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  1. 1. This article was downloaded by: [University of Sheffield] On: 06 November 2012, At: 03:03 Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK Journal of Marketing Management Publication details, including instructions for authors and subscription information: Conceptualising value co-creation: A journey to the 1970s and back to the future Christian Grönroos a a Hanken School of Economics, Finland Version of record first published: 05 Nov 2012. To cite this article: Christian Grönroos (2012): Conceptualising value co-creation: A journey to the 1970s and back to the future, Journal of Marketing Management, DOI:10.1080/0267257X.2012.737357 To link to this article: PLEASE SCROLL DOWN FOR ARTICLE Full terms and conditions of use: conditions This article may be used for research, teaching, and private study purposes. Any substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in any form to anyone is expressly forbidden. The publisher does not give any warranty express or implied or make any representation that the contents will be complete or accurate or up to date. The accuracy of any instructions, formulae, and drug doses should be independently verified with primary sources. The publisher shall not be liable for any loss, actions, claims, proceedings, demand, or costs or damages whatsoever or howsoever caused arising directly or indirectly in connection with or arising out of the use of this material.
  2. 2. Journal of Marketing Management iFirst, 2012, 1–15 Conceptualising value co-creation: A journey to the 1970s and back to the future Christian Grönroos, Hanken School of Economics, Finland Abstract Service-Dominant (S-D) Logic asserts that firms and customers always co-create value. This article argues that the co-creation of value term, as used by Vargo and Lusch (2008), is strongly metaphorical in its construction, and this metaphoric form acts as a barrier to focused empirical analysis. An alternative conceptualisation is offered. It is argued that value co-creation can be defined as the joint actions by a customer (or another beneficiary) and a service provider during their direct interactions. Value creation in such interactive contexts was studied as early as the 1970s in the early days of modern service marketing research. This article relies on two models from that time to develop a value co-creation logic and a conceptual model of value co-creation as an alternative schema to S-D logic. Keywords value co-creation; value-in-use; service logic; Service-Dominant Logic Introduction and purpose It is challenging to develop analytical, operational models of value co-creation. To meet this challenge and further develop service logic literature, this article defines value creation for a customer as the customer’s creation of value-in-use.1 Consequently, co-creation of value relates only to those stages of a value-creation process where the firm is present together with the customer. In the present article, value co-creation is defined as joint activities by parties involved in direct interactions, aiming at contributing to the value that emerges for one or both parties. These activities are only part of total value formation, because the customer’s other experiences in direct interaction and with their outcomes also contribute to total experienced value (value-in-use). Value creation is a fundamental cornerstone of the service perspective on marketing (i.e. service logic and Service-Dominant (S-D) Logic).2 Discussions on S-D 1‘In-use’ not only denotes physical use but also mental use and even possession. Hence, value-in-use can emerge from both physical and mental use of a resource or from mere possession of it. 2Because it is a perspective on business and marketing that is not only dominated by but also based on service, this article features the term service logic. Service is the mental model or dominant logic (Prahalad & Bettis, 1986) that guides the use of this perspective. ISSN 0267-257X print/ISSN 1472-1376 online © 2012 Westburn Publishers Ltd. Downloadedby[UniversityofSheffield]at03:0306November2012
  3. 3. 2 Journal of Marketing Management, Volume 00 logic frequently indicate that all value creation is co-creational and that both service providers and customers are always co-creators of value (e.g. Vargo & Lusch, 2004, 2008). But service logic literature notes that co-creation requires direct interaction between the co-creating parties which is a consequence of joint activities (e.g. Grönroos, 2011; Grönroos & Ravald, 2011). Regardless of the perspective, research acknowledges that the components of value co-creation require further study. At the same time, researchers note the difficulty of studying this phenomenon analytically (Payne, Storbacka, & Frow, 2008). Therefore, this article aims to develop a conceptual model of value co-creation that includes all the elements needed to understand, plan, and respond to customer– firm interactions in a way that supports both the customer’s and the service provider’s value creation. This model evolves from service research that goes back to the 1970s and offers an alternative view on value co-creation to that of S-D logic. Value is an elusive concept (Woodall, 2003). In the literature, value is understood in a number of different ways (Grönroos, 2008, pp. 281–282; see also Ramírez, 1999), and value creation has been described as one of the most ill-defined and elusively used concepts in service marketing (Carú & Cova, 2003). Therefore, for the purpose of the present article, we consider value creation as a process through which the customer becomes better off (or worse off) in some respect (Grönroos, 2008, p. 303) or which increases the customer’s well-being (Vargo, Maglio, & Akaka, 2008).3 The term ‘creation’ implies that the effect on value of customers’ experiences is positive, but customers’ co-creation experiences may also have negative, destructive effects (Echeverri & Skålén, 2011). Moreover, the term ‘value creation’ indicates that value is always instrumentally created (e.g. driving a car to a certain destination), though in many situations value simply emerges (e.g. a feeling of freedom when driving around in a car). Because the expression ‘value creation’ is so generally accepted in extant literature, this article retains it, with the recognition that its connotations are not necessarily accurate, and use it and value emergence interchengeably. In the context of this article, value co-creation explicitly may have both positive and negative impacts on value formation for customers, and it may be instrumentally created or just emerge from customers’ experiences. To develop a value co-creation model, a clear definition of value co-creation is a prerequisite. Management literature uses co-creation metaphorically to emphasise that suppliers need to recognise the role of customers in value creation. As Ramaswamy (2011) points out in his analysis of co-creation concepts, the phrase ‘co-creation of value’ serves as an all-encompassing expression to denote mutual value creation by the actors, such that, in the business engagement, both (or several) parties contribute to the value being created (Normann & Ramirez, 1993). Some actions may be independently value creating, some facilitate value creation for another party, and others are joint value-creating activities or value co-creation together in direct interactions. Yet the common term ‘co-creation’ is used to represent all these varied activities. A metaphor is not literal; thus the expression ‘the customer 3Grönroos (2008) defines value for customers in the following way; ‘Value for customers means that after they have been assisted by a self-service process (cooking a meal or withdrawing money from an ATM) or a full-service process (eating out at a restaurant or withdrawing cash over the encounter in a bank) they are or feel better off than before’ (p. 303). Downloadedby[UniversityofSheffield]at03:0306November2012
  4. 4. Grönroos Conceptualising value co-creation 3 is always a co-creators of value’ (Vargo & Lusch, 2008) should not be interpreted literally either.4 Co-creation as a metaphor or analytical concept Morgan (1986) advocates the use of metaphors to create perspectives on organisational issues: ‘The use of metaphors implies a way of thinking and a way of seeing’ (p. 12; emphasis in original) and provide ‘. . . a means of enhancing our capacity for creative and disciplined thought’ (p. 17). As Cornelissen (2004, pp. 705–706) notes, metaphors may provide new insights into the reality of what is studied. When using metaphors, ‘. . . participants actively and collectively create a representation of their strategic territory’ (Heracleous & Jacobs, 2008, p. 310). On the other hand, as Morgan (1980) observes, an object that is studied may also be ‘. . . imprisoned by its metaphors’ (p. 605).5 We can conclude that metaphors can be used as a means of stimulating thinking and helping researchers look at a phenomenon in new ways but not to predict how a phenomenon will function in its entirety. To emphasise the importance of activities by firms and customers (and possibly other actors in a network) to ensure value for the customer ultimately, without addressing the specific roles of the actors involved, this metaphorical usage of the expression ‘value co-creation’ works well. A reader’s attention is effectively drawn to the recognition that value for customers cannot be created by the firm alone (Normann & Ramirez, 1993). To say that value is collaboratively created also guides researchers to remember that value does not emerge by actions by one party but that actions by several parties are required. However, it does not specify the roles of these actors during the process. Although the co-creation metaphor thus offers guidance for further analytical developments by asserting that the customer is involved in a process that results in value for the customer, it cannot define the roles of the various actors and the existence of unique elements and sub-processes. For this effort, analytical concepts are required. The firm as a service provider produces resources and provides them to the customer who uses the resources by integrating them with other available resources during a usage or consumption process. In parts of this process, the firm and customer act jointly in direct interactions. Therefore, the value-formation process includes three distinct sub-processes: (1) the firm acts alone and facilitates the customer’s creation of value-in-use; (2) the customer acts alone by integrating available resources in a process that is closed to the firm (Grönroos & Ravald, 2011), thus experiencing the resources and creating value-in-use for him- or herself; and (3) the firm and the customer act together in a merged, coordinated, dialogical, and 4As described in the Collins English Dictionary (1999), a metaphor is ‘a figure of speech in which a word or a phrase is applied to an object or action that it does not literally denote in order to imply resemblance’ (p. 928), and Oxford Dictionaries (online edition 2012) defines a metaphor as ‘the application of a name or descriptive term or phrase to an object or action to which it is imaginatively but not literally applicable’. An often-used example of a metaphor is ‘he is a lion in battle’ (see, e.g., Collins English Dictionary), which does not mean that the person is literally a lion. In the same vein, the expression ‘customers and firms are always co-creators of value’ should not be interpreted literally, such that the parties literally create value together in time and space. 5For alternative discussions of metaphors in organisation and management research, see, for example, Oswick, Keenoy, and Grant (2002) and Pinder and Bourgeois (1982). Downloadedby[UniversityofSheffield]at03:0306November2012
  5. 5. 4 Journal of Marketing Management, Volume 00 interactive process that creates value for the customer, and for the firm as well – using the strictly analytical meaning of the expression, they co-create value (Grönroos, 2011). An analytical approach would set out to develop models of collaborative value creation, including independently occurring value-creation efforts, activities facilitating the other party’s value creation, and joint collaborative activities during direct interactions between two (or more) parties. As part of this overall model, the joint value-creating activities during direct interactions could be studied and developed conceptually. This article makes such joint value-creating activities the main focus (see also Grönroos, 2011; Grönroos & Ravald, 2011). Thus the expression ‘value co-creation’ is reserved for this phase within an overall range of possibilities for collaborative value formation. That is, co-creation of value is defined as joint collaborative activities by parties involved in direct interactions, aiming to contribute to the value that emerges for one or both parties. As noted, in many situations, value is not instrumentally created but rather emerges from customer experiences. Following Ravald and Grönroos (1996), this article uses the term ‘value formation’ to denote the process by which value either emerges or is created for customers (Echeverri & Skålen, 2011). However, for the joint activities of several parties (e.g. service provider and customer), which influence the value- formation process, such that value reflects the parties’ direct actions, this article uses the expression ‘co-creation of value’. According to Gupta and Lehman (2005), in a business engagement, value gets created for all parties. Referring to insights from the French nineteenth-century economist Frédèric Bastiat (1848), Vargo and Lusch (2008) point out that when providing service to a customer, the service provider potentially receives some service in return, such as information that customers provide that can be used to develop new services or systems. Consequently, any model of value co-creation must account for this reciprocity of value creation. Co-creation in early service marketing research An analysis of service marketing literature shows that joint interaction-related co-creational aspects of service processes – that is, simultaneously occurring service production and consumption processes – were thoroughly studied in the 1970s in the very earliest days of modern service research. Service marketing publications developed conceptual models of how service is co-produced and emerges in direct interactions between service providers and customers through co-creational processes. In the 1970s, co-production between service providers and users was also discussed in economic analysis (see Hill, 1977), where service was defined as a change in the conditions of a person or a good belonging to a person caused by the activities of another party (Hill, 1977). Elaborating on Hill’s definition, Delaunay and Gadrey (1987) defined a service activity as an operation aiming at bringing about a change of state in the condition of a user effected by a service provider, and often in collaboration between the user and the service provider (Delaunay & Gadrey, 1987; for an extensive discussion, see Gadrey, 2000). Implicitly in Hill’s arguments for his definition and explicitly in Gadrey and Delaunay’s definition, service is seen as an interactive process. In service management, the decisiveness of interactions were emphasised by using a moments-of-truth metaphor, introduced by Richard Normann Downloadedby[UniversityofSheffield]at03:0306November2012
  6. 6. Grönroos Conceptualising value co-creation 5 (1984) and made popular by Jan Carlzon (1987). Co-creation and value concepts were unknown in service marketing research at that time, so the models of the 1970s aimed to analyse how service emerges. However, they also include an implicit understanding that the service that emerges and is experienced by customers should be appreciated by them. To use today’s terminology, value should emerge, or be created, in interactive processes. Therefore, it may be possible to develop a conceptual model of value co-creation in service, consisting of resources and actions present in direct customer–firm interactions, on the basis of early service marketing research, such as the servuction model developed in France by Eiglier and Leangeard (1975, 1976) and the interactive marketing model developed in Finland by Grönroos (1978, 1984).6 The servuction model focuses on value-creating resources; the interactive marketing model is more interested in how such resources function in direct firm–customer interactions. In North America, Shostack (1977) presented a molecular model that resembled both European models; it proposes that services consist of bundles of elements that exist in a molecular fashion. By similarly combining the models from the French and Nordic schools of thought, this study derives a model of value co-creation. Continued research after the 1970s certainly details various elements of the service encounter, and more recent studies include service as a perspective on marketing and business, for both service- and goods-based firms. However, because the purpose of this article is to study how value co-creation can be understood and operationalised using the foundation of early modern service marketing research, it excludes later research. The servuction model The French school model7 categorises resources required for co-production and co-creation activities during direct firm–customer interactions. The model adopts the view that the service is co-produced in interactions. Thus service emerges through the process and is experienced by the customer. In value-creation terminology, these resources can be described as the value-creating resources that appear in direct interactions between parties. As illustrated in Figure 1, the model divides these resources into four categories: contact employees (e.g. service personnel), physical resources (artefacts, systems), focal customer (Customer A) and fellow customers (Customer B, who is also present during the service process). The active role of customers as service production resources and participants in the service process was noted not only by Eiglier and Langeard (1975, 1976) but also, for example, by Gummesson (1979), Lehtinen (1983), and Normann (1984). Because services are partly open processes, a customer interacts in a service environment, which Bitner (1992) labels the servicescape, with other people, artefacts, and systems that appear in that environment. The group of people can consist of two types: employees acting on behalf of the service provider and fellow customers present in the environment. The servuction model emphasises the need to recognise the role of fellow customers and their influence on the service experience of a focal customer. Originally, the model also included physical resources, but this category must be interpreted broadly to include not only resources as such but also 6For a discussion of the French and Nordic schools of service marketing thought, as well as the North American school, see Berry and Parasuraman (1993). 7The term ‘servuction’ was actually introduced somewhat later to denote this model (Langeard & Eiglier, 1987). Downloadedby[UniversityofSheffield]at03:0306November2012
  7. 7. 6 Journal of Marketing Management, Volume 00 Figure 1 The servuction model by Pierre Eiglier and Eric Langeard (1975, 1976). Service for Customer A is a function of interactions between - Physical resources and A - Contact employees and A - Customer B and A Physical resources (goods, tangible items, systems) Contact employees Customer A Customer B Service for Customer A Internal Support System systems of various kinds. In the decades since, the types of systems have developed to include, among others, Internet-based and mobile systems. Somewhat later, Lehtinen (1983, 1986) studied the interdependence among the various resources active in the service process, as indicated in the original model, and noted the importance of a fit across resource categories. In that context, he highlighted the concepts of a contact person’s style of performing and the customer’s style of consuming, such that physical resources influence these styles in any given situations (Lehtinen, 1983). Gummesson (1979) also emphasised the active role of service employees in shaping customers’ perceptions, whom he subsequently labelled part-time marketers (Gummesson, 1991). In his service management system, Normann (1984) pointed to the importance of employees who have not just the right skills but also personalities that fit the nature of the service encounters and the firm’s business norms (see also Normann, 1977). Service firms are not just personnel intensive but also personality intensive. Behind the line of visibility (Shostack, 1981), an internal support system aims to support the resources for the parts of the service process that are visible to customers and in which they take part. From a value co-creation point of view, the support system is not directly of interest. Only when considering value for the firm does it become important. The interactive marketing model The Nordic school model demonstrates how the value-creating resources of the servuction model function in direct collaborative interactions between a service provider and a service user. Again using value-creation terminology, the model develops activities of action variables that function in the directly interactive part of the value-formation process. As illustrated in Figure 2, the model divides these variables into three main categories: accessibility, interactive communication (between contact employees and customers, as well as between customers), and customer influence (by the focal and other customers present) on the service process (later termed customer co-production or customer participation in the service process). Downloadedby[UniversityofSheffield]at03:0306November2012
  8. 8. Grönroos Conceptualising value co-creation 7 Figure 2 The interactive marketing model by Christian Grönroos (1978). Service Concept Acccessibility of Resources Communication Customer -Employees Consumer Influence (customer participation; and co-production; peer communication) (Auxiliary services) The experiences with the service is dependant of -The accessibility of resources -Communication in customer –employee interactions -The customers and fellow customers influence on the process -Peer communication between customers The action variables are clearly interrelated. For example, fellow customers may alter the accessibility of a service by creating queues and longer wait times. They also may interfere with communication in the interactions between the focal customer and a contact employee. As Echeverri and Skålén (2011) argue, value created in interactions results from value practices, such as informing, greeting, delivering, charging, and helping. Value also may be destroyed during customer– firm interactions, so it is necessary to create fit between value-creating resources and the way they function, because ‘interactive value formation – value co-creation as well as value co-destruction – derives from providers and customers drawing on congruent . . . and incongruent elements of practices’ (Echeverri & Skålen, 2011, p. 370). Lehtinen (1983) emphasised this concept as well. Therefore, the value concept implicit in both the servuction and interactive marketing models allows for positive and negative service experiences, or value creation and value destruction. The many accessibility resources are varied, as listed by Grönroos (1990): Accessibility of the service depends, among other things, on: – The number and skills of the personnel; – Office hours, time tables, and the time used to perform various tasks; – Location of offices, workshops, service outlets, etc.; – Exterior and interior of offices, workshops, and other service outlets, etc.; – Tools, equipment, documents, etc.; and – The number and knowledge of consumers simultaneously involved in the process. (p. 76) In addition, the way websites and mobile interfaces can be accessed and navigated, as well as how they respond to customer actions, has an impact on accessibility. Depending on how they experience these and other factors, customers consider it easy, acceptable, difficult, or, in the worst case, impossible to access the service Downloadedby[UniversityofSheffield]at03:0306November2012
  9. 9. 8 Journal of Marketing Management, Volume 00 process, which determines how the service emerges for them. The more positive the effect, the more strongly the perceived accessibility in customer–firm interactions contributes to value formation. Negative experiences instead may lead to value destruction. Interactive communication takes place in all dialogical situations between customers and contact employees. Drawing on the observation that all types of interactions between customers and the representative elements of the firm also communicate something – namely, that all interactions are sources of communicative messages (Duncan & Moriarty, 1997) – interactive communication should stem from situations in which customers react to the performance or mere existence of some type of accessibility resource, including artefacts, processes, systems, and fellow customers. Interactive communication thus includes (Grönroos, 1990): • Dialogue between contact employees and customers, depending on the attitudes, behaviours, and communication skills of the employees, what they say, and how they say it; • Interactions of customers with physical resources and tangible items in the service process; • Interactions of customers with systems of various kinds; and • Interactions with fellow customers who are simultaneously present in the service process. Finally, customer influence and participation8 include customers’ capability and willingness to co-produce the service. Customers must have the knowledge, skills, and insight required to perform their tasks for the service to be performed. They also must be motivated to do so. Depending on how customers perform their tasks, the service that emerges differs. Customers who are prepared and willing to perform a task, such as preparing a complex document required to advance the service process, will probably receive better service. From a value-formation perspective, these customers’ impact will be co-creative. In cases in which customers cannot or do not want to perform tasks, the interactions will suffer, and the value impact will be co-destructive. A synthesis: Value co-creation model By combining the resource categorisation from the servuction model with the resources-in-action variables of the interactive marketing model, it is possible to derive a model of value co-creation in service. This model is based on the notion that customers create value through usage as value-in-use and that the co-creation of value therefore takes place in joint collaborative activities during direct interactions of the parties. The content of the resource categories has evolved over time, but the same categories still hold, as do the action variables. New accessibility resources and 8Customer participation was used by Richard Normann (1984) in his service management system to denote the customer’s role in the system and by Jarmo Lehtinen (1986) in a study of the range of service firms to define how customers’ activities influence the service they receive. Downloadedby[UniversityofSheffield]at03:0306November2012
  10. 10. Grönroos Conceptualising value co-creation 9 Figure 3 Conceptual model of value co-creation in service. Physical Resources (goods, tangibles, systems) Contact employees Focal customer Fellow customers Accessibility Effect (physical, mental, virtual) Interactive Communication Peer Communication SERVICE CONCEPT EXPERIENCED SERVICE (Outcome + Process) RESOURCE CATEGORIES ACTIVITIES Notes: The area inside the dotted circle denotes the value co-creation platform. Depending on how actively and successfully it is used by the parties, the co-created value effect differs. new means of creating accessibility have emerged, as have new communication tools, but the basic structure of the model holds, as illustrated in Figure 3. Co-created value for the customer The service concept, or what the service provider wants to achieve and for whom, is the starting point for developing a service offering, and the service process is where the service emerges for customers. A service concept should include a statement of benefits for customers. According to the perceived service quality model (Grönroos, 1984), consumers assess the quality of a service according to their experiences of both what they get as an outcome of the service process (technical quality) and how they experience the interactive part of the process (functional quality; see also Lehtinen & Lehtinen, 1991). Customers’ value formation follows the same pattern. During the interactive part of the service process, value is co-created jointly by the service provider and the customers. The service concept is the starting point; the experienced service is the end point. However, though the outcome of the service process is experienced at the end of the process, the process itself, as part of the service experience, is experienced throughout its progress. Between the starting and end points, various direct interactions that constitute value co-creation opportunities take place. The interactions are only a platform for co-creation that must be used by the parties in a way that influences the value-formation process. In the worst case, it is mishandled and leads to the destruction of value for customers. The middle part of Figure 3 depicts the value co-creation platform. The resources available for co-creation activities are to the left, and the activities enabled by use of these resources are to the right. As previously noted, the servuction model defines four categories of co-creation resources: physical resources, contact employees, focal Downloadedby[UniversityofSheffield]at03:0306November2012
  11. 11. 10 Journal of Marketing Management, Volume 00 customer, and fellow customers. The arrows in the middle of the figure denote which co-creation activities these resource categories trigger. Depending on the progress of the interactions between the focal customer and the other types of resources, the service becomes shaped in various ways, and value formation takes different forms. As Grönroos (2011) points out, ‘value(-in-use) is accumulating, or destroyed, throughout this (service) process. It is not determined at the end of the process only’ (p. 287). Therefore, value creation and destruction can occur during the same interactive process. Moreover, independent value creation based on experiences with the outcome of the service process may contribute favourably or unfavourably to the customer’s assessment of value. The value co-creation model, as suggested by the service logic, is also applicable in contexts in which firms supply physical products (goods) as the core of their offerings. The products form one physical resource in the process, such as artefacts and systems, together with employees and possibly fellow customers. As Giarini (1999/2000) states, ‘for each product we buy, be that an automobile or a carpet, cost of production or of manufacturing is very seldom higher than 20 per cent’ (p. 3). The rest of the cost stems from various services, such as logistics, maintenance, customer training, invoicing, engineering, software upgrading, and recycling – all of which are part of what customers experience and which influence the value that emerges for them. Some experiences with the product take place in direct interactions with other resources (e.g. test driving a car accompanied by the salesperson), but many of them probably take place afterward, during independent value creation activities beyond the value co-creation platform (e.g. driving the purchased car). In the interactive marketing model, the activities or action variables in the co-creation process are the accessibility effect of interactions with various kinds of resources, interactive communication between the focal customer and contact employees, and peer communication among customers. Accessibility effects are often physical, but they may be virtual or even mental. Thus, stemming from the accessibility of resources and systems, both physical and emotional effects arise, both of which may affect the value-formation process and are caused by actions that take place on the value co-creation platform. Interactive communication between customers and contact employees can take many forms and be initiated by either party. It is dialogical in nature, but it may not always lead to a dialogical process. It could have a positive effect on the value-formation process, leading to value creation, or it may have a negative effect, leading to value destruction. Finally, peer communication only takes place between customers, but actions by fellow customers could interfere with communication between the focal customer and a contact employee. Co-creation-based value for the service provider Value created for the service provider through direct interactions with its customers, or co-creation-based value, follows the same direct interaction process, illustrated in Figure 4. In this figure, the value-creation process flows from right to left. The starting point is a customer participating in the service process, which enables direct collaborative interactions. The resource categories in action are physical resources, contact employees, and the customer. The customer may be a single person or a group of customers simultaneously present in the service process. The amount of customer Downloadedby[UniversityofSheffield]at03:0306November2012
  12. 12. Grönroos Conceptualising value co-creation 11 Figure 4 Conceptual model of value co-creation in service: value for the service provider. ACTIVITIES Accessibility of Customer Feedback Interactive Communication RESOURCE CATEGORIES Physical Resources and Systems Customer Contact Employees Internal Support System Customer Feedback Input CUSTOMER PARTICIPATION ACTIONABLE INFORMATION Notes The area inside the dotted circle denotes the platform for value co-creation. The level of customer feedback input varies, depending on how effectively the firm manages to make use of it. input the firm receives depends, primarily, on how well the service provider manages to gain access to customer feedback, which reflects how willing customers are to provide feedback during the service encounter. It depends further on how well service employees are prepared, receptive, and willing to register such customer input. Behavioural feedback is easier to access because it appears in normal interactions, but the receptiveness of contact employees is critical in this case. Customer input emerges during interactive communication processes with contact employees, and also as observations of how customers relate to physical resources and systems in the service process. By enabling customers to provide feedback, using Internet-based and other systems, the service provider creates accessibility to customer feedback as input for the firm’s developmental processes. Provided that the customers decide to make use of such systems, the firm can get access to useful feedback in this way as well. The arrows in the figure denote how resource categories influence the various ways customer input emerges. The interplay between the resource categories and activities or action variables in the model determine how much input from customers is acquired and how it is acquired. However, to create value effects for the service provider, this input also must be registered, processed, and turned into actionable information that produces developments through an internal support system. Typically, this system includes reporting systems, monitored by supervisors and managers, who register, evaluate, and use customer input. If improved resources and systems that contribute to better future value experiences by the customers arise, the value for the firm as co-creation- based value has emerged from the same value co-creation process that generated customer value. However, in this case, the customers are value facilitators, and the firm is the value creator. Downloadedby[UniversityofSheffield]at03:0306November2012
  13. 13. 12 Journal of Marketing Management, Volume 00 Conclusion and discussion When value co-creation is related to direct collaborative customer–firm interactions and not used just to denote actors’ unspecified roles in the value-formation process, models from the early days of modern service marketing research can help clarify and conceptually shape the notion of value co-creation. These models demonstrate how service emerges in interactions between sets of resource categories, as well as how such interactions function to influence customers and value formation. The resource categorisation of the servuction model (Eiglier & Langeard, 1975, 1976) and the action-oriented interactive marketing model (Grönroos, 1978) offer a strong foundation for developing a model of value co-creation that includes both co-creation resource categories and co-creation activity categories. However, the model is a value co-creation platform only. The strength of the influence on the value-formation process by activities taken by the parties depends on their willingness, motivation, and skills to perform in a way that contributes to value formation. Furthermore, value can be influenced negatively by destructive actions on the platform. Using the reciprocity of value creation in service, the same interactive process that contributes to the emergence of value for customers has the potential to create co-creation-based value for the service provider. To do so, the resources in service encounters representing the service provider, especially service employees, must be receptive to registering valuable feedback from customers and their reactions, and through an internal support system that processes this input the firm must be able to use it for developmental activities. The firm must be prepared to receive customer input and make use of it. Early service marketing models provide a solid base for understanding and developing value co-creation further. More recent research has added other aspects, such as the servicescape concept (Bitner, 1992), but without changing the fundamentals of the model. New technologies and communication opportunities have expanded ways of working and communicating, such as peer communication during a service process using Twitter and other technologies. But again, these changes do not alter the basic nature of the model. Research and management implications To understand the total value-formation process analytically, it is necessary to assess the actions taken by the firm, value facilitation, and independent value-creating activities taken by the customer, as well as joint collaborative value-creating activities, separately. Only the last sub-process is studied herein. The proposed conceptual models of value co-creation can enable researchers to analyse the value effects of the joint, directly interactive phase of value formation that takes place during service encounters. By studying how effectively the accessibility of various resources in service encounters enhance value for the customer, and for the service provider in a reverse model, as well as how well interactive communications support value creation for the service-providing parties, it becomes possible to assess how well the flow of the process in a service encounter contributes to value-formation processes and its impact on the value that emerges. Moreover, researchers can assess how peer communication between customers simultaneously present in the service process affects value creation. Downloadedby[UniversityofSheffield]at03:0306November2012
  14. 14. Grönroos Conceptualising value co-creation 13 The model of value for the firm emphasises that customer feedback that emerges from the service encounter does not automatically materialise as value for the service provider. A preparedness to use customer feedback must exist, and an effective internal support system is required, which manages to process the input and turn it into actionable information. The model indicates the importance of managing such a support system, which should trigger further research into this mediating phenomenon in the use of customer feedback. Indirectly, the model also enables investigations of how service providers facilitate creation of value as value-in-use. The resource categories in the model demonstrate which elements support value co-creation, favourably or unfavourably. Thus researchers and managers can assess the effectiveness of service encounters. Moreover, they should trigger studies of how the accessibility of resources and systems, interactive communication between service employees and customers, and peer communication between customers influence the flow of the service processes, as well as how value for customers emerges in the service encounter through co-creation activities. From a managerial perspective, the proposed model demonstrates where managers should direct their attention when planning and implementing service encounters to ensure a positive co-creational impact on customers’ value creation. Finally, value co-creation during direct interactions of service encounters is only part of a customer’s value-creating process; the model connects value co-creation to the customer’s independent value creation. Thus it enables analyses of how the value outcomes of the co-creation activities of the direct collaborative interactions influence the continuation of value formation. Customers use resources provided to them during service encounters and integrate them into continued usage processes (e.g. wearing a clean shirt retrieved from the cleaners, driving a car bought from a car dealership or serviced by its workshop). References Bastiat, F. (1848). Selected essays on political economy (G. B. Huszar, Ed. & Trans.). Princeton, NJ: Van Nordstrand. Berry, L. L., & Parasuraman, A. (1993). Building a new academic field – The case of services marketing. Journal of Retailing, 69, 13–60. Bitner, M. J. (1992). Servicescape: The impact of physical surrounding on customers and employees. Journal of Marketing, 56, 57–71. Carlzon, J. (1987). Moments of truth. New strategies for today’s customer-driven economy. New York, NY: Harper & Row. Carú, A., & Cova, B. (2003). Revisiting consumption experience: A more humble but complete view of the concept. Marketing Theory, 3(2), 267–286. Collins English Dictionary. Millennium Edition (1999). Glasgow: Harper & Row. Cornelissen, J. P. (2004). What are we playing at? Theatre, organization and the use of metaphor. Organization Studies, 25, 705–726. Delaunay, J. C., & Gadrey, J. (1987). Les enjeux de la société de service. Paris: Presses de la Fondation National des Services Politiques. Duncan, T., & Moriarty, S. (1997). Driving brand value. Using integrated marketing to manage profitable stakeholder relationships. New York, NY: McGraw-Hill. Echeverri, P., & Skålén, P. (2011). Co-creation and co-destruction: A practice-theory based study of interactive value formation. Marketing Theory, 11(3), 351–374. Downloadedby[UniversityofSheffield]at03:0306November2012
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