At the setting up of the multi-sided platform, I need to attract both visitors and exhibitors. On the one hand I need enough visitors to be attractive for exhibitors but on the other hand, I also need enough exhibitors to attract visitors. That is the cross-side network effects. However, there, we may face an important problem: no side will join… Read more
At the setting up of the multi-sided platform, I need to attract both visitors and exhibitors. On the one hand I need enough visitors to be attractive for exhibitors but on the other hand, I also need enough exhibitors to attract visitors. That is the cross-side network effects. However, there, we may face an important problem: no side will join without the other(s). That is certainly the most difficult challenge and in order to launch my platform, I need to solve this problem. To succeed in it, I certainly need to set the right price on both side as well as the right price structure. But that is certainly not enough. “Although pricing is important, it is only one element in the design and implementation of a platform strategy”[1]. Without FISA to partner up the platform in the beginning, I will probably have to start with few exhibitors but interesting ones, i.e. exhibitors who will attract lots of people.
The cross-side effect can create high barriers to entry [2]. It is not always easy for a new competitor to enter the market and faces other well settled and successful competitors (like Batibouw). For multi-sided platform, competition can be fierce. In extreme situation, a single firm may get all the market (e.g. PC operating systems). The competitors of Batibouw do not have the experience, relations, etc.. that Batibouw does have. Thus, if I want to compete with Batibouw, I need to build my competitive advantage on something else. Therefore, I could develop a “niche strategy”. This implies that I will focus on one niche of the market in which the needs of the consumers are specific. For example, I could set up a faire that is specialised in the “green” construction.
In order to enhance the network effects, there are several possibilities. One way is to put forward the exhibitors, make sure that they are attractive for the visitors. Another way would be to increase the “word to mouth” effect within the visitors in order to attract more of them. To this end, it seems interesting to develop the social media. It will allow a broad communication between all the different groups.
In the business world, communication is something that is very important. It is a key role for the image and notoriety of the company. The communication allows companies to become known and to differentiate themselves in relation to their competitors. In recent years the media have significantly evolved with the advent of the Internet. Social networks such as Twitter, Facebook… Read more
In the business world, communication is something that is very important. It is a key role for the image and notoriety of the company. The communication allows companies to become known and to differentiate themselves in relation to their competitors. In recent years the media have significantly evolved with the advent of the Internet. Social networks such as Twitter, Facebook allow communication more quickly with the immediate distribution of the information.
With this development of internet, will exhibitions and fairs still exist? Fairs and exhibitions continue to rise. Some salons are inevitable as Batibouw, the auto show, Farma, in which the companies operating in this field will need to be seen with a faultless image.
The Fairs and exhibitions gather many advantages. First, customers can in many cases test the product. The presence at such an event allows also to evaluate the products or services sold by competitors. Thirdly, as already stated above, this allows to improve its image. In addition it can promote loyalty, it is a time of sharing between the client and the exhibitor.
The most important stakeholders at fairs are the exhibitors. Those are the exhibitors that will attract customers. We must therefore ensure that there’s quite a number of exhibitors at the event to attract them. Indeed it is the reputation of the exhibitors that will make the event’s reputation. But to attract exhibitors it is necessary to promise some significant presence of customers. Advertising is very important for this type of event because attracting customers is just as important.
Batibouw is a great event with a growing success. Create this kind of event can be difficult with this great event that brings together a large number of stands. To start an event it would be necessary to differentiate themselves to Batibouw: do not charge admission to the customer, arrange an event in a quite different state in Belgium and at a time quite different during the year.
We could also differentiate themselves in the form of service. Indeed, a virtual trade show can be created. More and more virtual trade shows appear online emphasizing lower costs and without any physical movement for the visitor as for the exhibitor. The price of stands could thus be reduced. Virtual trade shows is a new channel. For this to work it is necessary to provide the same services as physical salons. But this kind of new services could be criticized by the lack of communication exchange face to face. Indeed some companies continued to participate in many salon. Advertising can be personal because the company has direct contact with the buyer.
But will there still be room for a new event of this kind in Belgium? Some companies do not have the money to rent a stand in Batibouw. An event of smaller scale can therefore be interesting. The salon must also provide a diversity in its bid to influence people to move. If this is not the case, the client will remain in his house and will look at the business brochures online.
Without FISA’s ability to promote my fair, I would have worked on both sides: a positive incentive is needed for the customers in order to counter-balance the fact that the fair is less known. A significant reduction of price would be a solution for that. The positive cross-side network effect on the exhibitors’ side due to this price reduction won’t… Read more
Without FISA’s ability to promote my fair, I would have worked on both sides: a positive incentive is needed for the customers in order to counter-balance the fact that the fair is less known. A significant reduction of price would be a solution for that. The positive cross-side network effect on the exhibitors’ side due to this price reduction won’t probably be so large since the advertising for the fair is less efficient than with FISA. A way to give extra incentives to the exhibitors would be to propose more sophisticated contracts (giving more risk to the platform) than simply sell them an exhibit location. For instance, we could set a price decreasing in the number of visitors or we could pay them back a certain amount of money if the number of visitors has not reached a certain level.
Even if Batibouw is a reference in Belgium in this kind of fair, there are several ways to compete with it. Batibouw is limited in time and in space. As a result, some potential visitors don’t go to the fair. We could then imagine a fair that is not (only) in Brussels (like Batimons at Mons, Salon Habitat at Liège,etc…) or even more, that takes place in several cities over time. For the time limitation, I suggest a fair that occurs more than once a year; an extreme would be a website. The exhibitors wouldn’t buy some square-meter of location but a place on this site. The access to this site would probably be free for customers. This could lead exhibitors to give a lower value to this fair but some factors are acting in the opposite way. The site would be mainly searched by interested clients and it is not limited in time. Moreover, the visibility can easily be increased by social media and we could strengthen the network effect thanks to the possibility to leave comments on each exhibitor’s page.
Another strategy would be to find a special niche, like the passive houses, the wood constructions (e.g. “Bois & Habitat” which takes place at Namur expo), etc… and to specialize in this domain in order to obtain a kind of “label”.
In order to enhance the direct/indirect network effect, we have to, at least, give the impression that more people will come. A way to do so is to increase the promotion of this fair. The job is already done for the television and radio ads but there is still some work to do concerning its presence on the social media.
As Simon noted in his post, one of the challenges for multi-sided platforms is to choose the right price structure. But is Batibouw’s price structure really that important?
The assertion that choosing the right price structure is crucial for multi-sided platforms goes back to the seminal papers of Rochet and Tirole (1). According to them, a market is only two-sided… Read more
As Simon noted in his post, one of the challenges for multi-sided platforms is to choose the right price structure. But is Batibouw’s price structure really that important?
The assertion that choosing the right price structure is crucial for multi-sided platforms goes back to the seminal papers of Rochet and Tirole (1). According to them, a market is only two-sided if the price structure is non-neutral. In other words, the price structure chosen by the platform (and not just its price level) must affect total output.
The fees charged by a platform can be compared to VAT. In the case of VAT, it does not matter who of the buyer and the seller initially shoulders the burden. They ultimately conclude deals together and can thus reallocate the tax. The price structure is neutral. This is the well-known question of tax incidence.
Returning to multi-sided platforms, the key question is whether parties can (and do) reallocate the platform’s pricing structure (2). If this is the case, the platform’s price structure is neutral (potential cross-platform externalities are internalized by both user groups) and the platform – Batibouw in our case – doesn’t need to fret over its price structure.
This begs the question: is Batibouw’s price structure non-neutral? I am not sure I can give much of an answer. Though exhibitors and visitors sometimes end up concluding deals through which the initial allocation could be reversed, there are obstacles. For a start, it is not clear that exhibitors can isolate Batibouw visitors from other clients. Conversely, many visitors leave without concluding any purchase. For them, the initial allocation is harder to overturn.
What I do think, is that Batibouw views its price structure as being an important strategic component. This finds support in a number of steps which Batibouw takes, and which might prevent parties reallocating its price structure (3).
For a start, exhibitors are barred from reselling invitations or tickets (4). Infringements are sanctioned by an automatic 5000€ fee and the threat of litigation (which is made possible by Batibouw’s regulation). This notably prevents exhibitors from buying tickets and reselling them in a manner which taxes or subsidizes visitors (be they casual or professional). For example, some big players might choose to give-away tickets to potential clients. This could hurt Batibouw by changing the mix of visitors, and making the event less attractive for other exhibitors.
Second, Batibouw’s General Regulation imposes a number of requirements on exhibitors as far as the presentation of their stand is concerned (5). Exhibitors must fulfill numerous conditions, but the upshot is that they cannot “tax” visitors by degrading their visit (for example with obtrusive stands). In other words, Batibouw tries to balance exhibitors’ desire to advertise with its visitors’ experience. This akin to broadcasters, search engines and newspapers who must decide how much advertising to impose on consumers. These are important “price structure” decisions. For example, newspapers that include more adverts tend to be cheaper – or even free – and vice versa. This is because, for many multi-sided platforms, users pay by lending their eyeballs.
In conclusion, it is often said that choosing the correct price structure is a key strategic decision for multi-sided platforms. But “choosing” only begins to cover the challenge facing platforms. The chosen price structure will often lead to winners and losers. This leaves platforms with the task of policing their price structure, and traces of this policing activity can often be found in platforms’ regulations (6). This could well be the case for Batibouw.
(1) Jean‐Charles Rochet & Jean Tirole, Platform competition in two‐sided markets, 1 JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION (2003). And Jean‐Charles Rochet & Jean Tirole, Two‐sided markets: a progress report, 37 THE RAND JOURNAL OF ECONOMICS (2006).
(2) Here Rochet & Tirole’s work owes a great debt to Ronald Coase and his work on bargaining and externalities. Ronald Harry Coase, Problem of social cost, the, 3 JL & ECON. (1960).
(4) Section 7.10 of Batibouw’s General Regulation.
(5) Notably Sections 7.2, 7.5 through 7.9 of Batibouw’s General Regulation.
(6) As has been noted in previous posts, this is very notably the case for card networks. These networks usually set up complex systems of interchange fees to subsidize card users. As Rochet & Tirole point out (Rochet & Tirole, 2006), these systems become “neutral” if merchants can pass-on the fees to shoppers (they also mention other conditions which I skip for brevity). Accordingly, payment systems usually impose “no-surcharge rules on merchants” in order to safeguard the initial allocation of fees.
A multi-sided platform provides a common meeting place and has has as effect to facilitate interaction and reduce transaction costs. It helps two groups to find each other, which could hardly have been the case if this platform didn’t exist. The particularity of these platforms is that they depend on direct/indirect network effects: the utility of one side of the… Read more
A multi-sided platform provides a common meeting place and has has as effect to facilitate interaction and reduce transaction costs. It helps two groups to find each other, which could hardly have been the case if this platform didn’t exist. The particularity of these platforms is that they depend on direct/indirect network effects: the utility of one side of the platform increases with the number of members on the other side. This network effects have such an impact on the structure of the platforms that protecting and enhancing them could strengthen the platform.
Therefore, platforms encourage interaction between the two sides. Another determinant of (in)direct network effects is the size of the platform. The more people on one side, the more people on the other but congestion could cancel this positive externality. Being aware of this and find the right balance between size and externality is essential to maintain the value of the platform.
But another way to enhance these effects is to create rules and regulations. Thanks to these, negative externalities can be controlled, and the positive ones can be boosted. This enables the platform to control the behavior and the confidence of the members, which is a very important determinant of the value of the platform. Without trust, a platform wouldn’t work and so there need to be a good governance.
“Rules set by Facebook and Roppongi Hills, among others, show how complex rules controlling access, interactions, pranks, privacy, and other features are essential to solve problems that would reduce the value of the platform service.» (1)
As another example, we can mention Visa. The platform consists of merchants on one side and cardholders on the other side. The platform has taken some governance decisions so as to boost trust of its members. One way to boost trust is to assure that the brand will not be misused. To prevent this, Visa has created rules that govern the design of the cards, so as to create uniformity. Also, they have a lot of rules about dispute resolution, handling counterfeit transactions, fraudulent multiple transactions and a merchant fraud performance program. (2)
To conclude, we see that to strengthen a platform we must take into consideration the determinants of the network effects. The digitalization has impacted the need for rules and regulations in online platforms, concerning fraud but also privacy. Besides traditional elements like the size of the platform, new challenging elements like trust have become one of the main objectives for platform holders.
To create a platform where people can search for interaction and at best transaction, I need to get both visitors (including private and professionals) and exhibitors on board. Also, the proportion of visitors and exhibitors matters : customers will not be attracted by a fair with few exhibitors, and conversely. According to me, the problem can be divided in two… Read more
To create a platform where people can search for interaction and at best transaction, I need to get both visitors (including private and professionals) and exhibitors on board. Also, the proportion of visitors and exhibitors matters : customers will not be attracted by a fair with few exhibitors, and conversely. According to me, the problem can be divided in two parts : introduction stage and growth stage. The former is characterized by the launching of the two-sided platform. If we assume there is no FISA to partner up in the beginning, I suggest starting with attracting exhibitors : attracting big firms since they certainly have more money to spend in this kind of events, or focusing on small firms hoping that it will create a snowball effect. The platform has no reputation yet and exhibitors have nothing to lose by not being present at the fair. They should thus receive incentives to join the platform if we are in short supply. For example, through free access to the first edition or low access fee for example. On the other hand, we can expect the platform to begin being noticed in the marketplace during the growth stage. Customers will then exert stronger network effects on the other side, and the pricing structure will change (e.g., Batibouw’s present structure).
If I were a competitor, how would I try to compete with Batibouw? As Batibouw is considered as the dominant building fair in Belgium, it will be very difficult to compete with. Nevertheless, because visitors are heterogeneous, asymmetric platforms can co-exist in the market. There are many competitors such as “Salon Habitat” (Liège, November), “Energie & Habitat” (Namur, October), “Bois & Habitat” (Namur, March) and “Batimons” (Mons, February) proposing their offers at different locations and/or dates. For example, “Bois & Habitat” is specialized in wood construction. There are two ways to differentiate myself : vertical differentiation and horizontal differentiation. The former entails to choose particular levels of quality, the latter entails to choose particular features and prices. I would certainly opt for horizontal differentiation and select specific features that appeal to particular groups of customers. For example, create a fair devoted entirely to design-lovers or eco-minded.
“The network effect is a phenomenon whereby a good or service becomes more valuable when more people use it.”(1) A way to enhance network effects between visitors and exhibitors could be to increase their interaction. Another point is that exhibitors should continually meet clients need. Batibouw could for example create an opinion poll within its visitors (via the Facebook Page or the website) asking which kind of exhibitors should be added for the next edition. It could also ask their visitors to vote for the best exhibitor/stand/product in each sector, and give them the possibility to give feedbacks.
To create a large enough platform in order to reach critical mass and maximize network effects as fast as possible, I think the easiest way is to start by trying to attract exhibitors. Their number is smaller than individuals customers and professionals .The exhibitors know the need for this type of platform and it is easy to identify companies that… Read more
To create a large enough platform in order to reach critical mass and maximize network effects as fast as possible, I think the easiest way is to start by trying to attract exhibitors. Their number is smaller than individuals customers and professionals .The exhibitors know the need for this type of platform and it is easy to identify companies that will be interested in the project. Exhibitors are more easily convinced than individuals customers and professionals. Once there is enough exhibitors motivated for the platform, it is much easier to attract individuals customers and professionals.
I think it is difficult to compete directly with Batibouw in general construction field because Batibouw is a reference in its field. A good way to compete is to create a fair for a particular and specific area of construction. For example, create a trade fair devoted entirely to home insulation or wooden houses’ contruction.
There are of course many ways to enhance the network effects. One way would be to play with the elasticity of demand compared to price. For example, apply differential prices according to the target. Of course, this type of tariffs requires to have a perfect and complete information on the client’s willingness to pay. This would attract individual and professional customer while bringing more money to the organization. The price paid by exhibitors may therefore decrease in order to try to attract more exhibitors and enhance the network effects.
If there were no FISA and this specific case of a physical platform, I would probably begin with the most specific stakeholders that are exhibitors. The first thing to do is to find if enough exhibitors that are willing to go to your event, because they will be the one funding it the most. You could ask these exhibitors to… Read more
If there were no FISA and this specific case of a physical platform, I would probably begin with the most specific stakeholders that are exhibitors. The first thing to do is to find if enough exhibitors that are willing to go to your event, because they will be the one funding it the most. You could ask these exhibitors to ask their own client about whether or not they would like to participate in a fair were they could ask all their questions and see many professionals.
I talked about physical platform, which needs to have a lot a people on both sides simultaneously. A good idea would be to start with a non-physical platform like a website. You could easily see if your idea is interesting to other people or not.
Another step would be to find a location large enough.
Then you would have to find partnerships: if you want to have a lot of visitors, you have to advertise. For example, SNCB have a special page linked to Batibouw [1] and Immoweb allow you to come for free on one specific night [2].
At first, you might think that free tickets is against what the article says about visitors that might not be serious enough, or the room space, but if you think carefully, these serious visitors will probably know that this night is “reserved” for visitors who doesn’t pay and might want to come another day. Moreover, this night is on a Thursday evening and not on the weekend, so the “serious” customers won’t lose a chance to come by being afraid of too much people.
If I were a competitor, I would already know that the idea is interesting so I won’t lose time to figure that out. I would rather try to find Batibouw’s weaknesses to counteract them. Let’s take the example of Salon Habitat. First of all, they had the good idea of targeting another big city: they went to Liège while Batibouw happens in Brussels. If I were to compete against Batibouw, I wouldn’t target the same customers as they do but try to be more specific, for example with passive houses, a fair especially for student flat, etc.
Finally, if I had to improve the direct and indirect network effects, I would probably bet on social media. Network effects refer to the fact that people won’t want to use a product or a service if not enough people are using it. By increasing the number of customers, you attract new ones that wouldn’t use your product/service before.
The “salon BATIBOUW” page have actually 2177 likes, which seems like a reasonable number but according to RTBF Info [3], there were 296 000 people who went to the event. It’s a hundred times the people liking the Facebook page! Batibouw should try to increase its online community in order to touch more segments of customers on the Internet.
For me, the best solution would be to start with professional customers. As it is stated in the article, customers exert a strongest network effect on exhibitors than the contrary. So as my goal is to achieve the critical mass and maximize network effect, it seems thus logical to target them first. I’ll prefer to target professionals rather than individuals,… Read more
For me, the best solution would be to start with professional customers. As it is stated in the article, customers exert a strongest network effect on exhibitors than the contrary. So as my goal is to achieve the critical mass and maximize network effect, it seems thus logical to target them first. I’ll prefer to target professionals rather than individuals, because I think they are more likely to spend a bigger amount of money on such a fair, and that will also be an incentive for exhibitors to come. It can also be better for the image brand of an exhibitor to have worked with a well-known professional, rather than a “not so well-known” individual. Individual customers will come from themselves afterwards, if the fair take place (if they have enough incentives, like lower prices, but it is also already explained in the article).
Now if I assume that I have to compete with batibouw, it is not as easy to answer as before. Some other commentary proposed to do the fair in another city than Brussels, but I don’t really agree with them. Brussels seems to be the best place for that kind of event, by its central position (geographically). We may think about it like in a simple hoteling model, if it is not in the center, customers on the far left or right will have a bigger transportation cost (or here the time it takes to travel), and may decide to simply not come. It may not be appropriated for professionals, who’ll have the costs paid by the company, but it can be more pertinent for individuals, who represent a non-negligible amount of visitors.
As batibouw is considered as the biggest (and maybe the best) fair in that market, customers will not really see the point to come if my fair is a copy/paste version. I’ll have to find something to make them come, like a chance to win a certain amount of money (that will have to be spend in the context of the fair), special guests,…Maybe also set a different time for the fair to take place. Before Batibouw could be a good solution, because if it comes after, some people will make their mind about what they want at batibouw, and will not be a potential customer afterwards, for my fair. Actual competitors organize their fair at the same time or after, so I guess I must not take a crucial point into account, but I’ll stay on my position. The fact that they differentiate by specializing on a particular sector (like wooden constructions) may also be why they do not try to set the fair at another time.
Eventually, a way to strengthen the network effect would be to set up some kind of “feed-back”, with commentary from both exhibitors and customers, about what they thought of the fair, what they have learn/discover/…. If it is put on the website of the fair, or broadcast on television, it may enhance the popularity of the fair, because good feed-back can only make more people want to come. It would so be effective only for the next editions of the fair (which would probably only take place if the first one is a success, but that’s not the question here).
I really think the "chicken or egg" problem can't be solve by an unilateral answer. Indeed, the particularity of a platform as Batibouw is that it creates value by facilitate coordination between the two types of customers. You have to tackle both sides because if you start with the exhibitors, you will be very weak during the negociation because of… Read more
I really think the “chicken or egg” problem can’t be solve by an unilateral answer. Indeed, the particularity of a platform as Batibouw is that it creates value by facilitate coordination between the two types of customers. You have to tackle both sides because if you start with the exhibitors, you will be very weak during the negociation because of your lack of arguments (you don’t know and can’t prove their will be many people interested in your fair and in the products of the exhibitors). If you have bad agreements with them, you will have not enough money to set an attractive price for potential buyers and your fair may be a failure. On the contrary, if you start with the consumers side, you will have difficulties to attract them and to catch their interest without any guarantee concerning the exhibitors and you won’t be able to show to the exhibitors than your fair will attract enough consumers. I will shortly resume this problem by saying that you need the first side to interest the second side but you can’t have the first side because you don’t previously have the second side. That’s a practical application of the paradox of the chicken-or-egg.
Knowing that I would try to start at a local scale somewhere I know there is a demand for some products or services or somewhere a survey about that kind of demand would be relatively cheap. Thanks to this information I would try to negociate good agreements with exhibitors wich would allow me to set a low entry price and to attract many visitors. After some succesfull fairs I would try to enlarge my region of interest. I think that without a partner as FISA you can only compete with Batibouw after a couple of years. Indeed, you have to build a solid reputation and a good brand-awareness.
An other way to compete with Batibouw would be to offer extra-services which would create value for one of the two sides of the platformYou may also try to find an other soucre of subsidies. For example, you may propose to a bank or a loan officer to attempt to your fair and to create a first contact with potential consumers needing a loan in exchange of a fee.
A way to increase the network effect for the consumers is to facilitate interactions between them, they will have more incentives to come and to meet each other, so the platform could set an higher entry price. A way to enhance network effect for exhibitors would be to increase to value of the mass of visitors from the piont of view of the exhibitors. For example, each visitors could fill a document describing their needs than the exhibitors coulf freely access and after the fair could use to send a quotation or a contract proposition.
First of all I think the exhibitors are the most important stakeholders. In order to well organize this kind of event, you should contact them first. If you want to guarantee a good network effect with a high level of quality of your fair, exhibitors must be well selected and must have a good reputation. Then, it depends how you… Read more
First of all I think the exhibitors are the most important stakeholders. In order to well organize this kind of event, you should contact them first. If you want to guarantee a good network effect with a high level of quality of your fair, exhibitors must be well selected and must have a good reputation. Then, it depends how you will organize the fair. I think individual customers and professionals can be contacted simultaneously. The most important thing is to create a new experience which make the visit more interesting and original for the visitors. If you do it and your ensure a good quality of products and services, the demand of customers (individual and professionals) will automatically increase and the success of your fair will be guarantee.
Batibouw is really well reputated and it could be really difficult to « fight » with this fair. In order to « compete » with it, I think it’s better to find a niche and differientate the offer. That’s what Artexis done. They only focus about « timber and home ». This Batibouw competitor is more oriented towards the individual home, amenities and design. We realize that Philippe Lhomme, a manager of FISA is a little bit afraid about this new competitor.
If we want to try to compete with Batibouw, we can think about another niche. For instance, we can create a fair of building only dedicated to luxury products. This fair could be only devoted to rich people/investors and target another public than Batibouw.
If you want to improve the network effect between Professionals, individual customers and exhibitors, you have to increase interaction. Actually, with the new technologies, it becomes easier. Internet ables to create website with forum and social medias (Facebook, Twitter, and so on..) create new kind of communication, gather people and increase the popularity of an event which give to exhibitors and customers a biggest incentive to engage themself in a project.
I think that starting with the exhibitors would be the best option on a strategic point of view. Exhibitors have to choose between fairs that took places in Belgium because they can’t participate at all of them. The biggest challenge would be to stress the fact that it would be harmful in terms of image not to participate at the… Read more
I think that starting with the exhibitors would be the best option on a strategic point of view. Exhibitors have to choose between fairs that took places in Belgium because they can’t participate at all of them. The biggest challenge would be to stress the fact that it would be harmful in terms of image not to participate at the fair. At first, we could create a snowball effect by targeting small companies. Hopefully, the number of small companies will grow and then you will have good arguments to convince market leaders.
As soon as you have an attractive list constituted of various competitors, it can the basis of an advertising campaign. If customers, individual or professional, can see that information can be given from different competitors they will be willing to come.
Let’s pay attention to the fact that it has to be progressive, the process requires several steps to take and if you can’t prove that visitors will come, exhibitors will probably not take part in the adventure.
More globally, we can say without being mistaken that Batibouw has a strong image and if you set up a fair that is in direct competition with it, exhibitors will never choose your fair. I think that you have to differentiate and focus on a narrower portion of the industry; in other words to target a niche market.
Current competitors adopted the above-mentioned strategy: they focus on one thing in particular. Let’s take a few examples: Prowood is a fair that will take place in Ghent and that mainly focus on the wood technologies; Energie & habitat which will take place in Namur is focusing on the energetic performance of buildings.
The problem when starting up a two-sided platform is mostly the chicken and egg problem: “Who to attract first?” It is important to obtain a critical mass in order to build a successful two-sided platform. Therefore the pricing strategy is very important. Based on the literature I read, I recommend starting with attracting the individual customers first by setting their… Read more
The problem when starting up a two-sided platform is mostly the chicken and egg problem: “Who to attract first?” It is important to obtain a critical mass in order to build a successful two-sided platform. Therefore the pricing strategy is very important. Based on the literature I read, I recommend starting with attracting the individual customers first by setting their price below the marginal cost or even pay them to come. However it is important that we reach critical mass and this rather quickly otherwise the platform will fail. I suggest making use of innovators and prestige customers in order to build the critical mass. The exhibitors will follow if the demand is large enough or they will try it anyway as part of their marketing strategy because trade shows are seen as one of the most beneficial played advertising. As part of the pricing strategy I suggest to ask them rather a substantial amount of money to be there and to cover the expenses you made for attracting the customers. This skewed pricing strategy whereby we subsidiary one side to make them come and let the other side pay for it is called the divide and conquer strategy.
So far I touched upon two important things when setting up a two-sided platform: the pricing strategy and the critical mass.
However there is one other problem suggested in this question: “suppose there was no FISA to partner up with”. As we all know setting up this kind of platform requires quite a big investment. Alternatively we could do some advertising to pay for some of the costs. We could potentially ask more money to the participating companies by saying that they can profit from the opportunity of free advertising because the article mentioned that Batibouw has also become a reputation platform. However the downside of advertising is that it could lead to negative network effect when people do not like them.
A possible way to enhance network effects is by attracting the right customers. The platform could attract more prestige customers and influencers because according to literature they can generate significant direct/ indirect externalities. For example someone with a very nice taste or a nice house that comes regularly on television such as home or house make- over programs where people want to rely to and connect with them. However we need to provide these marquee customers with an incentive to come to our expo. We could for example offer them free food or a 10% discount when they buy something of some of the firms invited to the expo. Another possibility to extend the network effects is by making some modifications that make cross platform transactions between respective users possible. However this would be much easier for software companies than for Batibouw.
As seen in different texts the advantage of the first mover can be overcome because late movers can avoid pioneer’s positioning errors, incorporate the latest technology, have a better pricing strategy etc.
A first idea would be to position in another location because Batibouw is only in Brussels expo so there will possibly be people interested in this kind of events but might live to far away to go to the expo.
Another possibility is to focus on differentiation, more specifically focusing on another type of customers. For example just married couples are people with young children that are interested in renovating there home and using new techniques to do it. These customers will probably search for different and very specific things when going to such expo’s. As a competitor it could be interesting to differentiate not only on the customers but also offering another service. The customers described above will most likely not have a lot of money to spend on renovating or building there home (in regard to some other customers) therefore it could be interesting to offer a platform in collaboration with firms that offer slightly cheaper alternatives than the ones present at the Batibouw expo’s or use/ present other materials.
First of all, let’s suppose there are no FISA as a partner in the beginning. As we have seen, this would lead to a problem called “Chicken-or-egg” meaning that we don’t have exhibitors to attract customers (professionals or not) and we don’t have customers in order to make exhibitors come. We also know that we are in a situation where… Read more
First of all, let’s suppose there are no FISA as a partner in the beginning. As we have seen, this would lead to a problem called “Chicken-or-egg” meaning that we don’t have exhibitors to attract customers (professionals or not) and we don’t have customers in order to make exhibitors come. We also know that we are in a situation where a leader can emerge and this situation leads generally to a monopoly. In order to reach the critical mass and maximize the network effects I would first see the professionals and offer them a reduced price and I would add some incentive like if they bring other professionals or their individual customers. Then, I could attract exhibitors with a higher price. And finally, this should lead individual customers to buy tickets at a normal price. Of course, I would also use marketing as a weapon by negotiating special prices with professionals and exhibitors to advertise in their shops/companies. With this strategy, I plan to reach the critical mass fast enough to avoid competitors to take advantage over me.
Now, we know that there is a competitor (Batibouw) who is a monopolist in this sector. Because of the monopoly and once the monopoly is reached, this is much more difficult to compete. So I would try to target a “niche”, as for example by targeting renewable energies or special materials as wood [1], steel, aluminum (but only one of those). We could also imagine targeting a room in the house as the kitchen or the bedroom. We see that competitors distinguish themselves by giving free entrance to ladies [2] or by offering entrances for individual customers to the competitors [3].
In this scenario we see both direct and indirect network effects. Indeed, the more people are present, the easiest it will be to communicate through the network and more people can be reached. But there are also indirect effects because the more people there will be and the more exhibitors want to have a place and vice-versa. A way to strengthen direct effects would be to facilitate the communication between customers, professionals and exhibitors by encouraging exhibitors to hold presentations, questions/answers sessions etc. Indirect effects may not be strengthened because once the critical mass is reached there could not be more places for new exhibitors. Thus, we are limited by the space available. That is something that we don’t see with operating systems as Windows because there is always spaces for new developers!
Question: Assume that you are a competitor wishing to start a fair of your own. How would you try to compete with Batibouw? What are the current competitors doing?
As new on the market, either I have a sustainable competitive advantage that permit me to compete entirely to Batibouw and to try to take all the market, either I can try to… Read more
Question: Assume that you are a competitor wishing to start a fair of your own. How would you try to compete with Batibouw? What are the current competitors doing?
As new on the market, either I have a sustainable competitive advantage that permit me to compete entirely to Batibouw and to try to take all the market, either I can try to compete with him and grab some parts of the market. If I do need to compete with Batibouw several possibilities exist to differentiate myself or to try to reduce competition between us.
Firstly, I can select only one category of its exhibition’s theme to compete with. This year, for example, Batibouw proposes 12 categories (related closely or not to the sector of construction/habitations): outdoor spaces, furniture units, interior design, structural materials, floor coverings, sanitary, home builders, lights, renewable energies, kitchen, heaters/radiators and consulting/banks. By choosing one category, I specialize the fair in one sector only; by that way, some really specific exhibitors will be selected in the purpose of having the best one. A second way to reduce the competition level is to propose a fair at another moment and/or in another city than when and where Batibouw takes place.
The main Belgian concurrent of the Batibouw fair are the “Salon JardinEXPO 2015”, “Bois et Habitat”, “Salon MAISON-Jardin et loisirs” and “Architect@work Belgium”. Some of them are more specialized than Batibouw as “Salon jardin” specialized in outside facilities or “Bois et habitat” specialized in wood.
On the contrary there is “Salon MAISON-Jardin et loisirs” that is more generic and has a leisure category (with restoration, welfare…).What we can conclude from that is that no one propose exactly the same categories/sectors like Batibouw and try either to be more specific either more general.
Concerning the place where the concurrent fairs take place, we notice that it is in other cities than Brussels; it permits them perhaps to target another market.
The last aspect is the time line; when the fair takes place? Astonishment, they take place either exactly at the same moment than Batibouw like the “Salon JardinEXPO”, either, they just follow the Batibouw fair (around March of April). One potential explanation of that fact is the concurrent exhibitions will try to get the customers that develop the idea to change something in their habitation when they were visiting the Batibouw fair. Indeed, due to its reputation Batibouw attract people that know exactly what they want and why they are there but also people just visiting without any presumptions and it is these people (developing ideas of refurbishment work,…) that other fairs target.
There is a kind of indirect “advertising” effect, by going to the famous Batibow fair and visiting exhibitor companies that will be in another concurrent fair, people looking for more information after the Batibouw exhibition will go to the following fairs because they know that some exhibitors will be present there. We can associate this effect to an indirect network effect because the number of consumers going to Batibouw cause the production of other more specialized fairs that increase the number of potential Batibouuw visitor that are their to get general information.
In conclusion, if I need to create a “habitation” related exhibition I will try first of all to chose specificity that Batibouw present and get some the most experienced exhibitors (and some also present in Batibouw). Secondly, as the concurrent fairs do, my exhibit will take place after Batibouw event to attract some customers of it.
If there was no partner like FISA at the beginning, the start will be more difficult because of the “chicken and eggs problems”. In short, buyers will come if there are sellers and sellers will come only if there are buyers. I will explain how I would solve this problem and make sure that both sides will take part to… Read more
If there was no partner like FISA at the beginning, the start will be more difficult because of the “chicken and eggs problems”. In short, buyers will come if there are sellers and sellers will come only if there are buyers. I will explain how I would solve this problem and make sure that both sides will take part to the fair.
First, since I don’t know the taste of the consumers for my platform, I would start by attracting professional consumers (they are more likely to have a high taste for building fair). Even if we don’t have a list with all exhibitors that will come, the concept is still here and once we have a sufficient number of expected consumers we can begin to attract exhibitors. To do so, I will propose a system of low introductory prices through pre-sale tickets (which are only accessible for professional customers who have their own business) in exchange of advertising in their business. In order to increase the participation rate of this group, I will also offer discount to professional customers if they come with colleagues (if you take for instance 10 pre-sales tickets, you have a special price).
Once I will have attracted enough people in this group of customers, I will have a list with the names of the expected company’s representatives. Then, professionals exert a high network effect on the side of exhibitors since professionals have more financial means than private. It will give incentives to the exhibitors to come and so we will be able to make the exhibitors pay a high price to compensate the subsidization of the professional consumers by pre-sale tickets. Next, we can consolidate on these two groups until the critical mass is reached by advertising in the shops of the professionals, on the website and by viral marketing on Facebook (for example with a contest to attract private consumers: the one with the most likes on his building project wins free tickets). On the D-Day, the private consumers and the professionals who didn’t get a pre-sale will pay the basis price.
Secondly, if I assume that I want to compete with Batibouw with a fair of my own, how will I proceed? We have seen that with indirect network effect, a situation with a “winner-takes-all” can emerge. It’s what happened with Batibouw: there are different building fairs in Belgium but Batibouw seems to be the dominant building fair in Belgium.
As a competitor, it will be more difficult for me to rival and the more similar are the platforms, the fiercer is the competition. Then, I will propose the same concept but with little changes like a focus on a specific region or on a specific aspect of construction (wood construction or renewable energy materials). That’s what current competitors of Batibouw are doing. For instance, the fair “Bois and Habitat” promotes wood as building materials and interior decoration of homes. Another way to compete is to care about the identity of the various group, in that case exhibitors and visitors care about the identity of the matching prospects and not the number. For instance, I can propose a fair only with exhibitors and professional customers in order to increase the B2B relationships. Caring about the identity of the various group allows to internalize a sorting externality. That’s also what a current competitor of Batibouw do, “BTP expo” focuses on the exhibition of the latest technology and insist on their website on the selection of the visitors (construction experts, entrepreneurs or architects).
To conclude, I will discuss about how network effects can strengthen the platform. Communicating the list of the exhibitors and what is their product/service is a way to strengthen indirect and direct effect. The indirect network effect is the fact that when they are more exhibitors, there are more needs covered and thus there are more incentive for consumers to come and find the suitable product/service for their project. Direct network effect is the fact that when they are more exhibitors, others will come for their B2B relationships and because there is a cost of not coming due to the competition and the opportunity that it represents. Another way to increase the direct effect is to offer discounts for the professional investors when they buy a certain number of tickets, and put in place contest activities through social media for the private consumers. When there are more consumers, more will be attracted to come (“if others go there I should go there too”).
First of all, to have a network effect, both sides need to be brought together in the right quantity and at the same time. However, I think we should start negotiations with exhibitors first. Indeed, they are the ones that will determine the quality of the fair, that will create its reputation and that will allow diversification of products and… Read more
First of all, to have a network effect, both sides need to be brought together in the right quantity and at the same time. However, I think we should start negotiations with exhibitors first. Indeed, they are the ones that will determine the quality of the fair, that will create its reputation and that will allow diversification of products and services offered. It is from prime importance to deal with reliable professionals. Visitors will attend the fair only if they know that exhibitors are reliable and offer good quality for their services/products. To convince and stimulate exhibitors to take part in the fair, arguments such as visibility, the future reputation of the fair, the organization and the reward system are needed.
Imposing an entrance fee could target the audience who is really interested in those companies and prove that the fair has a certain level of credibility.
Batibouw is the most famous fair in Belgium, and will be difficult to compete with. The competitors need to differentiate themselves and to offer additional services.
We can imagine the creation of workshops, in addition to conferences that already take place at Batibouw. Debates between exhibitors that sell their products or even panel discussions of experts/specialists that don’t sell anything but teach the basis of construction to buyers can increase their confidence and prevent customers from feeling trapped.
Finally, awareness programs about technical professions and their future may also attract visitors who want to learn more about the construction sector and its opportunities.
Exhibitors and visitors’ testimonies (online) could also bring a plus to the fair.
In order to improve the network effect, we can imagine better synergies. Banks are already present on different stands at the fair, but exhibitors should deal with constructions contracts directly with the bank, so that clients wouldn’t need to visit the bank’s stand in order to get a loan. This proposition allows time saving and prevent buyers from having to deal with both the bank and the exhibitor.
The repayment of entrance fees following a purchase at the fair could increase attendance, even though entrance fees are low. However, this technique could promote sales.
Finally, an online platform that would include all the exhibitors’ activities could be useful. Indeed, the user could do his research on the platform and quickly get preliminary estimates from the companies involved with the fair. This would facilitate the fair attendance in order to confirm contracts. The communication between the different actors is very important in order to enhance the network effect.
First, when planning such an event, one should be able to work on both side nearly "simultaneously" :
If you work on the exhibitor side, you have to convince them that you will attract people. One way of doing so is by tying your own hands. Commitment is a good way to convince potential partners that you are a serious… Read more
First, when planning such an event, one should be able to work on both side nearly “simultaneously” :
If you work on the exhibitor side, you have to convince them that you will attract people. One way of doing so is by tying your own hands. Commitment is a good way to convince potential partners that you are a serious player. In this example, you can book a big room, already book an advertisement campaign, … Those kinds of commitment will support your promise to bring a lot of people.
While looking for partners, you should also work on the visitor side. You should try to have some contact with them. Since there is a bigger mass of individual entities on this side, you may want to organize exploratory group of discussions, survey (for more quantitative results), etc. in order to better understand your market. You can then adapt your offer and evaluate the price elasticity. Those are key elements that you need to organize this platform.
So, on one side, you must find partner very quickly to have names to attract visitors … but you must know your customers to adapt your offer and gain credibility towards the potential partners. This can be achieved trhough strategic commitments and marketing studies.
For the competition issue, I would like to raise another example. In the video game industries, there are also multi-sided platforms in which game editors and console developpers present their future games to potential players. There are many many conferences, events, … Let’s name the most popular : E3 (Los Angeles), Tokyo Game Show, Paris Game Week, Gamescom (Cologne), etc.
It is very interesting to notice how those events compete : they try to attract the same base of visitors and exhibitors … but at different moment of the year and on different geographical localisations. People are coming from all over the world in each event.
My answer to the question would be that competitors do not necessarily compete. Rarely, such event or platform try to do the exact same thing, at the exact same moment and the exact same place. I am not familiar with the construction sector but I doubt there is a similar event in Brussel during this time … To me, competitors are “sharing” the market, avoiding to fight with each other. If I wanted to compete with Batibouw, I would set up nearly the same plateform … but in Summer (instead of Winter).
One way to increase the network effect is to rely on the social medias to increase popularity but also to be linked with other similar events or activities in order to create a “club” effect. For example, there are two or three “medieval fairs” around Brussel each year. They partner with activities like artistic fencing, LARP, historical reconstitutions, tasting of alcohol produced in the old-fashioned way, etc. For the practicioners of such activities, the fairs become a must go.
To sum up, I think it is important to rely on already existing medias and try to build partnership with “complementary” events. This could increase the popularity of our event and thus give more incentive for exhibitioners to come.
It appears clear that if we need to set up a platform as fast as possible, we need to contact the exhibitors first. Indeed, the biggest part of the reputation for a fair is the exhibitors and the quality of their products. It appears easier for us to attract buyers with the quality of the exhibitors than to attract exhibitors… Read more
It appears clear that if we need to set up a platform as fast as possible, we need to contact the exhibitors first. Indeed, the biggest part of the reputation for a fair is the exhibitors and the quality of their products. It appears easier for us to attract buyers with the quality of the exhibitors than to attract exhibitors with the quantity of visitors. The main reason is that it is easier to evaluate the quality of the exhibitors without having a good approximation of the numbers of visitors than evaluating the quantity of visitors without having a good approximation of the numbers of exhibitors.
Since it is well known that Batibouw has a good reputation, we have a high risk to be in a “Winner take all” situation. To counter that situation, there are two option: being stronger that the opponent or to differentiate the offer. Facing directly Batibouw could be very risky, while differentiating the offer would be easier. The differentiation could be made on different dimensions: the offer (semi-professionals instead of professionals), the place (on Internet instead of on real life) or the price (lower price or no price at all for buyers). All those strategies would create fairs that are sufficiently different from Batibouw to avoid direct competition.
In order to strengthen the direct network effects, we should find a way to enhance to communication between the buyers and the professionals. For one of the fair’s benefits being the ability to communicate, Batibouw should create a platform that allows buyers to communicate with the professionals as a whole. Indeed, the communication is now possible from people to people, and we think it would be more effective to allow them to communicate to everyone at once. Such strategy would be possible with the integration of a digital forum or open discussions about some precise subjects linking buyers and professionals.
If we would have to build a structure without the support of the FISA the solutions are not numerous.
One solution could be be the help of the state for the structure, the communication and the prospection but let say that: like the FISA the state will not have a specific role to play.
One of the best solutions for me then… Read more
If we would have to build a structure without the support of the FISA the solutions are not numerous.
One solution could be be the help of the state for the structure, the communication and the prospection but let say that: like the FISA the state will not have a specific role to play.
One of the best solutions for me then would be to start slowly but surely. By slowly and surely I mean that the we have to target what the customers really want and if those needs can be satisfied by the current enterprises.
For example some years ago there was a huge interest in the solar panel technology and devices (helped by the green premium given by the state). Thanks to that some organims or groups decicided to target this particular “niche” and began a two-sided platform for this particular need. With this example I want to point that firstly you have to select something (product, service …) that is currently valuorized by the customers and propose them an offer around this particular procuts or service with the two-)sided platform.
Another exemple that shows clearly this step by step approach is the evolution of the comic-con of San-Diego.
In the beginning it was just a project made by some fans of comics in provide a service for the fan of American comic books, movies or science-fiction products and give them a place where they could share or discover knowledge about their hobby.
The idea was simple: focusing on the quality and not on the quantity. This is why they selected some special guests to talk about the projects and rasing some founds for bigger events. Thanks to the word of mouth, they were able to establish a wide community behind the project and until the comic-con was growing year after years.
This is the idea I defend,if there are no structures to help us firstly, we have to increase awareness of the potentials customers with something that try to answer the needs and that is valued by the customers.
Secondly we have to focus of the quality not the quantity in order to decrease the potential costs in the beginning and at the same time try to increase the word of mouth behind the project in order to become bigger and bigger accross the years without forgetting the main focus of the quality .
This is of the course a long-run project but without any big structure to help us, this would be one the safest way.
First of all, I think that the first persons to contact in order to set up a two sided fair are the exhibitors. Indeed, they form the basis of such a platforms. However, they will not come if we ask them to. We must give them multiple incentives in order to convince them. The arguments are multiple: visibility, certification and… Read more
First of all, I think that the first persons to contact in order to set up a two sided fair are the exhibitors. Indeed, they form the basis of such a platforms. However, they will not come if we ask them to. We must give them multiple incentives in order to convince them. The arguments are multiple: visibility, certification and award. It is important to mention that, certification and award is possible only if the fair have acquire a certain popularity and fame in the market.
Once the details are clear for the exhibitors, we must focus on the other side …
There must be a lot of publicity to reach the customers, who can be simple customers or professionals. It’s important to communicate on the perks that such a fair can offer. The mains are the reduction of transaction costs and the certainty to meet real professionals.
One way to compete with Batibouw is to open a fair where there are no fixed fee for the potential buyers. It will gather much more possible customers but on the other hand the constraints of space must be taken into account by having a larger building. Besides, more customers means more chaos in the fair so it is important to have a well-arranged warehouse offering the best visibility.
In order to enhance the network effect, Batibouw could create a social media related to the fair and similar a bit to Facebook. Every exhibitioner present at the fair could be visible on the website and it would be possible to contact each of them. There could be interaction between customers and firms but also between firms. Thus, they can keep contact after the fair. Only the visitors that have paid their entrance fee could register to this social media in order to be sure to have serious potential buyers (it could always be possible to add a fee for the non-visitors, thereby we could be certain that the person is really interested).
Comments for Building on Batibouw to understand two-sided platforms (2)
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At the setting up of the multi-sided platform, I need to attract both visitors and exhibitors. On the one hand I need enough visitors to be attractive for exhibitors but on the other hand, I also need enough exhibitors to attract visitors. That is the cross-side network effects. However, there, we may face an important problem: no side will join without the other(s). That is certainly the most difficult challenge and in order to launch my platform, I need to solve this problem. To succeed in it, I certainly need to set the right price on both side as well as the right price structure. But that is certainly not enough. “Although pricing is important, it is only one element in the design and implementation of a platform strategy”[1]. Without FISA to partner up the platform in the beginning, I will probably have to start with few exhibitors but interesting ones, i.e. exhibitors who will attract lots of people.
The cross-side effect can create high barriers to entry [2]. It is not always easy for a new competitor to enter the market and faces other well settled and successful competitors (like Batibouw). For multi-sided platform, competition can be fierce. In extreme situation, a single firm may get all the market (e.g. PC operating systems). The competitors of Batibouw do not have the experience, relations, etc.. that Batibouw does have. Thus, if I want to compete with Batibouw, I need to build my competitive advantage on something else. Therefore, I could develop a “niche strategy”. This implies that I will focus on one niche of the market in which the needs of the consumers are specific. For example, I could set up a faire that is specialised in the “green” construction.
In order to enhance the network effects, there are several possibilities. One way is to put forward the exhibitors, make sure that they are attractive for the visitors. Another way would be to increase the “word to mouth” effect within the visitors in order to attract more of them. To this end, it seems interesting to develop the social media. It will allow a broad communication between all the different groups.
References
Show less[1] http://www.strategy-business.com/article/03301?gko=16442
[2] http://sloanreview.mit.edu/article/strategic-decisions-for-multisided-platforms/
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In the business world, communication is something that is very important. It is a key role for the image and notoriety of the company. The communication allows companies to become known and to differentiate themselves in relation to their competitors. In recent years the media have significantly evolved with the advent of the Internet. Social networks such as Twitter, Facebook allow communication more quickly with the immediate distribution of the information.
With this development of internet, will exhibitions and fairs still exist? Fairs and exhibitions continue to rise. Some salons are inevitable as Batibouw, the auto show, Farma, in which the companies operating in this field will need to be seen with a faultless image.
The Fairs and exhibitions gather many advantages. First, customers can in many cases test the product. The presence at such an event allows also to evaluate the products or services sold by competitors. Thirdly, as already stated above, this allows to improve its image. In addition it can promote loyalty, it is a time of sharing between the client and the exhibitor.
The most important stakeholders at fairs are the exhibitors. Those are the exhibitors that will attract customers. We must therefore ensure that there’s quite a number of exhibitors at the event to attract them. Indeed it is the reputation of the exhibitors that will make the event’s reputation. But to attract exhibitors it is necessary to promise some significant presence of customers. Advertising is very important for this type of event because attracting customers is just as important.
Batibouw is a great event with a growing success. Create this kind of event can be difficult with this great event that brings together a large number of stands. To start an event it would be necessary to differentiate themselves to Batibouw: do not charge admission to the customer, arrange an event in a quite different state in Belgium and at a time quite different during the year.
We could also differentiate themselves in the form of service. Indeed, a virtual trade show can be created. More and more virtual trade shows appear online emphasizing lower costs and without any physical movement for the visitor as for the exhibitor. The price of stands could thus be reduced. Virtual trade shows is a new channel. For this to work it is necessary to provide the same services as physical salons. But this kind of new services could be criticized by the lack of communication exchange face to face. Indeed some companies continued to participate in many salon. Advertising can be personal because the company has direct contact with the buyer.
But will there still be room for a new event of this kind in Belgium? Some companies do not have the money to rent a stand in Batibouw. An event of smaller scale can therefore be interesting. The salon must also provide a diversity in its bid to influence people to move. If this is not the case, the client will remain in his house and will look at the business brochures online.
sources:
Show lesshttp://www.monde-economique.ch/fr/posts/view/la-communication-externe-un-role-essentiel-pour-l-entreprise
http://www.dgae.gov.pf/wp-content/uploads/pdf/organisationfoire.pdf
http://www.agence-evenementiel.info/le-role-de-lexposant-lors-dun-salon-commercial/
http://www.lesoir.be/810639/article/economie/immo/2015-03-03/belgique-compte-t-elle-trop-salons
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Without FISA’s ability to promote my fair, I would have worked on both sides: a positive incentive is needed for the customers in order to counter-balance the fact that the fair is less known. A significant reduction of price would be a solution for that. The positive cross-side network effect on the exhibitors’ side due to this price reduction won’t probably be so large since the advertising for the fair is less efficient than with FISA. A way to give extra incentives to the exhibitors would be to propose more sophisticated contracts (giving more risk to the platform) than simply sell them an exhibit location. For instance, we could set a price decreasing in the number of visitors or we could pay them back a certain amount of money if the number of visitors has not reached a certain level.
Even if Batibouw is a reference in Belgium in this kind of fair, there are several ways to compete with it. Batibouw is limited in time and in space. As a result, some potential visitors don’t go to the fair. We could then imagine a fair that is not (only) in Brussels (like Batimons at Mons, Salon Habitat at Liège,etc…) or even more, that takes place in several cities over time. For the time limitation, I suggest a fair that occurs more than once a year; an extreme would be a website. The exhibitors wouldn’t buy some square-meter of location but a place on this site. The access to this site would probably be free for customers. This could lead exhibitors to give a lower value to this fair but some factors are acting in the opposite way. The site would be mainly searched by interested clients and it is not limited in time. Moreover, the visibility can easily be increased by social media and we could strengthen the network effect thanks to the possibility to leave comments on each exhibitor’s page.
Another strategy would be to find a special niche, like the passive houses, the wood constructions (e.g. “Bois & Habitat” which takes place at Namur expo), etc… and to specialize in this domain in order to obtain a kind of “label”.
In order to enhance the direct/indirect network effect, we have to, at least, give the impression that more people will come. A way to do so is to increase the promotion of this fair. The job is already done for the television and radio ads but there is still some work to do concerning its presence on the social media.
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As Simon noted in his post, one of the challenges for multi-sided platforms is to choose the right price structure. But is Batibouw’s price structure really that important?
The assertion that choosing the right price structure is crucial for multi-sided platforms goes back to the seminal papers of Rochet and Tirole (1). According to them, a market is only two-sided if the price structure is non-neutral. In other words, the price structure chosen by the platform (and not just its price level) must affect total output.
The fees charged by a platform can be compared to VAT. In the case of VAT, it does not matter who of the buyer and the seller initially shoulders the burden. They ultimately conclude deals together and can thus reallocate the tax. The price structure is neutral. This is the well-known question of tax incidence.
Returning to multi-sided platforms, the key question is whether parties can (and do) reallocate the platform’s pricing structure (2). If this is the case, the platform’s price structure is neutral (potential cross-platform externalities are internalized by both user groups) and the platform – Batibouw in our case – doesn’t need to fret over its price structure.
This begs the question: is Batibouw’s price structure non-neutral? I am not sure I can give much of an answer. Though exhibitors and visitors sometimes end up concluding deals through which the initial allocation could be reversed, there are obstacles. For a start, it is not clear that exhibitors can isolate Batibouw visitors from other clients. Conversely, many visitors leave without concluding any purchase. For them, the initial allocation is harder to overturn.
What I do think, is that Batibouw views its price structure as being an important strategic component. This finds support in a number of steps which Batibouw takes, and which might prevent parties reallocating its price structure (3).
For a start, exhibitors are barred from reselling invitations or tickets (4). Infringements are sanctioned by an automatic 5000€ fee and the threat of litigation (which is made possible by Batibouw’s regulation). This notably prevents exhibitors from buying tickets and reselling them in a manner which taxes or subsidizes visitors (be they casual or professional). For example, some big players might choose to give-away tickets to potential clients. This could hurt Batibouw by changing the mix of visitors, and making the event less attractive for other exhibitors.
Second, Batibouw’s General Regulation imposes a number of requirements on exhibitors as far as the presentation of their stand is concerned (5). Exhibitors must fulfill numerous conditions, but the upshot is that they cannot “tax” visitors by degrading their visit (for example with obtrusive stands). In other words, Batibouw tries to balance exhibitors’ desire to advertise with its visitors’ experience. This akin to broadcasters, search engines and newspapers who must decide how much advertising to impose on consumers. These are important “price structure” decisions. For example, newspapers that include more adverts tend to be cheaper – or even free – and vice versa. This is because, for many multi-sided platforms, users pay by lending their eyeballs.
In conclusion, it is often said that choosing the correct price structure is a key strategic decision for multi-sided platforms. But “choosing” only begins to cover the challenge facing platforms. The chosen price structure will often lead to winners and losers. This leaves platforms with the task of policing their price structure, and traces of this policing activity can often be found in platforms’ regulations (6). This could well be the case for Batibouw.
(1) Jean‐Charles Rochet & Jean Tirole, Platform competition in two‐sided markets, 1 JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION (2003). And Jean‐Charles Rochet & Jean Tirole, Two‐sided markets: a progress report, 37 THE RAND JOURNAL OF ECONOMICS (2006).
(2) Here Rochet & Tirole’s work owes a great debt to Ronald Coase and his work on bargaining and externalities. Ronald Harry Coase, Problem of social cost, the, 3 JL & ECON. (1960).
(3) I draw these examples from Batibouw’s General Regulations, available at http://www.batibouw.be/en/documents/.
(4) Section 7.10 of Batibouw’s General Regulation.
(5) Notably Sections 7.2, 7.5 through 7.9 of Batibouw’s General Regulation.
(6) As has been noted in previous posts, this is very notably the case for card networks. These networks usually set up complex systems of interchange fees to subsidize card users. As Rochet & Tirole point out (Rochet & Tirole, 2006), these systems become “neutral” if merchants can pass-on the fees to shoppers (they also mention other conditions which I skip for brevity). Accordingly, payment systems usually impose “no-surcharge rules on merchants” in order to safeguard the initial allocation of fees.
Show lessVery informative, thanks!
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A multi-sided platform provides a common meeting place and has has as effect to facilitate interaction and reduce transaction costs. It helps two groups to find each other, which could hardly have been the case if this platform didn’t exist. The particularity of these platforms is that they depend on direct/indirect network effects: the utility of one side of the platform increases with the number of members on the other side. This network effects have such an impact on the structure of the platforms that protecting and enhancing them could strengthen the platform.
Therefore, platforms encourage interaction between the two sides. Another determinant of (in)direct network effects is the size of the platform. The more people on one side, the more people on the other but congestion could cancel this positive externality. Being aware of this and find the right balance between size and externality is essential to maintain the value of the platform.
But another way to enhance these effects is to create rules and regulations. Thanks to these, negative externalities can be controlled, and the positive ones can be boosted. This enables the platform to control the behavior and the confidence of the members, which is a very important determinant of the value of the platform. Without trust, a platform wouldn’t work and so there need to be a good governance.
“Rules set by Facebook and Roppongi Hills, among others, show how complex rules controlling access, interactions, pranks, privacy, and other features are essential to solve problems that would reduce the value of the platform service.» (1)
As another example, we can mention Visa. The platform consists of merchants on one side and cardholders on the other side. The platform has taken some governance decisions so as to boost trust of its members. One way to boost trust is to assure that the brand will not be misused. To prevent this, Visa has created rules that govern the design of the cards, so as to create uniformity. Also, they have a lot of rules about dispute resolution, handling counterfeit transactions, fraudulent multiple transactions and a merchant fraud performance program. (2)
To conclude, we see that to strengthen a platform we must take into consideration the determinants of the network effects. The digitalization has impacted the need for rules and regulations in online platforms, concerning fraud but also privacy. Besides traditional elements like the size of the platform, new challenging elements like trust have become one of the main objectives for platform holders.
(1) http://www.techpolicy.com/Articles/P/Platform-Rules-Multi-Sided-Platforms-as-Regulator.aspx
Show less(2) https://usa.visa.com/dam/VCOM/download/about-visa/15-April-2015-Visa-Rules-Public.pdf
(3) https://www.competitionpolicyinternational.com/assets/Hot-Tubs/SSRN-id1974020.pdf
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To create a platform where people can search for interaction and at best transaction, I need to get both visitors (including private and professionals) and exhibitors on board. Also, the proportion of visitors and exhibitors matters : customers will not be attracted by a fair with few exhibitors, and conversely. According to me, the problem can be divided in two parts : introduction stage and growth stage. The former is characterized by the launching of the two-sided platform. If we assume there is no FISA to partner up in the beginning, I suggest starting with attracting exhibitors : attracting big firms since they certainly have more money to spend in this kind of events, or focusing on small firms hoping that it will create a snowball effect. The platform has no reputation yet and exhibitors have nothing to lose by not being present at the fair. They should thus receive incentives to join the platform if we are in short supply. For example, through free access to the first edition or low access fee for example. On the other hand, we can expect the platform to begin being noticed in the marketplace during the growth stage. Customers will then exert stronger network effects on the other side, and the pricing structure will change (e.g., Batibouw’s present structure).
If I were a competitor, how would I try to compete with Batibouw? As Batibouw is considered as the dominant building fair in Belgium, it will be very difficult to compete with. Nevertheless, because visitors are heterogeneous, asymmetric platforms can co-exist in the market. There are many competitors such as “Salon Habitat” (Liège, November), “Energie & Habitat” (Namur, October), “Bois & Habitat” (Namur, March) and “Batimons” (Mons, February) proposing their offers at different locations and/or dates. For example, “Bois & Habitat” is specialized in wood construction. There are two ways to differentiate myself : vertical differentiation and horizontal differentiation. The former entails to choose particular levels of quality, the latter entails to choose particular features and prices. I would certainly opt for horizontal differentiation and select specific features that appeal to particular groups of customers. For example, create a fair devoted entirely to design-lovers or eco-minded.
“The network effect is a phenomenon whereby a good or service becomes more valuable when more people use it.”(1) A way to enhance network effects between visitors and exhibitors could be to increase their interaction. Another point is that exhibitors should continually meet clients need. Batibouw could for example create an opinion poll within its visitors (via the Facebook Page or the website) asking which kind of exhibitors should be added for the next edition. It could also ask their visitors to vote for the best exhibitor/stand/product in each sector, and give them the possibility to give feedbacks.
SOURCES :
(1) http://www.batibouw.be
Show less(2) http://www.salonhabitat.be
(3) http://www.energie-habitat.be
(4) http://www.bois-habitat.be
(5) http://www.investopedia.com/terms/n/network-effect.asp
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To create a large enough platform in order to reach critical mass and maximize network effects as fast as possible, I think the easiest way is to start by trying to attract exhibitors. Their number is smaller than individuals customers and professionals .The exhibitors know the need for this type of platform and it is easy to identify companies that will be interested in the project. Exhibitors are more easily convinced than individuals customers and professionals. Once there is enough exhibitors motivated for the platform, it is much easier to attract individuals customers and professionals.
I think it is difficult to compete directly with Batibouw in general construction field because Batibouw is a reference in its field. A good way to compete is to create a fair for a particular and specific area of construction. For example, create a trade fair devoted entirely to home insulation or wooden houses’ contruction.
There are of course many ways to enhance the network effects. One way would be to play with the elasticity of demand compared to price. For example, apply differential prices according to the target. Of course, this type of tariffs requires to have a perfect and complete information on the client’s willingness to pay. This would attract individual and professional customer while bringing more money to the organization. The price paid by exhibitors may therefore decrease in order to try to attract more exhibitors and enhance the network effects.
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If there were no FISA and this specific case of a physical platform, I would probably begin with the most specific stakeholders that are exhibitors. The first thing to do is to find if enough exhibitors that are willing to go to your event, because they will be the one funding it the most. You could ask these exhibitors to ask their own client about whether or not they would like to participate in a fair were they could ask all their questions and see many professionals.
I talked about physical platform, which needs to have a lot a people on both sides simultaneously. A good idea would be to start with a non-physical platform like a website. You could easily see if your idea is interesting to other people or not.
Another step would be to find a location large enough.
Then you would have to find partnerships: if you want to have a lot of visitors, you have to advertise. For example, SNCB have a special page linked to Batibouw [1] and Immoweb allow you to come for free on one specific night [2].
At first, you might think that free tickets is against what the article says about visitors that might not be serious enough, or the room space, but if you think carefully, these serious visitors will probably know that this night is “reserved” for visitors who doesn’t pay and might want to come another day. Moreover, this night is on a Thursday evening and not on the weekend, so the “serious” customers won’t lose a chance to come by being afraid of too much people.
If I were a competitor, I would already know that the idea is interesting so I won’t lose time to figure that out. I would rather try to find Batibouw’s weaknesses to counteract them. Let’s take the example of Salon Habitat. First of all, they had the good idea of targeting another big city: they went to Liège while Batibouw happens in Brussels. If I were to compete against Batibouw, I wouldn’t target the same customers as they do but try to be more specific, for example with passive houses, a fair especially for student flat, etc.
Finally, if I had to improve the direct and indirect network effects, I would probably bet on social media. Network effects refer to the fact that people won’t want to use a product or a service if not enough people are using it. By increasing the number of customers, you attract new ones that wouldn’t use your product/service before.
The “salon BATIBOUW” page have actually 2177 likes, which seems like a reasonable number but according to RTBF Info [3], there were 296 000 people who went to the event. It’s a hundred times the people liking the Facebook page! Batibouw should try to increase its online community in order to touch more segments of customers on the Internet.
[1] http://www.belgianrail.be/fr/loisirs/bexcursions/foires-et-salons/batibouw.aspx
Show less[2] http://www.immoweb.be/flashnews/marketing/batibouw2015/batibouw-FR.html
[3] http://www.rtbf.be/info/economie/detail_baisse-du-nombre-de-visiteurs-pour-la-54eme-edition-de-batibouw?id=7939634
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For me, the best solution would be to start with professional customers. As it is stated in the article, customers exert a strongest network effect on exhibitors than the contrary. So as my goal is to achieve the critical mass and maximize network effect, it seems thus logical to target them first. I’ll prefer to target professionals rather than individuals, because I think they are more likely to spend a bigger amount of money on such a fair, and that will also be an incentive for exhibitors to come. It can also be better for the image brand of an exhibitor to have worked with a well-known professional, rather than a “not so well-known” individual. Individual customers will come from themselves afterwards, if the fair take place (if they have enough incentives, like lower prices, but it is also already explained in the article).
Now if I assume that I have to compete with batibouw, it is not as easy to answer as before. Some other commentary proposed to do the fair in another city than Brussels, but I don’t really agree with them. Brussels seems to be the best place for that kind of event, by its central position (geographically). We may think about it like in a simple hoteling model, if it is not in the center, customers on the far left or right will have a bigger transportation cost (or here the time it takes to travel), and may decide to simply not come. It may not be appropriated for professionals, who’ll have the costs paid by the company, but it can be more pertinent for individuals, who represent a non-negligible amount of visitors.
As batibouw is considered as the biggest (and maybe the best) fair in that market, customers will not really see the point to come if my fair is a copy/paste version. I’ll have to find something to make them come, like a chance to win a certain amount of money (that will have to be spend in the context of the fair), special guests,…Maybe also set a different time for the fair to take place. Before Batibouw could be a good solution, because if it comes after, some people will make their mind about what they want at batibouw, and will not be a potential customer afterwards, for my fair. Actual competitors organize their fair at the same time or after, so I guess I must not take a crucial point into account, but I’ll stay on my position. The fact that they differentiate by specializing on a particular sector (like wooden constructions) may also be why they do not try to set the fair at another time.
Eventually, a way to strengthen the network effect would be to set up some kind of “feed-back”, with commentary from both exhibitors and customers, about what they thought of the fair, what they have learn/discover/…. If it is put on the website of the fair, or broadcast on television, it may enhance the popularity of the fair, because good feed-back can only make more people want to come. It would so be effective only for the next editions of the fair (which would probably only take place if the first one is a success, but that’s not the question here).
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I really think the “chicken or egg” problem can’t be solve by an unilateral answer. Indeed, the particularity of a platform as Batibouw is that it creates value by facilitate coordination between the two types of customers. You have to tackle both sides because if you start with the exhibitors, you will be very weak during the negociation because of your lack of arguments (you don’t know and can’t prove their will be many people interested in your fair and in the products of the exhibitors). If you have bad agreements with them, you will have not enough money to set an attractive price for potential buyers and your fair may be a failure. On the contrary, if you start with the consumers side, you will have difficulties to attract them and to catch their interest without any guarantee concerning the exhibitors and you won’t be able to show to the exhibitors than your fair will attract enough consumers. I will shortly resume this problem by saying that you need the first side to interest the second side but you can’t have the first side because you don’t previously have the second side. That’s a practical application of the paradox of the chicken-or-egg.
Knowing that I would try to start at a local scale somewhere I know there is a demand for some products or services or somewhere a survey about that kind of demand would be relatively cheap. Thanks to this information I would try to negociate good agreements with exhibitors wich would allow me to set a low entry price and to attract many visitors. After some succesfull fairs I would try to enlarge my region of interest. I think that without a partner as FISA you can only compete with Batibouw after a couple of years. Indeed, you have to build a solid reputation and a good brand-awareness.
An other way to compete with Batibouw would be to offer extra-services which would create value for one of the two sides of the platformYou may also try to find an other soucre of subsidies. For example, you may propose to a bank or a loan officer to attempt to your fair and to create a first contact with potential consumers needing a loan in exchange of a fee.
A way to increase the network effect for the consumers is to facilitate interactions between them, they will have more incentives to come and to meet each other, so the platform could set an higher entry price. A way to enhance network effect for exhibitors would be to increase to value of the mass of visitors from the piont of view of the exhibitors. For example, each visitors could fill a document describing their needs than the exhibitors coulf freely access and after the fair could use to send a quotation or a contract proposition.
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First of all I think the exhibitors are the most important stakeholders. In order to well organize this kind of event, you should contact them first. If you want to guarantee a good network effect with a high level of quality of your fair, exhibitors must be well selected and must have a good reputation. Then, it depends how you will organize the fair. I think individual customers and professionals can be contacted simultaneously. The most important thing is to create a new experience which make the visit more interesting and original for the visitors. If you do it and your ensure a good quality of products and services, the demand of customers (individual and professionals) will automatically increase and the success of your fair will be guarantee.
Batibouw is really well reputated and it could be really difficult to « fight » with this fair. In order to « compete » with it, I think it’s better to find a niche and differientate the offer. That’s what Artexis done. They only focus about « timber and home ». This Batibouw competitor is more oriented towards the individual home, amenities and design. We realize that Philippe Lhomme, a manager of FISA is a little bit afraid about this new competitor.
If we want to try to compete with Batibouw, we can think about another niche. For instance, we can create a fair of building only dedicated to luxury products. This fair could be only devoted to rich people/investors and target another public than Batibouw.
If you want to improve the network effect between Professionals, individual customers and exhibitors, you have to increase interaction. Actually, with the new technologies, it becomes easier. Internet ables to create website with forum and social medias (Facebook, Twitter, and so on..) create new kind of communication, gather people and increase the popularity of an event which give to exhibitors and customers a biggest incentive to engage themself in a project.
Sources:
Show lesshttp://trends.levif.be/economie/immo/duel-au-heysel-entre-fisa-batibouw-et-artexis/article-normal-198031.html
http://www.batibouw.be
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I think that starting with the exhibitors would be the best option on a strategic point of view. Exhibitors have to choose between fairs that took places in Belgium because they can’t participate at all of them. The biggest challenge would be to stress the fact that it would be harmful in terms of image not to participate at the fair. At first, we could create a snowball effect by targeting small companies. Hopefully, the number of small companies will grow and then you will have good arguments to convince market leaders.
Show lessAs soon as you have an attractive list constituted of various competitors, it can the basis of an advertising campaign. If customers, individual or professional, can see that information can be given from different competitors they will be willing to come.
Let’s pay attention to the fact that it has to be progressive, the process requires several steps to take and if you can’t prove that visitors will come, exhibitors will probably not take part in the adventure.
More globally, we can say without being mistaken that Batibouw has a strong image and if you set up a fair that is in direct competition with it, exhibitors will never choose your fair. I think that you have to differentiate and focus on a narrower portion of the industry; in other words to target a niche market.
Current competitors adopted the above-mentioned strategy: they focus on one thing in particular. Let’s take a few examples: Prowood is a fair that will take place in Ghent and that mainly focus on the wood technologies; Energie & habitat which will take place in Namur is focusing on the energetic performance of buildings.
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The problem when starting up a two-sided platform is mostly the chicken and egg problem: “Who to attract first?” It is important to obtain a critical mass in order to build a successful two-sided platform. Therefore the pricing strategy is very important. Based on the literature I read, I recommend starting with attracting the individual customers first by setting their price below the marginal cost or even pay them to come. However it is important that we reach critical mass and this rather quickly otherwise the platform will fail. I suggest making use of innovators and prestige customers in order to build the critical mass. The exhibitors will follow if the demand is large enough or they will try it anyway as part of their marketing strategy because trade shows are seen as one of the most beneficial played advertising. As part of the pricing strategy I suggest to ask them rather a substantial amount of money to be there and to cover the expenses you made for attracting the customers. This skewed pricing strategy whereby we subsidiary one side to make them come and let the other side pay for it is called the divide and conquer strategy.
So far I touched upon two important things when setting up a two-sided platform: the pricing strategy and the critical mass.
However there is one other problem suggested in this question: “suppose there was no FISA to partner up with”. As we all know setting up this kind of platform requires quite a big investment. Alternatively we could do some advertising to pay for some of the costs. We could potentially ask more money to the participating companies by saying that they can profit from the opportunity of free advertising because the article mentioned that Batibouw has also become a reputation platform. However the downside of advertising is that it could lead to negative network effect when people do not like them.
A possible way to enhance network effects is by attracting the right customers. The platform could attract more prestige customers and influencers because according to literature they can generate significant direct/ indirect externalities. For example someone with a very nice taste or a nice house that comes regularly on television such as home or house make- over programs where people want to rely to and connect with them. However we need to provide these marquee customers with an incentive to come to our expo. We could for example offer them free food or a 10% discount when they buy something of some of the firms invited to the expo. Another possibility to extend the network effects is by making some modifications that make cross platform transactions between respective users possible. However this would be much easier for software companies than for Batibouw.
As seen in different texts the advantage of the first mover can be overcome because late movers can avoid pioneer’s positioning errors, incorporate the latest technology, have a better pricing strategy etc.
A first idea would be to position in another location because Batibouw is only in Brussels expo so there will possibly be people interested in this kind of events but might live to far away to go to the expo.
Another possibility is to focus on differentiation, more specifically focusing on another type of customers. For example just married couples are people with young children that are interested in renovating there home and using new techniques to do it. These customers will probably search for different and very specific things when going to such expo’s. As a competitor it could be interesting to differentiate not only on the customers but also offering another service. The customers described above will most likely not have a lot of money to spend on renovating or building there home (in regard to some other customers) therefore it could be interesting to offer a platform in collaboration with firms that offer slightly cheaper alternatives than the ones present at the Batibouw expo’s or use/ present other materials.
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First of all, let’s suppose there are no FISA as a partner in the beginning. As we have seen, this would lead to a problem called “Chicken-or-egg” meaning that we don’t have exhibitors to attract customers (professionals or not) and we don’t have customers in order to make exhibitors come. We also know that we are in a situation where a leader can emerge and this situation leads generally to a monopoly. In order to reach the critical mass and maximize the network effects I would first see the professionals and offer them a reduced price and I would add some incentive like if they bring other professionals or their individual customers. Then, I could attract exhibitors with a higher price. And finally, this should lead individual customers to buy tickets at a normal price. Of course, I would also use marketing as a weapon by negotiating special prices with professionals and exhibitors to advertise in their shops/companies. With this strategy, I plan to reach the critical mass fast enough to avoid competitors to take advantage over me.
Now, we know that there is a competitor (Batibouw) who is a monopolist in this sector. Because of the monopoly and once the monopoly is reached, this is much more difficult to compete. So I would try to target a “niche”, as for example by targeting renewable energies or special materials as wood [1], steel, aluminum (but only one of those). We could also imagine targeting a room in the house as the kitchen or the bedroom. We see that competitors distinguish themselves by giving free entrance to ladies [2] or by offering entrances for individual customers to the competitors [3].
In this scenario we see both direct and indirect network effects. Indeed, the more people are present, the easiest it will be to communicate through the network and more people can be reached. But there are also indirect effects because the more people there will be and the more exhibitors want to have a place and vice-versa. A way to strengthen direct effects would be to facilitate the communication between customers, professionals and exhibitors by encouraging exhibitors to hold presentations, questions/answers sessions etc. Indirect effects may not be strengthened because once the critical mass is reached there could not be more places for new exhibitors. Thus, we are limited by the space available. That is something that we don’t see with operating systems as Windows because there is always spaces for new developers!
[1] http://www.bois-habitat.be/
Show less[2] http://cocoon.be/fr/infos-pratiques_1/
[3] http://www.salonhabitat.be/01729/fr/INFOS-PRATIQUES-EXPOSANTS
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Question: Assume that you are a competitor wishing to start a fair of your own. How would you try to compete with Batibouw? What are the current competitors doing?
As new on the market, either I have a sustainable competitive advantage that permit me to compete entirely to Batibouw and to try to take all the market, either I can try to compete with him and grab some parts of the market. If I do need to compete with Batibouw several possibilities exist to differentiate myself or to try to reduce competition between us.
Firstly, I can select only one category of its exhibition’s theme to compete with. This year, for example, Batibouw proposes 12 categories (related closely or not to the sector of construction/habitations): outdoor spaces, furniture units, interior design, structural materials, floor coverings, sanitary, home builders, lights, renewable energies, kitchen, heaters/radiators and consulting/banks. By choosing one category, I specialize the fair in one sector only; by that way, some really specific exhibitors will be selected in the purpose of having the best one. A second way to reduce the competition level is to propose a fair at another moment and/or in another city than when and where Batibouw takes place.
The main Belgian concurrent of the Batibouw fair are the “Salon JardinEXPO 2015”, “Bois et Habitat”, “Salon MAISON-Jardin et loisirs” and “Architect@work Belgium”. Some of them are more specialized than Batibouw as “Salon jardin” specialized in outside facilities or “Bois et habitat” specialized in wood.
On the contrary there is “Salon MAISON-Jardin et loisirs” that is more generic and has a leisure category (with restoration, welfare…).What we can conclude from that is that no one propose exactly the same categories/sectors like Batibouw and try either to be more specific either more general.
Concerning the place where the concurrent fairs take place, we notice that it is in other cities than Brussels; it permits them perhaps to target another market.
The last aspect is the time line; when the fair takes place? Astonishment, they take place either exactly at the same moment than Batibouw like the “Salon JardinEXPO”, either, they just follow the Batibouw fair (around March of April). One potential explanation of that fact is the concurrent exhibitions will try to get the customers that develop the idea to change something in their habitation when they were visiting the Batibouw fair. Indeed, due to its reputation Batibouw attract people that know exactly what they want and why they are there but also people just visiting without any presumptions and it is these people (developing ideas of refurbishment work,…) that other fairs target.
There is a kind of indirect “advertising” effect, by going to the famous Batibow fair and visiting exhibitor companies that will be in another concurrent fair, people looking for more information after the Batibouw exhibition will go to the following fairs because they know that some exhibitors will be present there. We can associate this effect to an indirect network effect because the number of consumers going to Batibouw cause the production of other more specialized fairs that increase the number of potential Batibouuw visitor that are their to get general information.
In conclusion, if I need to create a “habitation” related exhibition I will try first of all to chose specificity that Batibouw present and get some the most experienced exhibitors (and some also present in Batibouw). Secondly, as the concurrent fairs do, my exhibit will take place after Batibouw event to attract some customers of it.
Referenced used :
Show less[1] http://www.batibouw.com
[2] http://www.jardinexpo.be/012/fr/Accueil
[3] http://www.bois-habitat.be
[4] http://www.tendancesmaison.be
[5] http://www.architectatwork.be/fr/informations-pratiques_87.aspx?db=1
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If there was no partner like FISA at the beginning, the start will be more difficult because of the “chicken and eggs problems”. In short, buyers will come if there are sellers and sellers will come only if there are buyers. I will explain how I would solve this problem and make sure that both sides will take part to the fair.
First, since I don’t know the taste of the consumers for my platform, I would start by attracting professional consumers (they are more likely to have a high taste for building fair). Even if we don’t have a list with all exhibitors that will come, the concept is still here and once we have a sufficient number of expected consumers we can begin to attract exhibitors. To do so, I will propose a system of low introductory prices through pre-sale tickets (which are only accessible for professional customers who have their own business) in exchange of advertising in their business. In order to increase the participation rate of this group, I will also offer discount to professional customers if they come with colleagues (if you take for instance 10 pre-sales tickets, you have a special price).
Once I will have attracted enough people in this group of customers, I will have a list with the names of the expected company’s representatives. Then, professionals exert a high network effect on the side of exhibitors since professionals have more financial means than private. It will give incentives to the exhibitors to come and so we will be able to make the exhibitors pay a high price to compensate the subsidization of the professional consumers by pre-sale tickets. Next, we can consolidate on these two groups until the critical mass is reached by advertising in the shops of the professionals, on the website and by viral marketing on Facebook (for example with a contest to attract private consumers: the one with the most likes on his building project wins free tickets). On the D-Day, the private consumers and the professionals who didn’t get a pre-sale will pay the basis price.
Secondly, if I assume that I want to compete with Batibouw with a fair of my own, how will I proceed? We have seen that with indirect network effect, a situation with a “winner-takes-all” can emerge. It’s what happened with Batibouw: there are different building fairs in Belgium but Batibouw seems to be the dominant building fair in Belgium.
As a competitor, it will be more difficult for me to rival and the more similar are the platforms, the fiercer is the competition. Then, I will propose the same concept but with little changes like a focus on a specific region or on a specific aspect of construction (wood construction or renewable energy materials). That’s what current competitors of Batibouw are doing. For instance, the fair “Bois and Habitat” promotes wood as building materials and interior decoration of homes. Another way to compete is to care about the identity of the various group, in that case exhibitors and visitors care about the identity of the matching prospects and not the number. For instance, I can propose a fair only with exhibitors and professional customers in order to increase the B2B relationships. Caring about the identity of the various group allows to internalize a sorting externality. That’s also what a current competitor of Batibouw do, “BTP expo” focuses on the exhibition of the latest technology and insist on their website on the selection of the visitors (construction experts, entrepreneurs or architects).
To conclude, I will discuss about how network effects can strengthen the platform. Communicating the list of the exhibitors and what is their product/service is a way to strengthen indirect and direct effect. The indirect network effect is the fact that when they are more exhibitors, there are more needs covered and thus there are more incentive for consumers to come and find the suitable product/service for their project. Direct network effect is the fact that when they are more exhibitors, others will come for their B2B relationships and because there is a cost of not coming due to the competition and the opportunity that it represents. Another way to increase the direct effect is to offer discounts for the professional investors when they buy a certain number of tickets, and put in place contest activities through social media for the private consumers. When there are more consumers, more will be attracted to come (“if others go there I should go there too”).
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First of all, to have a network effect, both sides need to be brought together in the right quantity and at the same time. However, I think we should start negotiations with exhibitors first. Indeed, they are the ones that will determine the quality of the fair, that will create its reputation and that will allow diversification of products and services offered. It is from prime importance to deal with reliable professionals. Visitors will attend the fair only if they know that exhibitors are reliable and offer good quality for their services/products. To convince and stimulate exhibitors to take part in the fair, arguments such as visibility, the future reputation of the fair, the organization and the reward system are needed.
Imposing an entrance fee could target the audience who is really interested in those companies and prove that the fair has a certain level of credibility.
Batibouw is the most famous fair in Belgium, and will be difficult to compete with. The competitors need to differentiate themselves and to offer additional services.
We can imagine the creation of workshops, in addition to conferences that already take place at Batibouw. Debates between exhibitors that sell their products or even panel discussions of experts/specialists that don’t sell anything but teach the basis of construction to buyers can increase their confidence and prevent customers from feeling trapped.
Finally, awareness programs about technical professions and their future may also attract visitors who want to learn more about the construction sector and its opportunities.
Exhibitors and visitors’ testimonies (online) could also bring a plus to the fair.
In order to improve the network effect, we can imagine better synergies. Banks are already present on different stands at the fair, but exhibitors should deal with constructions contracts directly with the bank, so that clients wouldn’t need to visit the bank’s stand in order to get a loan. This proposition allows time saving and prevent buyers from having to deal with both the bank and the exhibitor.
Show lessThe repayment of entrance fees following a purchase at the fair could increase attendance, even though entrance fees are low. However, this technique could promote sales.
Finally, an online platform that would include all the exhibitors’ activities could be useful. Indeed, the user could do his research on the platform and quickly get preliminary estimates from the companies involved with the fair. This would facilitate the fair attendance in order to confirm contracts. The communication between the different actors is very important in order to enhance the network effect.
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First, when planning such an event, one should be able to work on both side nearly “simultaneously” :
If you work on the exhibitor side, you have to convince them that you will attract people. One way of doing so is by tying your own hands. Commitment is a good way to convince potential partners that you are a serious player. In this example, you can book a big room, already book an advertisement campaign, … Those kinds of commitment will support your promise to bring a lot of people.
While looking for partners, you should also work on the visitor side. You should try to have some contact with them. Since there is a bigger mass of individual entities on this side, you may want to organize exploratory group of discussions, survey (for more quantitative results), etc. in order to better understand your market. You can then adapt your offer and evaluate the price elasticity. Those are key elements that you need to organize this platform.
So, on one side, you must find partner very quickly to have names to attract visitors … but you must know your customers to adapt your offer and gain credibility towards the potential partners. This can be achieved trhough strategic commitments and marketing studies.
For the competition issue, I would like to raise another example. In the video game industries, there are also multi-sided platforms in which game editors and console developpers present their future games to potential players. There are many many conferences, events, … Let’s name the most popular : E3 (Los Angeles), Tokyo Game Show, Paris Game Week, Gamescom (Cologne), etc.
It is very interesting to notice how those events compete : they try to attract the same base of visitors and exhibitors … but at different moment of the year and on different geographical localisations. People are coming from all over the world in each event.
My answer to the question would be that competitors do not necessarily compete. Rarely, such event or platform try to do the exact same thing, at the exact same moment and the exact same place. I am not familiar with the construction sector but I doubt there is a similar event in Brussel during this time … To me, competitors are “sharing” the market, avoiding to fight with each other. If I wanted to compete with Batibouw, I would set up nearly the same plateform … but in Summer (instead of Winter).
One way to increase the network effect is to rely on the social medias to increase popularity but also to be linked with other similar events or activities in order to create a “club” effect. For example, there are two or three “medieval fairs” around Brussel each year. They partner with activities like artistic fencing, LARP, historical reconstitutions, tasting of alcohol produced in the old-fashioned way, etc. For the practicioners of such activities, the fairs become a must go.
Show lessTo sum up, I think it is important to rely on already existing medias and try to build partnership with “complementary” events. This could increase the popularity of our event and thus give more incentive for exhibitioners to come.
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It appears clear that if we need to set up a platform as fast as possible, we need to contact the exhibitors first. Indeed, the biggest part of the reputation for a fair is the exhibitors and the quality of their products. It appears easier for us to attract buyers with the quality of the exhibitors than to attract exhibitors with the quantity of visitors. The main reason is that it is easier to evaluate the quality of the exhibitors without having a good approximation of the numbers of visitors than evaluating the quantity of visitors without having a good approximation of the numbers of exhibitors.
Since it is well known that Batibouw has a good reputation, we have a high risk to be in a “Winner take all” situation. To counter that situation, there are two option: being stronger that the opponent or to differentiate the offer. Facing directly Batibouw could be very risky, while differentiating the offer would be easier. The differentiation could be made on different dimensions: the offer (semi-professionals instead of professionals), the place (on Internet instead of on real life) or the price (lower price or no price at all for buyers). All those strategies would create fairs that are sufficiently different from Batibouw to avoid direct competition.
In order to strengthen the direct network effects, we should find a way to enhance to communication between the buyers and the professionals. For one of the fair’s benefits being the ability to communicate, Batibouw should create a platform that allows buyers to communicate with the professionals as a whole. Indeed, the communication is now possible from people to people, and we think it would be more effective to allow them to communicate to everyone at once. Such strategy would be possible with the integration of a digital forum or open discussions about some precise subjects linking buyers and professionals.
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If we would have to build a structure without the support of the FISA the solutions are not numerous.
One solution could be be the help of the state for the structure, the communication and the prospection but let say that: like the FISA the state will not have a specific role to play.
One of the best solutions for me then would be to start slowly but surely. By slowly and surely I mean that the we have to target what the customers really want and if those needs can be satisfied by the current enterprises.
For example some years ago there was a huge interest in the solar panel technology and devices (helped by the green premium given by the state). Thanks to that some organims or groups decicided to target this particular “niche” and began a two-sided platform for this particular need. With this example I want to point that firstly you have to select something (product, service …) that is currently valuorized by the customers and propose them an offer around this particular procuts or service with the two-)sided platform.
Another exemple that shows clearly this step by step approach is the evolution of the comic-con of San-Diego.
In the beginning it was just a project made by some fans of comics in provide a service for the fan of American comic books, movies or science-fiction products and give them a place where they could share or discover knowledge about their hobby.
The idea was simple: focusing on the quality and not on the quantity. This is why they selected some special guests to talk about the projects and rasing some founds for bigger events. Thanks to the word of mouth, they were able to establish a wide community behind the project and until the comic-con was growing year after years.
This is the idea I defend,if there are no structures to help us firstly, we have to increase awareness of the potentials customers with something that try to answer the needs and that is valued by the customers.
Secondly we have to focus of the quality not the quantity in order to decrease the potential costs in the beginning and at the same time try to increase the word of mouth behind the project in order to become bigger and bigger accross the years without forgetting the main focus of the quality .
This is of the course a long-run project but without any big structure to help us, this would be one the safest way.
source: http://www.comic-con.org/about
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First of all, I think that the first persons to contact in order to set up a two sided fair are the exhibitors. Indeed, they form the basis of such a platforms. However, they will not come if we ask them to. We must give them multiple incentives in order to convince them. The arguments are multiple: visibility, certification and award. It is important to mention that, certification and award is possible only if the fair have acquire a certain popularity and fame in the market.
Once the details are clear for the exhibitors, we must focus on the other side …
There must be a lot of publicity to reach the customers, who can be simple customers or professionals. It’s important to communicate on the perks that such a fair can offer. The mains are the reduction of transaction costs and the certainty to meet real professionals.
One way to compete with Batibouw is to open a fair where there are no fixed fee for the potential buyers. It will gather much more possible customers but on the other hand the constraints of space must be taken into account by having a larger building. Besides, more customers means more chaos in the fair so it is important to have a well-arranged warehouse offering the best visibility.
In order to enhance the network effect, Batibouw could create a social media related to the fair and similar a bit to Facebook. Every exhibitioner present at the fair could be visible on the website and it would be possible to contact each of them. There could be interaction between customers and firms but also between firms. Thus, they can keep contact after the fair. Only the visitors that have paid their entrance fee could register to this social media in order to be sure to have serious potential buyers (it could always be possible to add a fee for the non-visitors, thereby we could be certain that the person is really interested).
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