Marketing Providers on P2P Platforms [Increase Sales Tactics]

Over the past decade, a growing number of firms have found success using a peer-to-peer (P2P) business model (e.g., Uber, Lyft, Airbnb, and TaskRabbit). P2P brands are expected to drive much of the sharing economy’s future growth, with experts projecting a market size of $335 billion by 2025 for the overall sharing economy, up from $14 billion in 2014. Marketing communications represent the company’s “voice” to consumers and offer a key way to shift consumers’ purchase perceptions and behaviors. Although P2P brands face many important decisions about their marketing communications, a new Journal of Marketing study explores one specific, but consequential, decision for P2P marketers: whether to focus on the platform or on the provider in marketing communications. Both strategies are used among P2P brands in the marketplace, but existing research offers no insight into whether platform- or provider-focused communications are more effective and why. 

Consumers interact with two distinct entities in a P2P purchase. The first is the platform, typically a for-profit firm that acts as an intermediary for exchange between consumers and providers of goods and services. The second is a peer provider, an individual who offers a good or service and connects with the consumer through the platform. We find the P2P model leads consumers to perceive high provider-firm independence where providers are viewed as relatively independent from the platform(s) on which they offer goods/services. Given the perceived independence of the provider and firm for P2P firms, P2P marketing managers may choose to focus on either entity in their marketing communications.

Across five experiments and a field study conducted in collaboration with a real P2P company, our research team demonstrates that when P2P brands use provider-focused marketing communications versus platform-focused marketing communications, consumers perceive a purchase as helping an individual provider to a greater extent. This mental shift increases consumers’ likelihood of purchase and app download as well as willingness to pay (WTP). This is because provider-focused marketing communications in this context lead consumers to think about their purchase from the provider’s perspective. We call this tendency an empathy lens, consistent with past research defining empathy as being aware of another person’s internal states and/or putting oneself in the place of another. We also show that our effects do not extend to traditional firms because consumers do not view these purchases through an empathy lens or to other types of P2P models (i.e., forums and cooperatives) because features of these models limit the role of marketing communications in shifting consumer focus to the provider.

Our findings have practical implications for marketing managers of P2P brands, public policymakers, and consumers. From a managerial perspective, our work is the first to identify the importance of provider-focused marketing communications as a way to drive important brand outcomes, including willingness to pay, purchase likelihood, and likelihood of downloading the brand’s app. We propose that our findings will be particularly helpful for marketers at start-up P2P brands. These new brands face increased spending from established P2P brands and a relatively high failure rate, thus making informed decisions about marketing communications particularly important. Our findings provide key insights for these marketers into the benefits of focusing on providers (vs. platforms) in marketing communications.

Our studies also suggest that there may be an opportunity for policymakers to educate consumers about how their perceptions about P2P purchases may be influenced by firm actions like marketing communications, and thus may not match economic reality. Our studies show that consumers often view purchases from for-profit P2Ps as helping an individual provider, which benefits these firms. However, this perception could have negative consequences for providers. For example, if consumers already believe that they are helping through their purchases, they may be less willing to support regulations that help protect these individuals financially or may be less willing to provide other support (e.g., tipping). This point is particularly timely as experts recently reported that the threat of COVID-19 has dramatically decreased the usage of popular peer-to-peer (P2P) brands like Uber and Lyft, leaving many P2P providers in a difficult financial position. While some P2P brands are pivoting to services like food delivery to keep drivers active, we suggest that consumers should remember that perceptions of helping do not always match reality. Therefore, while provider-focused marketing communications may make buying from a P2P brand feel like an act of helping, consumers should also consider providing additional financial support (e.g., via a bigger tip) if they are able. 

Read the full article. 

From: John Costello and Rebecca Walker Reczek, “Providers vs. Platforms: Marketing Communications in the Sharing Economy,” Journal of Marketing.

Go to the Journal of Marketing