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International Journal of Management (IJM)
Volume 9, Issue 6, November-December 2018, pp.13–23, Article ID: IJM_09_06_002
Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=9&IType=6
Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
© IAEME Publication
CO-CREATION A NEW METHOD OF BUILDING
BRAND LOYALTY & INNOVATION
Sunita Kumar and Megha Kandoi
Christ University, India
ABSTRACT
Innovation in any form can bring overall new energy to brand loyalty. In an
organization,especially in the service industry, co-creation is a business strategy
which is an open innovation for consumers. This paper provides a conceptual
understanding of how co-creation can add value in the service industry regarding
brand loyalty as well as customer relationship management through some of its basic
features of co-creation which include co-designing, collaborating, tinkering, and
submitting. Co-creation sources are combined to generate new directional and mutual
values. The co-innovation not only includes engagement, but also gives stakeholder
co-creation, and compelling experience for value creation.
Keyword: Co-creation, Brand, Brand Loyalty, Customer Relationship Management,
Brand Awareness, Innovation, Collaboration Partnership.
Cite this Article: Sunita Kumar and Megha Kandoi, Co-Creation A New Method of
Building Brand Loyalty & Innovation, International Journal of Management, 9 (6),
2018, pp. 13–23.
http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=9&IType=6
1. INTRODUCTION
Innovation has always been successful when it has been a group activity and is the result of
long hours spent on developing the idea of creativity together with others. Co-creation in
marketing is a successful strategy which allows consumers of a brand to get actively involved
and develop an interacting relationship with the brand to co-construct a product or service
which gives them maximum brand satisfaction. Co-creation also helps a brand to get a
competitive advantage over the others. In the world of innovation, branding rarely gets
referred to, and this is unacceptable as a brand is the fundamental attribute of co-creation.
People are mostly misunderstanding the brand,and they consider it to be just a logo or the
advertising or the product or service. In reality, the brand is a stakeholder experience and
something which might as well influence one’s future intentions. When the consumers
actively get, themselves involved in co-creation, they put forward their perception of the
brand which influences how they create and evaluate ideas. In the case of co-creation, brand
acts as a filtering technique to ascertain which ideas to consider for co-creating products and
which ones to discard. As co-created ideas are executed, the brand develops, and the meaning
of the brand perceived by the consumer becomes strong.
Co-Creation A New Method of Building Brand Loyalty & Innovation
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Service innovation through co-creation comes to the rescue of many companies whose
service businesses are under threat and facing challenges surviving in the market. The new
wave of service innovation has brought a change in the service industry as it benefits both the
service provider and the customers by having a competitive edge over others and building a
strong customer base that are loyal to the brand. Nowadays, consumers are seen demanding
intermediate personalized services for themselves with greater involvement, co-operation and
customization.
(Nonika & Hirotima, 1995)recognized that the consumers are associated with social
communicationso that a company or an organization assumes that they control the
interpretation of the brand, it might as well be proved that the meaning of a brand is created
by the consumers and the stakeholders in the procedure of interaction. (Ind & Coates, 2013)
Found out from a managerial prospect, that the congregation for the potential of online
engagement with the brand and the escalating admiration of the significance of the consumers
as the creator of value has encouraged the development of co-creation.
“When you need to transform a brand or product, you can’t just do the same things
better,” Jeremy Brown, Sense World wide’s Chief Executive said. “You need to do something
new. You tap into the creativity of your consumers.” Director of the strategy Brian Miller and
Brown have been running co-creation in global online communities and workshops all around
the world for more than a decade, and they believe co-creation is not only an innovative
process, but it also turns market research into a more dynamic and creative process.
Co-creation helps the contact or interaction between a consumer and an organization or
brand move away from transactional and become a creative experience. Creation of new value
gives the customers an opportunity to connect with the brand and the initiatives for the same
are on the rise more and more frequently. This paper attempts to understand how co-creation
helps in building strong brands and improve consumer loyalty with innovation in the service
industry.
2. LITERATURE REVIEW
(Prahalad &Ramaswamy , 2004) Found out that consumers want to interact with firms and
“co-create” value after being dissatisfied with available choices. Competitive advantage can
be gained by a company when a consumer can co-create unique experiences due to effective
interaction. This conceptual paper focuses on exploring the various aspects of co-creation.
The organization orchestrates and focuses the overall experience of its consumer involvement
in the process of co-creation. To ease the process of co-creation, Dialogue (interaction
between both sides), Access, Risk-benefits and Transparency (DART) acts as building blocks
of consumer-organization interaction. Carrying out the process of co-creation by an
organization is a herculean task, as the concept is often misunderstood and hence it challenges
two concepts – exchange of product and service offerings and the coming together of the
consumers. Co-creation acts as both value creation and extraction, and the market is viewed
as an area of probable experience of co-creation in which an individual’s restrictions and
selections explain the will to pay for it. It is a two-way street, and the risk involved is to be
equally shared by the consumers as well and not just the organizationitself. According to
(Merz & Vargo, 2009) brand value is co-created through network relationships and social
communication among the conglomerate of all stakeholders.
(Hatch & Schultz, 2010) Demonstrated that co-creation is not just limited to the area of
innovation, but as well spreads out to marketing and more specifically to branding. It also
expands to co-create ideas with other stakeholders and not only just consumers. The paper
presents an integrative constitution of co-creation based on two factors - stakeholder/company
involvement (dialogue and access) and organizational self-disclosure (transparency and risk)
Sunita Kumar and Megha Kandoi
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by integrating four building blocks of (Prahalad &Ramaswamy , 2004) while co-creating
LEGO brand as an example. They found out that branding can create dialogue among
different elements such as stakeholders, consumers, customers, fans, employees and critics
related to an organization. Branding acts as means of entry to some members involved in the
organization as stakeholders’ involvement is possible through the consequences of marketing,
corporate communication and human resource. The brand LEGO used the internet as a
medium to interact with consumers and a channel for brand engagement. It changed the way
organization involved in dialogue with consumers and the enthusiasm from the customers
made organization’s efforts to build strong brand possible. The key to increasing brand
engagement and building strong brands is dialogue and access which brings in transparency in
the organization eventually leading to risk. The organization undertakes the real risk,and this
process is to determine to what extent the major part of the world understands their value.
(Skaržauskaitė, 2013) Conducted a theoretical analysis to provide a comprehensive idea of
co-creation value. The concept of co-creation has changed from what it was in the 1990s with
the sole focus on customer participation to coming together with customers at their own free
will with the help of social technologies for the betterment of both sides. The focus also
drastically shifted to maintain a customer relationship with goods and services dominant
market. Through extensive literature review analysis, it was understood that the customer is
the sole person on whom the value creation is highly dependent on and without active
involvement or the willingness to interact, an amalgamation of efficient resources and
spectrum of a prospective method of co-opetition, co-creation experience is unsustainable.
(Verleye, 2015) Provides us with an understanding of customer engagement and
experience in co-creation of products and other determinants related to it. The paper argues
that co-creation depends on the benefits expected by the customer and to the extent to which
the customer is ready to fulfil his role as a co-creator. The argument is also put forward to the
point that co-creation experience has also depended on the characteristics or the availability of
technology in a co-creation environment and connectivity of the resources to customers. From
the extensive literature review, it was concluded that the benefits expected from co-creation
are hedonic, cognitive, social, personal, pragmatic and economic and the overall experience is
dependent on these dimensions. The benefits expected from co-creation is relative as in it
varies from customer to customer. The primary source of data was collected with a sample
size of 180 students and was assigned to two (technologization: low vs high) by two
(connectivity: low vs high) mixed design. The results showed that the overall co-creation
experience gets improved by an improvement in hedonic and social experience. The findings
tell us that co-creation experience is not affected only by the process of co-creation but also is
impacted by the characteristics of its environment and the interaction among co-creators.
Overall, it is a multidimensional phenomenon.
Co-Creation A New Method of Building Brand Loyalty & Innovation
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Figure 1 Types of Co-creation
3. CHARACTERISTICS OF CO‐
‐‐
‐CREATION TYPES
Table: 1 Source :( customer co-creation: a typology and research agenda)
Type of
Co-Creation
Selection
Activity
Contribution
Activity
Key
Payoffs
Key
Challenges
Prototypical
Application
Key
Studies
Collaborating
Customer‐Le
d
Open
Reduced
development
costs
Continuous
product
improvement
Protecting
intellectual
property
Attracting a
critical mass
of
collaborators
Open source
software
Grewal et
al. (2006)
Lakhani
and Wolf
(2005)
von
Krogh et
al. (2003
Tinkering
Firm‐Led
Open
Enhanced
differentiatio
n
Virtual test
markets
for new
products
Policing the
content of
rogue co
‐creators
Creating new
competitors
Modified
computer
games
Jeppesen
and Molin
(2003)
Nieborg
(2005)
Prügl and
Schreier
(2006
Co‐designing
Customer‐Le
d
Fixed
Reduced
development
costs
Decreased
risk of
product
failure
Attracting a
critical mass
of designers
Defending
against new
entrants
Online voting
on
customer‐gene
rated content
and designs
Ogawa
and Pillar
(2006)
Cook
(2008)
Submitting
Firm‐Led
Fixed
Shortened
product
development
cycles
Increased
access to
novel
customer
ideas
Acquiring
knowledgeabl
e new
co‐creators
Retaining and
motivating
existing
co
‐
creators
Company‐spo
nsored design
competitions
Füller et
al. (2004)
Sawhney
et al.
(2005)
Sunita Kumar and Megha Kandoi
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3.1. Branding
Branding is the way through which the attributes, characteristics and values are expressed of
an organization or its product or service. It is strategic unlike tactical marketing, and it stays
within the minds of a customer associated with the product, service or organization which
ultimately determines if the customer is loyal or not. Branding evolves more and more with
the behaviour of consumers and is the mental image of how an organization represents to a
consumer impacted by the elements, words and creativity that surrounds it.
Figure 2.The Dynamic Process of Building Brand
The efficacy of brand doesn't just happen before the purchase of product or service, but it's
also about the life of the brand of the experience it gives a consumer. Brand not only
creates loyal customers, but it creates loyal employees. Brand gives them something to
believe in, something to stand behind. It helps them understand the purpose of the
organization or the business.
3.2. Thread less New Era of Co-Creation and Building Loyalty
“Why wouldn’t you want to make the products that people want you to make?” (Nickell,
2008). Such are the expressions of Jake Nickell, the fellow benefactor and CEO of Thread
less, a shirt organization that print their most prevalent sections to the very individuals who
voted in favour of them and composed them. The idea of including the buyer in the
production of a shirt came to Nickell in 2000 when, with practically no aptitudes in outline or
its virtual products, he partook in a London-based plan celebration (Lakhani and Kanji, 2008).
Nickell, who won the prize, was animated by that idea and chosen to popularize it. By
November of that very year, Nickell and DeHart established an organizationgiven a
comparable thought and called it Thread less, a figure of speech between the string of fibre
used to make pieces of clothing, and the string additionally known to be a discourse on an
online group.
Toward the starting, the twosome asked their companions and previous colleagues to
present their plans and thoughts to the site. Not knowing which plans to pick when they began
streaming, they asked the recently printed group to choose. The plan has since survived, and
however it has advanced in the years since, the idea remains consistent with its root. Counting
the client in each progression of Thread less' DNA renders it an ideal case of co-creation. 95%
of Thread less' clients have purchased a thing, as well as either voted, remarked, submitted or
taken an interest in any capacity.
Thus, the organization depends vigorously on the fulfilment of its clients to look after
itself. In its 14 years and 6,359 printed plans (Thread less, 2015), Thread less has never seen a