Research

‘The Co-creative Consumer: Exploring the changing consumer/producer relations and consumer roles in modern product innovation practices’

To see all ‘co-creation’ research projects I conducted during my Masters study, visit this page.

Here you can read a summary of my literature review: (click here for the complete paper). You can also read a Dutch article about the paper on Frankwatching.com

Type:                     Literature review
Supervisor:        Prof. Dr. Gerrit Antonides
Institution:         Wageningen University

Page contents:

1. Introduction (Jump to)
2. Developments leading to co-creation (Jump to)
3. Consumer roles in innovation (Jump to)
4. Exploring the co-creative consumer (Jump to)
5. Challenges to successful co-creation (Jump to)

I    Introduction

Drawing on the idea that Dutch people like to meddle and voice their opinion, Lay’s developed a nation-wide contest asking people to come up with ideas for a new Lay’s potato chips flavor. The cross-media campaign ‘Maak de Smaak’ was a great success and resulted in a lot of buzz and almost 680,000 submissions, far more than the 375,000 the company expected. A jury headed by a well-known Dutch top chef cook, selected three finalists. Consumers could then vote for their favorite, resulting in another 220,000 responses, and the winner ‘Patatje Joppie’ was announced on television. The new flavor is now part of Lay’s Limited Edition product range. (Lay’s, 2010)

 An idea contest is just one of many initiatives in the last decade where firms actively involve consumers in new product development. This involvement is often met with great enthusiasm on the consumer’s behalf. The general development of involving consumers in innovation practices is coined ‘co-creation’ in 2000 by Prahalad and Ramaswamy (2004a). It underlines that value creation no longer merely stems from inside the firm. The new business paradigm is to create and maintain an active dialogue with consumers and use them as open-innovation resources (Prahalad & Ramaswamy 2004). While consumers were traditionally viewed as value exchangers and extractors, they are now considered a source of value creation and competitive advantage.

Co-creation is defined as; “Purposive and intentional collaboration between consumers and producers, where they systematically interact, learn, share information and integrate resources with the result of co-creating value”.

The paper offers a new perspective by identifying the various roles that consumers can take on in modern innovation practices. These roles are based on level of autonomy and influence in co-creating value. The roles are linked to practical cases, in order to illustrate their use and relevance. With this perspective the concept of co-creation becomes more tangible and is placed within a broader context.

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II    Developments leading to co-creation

To better understand the concept and the elements that make up the definition, it is necessary to look at the developments that influenced and stimulated co-creation.

The starting point is the societal process of individualization, which really set off around the 1980s. Consumers started focusing on expressing individual preferences through consumption choices. In accordance with this, firms started to become consumer-centric, offering customized services and products to appeal to individual needs.

The development of Web 2.0, around 2006, is another important development that facilitated co-creation. The internet became an interconnected platform of web applications and allowed people to create and change content. This empowered consumers to navigate and shape their own consumption environment. The current generation of consumers are empowered, informed, influential, creative, interactive and assertive.

Web 2.0 has made effective advertising increasingly difficult due to the large amount of ‘media clutter’ consumers are exposed to. To successfully draw and retain attention in this highly competitive new world, firms have to be able to stand out. Traditional ‘closed’ innovation processes, made way for ‘open innovation’ in pursuit of better and faster use of ideas. Firms increasingly involved consumers in open innovation practices.

The roles of the company and the consumers converge and they become collaborators in ‘co-creation’ of value. The base for the added value can be found in the co-creation process itself; consumers and firms interact collectively, provide inputs and exchange knowledge. The traditional production chain is reshaped into a dynamic network mechanism where consumers are continuously learning, interacting with producers and sharing ideas.

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III   Consumer roles in innovation

Co-creation can occur in various settings and at different levels of task complexity. The paper focuses on identifying the roles consumers can play in a firm´s innovation process. These roles are connected to the level of consumer influence and autonomy in the innovation process and range from ‘insight providers’ to ‘creators’ (see Figure 1)

Figure 1: Consumer roles in innovation practices, according to level of influence and autonomy.

1) The first role is that of ‘insight provider’, which is characterized by a low level of (direct) consumer influence and autonomy in the innovation process. Consumers are merely sourced by firms to help find solutions, provide insights, identify needs or evaluate ideas.

• A good example of this role can be found in the company InnoCentive. This company relies on ‘wisdom of the crowds’ to find solutions for very specific scientific problems. They broadcast problem statements into their community of more than 160,000 experts, screen the submissions, and select the best fitting solution (Piller, 2009; InnoCentive, 2011)
• For the Beiersdorf brand NIVEA, HYVE conducted an online (netnography) research project around sunless tanning. Consumer statements from online communities were analyzed to provide insights in to tanning issues. I a later stage, market researchers and designers transferred the insights into innovative product concepts and suggestions for products communication (HYVE, 2006)

2) In the role of ‘customizer’ the consumer has a direct influence in the final stages of product development; adapting and selecting a predetermined set of product features that fit their own preferences. Consumers can create value individually but only up to the extent to which the firms’ value chain supports this.

• Dell is often named as an example of a company that successfully introduced built-to-order techniques (Prahalad & Ramaswamy, 2004; Piller, 2009; Piller, 2010). Consumers are presented with a basic model, and then invited to customize aspects such as operating systems, software programs and colors.
• NIKE’s online customization tool NIKEiD allows people to design and customize NIKE products, from shoes to team jerseys to equipment. Customers can adapt colors, patterns, tags and performance features. Via the group application ‘The Team Locker’, sports teams can enter, share and rate designs. (R/GA Agency, 2011)

3) The role of ‘ideator’ is the next step towards an active consumer role in innovation practices. Here, consumers are collectively addressed by firms to provide their creative input and innovative products ideas. The results will finally become intellectual property of the firm and will be used as inspiration for innovation.

• The company Redesignme provides a platform designed to connect firms to ‘ideators’. Challenges are posted on the community of almost 7,000 creative consumers and designers. These community members can create their visual concepts, vote for the best design and provide feedback. The winning ideas are selected and rewarded by the firms. (Redesignme,2011)
• Doritos and Pepsi Max launched a large scale consumer contest in 2010 in the U.S; ‘Crash the Super Bowl’. Fans had to design their owncommercials and the winning commercials were aired during the Super Bowl XLV on the February 6, 2011. The contest resulted in 5,600 submissions. (Pepsico, 2011)

4) The role of ‘co-creator’ involves actual open innovation, where firms collaborate with consumers and use their skills and knowledge in developing new products. Co-creation involves all phases of the innovation process; idea generation, design and engineering and finally the test and launch phase. It often takes place in an online community, which provides a constant platform for interactive dialogues between participants. Co-creation is an ongoing process of learning, developing and evaluating ideas together. In the role of ‘co-creator’, consumers’ skills and knowledge are directly integrated in the business process.

• BMW has integrated its various co-creation projects into a holistic BMW co-creation lab to create a long-lasting platform. The lab, enabled by the German innovation company HYVE, offers multiple activities ranging from idea contests, user toolkits, virtual concept tests, and innovation research studies up to lead user application forms. (Bartl et al., 2010)
• Sara Lee’s Pickwick tea ‘Dutch Blend’ was developed in co-creation with members from the ‘Pickwick Gardens’ community on Hyves (a popular Dutch social network site). A group of 25 selected members co-created with the Pickwick experts, both online and offline, to develop the new tea blend, co-design the package and the marketing campaign. (Frankwatching, 2010).

Nevertheless, consumers can also integrate their skills and knowledge more independently, as long as firms facilitate this and there is a ‘joint value-creation’. Taking this perspective as a starting point, one can identify a broad array of levels and manners in which consumers act as co-creators. Figure 2 illustrates this and focuses on the phases of design, usage and experience.

Figure 2: Examples of co-creation within separate dimensions of consumption

The practical examples show that applications of co-creation can vary a lot in type and purpose.  Co-creation in ‘design’, the first block in the figure, can be considered as the next step in customization, offering a lot more degrees of freedom and a greater level of consumer influence. In the cases of Threadless and IKEA, customers can now use their creativity quite freely in designing products, without engaging in actual dialogue with the firm.

‘Co-creation in use’ focuses on the aspect of ‘usability’, referring to e.g. functionality, user control and freedom of choice, ease of use and efficiency (Preece et al. 2002, in Two Benches, 2008). The Smartphone application ‘Appie’ from the Dutch supermarket Albert Heijn, is just one of the numerous apps available that show how usability and personalization can result in co-creation of value.

Co-creation of ‘experiences’ is the most advanced level; every time a product is used consumers co-create their own consumption experiences, see this video of Nike+ as an example. These examples show the wide range of possibilities and applications of co-creation.

5) The final role that is defined is that of the ‘creator’; where innovation is initiated and driven by consumers themselves. Here, consumers act as involved and independent value creators. Füller et al. (2006a) recognize that only some community members are able to create ‘professional’ innovation, but the less skilled members help by coming up with ideas for improvement, or asking challenging questions. Their ideas can strongly influence the rate and direction of innovations in some industries (Baldwin et al., 2006). Some examples of consumer initiated communities are niketalk.com for sneaker fans, and Lugnet.com for Lego fanatics.

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IV    Exploring the co-creative consumer

Despite the variations in role and task type, literature defines certain characteristics that distinguish the co-creative consumer from the passive consumer. Co-creative consumers are often pro-active lead-users, who have insights into future needs. They possess relevant technical and social skills, and have a solid base of product knowledge. These lead-users are highly involved in the product category and interested in developing new products. Their contributions are often of good quality and relevance. Nevertheless, it can be useful to involve non-lead-users as well, to ensure relevance for the broader target group.

Figure 3 offers an overview of the characteristics and motivations that drive consumers to participate in co-creation

Figure 3: The co-creative consumers’ characteristics and motivations

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V    Challenges to successful co-creation

Identifying and involving the right participants, consumers as well as people from the firm, is challenging but crucial in order for effective results.

Consumers willingly participate in value creation mainly driven by intrinsic motivations. They enjoy the process and get a feeling of satisfaction and empowerment by contributing. This enjoyment is closely related to the social interactions and recognition they receive for their contributions. To retain consumer interest and involvement, firms should stimulate these interactions and appeal to intrinsic motivations.

There are many benefits of successful co-creation (see Figure 4 for a summary), but these can only be achieved if co-creation principles are applied correctly and are integrated throughout the business process. This requires firms to adapt their processes and mindset in order to effectively engage in co-creation. Firms should become more open and willing to integrate external sources in their innovation process. They should listen and observe their target group, determine main objectives for co-creation, and identify and involve appropriate co-creation partners. When it comes to managing the co-creation process, firms have to be able to find the right balance between freedom and control. They should stimulate a collaborative culture and allow for rules to evolve from within the community.

Figure 4: Benefits and challenges of co-creation as the new business paradigm

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