Vineet Kumar is an Assistant Professor of Business Administration in the Marketing Unit. He teaches the first-year required M.B.A. course on Marketing, and has taught in several executive education programs including Driving Digital and Social Strategy, Strategic Marketing Management, Business Marketing Strategy
, and Taking Marketing Digital
Vineet's research focus is on understanding the drivers of value creation in technology products and services, and strategies that firms should adopt in designing such products. His current interests cover a broad range within the technology+marketing interface, including studying: (a) product strategy and technological innovation, (b) designing social products to engage consumers, (c) gamification strategies to create consumer value (d) product design and development using a freemium model.
Vineet received his undergraduate degree from the Indian Institute of Technology, and completed his masters and doctoral studies at Carnegie Mellon University. His doctoral thesis research, which used structural econometric modeling to unravel the drivers of value creation for social products, was awarded the William W. Cooper Doctoral Dissertation Award. Vineet has held positions in the technology industry, working at established as well as start-up companies prior to his doctoral studies.
Making 'Freemium' Work: Many Start-ups Fail to Recognize the Challenges of This Popular Business Model
The article discusses the "freemium" business model, which is used by some Internet businesses and smartphone application developers to give users free basic features of a digital product and access to premium functionality for a subscription fee. The discussion topics include the freemium marketing strategy, the life cycle of upgrades in freemium companies, and the six questions that new business enterprises should explore when considering the freemium model. The article mentions how four companies including NYTimes.com newspaper and Dropbox cloud storage use the freemium model.
The Dynamic Effects of Bundling as a Product Strategy
Several key questions in bundling have not been empirically examined: Is mixed bundling more effective than pure bundling or pure components? Does correlation in consumer valuations make bundling more or less effective? Does bundling serve as a complement or substitute to network effects? To address these questions, we develop a consumer-choice model from micro-foundations to capture the essentials of our setting, the handheld video game market. We provide a framework to understand the dynamic, long-term impacts of bundling on demand. The primary explanation for the profitability of bundling relies on homogenization of consumer valuations for the bundle, allowing the firm to extract more surplus. We find bundling can be effective through a novel and previously unexamined mechanism of dynamic consumer segmentation, which operates independent of the homogenization effect, and can in fact be stronger when the homogenization effect is weaker. We also find that bundles are treated as separate products (distinct from component products) by consumers. Sales of both hardware and software components decrease in the absence of bundling, and consumers who had previously purchased bundles might delay purchases, resulting in lower revenues. We also find that mixed bundling dominates pure bundling and pure components in terms of both hardware and software revenues. Investigating the link between bundling and indirect network effects, we find that they act as substitute strategies, with a lower relative effectiveness for bundling when network effects are stronger.
Keywords: Product Strategy;
Video Game Industry;
Competitive Strategy for Open Source Software
Commercial open source software (COSS) products-privately developed software based on publicly available source code-represent a rapidly growing, multibillion-dollar market. A unique aspect of competition in the COSS market is that many open source licenses require firms to make certain enhancements public, creating an incentive for firms to free ride on the contributions of others. This practice raises a number of puzzling issues. First, why should a firm further develop a product if competitors can freely appropriate these contributions? Second, how does a market based on free riding produce high-quality products? Third, from a public policy perspective, does the mandatory sharing of enhancements raise or lower consumer surplus and industry profits? We develop a two-sided model of competition between COSS firms to address these issues. Our model consists of (1) two firms competing in a vertically differentiated market in which product quality is a mix of public and private components and (2) a market for developers that firms hire after observing signals of their contributions to open source. We demonstrate that free-riding behavior is supported in equilibrium, that a mandatory sharing setting can result in high-quality products, and that free riding can actually increase profits and consumer surplus.
Growth and Development;
Motivation and Incentives;
Open Source Distribution;
The New York Times Paywall (Powerpoint Supplement)
Healthymagination at GE Healthcare Systems
The New York Times Paywall (TN)
The New York Times Paywall
On March 28, 2011, The New York Times website became a restricted site where most of the content was protected behind a "paywall." Users who exceeded the limit of 20 free articles per month were required to pay for either a digital or print subscription. The newspaper industry had been suffering from revenue declines over the past decade, and the transition to digital media was difficult to navigate. Revenues from online advertising were not sufficient to replace the loss of print revenue, and many publishers had explored charging readers for content, with mixed success, where specialized sources like The Wall Street Journal were successfully using the model, but several other general news sites had failed. Newspapers and content creators in general were very interested in understanding whether transitioning to the paywall at the most popular news website would succeed, and whether it could become a blueprint for future success as a sustainable business model. There were several difficult issues to examine in determining the digital strategy for The Times. Would consumers remain as engaged with a site protected by a paywall? Would advertisers react positively to such a move that walled off readers? Would readers value both the print and digital versions of the content, or would it become necessary to create new content? The Times had several choices in designing the paywall, including determining the digital content, pricing, as well as how to interface with readers of secondary news websites like blogs that posted links to news articles. Should they design a "leaky" paywall where determined users could easily slip through, or a "bulletproof" paywall like the Financial Times had done, where users had to pay before they could access any content? What choices would provide the foundation for a successful business model?
Journalism and News Industry;
Healthymagination at GE Healthcare Systems
Jeff Immelt, the CEO of GE, introduced a new innovation strategy named "healthymagination" in 2009. With cost, quality, and access as its three pillars, healthymagination ensures a strong focus for new product introduction efforts all around GE. But will this focus enable GE to achieve and maintain market leadership across a healthcare market that is being buffeted by strong currents, including cost pressures, changes in chronic disease patterns, and rationalization of buyer behavior? Moreover, healthcare spending is also increasing in emerging economies, which could provide a strong growth engine for the future. Tom Gentile, the CEO of GE Healthcare Systems (GEHS), a key player in the Medical Imaging market, wonders how the innovation strategy might respond to these changes. GE has historically been a technology leader, selling the most advanced equipment to a variety of medical establishments. Will a complete shift to healthymagination allow GE to demonstrate strong organic growth through innovation, as Immelt had charged executives at GE?
Keywords: Innovation and Invention;
Medical Devices and Supplies Industry;
Why Do Consumers Contribute to Connected Goods? A Dynamic Game of Competition and Cooperation in Social Networks
Social network platforms and media rely on the voluntary contributions of individual users to stay relevant. Consumers (users) contribute content such as photographs, videos, tweets etc.: these are available to any of their friends or peers, but not to unaffiliated consumers. We term such contributions connected goods, since they occur in the context of users connected by a social network. A primary feature of connected goods is that the contributor or purchaser may not obtain consumption utility by contributing (for example, posting new videos on a Facebook account), but rather the user’s peers obtain consumption utility from these contributions. Understanding the drivers of contributions to connected goods is critical to both the social platform as well as advertisers who rely of traffic.
We formulate consumers’ decisions on when to actively contribute content to the social network as a dynamic game in the tradition of Ericson and Pakes (1995), and focus on Markov Perfect Equilibrium as the solution concept. In this game, forward-looking consumers strategically manage their contributions to maximize long-term utility that incorporates three primary effects. The first effect is self-expression, indicating con- sumers obtain an intrinsic benefit for contributions based on conveying an updated expression to their peers. The second effect is the competition for status, which depends on the positional contribution status relative to the consumer’s peers. The third effect is that consumers obtain consumption utility from the contribution made by their peers. Our model provides a general framework to rationalize why strategic consumers find making contributions to connected goods advantageous to their self-interest: with knowledge on the positional contribution status of peers in the social network, a consumer makes a contribution to compete for higher status in the network, and this contribution encourages further contributions from peers, which in turn increase the consumer’s future consumption utility.
Treating purchases of ringback tones as contributions to connected goods, we estimate the model using data on a network of interconnected mobile phone subscribers provided by a global cellular firm. Adapting recent developments in the estimation of dynamic games to social network competition, we derive estimates that characterize conspicuous contribution decisions and conduct policy simulations to investigate how a contribution made by one influential consumer can dynamically affect peer consumers in the social network.
Dynamics of Network Structure and Content in Social Media
Organizations use social media to leverage knowledge contributions by individual employees, which also foster social interactions – activity in blogs, forums, wikis etc. is critical to ensuring a thriving online community. Prior studies have examined contributions to such media at the level of the individual, focusing on drivers of participation, whereas we investigate three different dimensions of dyadic interactions. Our setting is an online forum in an enterprise, where employees both exchange knowledge by query-response and interact socially.
Using a networks approach to query-response behavior, we characterize each interaction as a directed tie, and view the entire set of online forum interactions as a social network. We evaluate network constructs including Simmelian embeddedness and content of relationships (expressive or instrumental), to understand the mechanisms underlying online social interactions.
We find that content and embedded nature of the relationship strongly influence responses: Simmelian ties formed in an expressive setting have the highest positive impact on response propensity, i.e. both content and embeddedness are impactful and reinforce each other. Our results have implications for designing online social communities, specifically that practitioners ought to consider the benefits of purely social interactions through the forum that may serve to lubricate future instrumental interactions.