Co-creation

Co-creation, consisting of interaction, experiences and relationships, is regarded as essential feature that characterizes services (Edvardsson et al., 2005). It is defined as the mutual development of value between consumers and brands, as well as development of value among consumers within a brand context (Nysveen & Pedersen, 2014). The hereby created value is applicable not only to consumers co-creating actively, but for other consumers as well (Ind et al., 2013). Co-creation experiences are the basis of building a brand (Ramaswamy & Ozcan, 2016).

2.2.7.1 Co-creation enablers

Three important occurrences enable co-creation activities, as stated by Payne, Storbacka and Frow (2008). The researchers describe them as follows. As mentioned previously, advancements in technology bring about new ways of connecting with consumers. Second, an increasingly dynamic industry environment leads industries to change and converge, eradicating traditional industry outlines and creating new

channels. Third, there is a shift in consumer mindset and lifestyle, where individualization, differentiation and transformation are important.

This shift is paralleled by the shift from a marketing perspective centered on the producer to a perspective focusing on the consumer. It entails the opinion that an ongoing learning procedure involving social and economic processes yields offerings higher in value compared to competitors (Vargo & Lusch, 2004). These offerings comprise value that is being co-created with consumers, by co-operating with and learning from them (ibid.). By doing so, companies are increasingly able to provide solutions that fit consumers and consumers are able to choose and adapt solutions according to their wants and needs (Nysveen & Pedersen, 2014). The service dominant logic of marketing described before can thus be defined as customer-oriented and market-driven and focuses on core competences (Vargo & Lusch, 2004).

Co-creation allows for an integrated network of competences and interactions that together produce sustainable and hard-to-imitate competitive advantage (Ramaswamy

& Gouillart, 2010). Within a context of co-creation, the company is not placed centrally in business considerations but is merely viewed as a part of a wider system (ibid.).

Ballantyne and Varey (2006) have identified three processes central to value co-creation: relating, communicating and knowing. This is explained by the researchers as follows. Relating denotes the fact that exchange processes between consumers and a brand cannot be reduced to an actual transaction. Rather, a number of interactions with consumers occur flexibly through time and space, which altogether create the framework for co-creation. Communicating entails the provision of information, listening to and informing consumers and most importantly, a dialog between parties that enables value co-creation. dialog develops relationships, facilitates learning and forms the base of knowledge development and innovation.

Critically important to a functioning dialog is trust. Last, knowing refers to ‘knowledge renewal’, which comprises the production, sharing and utilization of knowledge. All participants must want to share their know-how, to which trust is a critical prerequisite.

dialogs thus enable knowledge development and with trust, value can be co-created.

2.2.7.2 Benefits of co-creation

Benefits for the company consist of economic (e.g. number of new customers attracted), social (e.g. building a reputation in society that is enabled by communication among consumers) and functional (e.g. getting additional data and information about consumers) benefits (Piligrimiene et al., 2015). For consumers, co-creation leads to economic (e.g. reduced cost), social (e.g. communicating with other consumers), functional (e.g. wider choice, better knowledge about offerings), personal as well as hedonic (e.g. enjoying participation) benefits (ibid.).

2.2.7.3 Co-creation processes

According to Payne and colleagues (2008), co-creation processes can be divided into three categories: consumer processes, brand processes and encounter processes.

These are explained by the researchers as follows. Consumer processes denote the methods, procedures and resources consumers use to manage their activities of co-creation. Brand processes describe these processes from the standpoint of a brand, whereas encounter processes characterize how interactions between consumers and the brand are managed in order to allow for successful co-creation. Encounter processes can be divided into communication interactions, which are used to carry dialog; usage interactions, which take effect when consumers use a product or service;

and service interactions, which denote the interaction of the brand with consumers via service personnel or digitally (for example via a contact form). It is critical that expectations created during a communication interaction are met during the later stages of usage and service.

2.2.7.4 Customer engagement

Co-creation is a central means to get consumers engaged, which positively influences their experiences and strengthens their relationship with a brand (Nysveen &

Pedersen, 2014). It is crucial that consumers are engaged, as simply co-creating is not sufficient to influence trust, satisfaction and loyalty (ibid.). Customer engagement is defined as establishing a more profound commitment between the brand and consumers via interactive experiences (Kumar et al., 2010) and reinforcing the relationship with a brand, emotionally as well as cognitively, behaviorally and socially (Hollebeek, 2011). Thus, cognitive, emotional as well as behavioral approaches may

spur co-creation (Holbrook & Hirschman, 1982). The social approach has been researched to have the most profound influence on trust, satisfaction and loyalty (Nysveen & Pedersen, 2014). Engagement may take many different forms, from communication (word-of-mouth and reviews) to user-generated content and participation in the development of goods and services (Piligrimiene et al., 2015).

2.2.7.5 Online participation

In an online environment, brand meaning is constructed dynamically via textual exchange, in which consumers may express what they think about the brand and which in its sum shapes the brand and constitutes brand meaning (Vallaster & von Wallpach, 2013). Online environments are particularly fruitful for brand meaning creation, as consumers have easy access and may communicate freely (ibid.).

Online participation is defined as a user’s employment of new media for the creation and sharing of content with other parties interested, thus affecting their social surrounding. (Hoffmann, Lutz & Meckel, 2015). The creation of content online is a vital aspect of participation on the Internet (Jenkins, 2006), is driven by social purpose and addresses a specific target audience (Lutz, Hoffmann & Meckel, 2014). This content creation is made possible by tools such as blogs, video-sharing, or other social media sites (Schradie, 2011).

Schradie (2011) categorizes online content production into individual productive activities such as blogs, websites, photos, videos, and ratings; composite uses such as content creation and creation sharing; and semi-public forums that involve chat rooms, newsgroups and social networks. In a participatory culture that entices consumers to engage in online contribution, members believe that their participation matters and that there is some level of social connectedness and belonging to other social actors involved (Jenkins, 2006). Reviews and ratings are a valuable type of user-generated content as consumers share their opinions about a service so others can benefit from their experiences and make informed purchasing decisions (Liu, Karahanna & Watson, 2011).

In broad terms, it can be said that the underlying motivation for online participation is based on utilitarian, hedonic, and social functions of online communities (Lu, Phang &

Yu, 2011). Ardichvili (2008) lists personal benefits, community-related considerations, and normative considerations as motivators for participation. Consumers have an expectation towards the utility of participation, i.e. the usefulness of the online community. Hedonic motivation considers perceived enjoyment of participation.

Furthermore, social motivation, which is also what distinguishes communities from other online applications, is the facilitation of social engagement with other users (Lu et al., 2011).

Thus, participation can be encouraged with the improvement of usability by ensuring good information service quality in the form of improving navigation and ease of obtaining necessary information and interaction support quality by helping members interact with others and enabling the maintenance of social relationships among participants, in turn increasing the enjoyment level and sense of belonging (Lu et al., 2011). A well-designed incentive policy and event organization positively affect perceived enjoyment and sense of belonging (ibid.). On the other hand, participation can be hindered by barriers such as interpersonal factors, procedural and/or use of technology-related factors, and cultural norms (Ardichvili, 2008).

Online community engagement and user-generated content in relation to a brand can be of great value to a company. It encourages further engagement, can build trust with consumers, provide valuable Search Engine Optimization benefits, works reassuring for purchase and usage decisions, and increases followers on social media (York, 2016). By sharing knowledge, experiences, and information with others online;

empowered by new technologies and especially social media; a brand can develop via online participation (Hajli et al., 2017). The relationship between consumers and the brand can evolve, thus increasing customer loyalty, and can be of value for brands seeking to innovate (ibid.).

2.2.7.6 Brand engagement platforms

So-called ‘brand engagement platforms’ - real-world or digital environments that combine agents, information (data), processes and interfaces - strengthen engagement, according to Ramaswamy & Ozcan (2016). This is further elaborated on in the following and based on the researchers’ article on this topic. The intensity as well as the role of the company can range along a continuum. Brands can either simply make the platform available and watch from a distance or be involved as an active participant. Consumers’ roles may vary from simply providing comments or evaluations to being directly involved in the future plans of a brand. In order to connect with consumers, relational engagement platforms such as customer support or brand communities are regarded as valuable opportunities for co-creation platforms.

Products and services that comprise digitized parts or purely digital services can be designed to be brand engagement platforms themselves.

Brand engagement platforms have to be designed in a way as to enable agents to make customized experiences while embedding the platform in a wider ecosystem consisting of social and economic subsystems, according to Ramaswamy and Ozcan (2016). The authors further provide suggestions for doing so, as presented in the following. The platform has to take into account consumers’ experiences as well as their creativity, and has to provide the tools needed to accommodate both. Platforms have to be designed to enable mutual learning and the development of relationships, strengthen trust and develop new ways of value creation. Establishing dialog, providing reflexivity (i.e. allowing consumers to see what has been co-created together), offering transparency and providing access are crucial to embed a brand in consumers’ lives.

In order to do so, research needs to be conducted with regards to what consumers care about, how consumers are involved and engaged in a brand context and what motivates them to engage in the platform.

Brand communities are an effective way to spur co-creation (O’Hern & Rindfleisch, 2015) as consumers may engage with each other (Iglesias et al., 2013). Brand communities are defined as a set of consumers who are part of a social entity that revolves around a brand (Muniz, Albert & O’Guinn, 2001). Characteristics of such

brand communities are specific rituals and a deeper connection with and felt responsibility towards other members (ibid.). Communities that occur naturally are powered by consumers who are internally driven and place high emphasis on learning and sharing with regards to a brand (Ind et al., 2013). On the other hand, communities can also be initiated by the brand itself (ibid.). In contrast to consumers who can be motivated with extrinsic cues, consumers who are internally motivated are most engaged in participation (ibid.). In communities within a brand context, the brand largely shapes consumers’ co-creation behavior and expectations from the beginning (ibid.). Trust is crucial, as trust strengthens the sense of community, according to Ind and colleagues (2013). They argue that in turn, the sense of trust towards the community will influence trust towards the brand. Additionally, the right amount of control exercised by the brand and active listening are important factors for successful co-creation within communities (ibid.).

2.2.7.7 Customer engagement value

Kumar et al. (2010) introduced the concept ‘customer engagement value’. This term denotes the value for the company inherent in engaging consumers in co-creation (ibid.). Customer engagement value consists of four pillars: lifetime value (purchasing behavior), referral value (new consumers gained), influencer value (influencing potential and present consumers via word-of-mouth) and knowledge value (consumer feedback concerning improvements and innovations) (Kumar et al., 2010).

3 S CIENTIFIC M ETHOD

The following chapter provides an overview of the methodological approach that was chosen in order to answer the research questions. The research strategy will be based on ontological and epistemological determinants, and a justification for the research design approach of the project will be given.