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Customer co-creation of products

Customer co-creation of products

Customers today are far more involved in the development of a company's product, far more than they were. Companies today are involving their customers more actively to co-create its products. Co-creation involves the customer in developing the products that they will eventually use.

This method is likely to increase product quality, customer acceptance and loyalty. It is then less likely that customers would switch to a competitor, even if that competitor is part of the sharing economy. The power of co-creation is that it provides the same democratisation and customer value creation that peer-to-peer access and collaborative consumption uses.

For instance, imagine a hotel that includes customer ideas for room configuration, plannings, tour guides of interesting places to visit, information on cheap places to eat, and interesting events. This is not a perfect solution but it enables such a hotel to cancel-out Airbnb’s competitive advantage of providing customers a local experience. Including customers in the creation of value is certainly a strong way to increase customer-brand engagement and loyalty.

Perhaps, the best solution lies in a brand’s source of equity. If a customer truly loves a brand, they may not care about the costs of owning the product. Traditional businesses must know what makes their brand tick with their target market, and build their strategy around that. Not every consumption decision is made on cutting costs and finding the thriftiest option on the market. Certainly not every consumption decision is based on rational decision making. Many consumer decisions are affected by emotional and symbolic considerations.

Existing business must therefore strengthen their source of brand equity, or find one and build their strategy around it. Finding a relevant social conversation—gender, the environment, Lesbian-Gay-Bisexual-Transgender (LGBT) rights, poverty alleviation and so on—that suits the brand’s identity is a strong way to build authentic brand engagement and equity. A hotel that builds its equity around a social conversation on global warming may succeed in pairing the preservation of the environment with the desire to travel places and sleep in hotels in those places.

In practice, existing businesses must recognise the threat of businesses in the sharing economy and decide how to adapt accordingly. Businesses that believe their existing model is still desired, have to consider a strategy that caters to the needs of their targeted audience. They have to use and focus their own unique capabilities towards serving their customers better than competitors with a sharing model.


Search the internet for co-creation companies and describe in the Comments area one company that is actively trying to co-create their products with customers to increase customer loyalty and how they have gone about it.

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This article is from the free online course:

Business Futures: the Sharing Economy

RMIT University