowledge from a crowd of consumers or employees has the potential to be a new and powerful form of collective marketing intelligence,” says Lang.
Most commonly, crowdsourcing applications use a central technology platform to collect and integrate information and opinions – like an app that complies hundreds of restaurant reviews to help you decide where to eat.
For business applications, Lang’s study found that the success of crowdsourcing depends on two factors during this collection: the diversity of the backgrounds and experiences of the participants, and the existence of new information sought and contributed by participants.
“As the diversity of the pool and the amount of new information the participants provide increases, so does the accuracy of crowdsourcing results,” says Lang.
“Crowdsourcing can be used to design and produce new and better products, services and experiences,” he adds. “It can also assess trends and changes in the marketplace as well as environmental factors that impact profitability, like future crop and fuel prices.”
Crowdsourcing has proven to be more successful than traditional marketing decision-making processes—by 73 percent according to Lang’s study— but some marketing executives are still wary about using the new practice. Lang suggests managers encourage employees with incentives to collect additional information to yield even more accurate results. The outcome, he says, will potentially produce millions of dollars in profit.
“Crowdsourcing and the collective market intelligence it engenders are examples of how business is evolving for the better,” Lang adds.
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