Consumer cocreation in the New Product Development · PDF fileConsumer cocreation in the New...

Consumer cocreation in the

New Product Development Process

Lena Schmatzer

May 7th, 2014

eBusiness Class Dr. Christine Strauss | Mag. Andreas Mladenow

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Consumer cocreation – a conceptual framework

Consumer motivation drivers

Outcomes of cocreation

mini – Case Studies

Conclusion

1 Underlying concepts

May 2014 | Consumer cocreation Lena Schmatzer

The importance of NPD

1. Underlying concepts 2. Consumer cocreation – a conceptual framework

3. Consumer motivation drivers 4. Outcomes of cocreation 5. Mini – Case Studies 6. Conclusion

3

Vorführender

Präsentationsnotizen


Consumer cocreation as a promising future aspect in NPD



“value can only be created with and determined by the user in the ‘consumption’ process and through use or what is referred to as value-in use.” (Lusch et al. 2006)

Consumer empowerment means that consumers want to not only influence but also actively participate in the process of NPD as well as in its value creation. (Hoyer et al. 2010, van Doorn et al. 2010)

“Consumer cocreation is a collaborative NPD activity, in which consumers actively contribute and select various elements of a new product offering.” (Hoyer et al. 2010)

Cocreation ≠ Coproduction

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Vorführender



The shift from B2B to B2C



B2C Highly attractive and equally challenging in the cocreation process of NPD

Distance between firms and consumers much larger effort regarding consumer integration

B2B

Most prevailing studies

Distance between firms and firms

5

Vorführender



Consumer cocreation – a conceptual framework (Hoyer et al. 2010)



* Degree of cocreation: scope and intensity of cocreation activities across the four development stages.

6

Vorführender



Consumer motivation drivers



Hoyer et al. identified four groups among consumers who are not only able but also willing to engage in cocreation process.

Market ravens: are able to influence other customers’ purchase decisions. This results from an enormous know-how about the marketplace and a widespread set of information about products and specific brands that market mavens are willing to share with other consumers.

Emergent consumer: possess the capability to discover, and to a certain extent set trends

Lead users: recognize possible market trends before others do; lead users are able to find solutions to prevailing product gaps and needs

Innovators: the earliest to adopt new products; known as extreme users; developers due to their know-how and ability to contribute their ideas in an effective and functional way

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Vorführender



Financial factors

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Financial factors

Also referred to as economic drives (Etgar 2008) and economic rewards (Lusch et al. 1992)

consumers may obtain the intellectual property

consumers receive monetary prizes or firms offer profit sharing models in case of the engagement of cocreation activities.

Can be classified into two categories that both represent monetary or financial aspects in association with a target outcome of an exchange process

appear to be the most evident and instinctive factors with regard to the decision whether or not to engage in cocreation activities.

there are also many consumers that are not motivated by economic rewards at all and are willing to freely share their ideas and innovation concepts.



9

Vorführender


May 2014 | Consumer cocreation Lena Schmatzer 10

Social factors


Social factors

Also referred to as social benefits (Etgar 2008)

Recognition by firms, peer customers and product users

Online interaction develops strong social as well as interpersonal relationships

Social networks and cocreation communities creation of social contact values

Seeking of status and self esteem = strong motivational force

With reference to the seeking of status and social esteem the recognition may be a great form that satisfies this specific desire.



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Vorführender



Technological factors

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Technological factors



consumers’ motivation is driven by the achievement of specific technology know-how that can be gained in forums and groups that actively participate in the new product development process

„the major contribution of technological changes is their ability to allow rapid and low cost interactions between consumers and suppliers and among consumers themselves leading to tremendous reduction in the economic costs, time and effort required for consumer participation in value creation. … the advent of the Internet offers true interactivity with the consumer, customer-specific, situational personalization, and the opportunity for real-time adjustments to a firm’s offering to customers, as well as changes in consumer expectations regarding firm service strategies that flow from these developments”. (Etgar 2008, p. 99 f)

consumers are able to acquire enormous cognitive benefits via the exchange of information, ideas and general inputs from peers in the respective community

13

Vorführender


May 2014 | Consumer cocreation Lena Schmatzer 14

Psychological factors


Psychological factors



Also referred to as psychological drives (Etgar 2008) psychological rewards (Lusch et al. 1992)

Decisive factor about participating in cocreation activities or not

Consumers generally participate in cocreation activities because they want to realize specific objectives that are strongly linked to consumer values.

extrinsic values rather imply values such as excellence, satisfaction of the need of self expression and uniqueness

intrinsic values strongly refer to the engagement in cocreation activities because of the variation from their daily life and the experience for its own sake

“the degree of satisfaction, enjoyment, gratification, or happiness that is associated with internal or external exchange.” (Lusch et al. 1992)

especially non-economic rewards have high potential to influence the outcomes of exchanges

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RISK ? Is hard to classify into one of the four categories

Consumers may decide to engage in cocreation projects in order to

reduce their risk related to the purchase of inappropriate products. Through their participation and input they can actively

help avoiding these risks.

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Outcomes of cocreation



Firms can reduce their risk due to the valuable input by consumers

Consumers shape the new products according to their specific needs

Products become more effective

Product-related and personal relationships can be developed

Reduced control by firms

Management tasks might become increasingly complex

The process of selecting the best consumer idea out of a huge

amount of delivered ideas is very challenging

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https://aragonresearch.com/wp-content/uploads/2013/09/new-microsoft-logo-square-large.jpg


LEGO is one of the most prominent examples of consumer cocreation companies. late 90’s: LEGO had to fight many difficulties, one being that the product development became increasingly more complex. 2003: new CEO was announced, who tremendously changed the product development strategy towards actively involving consumers in the new product development process; he thought of users being designers in the product innovation approach, which quickly became a focus point of LEGO’s strategy. By working with an open innovation and consumer cocreation approach LEGO’s business has been successfully transformed.



Mini – Case Studies

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The customer motivation can be clearly attributed to social factors. LEGO = “play well” (leg godt in Danish)

Regular reviews, assessments and most importantly launching the best ideas as a new product, consumers are strongly motivated by psychological aspects. The economic aspect must not be overseen. Consumers, whose idea has been chosen for a new product launch earn 1% of the total net sales of the specific product.

Vorführender


Organisationsstruktur


At hand of Threadless.com a good example can be drawn for a strong financial rewarding scheme. Obviously it also contains strong social aspects, referring especially to the well-developed community However, it states a good example for a successful consumer cocreation that was mainly driven by economic motivational factors.



Mini – Case Studies

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Threadless.com is a platform that invites people to design and submit t-shirt designs > 2.3 million community members Threadless succeeded in making a significant impact. Remarkably, they won $ 7.1 million in awards. “earn fame and fortune” well-developed and very strong community that arose over time ”Threadless is a creative community that makes, supports, and buys great art.” (Threadless.com, as of January 6th, 2014)

Vorführender


Organisationsstruktur / Produkte

http://www.flickr.com/photos/colleen-lane/4308706250/





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Companies have to deal with a greater demand, faster changing consumer needs and subsequently a strong product development in order to stay competitive. Due to these challenges companies more and more start to involve the consumers in order to develop products that best meet the consumers needs.

Even though a strong emphasis is put on the model of consumer cocreation, and the most decisive motivational factors that are indispensable for the consumers’ engagement it must not be overseen that cocreation doesn’t end with the product launch. Social media and the established massive communities are very often used as an extremely efficient tool when it comes to market and advertise the product.

Conclusion


Internet sources • Co-Creation in New Product Development: http://vimeo.com/28986632, as of January 5th, 2014 • Crossroad Innovation: http://www.crossroadinnovation.com/cocreation/companies, as of January 5th, 2014 • HYVE: https://www.hyve.de/, as of January 5th, 2014 • Ideaconnection: http://www.ideaconnection.com/open-innovation-success/Nivea-Co-Creates-with-the-Crowd-to-Eliminate-Stain-Pr-00365.html, as of January 6th, 2014 • Kotler Marketing: http://www.kotlermarketing.com/phil_questions.shtml, as of December 31st, 2013 • McDonald’s – Mein Burger: http://vimeo.com/55641945, as of January 6th, 2014 • People’s Lab: http://peopleslab.mslgroup.com/peoplesinsights/peoples-insights-volume-1-issue-48-lego-cuusoo/, as of January 6th, 2014 and http://peopleslab.mslgroup.com/peoplesinsights/5-co-creation-communities-ten-frontiers-for-the-future-of-engagement/ , as of January 6th, 2014 • Threadless: http://www.threadless.com, as of January 5th, 2014 • Visioncritical:http://www.visioncritical.com/blog/5-examples-how-brands-are-using-co-creation, as of January 5th, 2014 Papers • Bolton, Ruth N. / Saxena-Iyer, Shruti (2009): Interactive Services: A Framework, Synthesis and Research Directions. Journal of Interactive Marketing, 23, pp. 91 – 104) • Bradfield, D. J. / Gao, J. X. (2007): A methodology to facilitate knowledge sharing in the new product development process. International Journal of Production Research, Vol. 45, No. 7, pp. 1489 – 1504. • Clark, Ronald A. / Goldsmith, Ronald E. (2005): Market mavens: Psychological influences. Psychology & Marketing, Vol. 22 (4), pp. 289 – 312. • Etgar, Michael (2008): A descriptive model of the consumer co-production process. Journal of the Academy of Marketing Science, Vol. 36, pp. 97 – 108. • Filieri, Raffaele (2013): Consumer co-creation and new product development: a case study in the food industry. Marketing Intelligence & Planning, Vol. 31. No. 1, pp. 40 – 53. • Hoffmann, Donna L. / Kopalle, Praveen K. / Novak, Thomas P. (2010): The “Right” Consumers for Better Concepts: Identifying and Using Consumers High in Emergent Nature to Further Develop New Product Concepts. Journal of Marketing Research, Vol. XLVII, pp. 854 – 865. • Hoyer, Wayne D. / Chandy, Rajesh / Dorotic, Matilda / Krafft, Manfred / Sing, Siddarth S. (2010): Consumer Cocreation in New Product Development. Journal of Service Research, 13 (3), pp. 283 – 296. • Lusch, Robert F. / Brown, Stephen W. / Brunswick, Gary J. (1992): A General Framework for Explaining Internal vs. External Exchange. Journal of the Academy of Marketing Science, Vol. 20, No. 2, pp. 119 – 134. • Lusch, Robert F. / Vargo, Stephen L. (2006): Service-Dominant Logic: Reactions, Reflections and Refinements. Marketing Theory, 6 (3), pp. 281 – 288. • Nambisan, Satish (2002): Designing Virtual Customer Environment for New Product Development: Toward a Theory. The Academy of Management Review, Vol. 27, No. 3, pp. 392 – 413. • Tidd, Joe / Bessant, John (2009): Case Studies Lego. Managing Innovation, pp. 1 – 5. • Van Doorn, Jenny / Lemon, Katherine N. / Mittal, Vikas / Nass, Stephan / Pick, Doreén / Pirner, Peter / Verhoef, Peter C. (2010): Customer Engagement Behavior: Theoretical Foundations and Research Directions. Journal of Service Research 13, pp. 253 – 266. • Von Hippel, Eric (1986): Lead Users: A Source of Novel Product Concepts. Management Science, Vol. 32, No. 7, pp. 791 – 805. • Walsh, Gianfranco / Elsner, Ralf (2012): Improving referral management by quatifying market mavens’ word of mouth value. European Management Journal, 30, pp. 74 – 81.

References



http://vimeo.com/28986632

http://www.crossroadinnovation.com/cocreation/companies

https://www.hyve.de/

http://www.kotlermarketing.com/phil_questions.shtml

http://vimeo.com/55641945

http://peopleslab.mslgroup.com/peoplesinsights/peoples-insights-volume-1-issue-48-lego-cuusoo/

http://www.threadless.com/

http://www.visioncritical.com/blog/5-examples-how-brands-are-using-co-creation

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