Customer Value Proposition And Co-creation - Research Paper Example

USTОMЕR VALUE РRОРОSITIОN AND СО-СRЕАTIОN Student’s name Code & Course Professor’s name University City Date Сustоmеr Value Рrороsitiоnand Со-Сrеаtiоn 1.0 Background In the modern-day business society, the customer value proposition is highly regarded as an instrumental factor in realising a company’s sustainable efforts. Nonetheless, it is highly unlikely that the affected companies have increasingly shied off in attaining such objectives. Simply put, there is no agreement as to the structure that presents a customer’s value preposition is a broader sense. Customers expect that sellers are more aware of the customer’s needs with respect to the business environment that explicitly affects the business’ latent and future expectations. Customers are no longer referred to as the targets of marketing but rather the co-creators (Lusch, Vargo, & O’Brien, 2007). Customers are indispensable in value creation processes, since they assume a more pertinent role in the company’s success. Unmistakably, the traditional roles are shifting towards value co-creation forms. The change in roles is central to value co-creation proposition and customer value proposition. Managers have employed collaborative strategies in accessing resources instrumental for customer satisfaction and value addition (Grönroos & Helle, 2010). Although a responsive nature to the customer request is instrumental in the customer satisfaction, customers affirm the importance of understanding their needs subject to value co-creation and relational actions (Beverland et al. 2007). Against the needs for such changes, companies have continuously neglected these initiatives. Nonetheless, some firms have shown satisfactory levels of proactive customers such as Steelcase, Motorola, Boeing and Mattel. 2.0 Research problems It is reasonably challenging to develop an operation and analytical models that are focused in value co-creation. In meeting such challenges, it is imperative to develop a conceptual framework where companies can exercise the prowess in garnering customer value proposition (Vargo & Lusch, 2004). The orientation of strategies towards customer value addition is a daunting task given the various aspects involved in this regard. Undoubtedly, companies cannot fully develop, offer and deliver values to the consumers by stressing more knowledge on the goods (Vargo, 2004). The multifaceted paradigm shift towards customer and company interaction has taken new shapes and forms that surpass the traditional understanding of the exchange. A major challenge is realised through the management of the complex network of the cross functional unit in an organisation. Managers need to create guiding frameworks that implement strategies cemented on cross functional approach. Companies and customers have created a new way of supporting the value co-creation of both entities. Nonetheless, not all the firms have benefitted from the development of co-creation mechanisms, necessitating the need for careful consideration of the customers’ needs. Evidently, research advocates that the companies have misunderstood, underestimated and overlooked the expectations of the customers (Grönroos & Helle, 2010). Presently, given the combination of a variety of practices in the value co-creation, the goal of many companies rests on the propensity of to add more value to customer experience. Nonetheless, what remains largely unexplored is the strategy used in the integration of such initiatives. Many companies are incapacitated in realising the strategy used for aligning customer value, with respect to their intended expectations (Muller, 2012). Tentatively, given the popularity of customer value proposition, management practise research showcases the lack of a consistent customer value proposition for business management (Anderson, 2006). Accordingly, most of the value propositions present facts of savings and benefits for the customers without validated back up (Anderson, 2006). Despite the use of these strategies a number of challenges exist in achieving such initiatives (Muller, 2012). Green products have seen its fair share of failure in the marketplace. Its failure is attributed to the lack of additional customer benefits. Consequently, the green products are at times not noticeable to the customers. As such, value is important is positioning the product on a successful competitive marketplace.On the other hand, well designed products are insignificant in a competitive market given its unsustainability (Muller, 2012). Most human oriented design instruments are focused at satisfying the customer’s needs, leaving out sustainability practices. In order to be, sustainable companies have to incorporate triple down designs. Hence, meaningful designs are culturally and personally appealing. The development of proposition tools such as SVPT needs to be furthered. For instance, the various components of SVPTtoll necessitates for a validation activity realised through the possible use of special instruments. These suggest its qualitative ability to create a development process. 3.0 Theories 3.1 Practice Theory This theory focuses on the fact that social reality consolidates various practices that facilitate the creation of action and order; hence, practise is central to the study of human affiliated phenomena. Education theorists affirm that individual knowledge is linked to the participation in practice (Brown & Duguid, 2001). The situated ideology is cemented in the perspective of learning as an independent activity in which it occurs (Lave, 1988). Accordingly, it affirms that knowledge is based on the fabric of human practices (Korkman, 2006). In this reverence, it is imperative to create a value proposition that conforms to the knowledge exchange existing between the resource integration actors. The incorporation of the practise theory creates the conceptualisation of the co-creative practises forms of value proposition that consolidates the resource integration actors. This stems from the products and resources that facilitate the organisation’s goals. Customer value perception, however, is shifting given that consumer perception is exceedingly invariable. In this reverence, a shift in the consumers’ need necessitate for a change in the company’s strategies in attracting the consumers. Overcoming such disconnect can be difficult, specifically in the global scope and various factors. Co-creation, therefore, is as a deliberated resource consolidation of behaviours of various actors aimed at realising an intended value proposition (Bendapudi & Leone, 2003). Lush links co-creation to value while he defines co-production as the degree to which the consumers are participating in an aspect focused towards an achievement of the desired results (Vargo and Lusch, 2008a). Essentially, the participatory act of the customer is the core basis of co-production. 3.2 Sustainability theory Sustainability is multi-disciplinary given its incorporation in various dimensions of management practise. As a result of the Brundtland report of 1987, the development of the Natural Step Framework has been idealised. The concepts realised in the various sustainability approaches advocates for the creation of a sustainable society as a whole. Nonetheless, this approach is typified by an ecological efficiency but rather the individual result in the mind. 4.0 Findings 4.1 Customer value proposition A customer’s personal resource has exceedingly become essential in the management, retailing, human resource, service marketing and operations (Kelley, Donnelly, & Skinner, 1990; Johnston & Jones, 2003). The extensive use of internet has showcased its prominence in harnessing customer resource in different dimensions (Dong, Evans, & Zou, 2008). A customer’s level of participation depends on the customer’s requirement, per se, their perception directly impacts on their participation level(Bendapudi & Leone, 2003). The application of S-D logic to different practical concepts suggests that resource integration plays a significant role in showcasing the effects of actor’s interaction. Resource integration, therefore, is a more instrumental ideology as opposed to co-production because it is a strategy through which co-creation is attained. Hence, through the creation of nature of the resource as one an underlying blueprint, the concept of resource integration is pivotal in provisioning insights in the co-creation process (Kleineltankamp et al., 2012). Understanding the consumer’s needs is noteworthy in the making smarter choices regarding resource allocation. Contrariwise, some managers assert that customer value proposition affects strategies employed in a company’s promotional and advertisement initiatives (Bendapudi & Leone, 2003). It is evident, through a pilot study in Europe and United states that structuring the best value proposition was exceedingly difficult in many companies. All Benefits: Research suggests the mistaken approach manager’s use in listing customer’s benefits.It necessitates for the least knowledge regarding the competitors and the customers as a whole. Despite its simplistic approach, it is typified by benefits assertion, as a major drawback (Anderson, 2006). Given the various point of parity, it dilutes the existing genuine points of difference. Therefore, identification of the elements constituting to points of parity and points of difference, is instrumental for managers. Favourable points of Difference: This value proposition recognizes various alternatives for the customers. An element of offerings dissimilar to the succeeding alternative does not necessarily imply the value difference to the customers. Lacking a detailed understanding of the customer’s preferences, may compel the suppliers to contend on the points of difference typified by little value. In effect, it results to a pitfall in the value presumption, given that the favourable difference points may be useful to the customers (Anderson, 2006). Resonating Focus. They are inclined to engage with the suppliers who comprehend the customer’s value proposition. It is achievable through offerings that are superior to elements crucial to target customers;proposing superiority in value, performance and communicating in a sophisticated, yet easy to understand strategy (Anderson, 2006). Customer value focuses on the marketing strategy and the implementationcustomer affiliated problems that should otherwise be focussed on the formulation of strategies in countering the same (Tournois, 2004). As seen with the case of Hugo Boss, DEL and other successful companies, the redefinition of the company’s frontier is indispensable in the achieving customer value. As such, achieving customer value is conceptualised as a system that consolidates a number of variables that affects the behavioural functions and managerial decision affecting a company (Tournois, 2004). Essentially, the creation of customer value should help companies to showcase their actions and share the strategies with internal and external players.Fisher and Smith (2011), advocates that a limited scope be realised through the traditional approach of positivisms. Critical realism facilitates for a multidimensional perspective where different views are realised (Van de Ven, 2007). 4.2 Linking value proposition to value co-creation It offers a managerial platform where various companies can explore the effectiveness of various co-creation supports (Rintama¨ki et al., 2007). Therefore, value co-creation is related to the company’s value proposition. Strategies such as co-development, co-design and co-promotion propels the need for change in a company’s traditional practices. Contrariwise, the delivery of co-creation mechanism depends in the customer value proposition (Babin, Darden, & Griffin, 1994). Undoubtedly, not all co-creation strategies can instrumentally deliver economic, emotional and functional propositions for the company. As such, in order to determine the implications of the strategies used, it is vital to make an analysis of the customer’s value proposition. Demonstrate Customer value in Advance Consumers must realise the added value and cost savings expected from using the supplier's offering as opposed to the subsequent proffered alternative convincingly. Value calculators can be employed, given their use in the demonstrating value likely to be received from the offerings (Anderson, 2006). Document Customer value Although demonstration of superiority in value is eminent, it is not sufficient in consideration of the best available practices. Documentation of cost savings and incremental profits are applicable in delivering to companies involved in various purchase. Tentatively, suppliers work with customers to track and offer in a period, after which they conduct an extensive analysis. An incorporation of value documenters further the refinement of the customer value models (Anderson, 2006). Sustainable Value Proposition Tool (SVPT) The incorporation of SVPT tool in creating sustainability practise, defines the proposition as a totality of the company’s activities, with respect to rigorous assumptions (Muller, 2012). Design management unequivocally uses the relative comprehension of the value. A higher level of value necessitates a distinct design activity. As such, the value proposition is engendered towards the design driven process within the company. SVPT consists of three modules namely, awareness module, checklist and design principle of sustainable value addition. The principles present the goals that need to be achieved, against its value proposition. Evidently, they present questions that guide the sustainability of the design strategy. In essence, the products and services are designed along these principles. Tentatively, the awareness module showcases an understanding of sustainability and value propositions of all the functions participating in the creation of value proposition. Simply put, it generates the knowledge crucial in the development of a sustainable value proposition on the involved parties. The checklist, in contrast, is a comprehensive list of the questions that facilitates the goals of a specific project (Muller, 2012). SVPT propels the transformation in proposition design of the affected companies/ firms. This tool is focussed towards the support of innovative creation of sustainability that lack the deficiency in reducing the productivity on the planet (Muller, 2012). 5.0 Managerial Implications Against the rational understanding of the factors of co-creative practise, a company should not be comprehended as a single resource that consolidates actors. However, firms consist of various levels that represent the divergent resource integration in the process. A company that seeks to reorient its strategies to consolidate customers into value creation initiatives must realise the challenges that arise through the process and create strategies to counter them (Alavi & Leidner, 2001). The firm’s value model suggests presupposes that customer feedback arising from the service encounter is not a representative of the value for the service. The preparedness and an effective internal support platform should be in place to manage the inputs that are subsequently transformed into actionable information. Tentatively, it facilitates for the investigation of the creation of the values in firms. The resource categories demonstrate the values that complement the co-creation. This suggests how far the company can effectively manage the customer whilst their limited control. Resource integration in B2B are more multifaceted and necessitates for the integration of various actors. Therefore, an overemphasis on resource consolidation should not prevent the management from conducting continued significance of service experience. Direct integration are significant for value creation. Value realisation, on the other hand, will have temporal components, hence the customer’s perception of the values may be invariable over time, specifically given the benefits of the anticipated outcome. Economic customer value proposition Rintama¨ki et al. (2007) points out that its stress typifies economic customer value proposition on utilitarian value aspect. Simply put, utilitarian value is a task related, instrumental, rational, cognitive and functional aspect in the business (Rintama¨ki et al., 2007). Economic customer value proposition is based upon the deliverance of the value originating from low sacrifices in monetary terms (Rintama¨ki et al., 2007). More often than not customers are driven through initiatives typified by price of the offerings, suggesting their interest in the accepting various forms of co-creation resulting to a further decrease in pricing. In this regard, integration in the specific values of the co-creation mechanisms are used in engaging additional customer resource in delivering the economic customer value proposition (McLeod, and Shih, 2007). Functional customer value propositions Its integration furthers the product attributes because it focuses in cementing the customer’s individual value creation process. Functional customer value propositionscorrelate to products that meet the customer’s processes and requirements, which result to increased shopping experiences (Verhoef, 2009). Given the motivation of convenient shopping experience, companies characterised by functional customer value proposition ought to provide products that meet the consumer’s needs. It should be succeeded in a manner that offers solutions which minimise the consumers’ sacrifices (Verhoef, 2009). Eventually, it dictates the comprehension of the consumer’s perspective. Emotional Customer value proposition Management of the customer’s experience is an exceedingly complex task. The vigilant considerations of co-creation mechanism are significant in meeting the customer’s emotional expectations (Verhoef, 2009). In essence, it suggests for the annexation of the customer resources in the achieving a favourable effect in realising a satisfying shopping experience. The existent influence from other customers are influential in empowering customers (Hoyer, Chandy, Dorotic, Krafft, & Singh, 2011). Symbolic customer value proposition Companies that develop their business on this assumptions should have an in-depth understanding of the meaning constituted in their offering. Because the specific meaning is the guiding principle in these propositions, the managers should explicitly understand how to incorporate the additional resources in the processes. 6.0 Recommendation Based on this report, the consideration of co-creation benefits can considerably stimulate a company’s competitive edge. It is imperative to have an improved research that extends the market strategies in shifting beyond the functional boundaries of the S-D logic. In this regard, companies need to create a collaborative framework that addresses the need to consolidate customer value proposition in various practices. Its implementation is documented to garner customer support and improved interactive approach in market shifts. More often than not, most companies have created a significant elements of their business on co-creation lacking careful consideration on its eventual impact to customer value proposition. It is advised, therefore that handling such initiatives necessitates for the involvement of customers in the realisation of customer value proposition. The incorporation of the S-D logic theory, practise theory and sustainability theory will ultimately spearhead warranted strategies in finding appropriate solutions. 7.0 Conclusions The shift to active customers is instrumental in delivering the company’s value propositions. The existence of a coherent natural fit between value co-creation and customer value proposition creates significant benefits from increased customer experience. As a result, because service is co-created, it sustains the S-D logic where the customers are the major players in the service process. Thus, co-creation occurs when the actors of all the resources are consolidated. Nevertheless, the critical success factor of a company’s future may not be contingent on the company’s knowledge. This can be integrated through the firm’s marketing communications and advertisement strategies consistent with the potential of presenting warranted meaning to the firm’s offering. A customer’s invitation customers to promotion strategies would garner the delivery of the symbolic customer value proposition. Through such invitations, the customers are welcomed to develop a symbolic value with respect to the company’s offering. A readjustment of the company’s traditional roles can be shifted in engaging the company’s processes in various dimensions. After a subsequent comprehension on customer’s value proposition regarding economic, emotional and functional value, the firm can effectively assess the opportunities available from various co-creation strategies. Therefore, companies ought to quantitatively understand the type of customer value proposition and available resources. Henceforth, a leveraged strategic approach can offer significant possibilities of delivering value proposition more sustainably. Reference List Alavi, M, & Leidner, D, 2001, ‘Review: Knowledge management and knowledge management systems: Conceptual foundations and research issues,’ MIS Quarterly, Vol 25, No (1),pp 107–136. Babin, B, Darden, Q, & Griffin, M 1994, ‘Work and/or fun: Measuring hedonic and utilitarian shopping value, Journal of Consumer Research, vol 20, pp. 644– 656. 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