The Role Of Co-creation in Product Innovation and Marketing

The role of ‘co-creation’in product innovation and marketing Master Thesis Joyce van Dijk MSc www.insites-consulting.com Ghent I Rotterdam I London I Timisoara I New York

Nice to meet youJoyce van Dijk• MSc in Management, Economics and Consumer behaviour• Specialization: consumer behaviour• Focus: the connected consumer and co- creation• Frankwatching, wordpress blog, workshops http://joycediscovers.wordpress.com/ http://twitter.com/#!/joycediscovers http://www.linkedin.com/in/joycediscovers

Presentation set-up1. The concept of co-creation 2. MSc thesis experiment  Concept & consumers roles in NPD  Relevance  Development of co-creation  Set-up and stimuli  Consumer motivations to co-create  Focal aspects  Main challenges  Outcomes and implications Presentation set-up

The concept of co-creationWhat is co-creation and why is it a relevant concept? The concept of co-creation

Co-creation is a systematic collaborationPurposive collaboration betweenconsumers and companies,where they systematicallyinteract, learn, share information,and integrate resources todevelop or improve products(based on Prahalad & Ramaswamy, 2004) The concept of co-creation

Consumers can play different roles in NPD The concept of co-creation

Companies use co-creation to increase success Companies  Advertising clutter  Relevancy  Effectiveness  Reduces R&D costs  Increase market success  Facilitate dialogue The concept of co-creation

Consumers want to be involved in brand decisions Consumers  Empowered  Informed  Authentic  Idea source  Brand partner The concept of co-creation

Consumers want to be involved in brand decisions I can I enjoy it! express myself I feel My skills are empowered recognised to influence I like to help I like others interactingI can develop I can make myself some money WHY do consumer co-create? The concept of co-creation

Co-creation increases sales and w-o-mExample: Pickwick Dutch tea blendResults were much higher than usual line extensions: Distribution: 99% according to Nielsen data (expected 80%) Market share within black tea 2,2% (expected 1%) Awareness among tea-users 51% (goal 35%) Activated interest to buy 17,5% (goal 10,5%) Repeat purchase 11% (goal 6%)

What companies co-create? More than 50% of Fortune 500 companies have made open innovation an integral part of their innovation strategy. Consumers have become the focus of attention in this arena The concept of co-creation

Challenge to change company mindset Main challenges for companies  Management mind shift  Deciding on objectives  Managing expectations  Freedom VS. management and monitoring  Unravel latent needs  Feedback and recognition The concept of co-creation

MSc experimentDoes co-creation affect consumers’ brand andproduct perceptions? MSc Experiment

Does co-creation affect brand & product perceptions?Research gapResearch focus: co-creation MSc experimentprocess and co-creation participantsEffects on non-participants arehardly known Does co-creation affect consumers’ brand and product perceptions? 99% of target group is non- participant in co-creation Only 1% of consumer target group participates in co-creation

Does co-creation affect brand & product perceptionsConsumers who participate in co-creation show: Increased loyalty to the company Stronger relationship with the company Increased likelihood to spread positive word-of-mouth Increased trust in the brand But what about the large majority of An increased positive brand image consumers who do NOT participate?Studies show that co-creating Creates more relevant products But can performance be due to Enhances product performance (sales) perception effects?

Test effects on non-co-creators Method Closed consumer panel Representative of Dutch population Experiment set up as concept test questionnaire 100% awareness 100% distribution 2 manipulated variables: Co-creation level (A/B/C) Final sample: 530 respondents and brand (Honig/Samo) Brand Co-creation level Honig A: producer created B: co-created C: co-created +’extra’ proof Samo A: producer created B: co-created C: co-created +’extra’ proof MSc Experiment

Brand attitude constructs Brand constructs  Sincere brand personality: e.g. sincere, honest, real (11 items)  Brand qualities: e.g. reliable, trustworthy, accessible (5 items)  Brand relationship: commitment, satisfaction, intimacy, self-connection (8 items) MSc Experiment

Product evaluation & claimed behaviourThe effect of the co-creation claim on consumers’ … Product evaluation & claimed behaviour  Product evaluation: attractiveness, relevance, innovativeness, uniqueness, expected success  Willingness to pay: average between cheap & expensive  Behavioural intentions: trial, purchase, w-o-m, recommend to others MSc Experiment

Strongest positive effect on brand level 4,6 Sincere Brand Personality 4.0 4.2 Brand Quality 3.5 3.8 Brand Relationship 3.2 1 2 3 4 5 6 7 Co-creation No co-creation MSc Experiment

Comparing co-creation groups B and CCo-creation group B versus C (with the additional evidence)The added proof in group C did not significantly enhance co-creation effectsOnly significant results for Honig and only on some construct-items:  Originality  Accesibility Items of brand  Cheerfulness construct  Realness / authenticity Product  Uniqueness evaluation item MSc Experiment

Honig versus Samo Honig was also considered more suited as a co-creation partner than Samo (aspects: logical, attractive, suitable, credible) Co-creation same effect on Honig as it had on unknown brand Samo MSc Experiment

Additional comments Please keep in mind...  This experiment is a snapshot of reality  Influences such as W-O-M are not included  Also, overall brand behaviour and consistency in behaviour will play a huge role MSc Experiment

Take away messageCo-creation can be  An effective innovation method  Beneficial as a communication tool: Enhance ‘sincere’ brand personality Strengthen brand relations Both established and new brands Improve brand quality inferences Make products more attractive and appealing Take away message

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The Role Of Co-creation in Product Innovation and Marketing

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