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VALUE CO-CREATION: A NEW WAY OF THINKING

The topic I am doing to discuss today is pretty new in the subcontinent. However, it has been practiced in the western parts of the world since 2000. The interesting fact is that, many firms of our country are practicing this concept without even having any clue. Marketing is all about commonsense indeed. So, my approach here would be to fine tune the “commonsense”, describe some of the benefits and principles.

We are going to talk about co-creation. Let me start with the bookish definition. Co-creation is a form of marketing strategy or business strategy that emphasizes the generation and ongoing realization of mutual firm-customer value. It views markets as forums for firms and active customers to share, combine and renew each other’s resources and capabilities to create value through new forms of interaction, service and learning mechanisms. It differs from the traditional active firm – passive consumer market construct of the past. In easy words, co-creation is a culture where the firms encourage its customers to get involved with the value chain through active participation where firm and customer both get benefited. ATM and Internet Banking are some of the common examples of co-creation. These services not only reduce the chances of service failure but also engage customers in the value chain. There are more benefits of co-creations. Co-creation is considered as one of the key ingredients for innovation and idea generation.

Co-creation can be implemented in every level starting from the ideation, product design and development, service delivery, etc. For example, customers are allowed to personalize their Dell PC before ordering. ‘Color Bank’ of Berger Paints is also a good example of co-creation where customers create their very own color. We have already mentioned about ATM and Internet banking before. These are the examples of service delivery co-creation. Note that co-creation involves giving customers the right to participate in the development process of their own experience, not only by giving input about what they like and don’t like as in traditional market research but also by giving tools that allow them to become actual designers of a product.

In co-creation, there is a fine line between doing it right and not cracking it. Successful co-creation initiatives share 5 common rules:
- The right attitude: The firm must realize that co-creation is an organizational culture. To make co-creation effective and successful, it is important for the firms to confirm an integrated set of attitudes and beliefs.
- Inspire participation: Trigger people to join the challenge. The firm should open up and show what’s in it for them (customer).
- Develop support system: It is important for the firms to develop a support system to assist the entire co-creation process.
- Continue development: Co-creation is not a single-shot approach. It must be a longer-term engagement promise. Only then it will deliver results.
- Share results: The result/reward must be shared to the customers and it should be visible. If the results are not visible, the system will collapse like anything.

Previously, I talked about some of the benefits of co-creations. Now, let me explain you how. As customers get involved with the value chain and gain role clarity, their abilities to perform necessary behavior increase. Moreover, co-creation gives them more comfort and ownership. In marketing terms, we call it ‘sense of belonging’. Being a part of the value chain gives him/her an inner satisfaction. A satisfied customer usually stays loyal to a specific firm/brand and actively spread WOM (word-of-mouth) to his/her reference group. They also act as the ‘partial employees’ of a firm. On the other hand, customer has a role to play in the co-creation model. Therefore, it is less likely to have any service failure. Even if there is a failure, the customers tend to take it easy (in general) as per the research results. Co-creation also helps the firms to understand the customer intel and latent demands.

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