Discussing The Influence Of A Reward On Crowdfunding Consumer Participation (Coursework Sample)

DIGITAL MARKETING
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Digital Marketing
Crowd funding is a common external capital source for ventures. The concept involves business mobilizing funds in small pieces for their ventures. Though initially crowd funding was embraced in funding artists or creative projects, it has gained popularity in other sectors including fashion, software, and journalism (Kraus, Richter, Brem, Cheng & Chang 2016). The internet has become a fundamental tool in facilitating crowd funding.
The concept of crowd funding usually takes four models. Firstly, there is donation-based crowd funding where the sponsors do so in the spirit of benevolence without expecting any returns. Secondly, there is reward-based crowd funding where the sponsors expect material and monetary rewards from the venture’s proceeds (Xu, Zheng & Wang 2016). Besides, there is crowd lending where the sponsor is paid back their investment. Finally, equity-based crowd funding gives the sponsors shareholding to the venture.
Reward-based crowd funding is quite popular and involves. During the initial phase of raising capital, the sponsors are promised to gain proportionally to their investment. As the project gets into the implementation phase, rewards received may include material rewards or immaterial rewards (Saxton & Kishore 2013). Possible intangible rewards include social acknowledgment, mentions, calls and in-person meetings, updates throughout the course of the project.
The incentives are an important motivation for participating reward-based crowd funding. Most crowd-funding participants derive emotional value as the highest form of reward. This involves feeling like part of a worthy cause. Recognition on the success of a project hence is considered a worthy reward (Killian & McManus 2015). Besides, receiving a tangible product or an experience from the cause is also highly appreciated.
The degree of satisfaction from the reward and the resultant intrinsic or extrinsic motivation may be influenced by several factors. These include that age, gender, the size of the incentive, and “activeness.” Besides, how immediate or delayed the payoffs will be and the perceived qualities of the project influence the motivation and satisfaction.
Crow funding is however faced with a variety of challenges. In this regard, the managerial issue of finding control and transparency balance remains to be the biggest unsolved problem (Kraus et al. 2016). Control primarily involves the division of authority between the concerned company and the crowd. According to research, most companies took a...