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As management teams drive growth through value creation they are investing heavily in greater product variety through brand or product extensions, in addition to enhancing the ever-increasing brand touch-points. All this is done to produce stronger brand connections. Paradoxically, as this is a common theme across numerous industries, it is resulting in many brands becoming less able to differentiate themselves from their competition. Why is this?
In the past, the process of value creation was driven almost exclusively within the business. Many business writers have covered this topic, Professors Michael Porter, Peter Drucker and Philip Kottler being among some of the most well-known. The presumption has been that product design and production, the creation of marketing messages and the control of sales channels, could be performed in-house with minimal consumer input. The role of the consumer was seen solely at the end-of-line points of consumer interaction, not during the process of value creation. After all, “…consumers aren’t creative!” is a widely-held belief and often stated comment.
Secondly, consumer value has been generally defined as the difference between the perceived benefits of the product or service, and the costs of that product or service. This broad definition is singularly unhelpful to managers as they try to come to terms with how value is actually created. Despite the defining words of Austrian-Hungarian economist and Harvard University lecturer Joseph Schumpeter in the 1950s – “One does not make a difference unless it is a difference in people’s lives” – management has struggled to come to terms with the exact role of the consumer in best delivering this ‘making a difference’.
Even though there is growing acceptance that co-creation may change the way companies view the role of the consumer in the creation of value, much remains unknown about how customers actually engage in co-creation. One of the reasons for this is that co-creation can be interpreted in a number of different ways. IKEA, the Swedish multinational furniture retailer, embraces co-creation at its basic level by having its customers provide their own assembly operation. IKEA benefits by high turnover of products, the consumer benefits from lower costs. Boeing, the aircraft manufacturer, has used both customers (the airlines to whom they sell their planes) and consumers (frequent flyers) in the design of their aircraft. The executives of BMW have realised, with the development of the Mini, that there is significant mileage to be gained by tapping into the collective experiences and creativity of millions of consumers around the world. Today, many Mini owners have opted to co-create a car to their own unique specification. Although these examples might be interpreted as co-creation, they are primarily product-centric, not customer-centric since the focus is on connecting the customer to the companies’ offerings.
On the other hand, there is Amazon, the online bookseller that embraces co-creation by encouraging readers to write product reviews for other customers. Video game producers might be regarded as truly consumer driven since many would not exist without the input of the gamers. These companies use co-creation to build sustained value and customer loyalty.
The movement of hyper-personalisation in the design of personal running shoes and M&Ms confectionery is also co-creation, with a more direct consumer involvement in the design of products they will purchase.
…researchers are not expecting research participants to develop ideas that would inspire product or brand managers to veer hugely from a chosen course of action.
For some time, market researchers have tried to tackle this issue of co-creation with the development of focus group or in-context scenarios (in-home, in-shop and other in situ locations) that enable them to closely observe consumer behaviour. Given the belief that close observation of consumers should inevitably lead to a deeper understanding of their behaviour, there is little wrong with this approach. However, what is often missing from these types of sessions is that the researchers are not expecting research participants to develop ideas that would inspire product or brand managers to veer hugely from a chosen course of action. There always seems to be a clear delineation between the role of the researchers, marketers, the product/brand developers and the designers, and that of the consumer.
There seems to be little doubt that co-creation adds a new dimension to the company/consumer relationship by engaging consumers directly in the production and distribution of value. However, the process requires a fundamental shift in the way companies and consumers interact. This interaction can take place anywhere within the business operation (not just at the point of sale), and research sessions (whether traditional focus groups or the less traditional in situ locales) provide an ideal time to explore value creation.
One area of business where co-creation can return significant dividends is in stretching the brand or brand category. Whilst consumers have few unmet needs, having more choice of products and services than they have ever had, they don’t appear to be entirely satisfied. They are, however, in an ideal position to suggest improvements to a product or category that they might have been using for some time. Elicitation approaches, where the intention is to generate candid responses from consumers that can immediately be put into action, are usually not successful and are often not that insightful. Projective techniques, where the unconscious expression of consumers’ impressions, emotions or feelings are exploited to spark co-creation to help the consumer bring to life a new reality of a specific brand or category context, have a much greater chance of providing the actionable answers that drive innovation.
…for a true co-creation process to work effectively the customer needs to be placed explicitly at the same level of importance as the company.
Kelloggs, the giant global food company, used co-creative techniques in the development of its product, Kellogg’s Cereal Straws. It started in a classroom in Valencia, Spain, where 9 and 10 year old Spanish kids were taking part in a research project. The specific activity in the research related to the “problems” kids have with cereal or the times they consumed cereals such as breakfast or ‘la merienda’, their afternoon snack. They were asked to create and draw their own ideas and discuss ways that would help solve some of these problems. A requirement of the project was that their ideas had to taste good and be enjoyable for them to eat. During this highly interactive session, a problem was highlighted by one small group with drinking their milk. To them, milk was boring and something that their mums made them have. The kids pointed out that milk was for drinking, such as in milkshakes, and using straws rather than spoons (as they did with the cereals) made consumption more fun. What developed from this small beginning was the equally fun concept of not only drinking milk through the straw but being able to eat the straw afterwards. Of paramount importance was that the straws had to be crunchy and tasty. Though the idea went through other iterations and inspirations in its development, the kids’ idea was the initial spark. And though the eventual product came to market a few years later, Kellogg’s Cereal Straws was a result of kids’ imaginations and problem-solving, combined with the company’s acceptance and management of the co-creation process to produce value and growth.
In addition to conventional methods of value creation, many companies are starting to adopt the use of social media websites and the blogosphere to develop co-creative initiatives. However, it’s one thing for consumers to voice their views and opinions on social and corporate websites, but for a true co-creation process to work effectively the customer needs to be placed explicitly at the same level of importance as the company, and the process starts with access and transparency.
Where in the past value was created by companies in the value chain, value today is co-created at multiple points of interaction. A basis for this value can be the experience of co-creation. For those companies embracing the process the rewards can be substantial, particularly in relation to competitive advantage generated by customer loyalty. We need to stop believing that “consumers aren’t creative” and embrace the idea that they are, learning to listen better to, and engage with, their unique creativity and co-create with them.
By Bryan Urbick
Bryan Urbick, Chairman of Consumer Knowledge Centre, is a frequent author and lecturer around the world on the subject of kids, families, women, Prime Timers (people aged 55+), product development, innovation and the NPD process. Bryan sits on the Editorial Advisory Board of Young Consumers (Emerald Group Publishing Limited) and is a member of the international Literati Network. For more information please visit: www.consumer-knowledge.com