The Importance of Gamification in Business - Case Study Example

Literature Review: Gamification in marketing Name Subject and code Institution Date of submission Literature Review: Gamification in marketing Defining gamification concept According to Deterding et al. (2011), in spite of the emergence of the term gamification in the recent past, the fundamental ideas have already been explored in gaming literature. They argued that in that case, if the term gamification has to be described and conceived as an scholarly concept, then focus should be on determining whether the concept and existing gamified applications are considerably dissimilar from preceding fields of research, as well as how this should be situated proportionate to current fields of study. Deterding et al. (2011) seemed to believe that gamification indeed embodies new possibilities of research and as consequence proposed that it should be defined as an application of game design components in non-game contexts. An almost related definition was proposed by Park and Bae (2014). In their view, gamification should be defined as a new movement intended to create effects in non-game fields through an application of game thinking and mechanics, which make game fun. At this stage, it is easy to observe that the proposed definitions appear to relate to comparable concepts like playful interaction, serious gaming, as well as game-based technologies. In a more recent review by Lucassen and Jansen (2014), the researchers attributed the definition of the term to Deterding & et al. (2011). Fuchs et al (2015) understands gamification to be a concept describing a new age in which gamers tend to jointly apply their problem-solving skills in solving puzzles in a digital game but as well as to approach political and social issues within the real world. Toward this end, it could be reasoned that while numerous different understandings of the term prevail, the most predominant one is understanding gamification as a combination of techniques that have a potential to regulate behaviour for strategic reasons through game rules. While there may be numerous names that relate to the concept, Lucassen and Jansen (2014) contend that Deterding’s et al. (2011) definition is the only one that has been widely used in the academia. Still, the term has been recently integrated into consumer marketing as well as in reference to a range of consumer products. The objectives of such applications in consumer marketing are to increase consumer loyalty, engagement, motivation as well as promote brand awareness. Because of a wide acceptance of its application in consumer marketing, the possibility of effective application of gamification to marketing has gradually been entrenched into the minds of marketing scholars and executives. Indeed, it was earlier projected that the gamification market would grow to about US$2.8 billion in 2016 (Lucassen and Jansen 2014). In an earlier review by Deterding et al. (2011), it was observed that video games and associated fields have speedily joining the mainstream culture. Subsequently, the researchers dubbed the trend “the socio-cultural trend of ludification.” Origin of the concept Park and Bae (2014) observed that the idea of gamification was initially conceived by company called the New Games Movement in the United States. In their view, gamification takes pleasure and calls for users to participate voluntarily by providing problem-solving techniques of fun facts. Still, the history of the concept of gamification is dated back to 2002 when Nick Pelling, a British programmer, coined the term. Fuchs et al (2015) support the idea that the term was first coined by Nick Pelling to refer to evolution of “electronic devices into entertainment platforms.” Park and Bae (2014), however, commented that the term only started to gain significant popularity in 2010. Still, other versions of the originality of the term reveal that before the term came into use, a Forbes writer called Charles Coonradt in his 1984 book called "Grandfather of Gamification" coined the term. At any rate, it is critical to observe that term "gamification" started to be extensively used in 2010 in reference to an integration of social/reward dimensions of games into software. Zichermann (2013) agrees that the concept of gamification became prevalent, specifically in marketing, in 2010, as during this time, more than 350 companies introduced significant gamification projects. Examples of these companies include eBay, NBC, MLB, Cisco, SAP, Oracle, Adobe, Southwest, Lufthansa, Nike and Ford. According to Deterding et al. (2011), the concept of gamification may have originated in the digital media industry. However, they observed that the term was initially documented in 2008, despite coming into extensive usage in 2010. Indeed, as Lucassen and Jansen (2014) also observed, a gamification product provider called Bunchball could be said to have pioneered in first adopting the term to refer to its ’Nitro’ platform dubbed Paharia in 2010. A year later, gamification ultimately made an entery into the Zeitgeist Google. Reasons for integrating the term in marketing Relatin g game mechanics to the current service marketing literature offers a structure on how gameplay can be viewed as an element of overall marketing service as well as how it has a potential to support the major service offering. Clearly, gamification has two key approaches. In the first approach, gamification is essentially a general process whereby games in addition to playful events, which are perceived as essential elements of culture or society. Fuchs et al (2015) drew on biology, and anthropology to show that the playful may actually fit in to living things of any form, rather than be restricted to human sphere. It may as well refer to a rationalisation process, as well as more of an unconscious response to the surrounding environment. The second approach has been widely proposed by marketing gurus and programmers, as an integration of gaming design and elements in marketing to engage consumers. Huotari and Hamri (2011) also observed that gamification in marketing is business-focused and is intended to advise firms that desire to attract new customers on implementing game features into their products and services. In their review of the relevance of gamification in modern-day marketing, Fuchs et al (2015) commented that game designers are evolving into the new social entrepreneurs, even as the citizens are transforming into gamers. Basing on this framework, it is easy to observe that gamification has becomes a technology that enable wholly ambitious transformation. They were adamant that gamification is relevant to marketing as it promotes brand loyalty (Lucassen and Jansen 2014). As observed earlier, while there is a diversity of understandings of the term gamification, the most predominant understanding is that it is essentially an amalgamation of techniques that potentially regulate human behaviours for strategic reasons by relying on game rules and experience. Drawing on this observation, it is easy to see why the concept of gamification relates to the concept of marketing. Indeed, while attempting to clarify the relevance of gamification in marketing, Fuchs et al (2015) pointed out that at its basis, the term is relevant to the mechanics of marketing as gaming to non-game activities potential alter human behaviours. They added that gamification methodologies are not intended to alter people’s thinking, but their behaviours. Similarly, traditional marketing techniques, including marketing and advertising, are intended to influence consumers’ thoughts, behaviours, beliefs, and attitudes. Within the context of consumer marketing, the concept of gamified loyalty therefore emerges. Indeed, Fuchs et al (2015) explains that gamification processes assure of a direct means to acquiring the behaviours and as a consequence consumers’ loyalty. Durmaz and Diyarbakırlıoglu (2011) also argued that consumers become motivated by a range of psychosocial needs, which may be grouped into personal and social motives. Shang and Lin (2013) also observed that gamification may use a range of ways to motivate users into taking desired actions, including through rewards in response to their actions of frequently visiting and purchasing products or services. While the gamified applications are designed to execute divergent actions, they are all aimed at making the activity to be engaging to customers and to influence them to make purchase decision. In a related study, Sailer et al. (2013) considered gamification to be an innovative approach that advances motivation. According to Shang and Lin (2013), gamification leverages players’ internal motivators through regular contests, which may entail winning prizes and are rooted in external motivators, where participants take part in the game to win rewards and in return become engaged. Durmaz and Diyarbakırlıoglu (2011) also consider gamification as capable of being adjusted to fit consumer’s individual needs and to change their attitudes and behaviours. Consistent with this view, Topaloglu (2012) argued that understanding the behaviours of consumer is at the core of building strong consumer-retailer relationship. Criticisms of the concept The concept of gamification has been extensively criticised. As Fuchs et al (2015) observed, gamification is less about designing of games and is actually more concerned with exploiting consumers. They added that it does frustrate the tradition of game design and minimises playing to an experience resulting from stimulus-response; while video games and games, to be specific, have attempted to set apart and confuse the implication of play in a digital culture. In the review, it was also observed that gamification is considered a bad term by those who take part in studying and exploring video games, given that it is linked to processes of appropriating values and elements of digital gaming by marketing interests. Basing on this backdrop, Fuchs et al (2015) stated that gamification should be rethought, if it as to acquire the respect of those people who have worked with games during the last decades. Zichermann (2013) also indicated that gamification has it fair share of detractors and that many of the commentators who have critivised it have tended to dismiss it to be a fad. They criticise its tendency to apply game concepts, and contend that its techniques are shallow while they aim at exploiting customers. Still, Zichermann (2013) was quick to observe that gamification’s detractors seem to have ignored that the gamification industry continues to deliver tangible results, as each day millions of people rely on gamification as a means of improving their lives. Benefits of crowdsourcing Morschheuser et al (2016) define crowdsourcing as a process of outsourcing tasks or works to individuals online instead of actual employees. The researcher investigated how diverse implementation of gamifications increases the motivation and participation of the crowdsourcees. The found that gamification is an effective approach that increases participation in crowdsourcing. Regarding the benefit of crowdsourcing Morschheuser et al (2016) opined that its helps in cost savings as well as increasing the prospect to innovate solutions that would otherwise have not been cultivated in-house. Whitla (2009) also examined the benefits of crowdsourcing and established that unlike companies that perform tasks in-house, companies that outsource are likely to gain greater access to a more extensive host of potential workers with diverse talents and expertise, as well as who are more ready to finish tasks in short time-frames and at low cost. In a related study, Halder (2014) also established that crowdsourcing process has a potential to bring about significant advantages to companies and individuals to finish a variety of tasks satisfactorily. Additionally, Halder (2014) agreed with Morschheuser et al (2016) that crowdsourcing enables companies to finish task cost-effectively or at the most affordable price. In their view, some significant justifications for use of crowdsourcing include accessing better solutions at the most affordable price, if compared to the cost of employing a dedicated professional. Hamari and Koivisto (2015) also observe that crowdsourcing system encourages, as well as assists the creation of constructive motivations toward crowdsourcing tasks and fits the types of the activities. For example, while certain crowdsourcing approaches are aimed at contributions that have been systematically derived, some crowdsourcing forms require incentive structures, which encourage innovation. Morschheuser et al (2016) was however concerned that crowdsourcing significantly depends on a reserve of people perceived to be willing to undertake tasks for monetary compensation or for free. It is because of this that Morschheuser et al (2016) observed that crowdsourcing tasks are progressively more gamified. In which case, companies make the task to seem like participants are playing a game so as to offer motives for tasks. The study by Morschheuser et al (2016) established that intrinsic motivation is enabled by tasks that permit participants to be innovative, creative as well as to experience some form of autonomy, attain social recognition and feel more accomplished or competent. Crowdsourcing also has a number of disadvantages. According to Halder (2014), while crowdsourcing enables a business to access cheap or more affordable labour, it lead to less efficient output, relative to the work of professionals in in-house tasks. In certain occasions the question of management is indispensable. Mostly, a company that runs a crowdsourcing project would need to manage it’s a large base of workers, which in reality leads to greater time wastage. This is particularly so as the company would face difficulties coordinating work among its crowd members. In some occasions, some members may not take the tasks seriously leading to poor work output (Whitla 2009). In marketing, gamification is leveraged to increase the possibility that a consumer repeats required steps. It provides an opportunity for a company to influence consumer behaviour through games. Significant game elements usually applied in gamification vary from scoring systems, buying virtual goods, acquiring desired ranks and acquiring incentives (Lucassen & Jansen 2014). Current research studies indicate that gamification had a potential to increase customer loyalty and commitment, in addition to motivation of workers in the case of crowdsourcing. When effectively implemented, I ha as a potential of having higher return on investment for a firm. This was the case of Lufthansa and Nike in the following case studies. Case Study 1 An example of gamification in marketing is frequent-flyer programs. Among the most successful frequent-flyer programs run by Lufthansa in its Miles & More programme. In 1993, Lufthansa launched the Miles & More programme, which gained significant success in 2011 after having an estimated 20 million participants globally (Fuchs et al 2015). Some other airlines like Star Alliance also run a similar programme. In the Miles & More programme, aircraft passengers are allowed to garner scores through their flights, fittingly called “miles.” The programme has two types of miles (Fuchs et al 2015). The first includes “award miles,” which is invested in varied upgrading as well as rewards. The second is “status miles,” which passengers collect to scale up the hierarchy level. For instance, Lufthansa rewards 35,000 miles with the “frequent-flyer status,” which is level 1. The programme is characterised by a silver card. The card allows customers access to business lounges in addition to numerous smaller rewards. On the other hand, for 100,000 miles, passengers are given ‘golden card,’ which represents a level 2 status called “senator status.” Using the card, passengers can access senator lounges in addition to exclusive telephony services. Lastly, when a passenger accumulates 600,000 miles in a period of 2 years, she or he becomes a member of HON-circle, which is at level 3. The passenger is provided with a black card and privileges like a limousine service and personal assistant. Luftnansa’s gamification programme changes consumer behaviour by motivating them to stay loyal to the airline by trying to attain the different levels of the game (level 1, level 2 and level 3). Here, the frequent-flyer programme is seen to be a strategic technology that manipulates consumers’ behaviour towards products and services. At the same time, it circumvents their attitudes toward the airline. In turn, it creates a form of commitment on the part of consumers that is different from consumer’s satisfaction. Participating in the Miles & More programme actually translates to playing a game, in which attaining one level motivates the passenger to pursue the next level, in spite of being disappointed with Lufthansa’s services. Currently, it is the largest frequent flyer programme in all European countries. While Lufthansa has been criticised for having poor airline services, including lack of access to better seats, customers have remained loyal to the company because of the Miles & More programme (Olmsted 2015). Case Study 2 Nike launched a mobile application called Nike+Fuel in January 2012. The Nike+ Fuelband is essentially a bracelet with an inbuilt technology designed for monitoring the movements of the wearer (Chou 2012). Essentially, the project was intended to market Nike’s fitness-tracking wristband. Participants have to download the Nike+ App, which they rely on to monitor their workouts. The Nike Fuelband provides feedback to user on a daily basis to show them how close they are to attaining their daily goals. When a user hits a goal, an animated cartoon character pops up and celebrates. Participants are also provided with a chance to challenge friends to a game, which in turn provides them with a great incentive to apply the app (Chou 2012). The app provides a case scenario of how brands can effectively engage customers using the elements of gamification. The objective of Nike’s gamification project was to keep contacts with customers in order to collect information regarding them (Chou 2012). The use of gamification in the project was in order to provide customers with incentives when they run and monitor their activities. Runners would compete against other runner and in the process collect their latest accomplishments and general performances. Nike would the collect users’ personal data that would then be used for content marketing. Once customers complete different levels, they would be given rewards such as badges and trophies (Bradshaw & Mishkin 2014). The data gathered would also be applied in personalised services, digital marketing and research and development. At the same time, the game would encourage customer loyalty. The gamification project helped Nike to promote lifestyle among its customers by motivating them to keep fit. The gamification project has enabled Nike to keep a customer base that is loyal to its brand. For instance, at the end of 2011, Nike reported it had more than 5 million uses who applied the Fuelband was 5 million. They were projected to attain more than 11 million in 2013 (Chou 2012). At the same time, Nike managed to make significant sale of its fitness-tracking wristband. Ultimately, Nike announced it would halt the programme in April 2014 (Bradshaw & Mishkin 2014). The NikeFuelaband project is said to have been successful, having consolidated user base of up to of 28 million users (Burke 2014). Reference List Bradshaw, T & Mishkin, S 2014, "Wearables industry ponders next step in fitness after Nike move," Financial Times, 6 Jan 2017, Burke, B 2014, "Nike's Bid to Dominate Activity Tracking with NikeFuel," Forbes, viewed 6 Jan 2016, Chou, Y 2012, Top 10 Marketing Gamification Cases You Won’t Forget, viewed 6 Jan 2016, Deterding, S., & et al. (2011b). Gamification : Toward a Definition. In D. Tan, & B. Begole (Eds.), Proceedings of the 2011 Annual Conference Extended Abstracts on Human Factors in Computing Systems. (pp. 12–15). Vancouver. Durmaz, Y & Diyarbakırlıoglu, I 2011, "A Theoritical Approach to the Strength of Motivation in Customer Behavior," Global Journal Of Human Social Science, vol 11 no 10, 1-10 Fuchs, M, Fizek, S, Ruffino, P & Schrape, N 2015, Rethinking Gamification, Meson Press, Luneburg Halder, B 2014, "Evolution Of Crowdsourcing: Potential Data Protection, Privacy and Security Concerns under the New Media Age," Democracia Digital e Governo Eletrônico, Florianópolis , no 10, pp.377-393 Hamari, J & Koivisto, J 2015, "Why do people use gamification services?," International Journal of Information Management, vol 35 (2015) 419–431 Huotari, K & Hamri, J 2011, "Gamification” from the perspective of service marketing," CHI 2011, May 7–12, 2011, Vancouver, BC, Canada. Lucassen, G & Jansen, S 2014, "Gamification in Consumer Marketing - Future or Fallacy?" Procedia - Social and Behavioral Sciences, vol 1 no 1, pp.1-8 Morschheuser, B, Hamari, J & Koivisto, J 2016, "Gamification in crowdsourcing: A review," 49th Hawaii International Conference on System Sciences, pp.4374-4383 Olmsted, L 2015, "Best and Worst For Frequent Travelers: Aviation 2016, Year In Review," Forbes, 6 Jan 2016, Park, H & Bae, J 2014, "Study and Research of Gamification Design," International Journal of Software Engineering and Its Applications, Vol.8, No.8, pp. 19-28 Sailer, M, Hense, J, Mandl, H & Klevers, M 2013, "Psychological Perspectives on Motivation through Gamification," Interaction Design and Architecture(s) Journa, no.19, pp. 28-37 Shang, S & Lin, K 2013, "An Understanding of The Impact Of Gamification On Purchase Intentions," Proceedings of the Nineteenth Americas Conference on Information Systems, Chicago, Illinois, August 15-17, 2013, Topaloglu, C 2012, "Consumer Motivation And Concern Factors For Online Shopping In Turkey," Asian Academy of Management Journal, Vol. 17, No. 2, 1–19 Whitla, P 2009, "Crowdsourcing and Its Application in Marketing Activities," Contemporary Management Research, Vol. 5, No. 1, pp.15-28 Zichermann, G 2013, "Gamification: The Hard Truths," The HuffingtonPost, viewed 6 Jan 2016, Read More