Executive summary of "The impact of choice on co-produced customer value creation and satisfaction

Citation

(2015), "Executive summary of "The impact of choice on co-produced customer value creation and satisfaction", Journal of Consumer Marketing, Vol. 32 No. 1. https://doi.org/10.1108/JCM-12-2014-1256

Executive summary of "The impact of choice on co-produced customer value creation and satisfaction"

Article Type: Executive summary and implications for managers and executives From: Journal of Consumer Marketing, Volume 32, Issue 1

This summary has been provided to allow managers and executives a rapid appreciation of the content of the article. Those with a particular interest in the topic covered, may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefit of the material present.

A major consequence of the Internet explosion is the increasing emphasis placed on collective endeavor. Collaboration has become acknowledged as being an effective means of adding value for the customer. Technology advances have enabled this approach to be developed further. This has led to a growing number of organizations involving customers in the value-creation process.

Customer input into co-production has been facilitated by the emergence of online customer participation enabling platforms (CPEPs). These service delivery systems vary in the sense of making customer involvement compulsory or offering people a choice of whether to participate or not. Whether customers get the option is often incorporated into the design of the specific CPEP utilized by the firm.

Researchers note the conceptual link between co-creation and co-production, which is also referred to as the “activation stage”. When co-production is shown to increase the value of a service, involving the customer in the process is justified. In such circumstances, the enhanced serviced experience positively impacts on the company’s aim to provide a differentiated offering.

Empirical evidence exists to support the belief that participation of customers does help create extra value for them. But the involvement in this instance needs to be more than simply being the end-user of the product or service in question. Besides, a role as an end-user is argued to generate only a limited amount of satisfaction. But participating earlier in the value-chain can help to provide a more fulfilling experience.

Value creation incorporates three separate dimensions:

1. Individual value, which can be created by customers when they are actively involved in the production of services. The literature defines this value type as incorporating such as the pleasure, sense of achievement, prestige and personal growth gained from the co-creation process. Although the feelings are deemed “intrinsically motivating factors”, the claim that their status as co-created value arises from the customer’s experience is equally valid.

2. Relational value: Co-creating value is “inherently relational” and involves interaction between firms and their customers. Engaging in co-creation, thus, provides customers with value opportunities to develop interpersonal relationships. Technology functions to enable such interaction, and how it takes place. The network that conducts interaction is much broader and easier to access, thanks to technologies like the Internet. It is also possible to extend the relational value if the design of the CPEP used permits interaction with other customers as well as the company. Different studies acknowledge the merits of the “community-like structure” that develops when the social-bonding process is expanded in this way. The wider connections made possible ensure that community rather than company becomes the main driver of interaction. And there is also a greater prospect that needs will be met due to the obligation that members feel toward each other.

3. Economic value: This is generated in the shape of improved service quality and greater scope for customization. Customer participation can enable such outcomes by respectively increasing the probability of achieving the desired result or opting for producing appropriate service aspects. Stronger perceptions of service quality are also possible through greater customer control of how services are co-produced and utilized.

Whether customer participation is mandatory or optional has a significant bearing on value creation. Granting individuals a choice positively influences the attitude toward the firm and the technology used for co-creation. Satisfaction levels can be higher too. On the other hand, making involvement obligatory can harm the commitment needed to engage in the necessary co-creation behaviors. People becoming less prepared to take responsibility for decision-making is another likely consequence. The appeal of alternatives which are not permitted can increase too.

In the view of some academics, frustration, resentment and other negative feelings toward the service provider stem from the belief that freedom has been lost because participation is mandatory. The cumulative effect of all this is reduced activity levels, which inevitably lowers the amount of value that is created.

When a customer is motivated, involvement increases and the capabilities of the CPEP are likelier to be exploited more fully. A higher degree of participation means that the customer becomes more satisfied due to the fact that a larger amount of individual, relational and economic customer value has been co-created. It is similarly proposed that a CPEP which is better able to support co-creation of value in all three dimensions will raise customer satisfaction.

To examine the issues further, Flores and Vasquez-Parraga conducted an experiment involving 214 subjects recruited through survey research panels. Females account for around 60 per cent of the sample and the mean age of respondents was 46.4 years. Experience of using an online financial service relating to such as tax, investment, banking or insurance during the previous 12 months was a condition of taking part in the experiment.

Subjects were randomly exposed to one of the two scenarios. In the first, the organization offered only an online service where customer participation was mandatory. The second had the same service, but also provided the option of going to a local branch where an employee would complete the service.

After respondents completed the service they were assigned to, the analysis revealed that:

• choice positively impacts on the co-creation of relational and economic value;

• the influence of choice on all three dimensions of value was considerably stronger than when no choice was offered; and

• the impact on satisfaction of the value creation factors was positive and significant in each case.

A positive relationship between choice and individual value was also evident but was not statistically significant. The authors propose that the impact may depend on how novel the experience is, as innovation helps to increase individual value. Learning and innovation will be much less when CPEP usage experience is not markedly different from previous encounters with the technology.

Based on these findings, Flores and Vasquez-Parraga also concluded that:

• both choice and no choice generate positive value creation, but the impact is considerably stronger in the choice condition;

• design elements of a CPEP influence value creation in whether or not they permit the customer a choice regarding their participation; and

• the impact of choice on value creation will be substantially greater in situations where learning is anticipated relative to those where it has already occurred previously.

Practitioners are urged to focus on design of CPEPs, so that customer participation in value creation is optional. Although the cost of integrating choice into the existing delivery systems could well be expensive, the impact on positive customer engagement will compensate. The need to motivate customers to use a CPEP is also noted. Use of messages that highlight the benefits of experiencing individual, relational and economic value might have the desired effect. The authors advise firms to ascertain the impact of the CPEP used on each value dimension. Identifying which are most pertinent to their customers is recommended too.

Longitudinal study might ascertain if links exist between any of the value creation dimensions and future behavior. The data generated could likewise reveal whether these value sources impact on either or both attitudinal and behavioral loyalty. Conducting research in legal services or other contexts is another future option, as is an investigation into the potential effect of other CPEP design features on individual value creation.

To read the full article enter 10.1108/JCM-04-2014-0931 into your search engine.

(A précis of the article “An investigation of the effects of product recalls on brand commitment and purchase intention”. Supplied by Marketing Consultants for Emerald.)