Crowdfunding has become the budding entrepreneur’s best friend. Sites like KickStarter, GoFundMe, Indiegogo, Patreon, and countless others make raising funds simple and easier than ever. The crowdfunding industry has grown from $564 million in transaction value in 2016 to $655 million in 2019, and is projected to hit $881 million by 2022.
We’ve likely all seen a campaign in some form or another; the original Fidget Cube asked for $15,000 on Kickstarter, but gained almost 155,000 investors for a total of $6.5 million dollars.
However, the momentum and capabilities of this style of fundraising have caught the eyes of some bigger brands. Gillette, Lego, and Coca-Cola certainly don’t need help in the way of funding new products, but have decided to use crowdfunding as a new method of market research.
Gillette used Indiegogo to test its new innovation of heated razors, a product aiming to simulate a barber’s hot towel shave with a heated razor cartridge. The new product emerged from Gillette’s R&B team, GilletteLabs, whose vision is to think outside the usual shave experience, as they can only experiment so much with the sharpness and number of blades.
The heater razors had already been in development for close to two years, but Gillette wanted to test demand, raise awareness and interest, and gather and implement customer feedback before launching a mass production. They definitely found what they were hoping for; they hoped to sell 250 razors but within the week its Indiegogo campaign went live, it sold six times that.
Other big brands seek to use crowdfunding earlier in the development; Lego launched its new project Lego Forma on Indiegogo last year, wanting to test its new concept of an adult-focused Lego. Senior Marketing Manager Kari Vinther Nielson said “We believe we can learn a lot from taking our idea to an audience base that is eager to engage in open innovation and discussion.” For an innovation that breaks away from their more standard concepts, crowdfunding is a way to “de-risk” new initiatives as well as accelerate product development; the Lego Forma campaign reached 1134% of its perk goal on Indiegogo.
Finally, Coca-Cola wanted to test consumer response to its bottled water brand, Valser, but set a monetary fundraiser goal rather than a set number of units. Innovation Director George Parker said their Indiegogo campaign helped gauge consumer interest as well as bring the product to market faster. In the food and beverage industry where consumer tastes are constantly and rapidly changing, quick turnaround in testing, implementing feedback, and delivering is crucial.
From an analytics standpoint, crowdfunding also is a great way to generate information about your consumers – not only demographics, interests, behaviors, and amounts donated by crowdfunders, but it also serves as a built-in remarketing audience, which can additionally be used for further prospecting with “lookalike” audiences. In Gillette’s campaign, they asked donors to fill out two surveys: one with feedback about the product, another with targetable identifying data.
From a marketing management perspective, here are some questions to consider:
- How would crowdfunding campaigns fit into a company’s existing research and development team?
- How might using crowdfunding campaigns affect brand integrity? Would it degrade the image of the brand, or improve it? How?
- If you were a marketing manager at Gillette and wanted to implement a crowdfunding campaigns for its heated razors earlier on in its product development, what would your pitch look like? How would it be different than the campaign Gillette did launch?
Marketing Management 