CO-CREATION EXPERIENCES: THE NEXT PRACTICE IN VALUE CREATION

CO-CREATION EXPERIENCES: THE NEXT PRACTICE IN VALUE CREATION

1. Consumers today have more choices of products and services than ever before, but they seem dissatisfied. Firms invest in greater product variety but are less able to differentiate themselves.

2. The word “market” conjures up two distinct images. On one hand, it represents an aggregation of consumers. On the other hand, it is the locus of exchange where a firm trades goods and services with the consumer.

3. Consumers get involved only at the point of exchange. Firms aggregate consumers into “meaningful segments” for ease of exchange. Both of these images of the market are being challenged by the emergence of connected, informed, empowered, and active consumers

4. CONSUMERS, MARKETS, FIRMS, AND VALUE CREATION: THE TRADITIONAL SYSTEM The concept of the “value chain” epitomized the unilateral role of the firm in creating value (Porter, 1980). The firm and the consumer had distinct roles of production and consumption, respectively. In this perspective, the market, viewed either as a locus of exchange or as an aggregation of consumers, was separate from the value creation process (Kotler, 2002).

5. CO-CREATION EXPERIENCES AS THE BASIS FOR VALUE CREATION High-quality interactions that enable an individual customer to co-create unique experiences with the company are the key to unlocking new sources of competitive advantage.

6. BUILDING BLOCKS OF INTERACTIONS: DIALOGUE, ACCESS, RISK-BENEFITS, AND TRANSPARENCY (DART) Dialog, access, risk-benefits, and transparency (DART) are emerging as the basis for interaction between the consumer and the firm. Dialog is an important element in the co-creation view. Markets can be viewed as a set of conversations between the customer and the firm. Dialog implies interactivity, deep engagement, and the ability and willingness to act on both sides.

7. THE MARKET AS A FORUM FOR CO-CREATION EXPERIENCES Co-creation of value fundamentally challenges the traditional distinction between supply and demand. The new frame of value creation creates new competitive space for firms. To compete effectively however, managers need to invest in building new infrastructure capabilities, as well as new functional and governance capabilities—capabilities that are centered on co-creation through high-quality customer-company interactions and personalized co-creation experiences (see Prahalad & Ramaswamy, 2004).

8. IMPLICATIONS FOR INTERACTIVE MARKETING In the traditional view of marketing, interaction is where the firm markets its offerings to extract economic value from the consumer Firms manage customer relationships leaving little room for customers to have a voice, inject their view of how they want to (individually and collectively) interact with firms and consumer communities, and co-create value that customers are, by design, “willing to pay for.”