The Benefits and Challenges of This New Relationship for Marketing Managers

Co-Creation

                               Chineye Augusta Onwuama

201315284

University of Liverpool

With the advent of co-creation, the relationship between the organization and the consumer has changed. This paper intends to critically discuss the benefits and challenges of this new relationship for marketing managers.

Before the initiation of co-creation, businesses operated through traditional marketing, (price, product, promotion, place) customers would buy what they can see in the market, but Customers todays have more options of products, yet they seem disappointed (Prahalad and Ramasamy, 2004, p.6).  According to Nicolic et al (2013, p.85) co-creation portrays set of strategies that set up a dynamic, inventive and social coordinated process between producers and clients with regards to product advancement. Ford et al (2012, p.281) discussed that in marketing cocreation is not all about selling Product and services to customer, but should think as far as how they can co-produce and meet the needs of the customers. For example, Unilever company stated an open innovation that says, “if you have a new design or technology that could help us grow our business and solve the challenges we have set, we would like to work with you through open innovation”. It was further suggested that with co-production the value of the customers is met, and this value is strongminded by experience provided through product and services. Liu (2009) stated that co-creation occurs where self-service is vital, and customers are doing the services that used to be done for them by employees. For instance, Automatic Teller Machines (ATMs) serving the role of a bank teller, customers doing some transactions through internet, customers scanning and checking out items via self-checkout in a grocery store, self-serve kiosk at the airport to get boarding pass.  All these tends to create value and it is beneficial to Managers and customers.

Co-creation is a marketing plan grounded on consumer values by making use of distinctive mediums to share ideas, information and issues faced in other to enhance the quality of the product. During the process of creating value, customers loyalty and Personalized experience will be accomplished, there by expands the value of the product and increases the profit of the manufacturer (Parahalad and Ramaswamy, 2004, p.9).  Witzel and Mattu, FT, (2010) agreed that It is not compulsory for the customers to buy the product or services before adding value, value could be added on product and services without contacting the company through social networking such as Facebook, Instagram and Twitter. von Hippel and von Krogh (2006, p.298) discussed that Some costumers are motivated by the benefits they get whilst adding value in co-creation with a firm such as financial reward, financial reward could be in form of share of profit or cash given as a prize, and firms benefits from customers that are not motivated by money because there are some customers that freely want to share ideas. such customers receive social advantages of co-creation from titles or different types of acknowledgement including expanding status, social regard, “great citizenship” (Nambisa and Baron 2009, p.389). Darmody, (2017) argued that customers are being exploited on the bases of creating value for customers, by not paying the customers for collaboration and eagerness contributed in developing a product. Zwick, et al. (2008, p.165) agreed that value in co-created product is said to be more expensive than product produced through identical production. For example, in a Nike shop customer are given the opportunity to order customize Nike shoe of their choice, but a customized Nike shoe are more expensive than standard Nike shoe, hence customers are paying for adding value in co-creation.  Motivation is the main reason why most customers are willing to add value to an Organization and another reason for having low participants when Organizations with huge number of Fans develop cocreation platform. There should be a balance between monetary and non-monetary motivation to achieve required participation and value from customers.

 value can be added to a company through innovation as it improves the competitiveness of a company by co-producing solutions with customers that will add worth to customers’ needs and beneficial to the organisation (Ford et al 2012, p.283).  For instance, in 2006 the Lugnet community amalgamated 10 Fans to contribute in the co-creation of innovative LEGO hobby train launched in 2007 by picking the ones with 100000 votes. The reward customers received was having their names appeared on the packaging. Nambisa and Baron (2009, p.342) stated that Some customers are motivated to participate in innovation because they acquire knowledge of the technology product and services they are co-creating with by partaking in forum and improving the groups that where run by manufacturer. For example, companies such as Lenovo and blackberry have discussions that pull in customers who take an interest in all phases of the co-creation procedure and pick up innovation learning themselves from trading thoughts and contributions from others in the group. Hoyer et al (2010, p.283) argued that positive contribution from customers depends on the level of modification or determined by the grade of newness required of innovation (radicalness). Leonard and Rayport (1997, p.104) states that when an innovation is very new, there are some limitations that would affect customers in development of the product. Zachay et al (2004, p.171) suggested that radical innovation requires a complete process of development and comes with a lot of complications therefore there will be plenty of uncertainties. Radical and non-radical innovation are beneficial to companies and customers. companies ought to provide adequate technology and expert that would fit the cocreation they are seeking to develop. Magnusson et al (2003, p.113) Argued that some of the ideas created by customers believed to be impossible by the firm at early stage, this could lead to firm seeing those information as over-burden. According to Steve Jobs, Chairman and CEO of Apple Inc “you cannot just ask customers what they want and then try to give that to them. By the time you get it built, they will want something new.”

in the context of brand community, brand management stake holders can be completely involved because they are the ones to share information that would increase the brand value of an Organization Nambisa and Baron (2009, p.389). For example, in 2012 Microsoft brand dropped value by 9%, they did a survey on the brand experience the response they received proved that the brand value was reduced, because windows 8 was not a friendly operating system. in 2014 brand value of Microsoft increased to 29%. Ellson (2004) discussed a consumer frames impression of a brand through different aspect including past experience, individual objectives and qualities, usage circumstances and correlations with contender brands. This argument proves that the brand value of Microsoft increased because of the brand experience that was created with their customers as brand experience is all about customers getting the better use of a brand. Campbell (2009) argue that in brand management customers’ knowledge is very vital, with the end goal that a brand can have various implications in the market depending upon the stakeholder. br Brand management in cocreation can result to expansive volumes of consumer participation, this could lead to firm seeing those information as over-burden. Managers believe it is best to keep it very simple with your customers because most customer just jump on brand that has the best arrangement, therefore interacting and receiving information from them would vanish brand loyalty.  (Spenner and Freeman 2012)