Retail service co-creation: a tool for understanding and ... - POLITesi

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POLITECNICO DI MILANO

School of Industrial and Information Engineering Department of Management Engineering

Master of Science in Management Engineering

Retail service co-creation: a tool for understanding and transferring the new meaning to customers

Supervisor: Emilio Bellini

Tutor: Federico Artusi

Master thesis by:

Nicole Mazzocchi, 873699

Academic Year 2017/2018

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1 Acknowledgments First and foremost, I would like to thank Professor Emilio Bellini, for the trust granted to me by

accepting the role of supervisor of my thesis, and Federico Artusi, who has guided me through this

challenge.

A special thanks to my family, who has always been and will always be my point of reference. Thanks

to you, who have allowed me to be the person I am and who have supported me in every choice of

my life. A more special thanks to my grandfather, the person who has taught me to never give up

and to work hard in order to make my dreams come true.

Another warm thanks to my friends because you, my dear friends, have given me the best laughs,

the best holidays and the best memories.

My heartfelt thanks to Danilo Pedrini, who like a guardian angel, has always supported me and put

up with me.

Then, last but not least, I would like to thank the whole magical world of Digital360 and in particular

of Partners4Innovation, that has welcomed me like a family and has taught me to practice as advisor

with passion, curiosity and humility.

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2 Abstract

La customer shopping experience è diventata recentemente uno strumento delle aziende per

ottenere vantaggi competitivi. In particolare, molti retailers usano la co-creazione per trasmettere

un’esperienza positiva di valore ai propri clienti. L’attuale ricerca su co-creazione suggerisce che si

sa relativamente poco su come i clienti vengono ingaggiati nella co-creazione di valore. Inoltre, la

co-creazione non è stata studiata in ambito di innovazione di significato, al contrario, sono sempre

state considerate due letterature opposte in quanto la co-creazione può coinvolgere i clienti sin

dalle fasi iniziali di sviluppo di un nuovo prodotto o servizio, mentre l’innovazione di significato viene

a contatto con i clienti solo durante la vendita in negozio. In questa tesi si vuole dimostrare che co-

creazione e innovazione di significato possono coesistere e in particolare che la co-creazione può

essere usata come strumento per far percepire il significato dell’esperienza in negozio ai clienti.

Questo studio si basa sulla distribuzione di un questionario a clienti di quattro casi studio che hanno

sviluppato innovazioni di significato e che usano la co-creazione con i clienti. I risultati forniscono

nuove opportunità di ricerca sulla co-creazione per un’innovazione di significato, come la

considerazione che la co-creazione e l'innovazione di significato non sono due entità separate ma

hanno una correlazione, che è data dal fatto che i clienti percepiscono il significato generato

dall'azienda e implementato in una soluzione di retail, grazie alla co-creazione. Pertanto, è possibile

collegare la co-creazione con l'innovazione di significato, poiché il l’azienda genera il significato che

viene poi trasformato in una soluzione di retail e quindi percepito dai clienti con la co-creazione.

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The customer shopping experience has recently become a tool for companies to gain competitive

advantages. In particular, many retailers use co-creation to convey a positive experience of value to

their customers. Current research on co-creation suggests that relatively little is known about how

customers are engaged in value co-creation. Furthermore, co-creation has not been studied in the

field of innovation of meaning, on the contrary, have always been considered two opposite

literatures since co-creation could involve customers from the initial stages of development of a

new product or service, while innovation of meaning contacts customers only during in-store sales.

In this thesis, the aim is to demonstrate that co-creation and innovation of meaning can coexist and

in particular that co-creation can be used as a tool to enable customers to perceive the meaning of

the store experience. This study is based on four case studies that have developed innovations of

meaning and engage customers in co-creation activities and on the distribution of a survey to the

clients of the firms of the case studies. The results provide new research opportunities on co-

creation for an innovation of meaning, such as the consideration that co-creation and innovation of

meaning are not two separated entities but have a correlation, that is given by the fact that the

customers perceive the meaning that’s has been generated by the firm and implemented into a

retail solution, thanks to co-creation. Therefore, we can link the co-creation with the innovation of

meaning frameworks, as the supplier generates the meaning that is then transformed into a retail

solution and then perceived by customers thanks to the co-creation.

Keywords: co-creation, innovation of meaning, retail, Service Dominant logic, New Service

Development, customer experience

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Table of Contents

1 Acknowledgments ................................................................................................................ 3

2 Abstract ............................................................................................................................... 5

3 Executive summary .............................................................................................................. 9

3.1 Problem setting ........................................................................................................................ 9 3.1.1 The purpose of the research ....................................................................................................................... 9

3.2 Innovation in services ............................................................................................................. 10 3.2.1 Design driven innovation .......................................................................................................................... 10 3.2.2 New service development ........................................................................................................................ 12

3.3 Customer experience .............................................................................................................. 12 3.3.1 Retail customer experience ...................................................................................................................... 13 3.3.2 Co-creation of experience ........................................................................................................................ 14

3.4 Research question .................................................................................................................. 16

3.5 Methodology .......................................................................................................................... 16

3.6 Case studies analysis ............................................................................................................... 17 3.6.1 Lush ........................................................................................................................................................... 18 3.6.2 Leroy Merlin ............................................................................................................................................. 18 3.6.3 Adidas Runbase ........................................................................................................................................ 19 3.6.4 La Feltrinelli RED ....................................................................................................................................... 20

3.7 Discussion ............................................................................................................................... 21

3.8 Conclusion .............................................................................................................................. 23 3.8.1 Theoretical implications ........................................................................................................................... 24 3.8.2 Managerial implications ........................................................................................................................... 24 3.8.3 Limitations and further research .............................................................................................................. 24

4 Problem setting .................................................................................................................. 27

4.1 The context ............................................................................................................................. 29

4.2 The purpose of the research ................................................................................................... 33

5 Innovation in services ......................................................................................................... 37

5.1 Radical service innovation ...................................................................................................... 41 5.1.1 Design driven innovation .......................................................................................................................... 43

5.2 New Service Development (NSD) ............................................................................................ 49

6 Customer Experience .......................................................................................................... 61

6.1 Retail customer experience ..................................................................................................... 69 6.1.1 Designing the encounter .......................................................................................................................... 79

6.2 Co-creation of experience ....................................................................................................... 81 6.2.1 Co-creation and innovation of meaning ................................................................................................. 105 6.2.2 Measuring co-creation ............................................................................................................................ 107

7 Research questions .......................................................................................................... 111

8 Methodology ................................................................................................................... 113

9 Case study analysis .......................................................................................................... 121

9.1 Lush ...................................................................................................................................... 125 9.1.1 Products and services ............................................................................................................................. 129

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9.1.2 The store ................................................................................................................................................. 131 9.1.3 Innovation of meaning ............................................................................................................................ 133 9.1.4 Competitors ............................................................................................................................................ 139 9.1.5 Co-creation ............................................................................................................................................. 143

9.2 Leroy Merlin ......................................................................................................................... 147 9.2.1 Products and services ............................................................................................................................. 151 9.2.2 The store ................................................................................................................................................. 155 9.2.3 Innovation of meaning ............................................................................................................................ 157 9.2.4 Competitors ............................................................................................................................................ 161 9.2.5 Co-creation ............................................................................................................................................. 163

9.3 Adidas Runbase .................................................................................................................... 165 9.3.1 Products and services ............................................................................................................................. 169 9.3.2 The store ................................................................................................................................................. 171 9.3.3 Innovation of meaning ............................................................................................................................ 175 9.3.4 Competitors ............................................................................................................................................ 179 9.3.5 Co-creation ............................................................................................................................................. 181

9.4 La Feltrinelli RED ................................................................................................................... 183 9.4.1 Products and services ............................................................................................................................. 185 9.4.2 The store ................................................................................................................................................. 187 9.4.3 Innovation of meaning ............................................................................................................................ 191 9.4.4 Competitors ............................................................................................................................................ 195 9.4.5 Co-creation ............................................................................................................................................. 197

10 Discussion ........................................................................................................................ 199

11 Conclusion ........................................................................................................................ 205

11.1 Theoretical implications ........................................................................................................ 207

11.2 Managerial implications ........................................................................................................ 209

11.3 Limitations and further research ........................................................................................... 211

12 Index of Figures and Tables .............................................................................................. 213

13 References ....................................................................................................................... 217

14 Attachments .................................................................................................................... 229

14.1 Surveys ................................................................................................................................. 229 14.1.1 Lush .................................................................................................................................................... 229 14.1.2 Leroy Merlin ....................................................................................................................................... 234 14.1.3 Adidas Runbase .................................................................................................................................. 239 14.1.4 La Feltrinelli RED ................................................................................................................................ 244

14.2 Results of the surveys ........................................................................................................... 249 14.2.1 Lush .................................................................................................................................................... 249 14.2.2 Leroy Merlin ....................................................................................................................................... 251 14.2.3 Adidas Runbase .................................................................................................................................. 253 14.2.4 La Feltrinelli RED ................................................................................................................................ 255

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3 Executive summary 3.1 Problem setting

In a more and more dynamic retail context, in which new technologies are shaping the new formats

of store, it is increasing the necessity of retailers to find new ways to engage customers. Online

shopping is spreading, and retailer have to find alternatives ways. An opportunity to increase the

attention on brick-and-mortar stores is to engage customers in some activity inside the store in

order to provide them with a superior shopping experience. There are already some examples of

successful customer experiences due to engagement of the customers, one of all is Build-A-Bear in

which clients can customize their soft toys choosing how to assemble the different parts. Several

retailers are responding to the online competition proposing new meanings that give a reason to go

to the store instead of buying online. Build-A-Bear in particular uses the co-creation with the

customer in order to highlight the new meaning and make customer aware of this new meaning. It

would be interesting to analyse how it is possible to use co-creation to enable the perception of the

meaning generated. Starting from the existent literature on service innovation and on customer

experience, there are not researches on how co-creation can enable the perception of the meaning.

This kind of experience could become the mean through which gaining competitive advantage.

3.1.1 The purpose of the research

Several authors have focused the attention on customer experience (e.g. Pine and Gilmore 1998,

Prahalad and Ramaswamy 2004, Meyer and Schwager 2007). Christopher et al. (1991) argued that

during 1950s and 1960s the differentiation was based on tangible goods and when tangible goods

became a commodity in 1970s, the differentiations moved to services. Then when services began

generic, the differentiation started to be based on experiences in 1980s. From 1980s experiences

became the point of difference of the offering and therefore a firm if wants to be competitive, must

stage experiences that sell. In fact, retailers could gain several advantages from the right

management of the customer experience as from experience derives the value. Prahalad &

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Ramaswamy (2003) defined value creation “Value creation is defined by the experience of the

specific customer, at a specific point in time & location, in the context of a specific event”. The

encounter is the space in which the experience happens. The study wants to understand how the

companies were able to realize a successful retail solution for the intended meaning, in order to

design a model that can help other companies to do the same with new meanings. The reason

behind this research is that the retail is a dynamic and interesting context in which companies are

forced to innovated in order to be competitive.

3.2 Innovation in services

Due to the servitisation of the society, more attention has been dedicated to service innovation by

scholars. The literature has evolved from considering both radical and incremental innovation as

two different kinds of innovation, to considering different sources of innovation and not only R&D.

Radical innovation is faster than incremental innovation and the output has a major impact. In this

research, the focus is on radical service innovation because the retail field is continually changing,

and more and more retailers are disrupting the market. Radical service innovation is definitely more

interesting nowadays and there more possibilities to gain outstanding profits, so companies can

benefit more and can also obtain significant competitive advantages.

3.2.1 Design driven innovation

There are different kinds of radical innovation, one of these is design drive innovation, that regards

the generation of new meanings. While the literature on technology push innovation is abundant,

the literature on design driven innovation is quite confuse as there is not a clear definition of design

and design process. Indeed, the design concept has evolved during the years, for László Moholy-

Nagy in 1947 design is an attitude that has many connotations and it is the balance of elements such

as materials, shape, colour, volume and space, while recently, the World Design Organization has

tried to find a new and more current definition for design that respects the new role that design has

in the industrial context it defines industrial design as “a strategic problem-solving process that

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drives innovation, builds business success, and leads to a better quality of life through innovative

products, systems, services, and experiences”. Actually, this definition respects the etymological

meaning of the word design that is “making sense of things”. The research has tried to clarity these

concepts. In particular, Verganti (2008) has developed the development process of design driven

innovation that has given fundamental insights to the research. First, he has defined the design

driven process as a process that starts from us as individuals by envisioning our own hypothesis

about what we would love that people love. The way we envision possible hypothesis is not based

on ideation but on reflection and self-criticism, without thinking to a solution, because solutions

come after. Then, we have to move outside and the most delicate way to do it is to work in pairs

because pairs are two individuals who are envisioning similar directions. By challenging each other

they will naturally tend to go deeper in their reflections, without killing their visions. The next step

is to move to a newer direction, comparing and combining different hypothesis in order to search

for unprecedented interpretations. For this reason, the pairs assemble into a larger group called

radical circle. The next step is to go outside the organization, first to interpreters, and finally to

customers. As there is a contact with customers, it would be interesting to see how the interaction

in the encounter affect the perception of the meaning. The encounter is none other than the retail.

Regarding retail, the value is generated through the different innovation strategies. Technology

helps retailers to implement innovations. For instance, the integration of the online and offline

channels and the omnichannel retailing are the new technologies that allow firms to implement the

new concept of seamless store. This technological dimension is part of the construct that has been

drafted is called “how-solution” of retail service innovation strategy. Another dimension regards the

market. Marketing policies and 4Ps have a relevant role in the retail innovation strategies because

value is generated through an analysis of consumers’ needs and behaviours (Berry et al., 1990;

Homburg et al., 2002). The aim is the creation of the perfect experience that attract and engage

customers on a personal level. This market dimension is called “what-experience” of retail service

innovation strategies. It regards decisions about new forms of interaction that satisfy hedonic needs

(Pinto, Dell’Era, Verganti, Bellini 2017). Then, there is the design dimension that in which there is an

innovation of the semantic dimension of the product. Meanings are not given but can be innovated

due to the evolution of the socio-cultural context and the discovery of new technologies (Pinto,

Dell’Era, Verganti, Bellini 2017). This dimension is defined as the “why-meaning” of retail service

innovation strategy and it regards the new meanings of visiting a store. The “how, what, why”

construct has been used to express the innovations of meaning of the four case studies.

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3.2.2 New service development

New service development (NSD) process was born from the need of having a different framework

from the one of the new product development (NPD) process as service and goods are very

different. NSD literature is relatively recent compared to NPD literature and does not converge to a

point because several researchers agree on the fact that services can be very different from each

other and therefore, the NSD process should be adapted to the context. Therefore, it is reasonable

to think to have a structured process that can be adapted to the different contexts, in particular that

can be adapted to radical innovation as innovation of meaning is a radical innovation. Several

authors have proposed their idea of NSD process, that has become an issue even for managers. For

some managers the customer’s involvement is fundamental, especially for the co-creation. Some

authors have demonstrated that customer co-creation is less critical than previously thought and

that it is important not only to collect data about customers but also to understand what kind of

information are and to integrate that information in the NSD process (Edvardsson, Meiren, Schäfer,

and Witell 2013; von Hippel 1994). This is a great shift of the concept of service, from a market

category to resources in customers’ value creation process, that is exactly the idea of service-

dominant logic (Vargo and Lusch 2004; 2008; 2017).

3.3 Customer experience

In the recent literature, attention to customer experience has grown, a great number of papers had

touched the topic and companies are more and more attentive to customer experience, as it is a

way to gain competitive differentiation. Customer experience, if managed properly, can provide

several benefits to companies because affects customer satisfaction (Liljander and Strandvik 1997),

delivers customer loyalty (Yu and Dean 2001, Pullman and Gross 2004, Mascarenhas et al. 2006),

influences expectations (Johnson and Mathews 1997, Flanagan et al. 2005), instils confidence

(Flanagan et al. 2005), supports the brand (Grace and O’Cass 2004, Berry and Carbone 2007) and

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also creates emotional bonds with customers or, conversely, leads to emotional scarring (Pullman

and Gross 2004).

3.3.1 Retail customer experience

Marketing literature has always dedicated particular attention to the retail. Several researchers

have tried to identify the marketing mix that influence the retail experience and how to enhance

the retail customer experience in order to provide customers with memorable experiences that

convince them to spend more time in the store and to come back several times, but it is still a critical

issue. Indeed, technological innovation has changed completely the retail environment and

consumers habits and lifestyles has changed during the years. The online channel has become a

must have but still do not satisfy the need of customers to build strong relationship with the brand.

Then, nowadays customers have the possibility to search information about products, services and

experiences even before entering the store and they infinite choices of products available on the

market. Therefore, it becomes hard for retailers to satisfy customers’ needs in a brick-and-mortar

store. Why should a customer go to a store instead of purchasing online? Some retailers have tried

to give an answer proposing engaging experience in the store, as the Build-A-Bear example

previously mentioned. However, these considerations highlight that the current literature is not

aligned with the new trends. There is a need of deepen the research in the retail field and in

particular in the co-creation filed. Indeed, even if the research on co-creation is abundant, as it is

evident looking at Service Dominant logic literature that given birth to the co-creation literature,

there is an issue that has not been addressed, that is the case of innovation of meaning. Co-creation

literature focuses on how to develop successful co-creation with customers and what are the

variables that affect the customers’ process, the supplier process and the encounter process but do

not indicate how co-creation could be used in an innovation of meaning.

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3.3.2 Co-creation of experience

In fact, Service Dominant logic (Vargo and Lusch 2004) has focused the attention on how the value

is created, co-created and used and in defining the roles of firms and customers in the generation

of values. They have summarized the basis of Service Dominant logic into some foundational

premises, that subsequently have been edited by other authors. Their studies have contributed to

identify what are the actions that the firms do alone, what can be done together with the customers

and what customers do alone. In fact, before the Service Dominant logic, it was not clear where the

values was generated and where was used by the customers. Vargo and Lusch started to ask

questions such as which actor generates the value, and which uses the value and tried to answer.

Then, other authors contributed to the literature modifying the foundational premises by Vargo and

Lusch. Indeed, Grönroos and Voima analyse the creation of value-in-use and value-in-exchange

considering value-in-exchange the outcome of value created by the provider before the interaction

with users and value-in-use the value created by the customers during the usage. They do not

consider creation of value-in-use before the interaction between users and firms and do not focus

on co-creation, assuming that is the firm alone that provide the value that then is transformed in

value-in-use by the customer. In this case, the firm provides potential value-in-use becoming in this

way a value facilitator. Then during the interaction, the customer is co-creator of value together

with the firm, while during the usage the customer creates alone the value. Grönroos and Voima

call these processes the provider sphere, the customer sphere and the join sphere. Co-creation can

only happen in the joint sphere through direct interactions. Direct interaction then influences

customers’ behaviours and may lead to value destruction if not managed properly. This risk must

be reduced by interacting with customer before the launch of the product or service in order to

understanding the customer process and the context which influence customers’ behaviours. This

action is possible because the spheres are not steady but are flexible and it could happen that there

is a direct interaction during the production. The boundaries of the spheres can move introducing

broaden spaces for co-creation with customers. The flexibility of the boundaries aligns the

framework to the one proposed by Payne et al. in 2008. The framework proposed by Payne et al. is

one of the most appreciated and quoted and has be taken as point of reference for this thesis.

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3.3.2.1 Co-creation and innovation of meaning

Innovation of meaning is inside-out and does not consider the user during the planning of the

meaning and the designing of the solution while for co-creation the engagement of the user is a

fundamental part and it happens from the beginning. Even if innovation of meaning does not

consider the engagement of the user, then however there is an interaction with the user. It could

be interesting to analyse how an innovation of meaning is transferred into a co-creation solution.

Companies could be interested in this concept because they need to create memorable experiences

and innovation of meaning could be the successful way to innovate the meaning behind the co-

creation experience.

3.3.2.2 Measuring co-creation

There are few studies that have systematically explored the nature of the dimensions of customer

value co-creation behaviour. Some studies consider multidimensions approach (e.g., Bettencourt,

1997; Bove, Pervan, Beatty, & Shiu, 2008) to capture the value of the co-creation, while others are

unidimensional (e.g., Cermak, File, & Prince, 1994; Dellande, Gilly, & Graham, 2004; Fang, Palmatier,

& Evans, 2008). However, none of these studies explores the relationship between the overall

construct and its dimensions. The study proposed by Yi and Gong (2013) develops a scale to measure

customer value co-creation behaviour, that is conceptualized as a multidimensional concept

consisting of two higher-order factors, each made up of multiple dimensions. The two factors are

customer participation behaviour and customer citizenship behaviour.

Another important study on value co-creation measurement is the one conducted by Ranjan and

Read (2016). The study presents two dimensions that have an impact on value co-creation: co-

production and value-in-use. The study provides the literature with an important step forward in

the direction of illustrating the complete multidimensional theoretical nature of value co-creation

and developing a measurement instrument aligned with theory. It highlights also the need of other

research, for instance better alignment with the service dominant logic as co-production is not a

concept included in the approach.

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3.4 Research question

Having analysed the state of the literature on customer experience and on innovation in services, it

has been highlighted that there is a lack. Service dominant logic has given birth to the studies on co-

creation. Co-creation has been studied first for goods companies and then for service companies,

without considering the typology if innovation that the firm is pursuing. There are no studies on co-

creation of experience for a service firm that has implemented an innovation of meaning, even if

there are already some examples on the market. It seems that co-creation and service innovation

literatures are two separated entities as there are no tries of making them converge. There are

already frameworks on the variables that affect co-creation and frameworks on how or develop

successful innovation of meaning, but how to implement the meaning generated into a retail

solution? And What if the solution is a co-creation experience? It would be interesting to understand

if there is a correlation between co-creation and innovation of meaning and if customers who co-

create, perceive the meaning of the experience. Thus, the research question that this thesis wants

to answer is the following:

How does the co-creation enable the perception of the new meaning?

3.5 Methodology

In order to answer to this question, it is necessary to examine how retail firms use co-creation to

enable the perception of the new meaning generated. In particular, this research uses the

framework proposed by Payne, Storbacka and Frow (2008) in order to find what are the co-creation

activities that help customers to perceive the innovation of meaning in the retail. Indeed, to

understand what customers perceive, it has been conducted an analysis based on surveys. For the

analysis it has been selected four case studies of retail firms that use co-creation to make customers

aware of the new meaning. The case studies are: Lush, Leroy Merlin, Adidas Runbase and La

Feltrinelli RED. Lush differentiates itself in the cosmetic industry for selling handmade and solid

cosmetics, Leroy Merlin is in the do it yourself and home improvement sector, Adidas Runbase is

meeting point dedicated to runners created by one of the major leaders in the sporty wear market

and La Feltrinelli RED is a bistro by the famous Italian publishing company La Feltrinelli.

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The surveys have been designed taking into considerations the different variables that affect co-

creation according to the co-creation framework proposed by Payne, Storbacka and Frow (2008).

Therefore, it has been divided into different sections. The first section is dedicated to the

demographic information in order to have a general picture of the kind of people who have

answered the surveys and the second section is for segmenting customers according their

motivation to co-create. Then, the other sections were dedicated the kinds of interaction that

happen between customers and firm before, during and after the experience inside the store,

according to the co-creation framework. In particular, it has been dedicated a part to Customer

Learning to see if customers perception of the firm and memories of previous experiences affect

the present experience inside the store. Another part has been directed to Relationship Experience

in order to capture the type of relationship that customers have with the company and with the

retail. Then, some questions were dedicated to value creation and value-in-use with the aim of

catching the moment in which value is co-create with the customers, that is what happen during

the Encounter Process. Then the last section has been dedicated to the innovation of meaning to

see if customers perceive that the experience proposed by the retail firm is radically different form

the ones proposed by competitors and to see if customers understand the meaning of the

experience. The surveys have been distributed to customers of the four case studies trying to catch

every segment. The ideal situation is to have one survey with all the questions of the four case

studies, but, as there are several questions, the surveys have been divided into two: one survey for

Lush and La Feltrinelli RED and another one for Adidas Runbase and Leroy Merlin. It has been asked

to interviewees to answer to both the surveys in order to have reliable data.

3.6 Case studies analysis

It has been conducted an analysis on the case studies in order to understand what is the new

meaning that has been generated and how the firms have transferred it into a retail solution and

experience. For each case study, it is presented the company, the innovation of meaning using the

framework “how, what, why”, the characteristics of the store and how the meaning is reflected in

the store and the main competitors of the firm, paying attention on the differences of the store and

the innovation of meaning between the firm and its competitors. The “how, what, why” analysis

focuses on forms of innovation that are considered most representative of retail services. The Why

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represents the meaning behind what the firm is doing, it is like a guide line for all that the firm wants

to do. Then, the What is the experience the firm provides to customers, while the How represents

the solutions that the firm is implementing.

3.6.1 Lush

Lush reflects the meaning of its values into the store providing customers with an immersive and

memorable experience. The store is like a lab or a workshop in which customer can touch and try

the products. Salesperson explain how to use the products and let the customers participate by

asking questions and making their hands dirty and having fun. In addition to this, the whole

environment is designed to create an immersive experience as it is colourful and scented, and it is

similar to a grocery. Indeed, salesperson wear aprons and products are placed on wood shelves with

blackboard that explain the products. Therefore, we could say that the new meaning proposed by

the Lush retail is “Experiment with the beauty”. Lush stores are the greatest representation of the

principles explained above in terms of design and experience. Indeed, the stores are colourful and

scented, characteristic that immerse totally the customer into the Lush experience. They are similar

to groceries as employees wear an apron and as the client enter the shop, they immediately ask if

clients need help and guide them into the shop helping them to find what they need, by showing

the different products. Then, customers are involved through the five senses and the atmosphere

of Lush stores becomes the main communication tool thanks to which the company manages to

reach its consumers even without using advertising. By communicating personal values and of a

more general nature (ethics, ecology) and positioning itself diametrically opposite to its

competitors, Lush has thus succeeded in aggregating a universe of consumers.

3.6.2 Leroy Merlin

Leroy Merlin, being a company that sells tools and products for DIY and having seen the more and

more increasing willingness pf people to create their own style at home, has generated and

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implemented a new meaning that can be summarized in this sentence: “Express your DIY”. In order

to allow customers to be real DIYers, has understood that was necessary to transfer knowledge and

skills to them. Therefore, Leroy Merlin has realised inside the store DIY courses, that are free and

short courses with experts who help participants to understand the basis of DIY and let them realise

simple products. Another feature is the Design Lab that contribute to transfer skills to DIYers. In

addition to this, Leroy Merlin has been able to create a real community of DIYers thanks to the DIY

stories on the website and to the charitable initiatives of the DIY community organized by Leroy

Merlin. Being a firm for home improvement, Leroy Merlin is a large-scale distribution retail and the

stores are really enormous. The internal structure of the store is similar to the large-scale

distribution retails of competitors, there are sections dedicated to home areas such as kitchen, living

room, bathroom and garden and sections dedicated to tools such as ironmongery, tiles and parquet,

lighting and décor. The only differences are the colours that remind to the Leroy Merlin logo and

the rooms dedicated to the lessons. There is no difference also between the employee’s behaviour

that is equal to that of competitors. Recently Leroy Merlin has opened a new store format that is

the showroom. The showroom allows customers to see the products in a real home environment.

The showroom is placed near the retail and which immediately allows the customer to put at his

ease, in a space where she can appreciate - through a renewed dynamic exhibition - the products

already present in the store. The experience of visiting the store starts from the Agora, the new

form of relationship between the customer and the collaborator, in which the collaborator guides

customers during the visit and answer to all their questions. There is also the possibility of asking

for a team of professionals composed of Architects and Interior Designers, in order to receive a

photo book of their project, also supplied with matching accessories and furnishing accessories.

3.6.3 Adidas Runbase

The strength of Adidas Runbase is the feeling of community. Indeed, it is not a point of sales but a

meeting point for runners. For the Adidas runners the group is very important, they do everything

together, not only the trainings. For instance, where there is a marathon, they train together with

the same goal to reach and the day of the run they meet at Adidas Runbase and eat the breakfast

together, then run together wearing the Adidas runners’ t-shirt and party together after the run.

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Moreover, at the finish line there is always someone that wait for the Adidas runners. All these

features strengthen the feeling of community. The new meaning of the store is radical and could be

expressed by this sentence “Be part of the community of urban running lovers”. Indeed, what is

radical is the fact that the experience is outside the store and is free. In this way Adidas has changed

completely the meaning of a store that is not anymore a place where to sell products. It is also

fundamental that there is a daily and fixed programming of the trainings in order to give to runners

the feeling of being part of a family. The fact that runners do everything in group, help them to reach

the goal. Then, the free runs attract a wider range of customers as they do not have to pay for using

the service. All those characteristics transmit the positive values of sport, such as the fair play that

normally is not associated to the run. Adidas has been able to create a great community of runners

giving them a base that is for runners a sort of home away from home. Adidas Runbase was born

from the need of runners of being part of a community that shares the same interest: the run. The

number of runners is increasing every year and it has been a real boom after the economic crisis.

Adidas Runbase has transformed the traditional store in a locker room in order to allow runners to

have a place where to meet and to start to run together. In an Adidas Runbase there is a space

dedicated to the exposition of new Adidas products for runners, a locker room and a place to train.

Adidas Runbase organise events for every day of the week, generally with limited spots, in which

people have to subscribe and then the there are some trainers that guide the runners during the

training. Runners can test the new products and participate to indoor or outdoor trainings and runs

with the help of expert trainers. Everything for free.

3.6.4 La Feltrinelli RED

La Feltrinelli RED proposes a new format of library that not only gives the possibility to customers

to buy books, but also to spend time there reading books, to participate to books or music album

presentations, to listen to live music, to eat excellent food from the Italian tradition or to do

aperitives in a foreign language. All these offerings give the possibility to customers to live the library

in a different way. In fact, the new meaning behind this experience is “Bistro for investing time in

culture”. Regarding RED, it is interesting how the store has been designed. The customers live a

unique experience for each of the three parts Read, Eat and Dream. The stores are furnished with a

modern style and generally are 350-400 m2 large with around 80 seats and more than 10000 books.

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The client, when enters the store, has the perception of being at home because of the cosy

atmosphere the open kitchen. The books welcome and surround the audience in the main hall.

There is also a department of literature in foreign languages, an offer designed for the large tourist

crowd. A room is reserved for the "Kidz" department, while there are spaces dedicated to art,

contemporary architecture and comics. Then, there is a collection of vinyl and gifts. The

restaurant/café part is interesting too. The menu is packaged like a real book to browse for an

inspiration. Index, chapters and texts tell about dishes, cocktails and desserts. Stories become

suggestions for culinary combinations, or the direct source of recipes. In the list, each dish is

accompanied by a literary quote or by the indication of the novel from which it is taken. In addition

to this, RED organizes events such as aperitives in a foreign language, presentations of new books

or CDs and live music. It is a modern bistro in which customers can sit and read a book or eat and

participate to events.

3.7 Discussion

Then, it has been conducted an analysis on the results of the surveys. First, the results have been

divided into two groups: answers of interviewees who have recognized the meaning of the

experience and answers of interviewees who have not recognized the meaning of the experience.

Then, it has been done the Shapiro-Wilk test in order to understand if the answers of interviewees

of the two groups follow a normal distribution and it has been conducted a T-test to see if the two

groups present statistical differences in the averages. If so, who recognizes the meaning of the

experience, lives co-creation in a different way from who does not recognize the meaning. This test

is used to demonstrate if co-creation enables the perception of the meaning of the experience. in

addition to this, confidence intervals are used to highlights the differences of the averages of the

two groups. Indeed, if the intervals do not overlap, there is another evidence of the statistical

difference of the two groups.

Analysing the results, it has been observed that for Lush, Leroy Merlin and La Feltrinelli RED, Market

Mavens are the customer segment who in majority has recognised the meaning of the experience,

while for Adidas Runbase, Innovators have recognised the meaning in majority. This is an interesting

finding and demonstrates that the meaning of the Adidas Runbase experience is perceived by more

innovative customers who generally are the first ones to try new products. Then, the surveys have

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demonstrated that co-creation enables the perception of the meaning implemented into a retail

experience by a firm and that in particular the co-creation components, Customer Learning,

Relationship Experience and Encounter Process enable the perception of the meaning. There are

some differences due to the diversity of the cases studies, but the Encounter Process is the only

category that enables the perception of the new meaning in all the case studies. Indeed, as it has

been reported in Table 1, the third category of questions of the surveys that refers to the Encounter

Process (columns highlighted in blue), is the only category that has an average p-value, that is the

probability associated to the T-test, is always lower than 0.05, (because a=0.05). Therefore, we can

affirm that there is statistical difference between the averages and this difference is not due the

case. This finding answers to the research question and confirms that the Encounter Process is the

place and moment in which co-creation happens and in addition to this, this kind of co-creation due

to direct interaction with salespersons contributes to highlight the meaning implemented into the

retail solution and make easier for customers to perceive it.

Table 1 - Results of the surveys

Then the confidence intervals analysis performed on the two groups contributes to highlight where

the averages can be considered statistically different. For each case study, almost all of the

questions that present different confidence intervals correspond to the questions that the T-test

has demonstrated that have averages statistically different. Therefore, interaction in the encounter

makes easier for customers to perceive the meaning that has been generated by the firm and that

has been transferred to a retail solution. The finding has been outlined in the figure below, in which

it is highlighted that the meaning generated by the firm is then perceived by customers through the

co-creation during the Encounter Process.

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Then, there is another important issue to discuss that is the correlation between the recognition of

the radically different experience and the recognition of the meaning of the experience. This is the

confirmation of the already demonstrated fact that the innovation of meaning is a radical

innovation. In fact, according to the innovation strategies framework proposed by Verganti (2008),

the generation of new meanings is a radical innovation. Therefore, the finding is in line with the

literature in design driven innovation.

3.8 Conclusion

The results of the study have led to some key points. First the consideration that co-creation and

innovation of meaning are not two separated entities but have a correlation. This correlation is given

by the fact that the customers perceive the meaning that’s has been generated by the firm and

implemented into a retail solution, thanks to co-creation. In fact, the results of the surveys have

highlighted in each of the four cases, that the interaction given by the encounter process, for

instance participation into the personalization of the product or running together with the

community of runners, enable customers to perceive the innovation of meaning. Therefore, we can

link the co-creation with the innovation of meaning frameworks, as the supplier process generates

the meaning that is then transformed into a retail solution and then perceived by customers thanks

to the co-creation in the encounter process.

Figure 2 -How co-creation enables the perception of the new meaning

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3.8.1 Theoretical implications

This study has a particular importance for the literature that has never addressed the topic before.

The hope is that this study will be a point of start for future researchers. There are already several

research on co-creation and design driven innovation. Indeed, the growing attention to design

driven innovation has contributed to improve the research and to create awareness around a topic

that has been underestimated for years, the design as a process and not as the aesthetics of a

product, and the more and more in-depth research on co-creation has enabled firms to create

better and meaningful experiences. There is still the need of continuing the research.

3.8.2 Managerial implications

These findings can also assist retailers in differentiating their offering from competitors ones. Many

retailers are recognizing the importance of the shopping experience as the key differentiating

variable in the retail marketplace. Customers are searching more and more uniqueness and

providing them with a new meaning is a way to differentiate the experience. The study identifies

some co-creation variables that affect the encounter process and that if managed well, can help

retailers to reflect the meaning into the store. Of course, there are factors that might seem external

to the firms, for example the mood of the customers or their willingness to spend time into the

store, but these factors can be influenced by the employees’ behaviour with strategies based on

creating an entertaining and fun retail environment.

3.8.3 Limitations and further research

Although this study illustrates the advantages of co-creation for retailer that have generated new

meanings, the study relates only to four case studies, that are limited in the terms of the degree to

which industry and relationship specific inferences can be drawn. The research conducted in this

thesis has focused on a limited sample of interviewees and the number of the sample is not enough

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to prove that the proposed framework is valid. Then, in addition to the small number of the sample,

the interviewees are all from Milan or near Milan, and the majority of them is relatively young being

from 19 to 39 years old, and workers with a degree. The study should be expanded by considering

other categories of people in order to generalize the framework. It is required further research to

test the framework in other retailers that offer other services but that have generated new

meanings and have tried to implement those meanings into the retail solution. Then, it could be

interesting also to expand the research to other retailers or to look at other services different from

the retail.

Customer experience and innovation are not new concepts, and historically many successful

companies have used essentially qualitative research techniques to develop distinctive customer

experiences. Developing innovative customer experiences require the involvement of resources,

the willingness to do something new, for sure it is risky but then the advantages are large. One only

needs to find the courage to start the adventure. Indeed, the purpose of this thesis has not been to

solve a problem, but to activate. Definitive answers to research on innovation of meaning and on

co-creation have not been provided herein. The goal has been to create awareness about the need

of research and to suggest possible directions for further researches, in a field that is still largely

unexplored. The hope is that this thesis is only a first step in a long exploration effort to come.

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4 Problem setting

The current retail environment is completely different from the one of some years ago. If we had to

imagine people go shopping in the 2000, we should see people going around the city centre or the

shopping malls, entering the shops, looking for what they need and buying. Nowadays we see

people, especially young people such as millennials, searching online what they need and then going

then the shop or even buying online. Such a transformation is mostly due to the technology. Digital

technology has allowed us to improve our experience but at the same time has made us more

demanding. Seeing and buying products is not enough anymore for customers, what counts is

experience (Pine and Gilmore 1998). But which kind of experience? It is not even enough to add the

online channel to fulfil the needs of the new consumers, what is necessary is to find something that

is meaningful to them. People are constantly searching for new meanings because there are some

changes in people’s lives that are still interpreted in the old way and they need a new interpretation.

An example is the new meaning that Starbucks has given to the café. Starbucks cafes are something

in the middle between home and work but that make you feel at home and in order to realise this

meaning, they call you with your name when your coffee is ready. Another example is Ikea that put

pencils and rulers on shelves so that you can experience the do it yourself starting inside the shop.

These innovations catch the changes in people lives and propose an answer. Several firms use co-

creation to provide customers with interesting experiences. In fact, more and more retailers engage

customers in some activities inside the store. The interesting question is to understand how these

retail companies have used co-creation to enable the perception of the new meaning.

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4.1 The context

The retail sector is continuously innovating, and change is already here. Indeed, according to Doug

Stephens, founder of Retail Prophet “We will see more disruption in the next 10 years of retail than

we did in the previous 1,000”. Millennials are becoming the major percentage of the population

surpassing Baby Boomers. These new generations are digital native and use the smartphone for

each activity they do. They have new expectations from retailers that have to adapt and respond to

the needs of consumers. This new kind of customers does not think that brick-and-mortar and online

shops as two different entities like previous generations but identifies a seamless experience.

Millennials like to interact with the brand without any kind of obstacle. This is why retailers are

trying to offer omnichannel experiences that allow customers to have a seamless interaction.

Technology is the key tool. Data and analytics will allow retailers to create more tailored and

customized stores that can understand and anticipate the needs of shoppers. It is fundamental the

ability of making better decisions about what to stock and what to put in the store and to provide a

customised experience. There is no a shadow of a doubt that the role of the retail is changing, and

companies are already facing the challenge. In fact, a large number of companies are innovating in

the back end and in the front end. Regarding back end innovation, companies are adopting systems

for managing the supply chain in an integrated way, for managing the warehouse and for managing

processes such as business intelligence systems, CRM and ERP. While regarding front end

innovation, retailers are innovating the phases of pre-sale, sale and post-sale by improving the

touchpoints, the online channels, alternative ways of payment and new systems of loyalty. All of

these innovations will contribute to shape the retail of the future. The new retail is not anymore the

place in which the consumer has access to the products but is the place in which it is built a strong

relationship with the customers and it is a place more meaningful and functional. One of the

greatest challenges is to allow customers to interact with the brand though all the five senses. They

have to offer an effective and fulfilling customer experience to customers who are changing their

needs. The current question is how to develop new services that fulfil the demanding and changing

needs of the new customers and about this topic the literature is quite developed, since the

importance of services nowadays is recognised by everyone.

The study conducted by Grewal, Roggeveen and Nordfäl (2017) highlights the new technologies that

retailers use to engage customers. According to them, there are five categories of technologies that

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are impacting the retail. The first one is Technology & Tools to Facilitate Decision Making. These

technologies are revolutionising the shopping experience as allow customers to take decisions

faster having more information on the products. Some examples are apps that allow customers to

check the queue and to take the ticket for a certain date and hour before entering the store, or QR

codes that shows more information about products, or special lenses to see in 3D or even apps that

allow customer to pay without doing the queue at the cash desk. In addition to this, this kind of

technologies help retailer to offer customised products for their customers. Another kind of

technology is Visual Display & Merchandise Offer Decisions that help to design and deliver offers

that stand out. The importance of the organization on the shelf, of the displays, of the packaging

but also of the locational factors is increasing. Then, Consumption & Engagement because

consumers’ actual consumption of goods and services is at the heart of all retailing and providing

customers with a superior experience can differentiate companies (Grewal, Levy, and Kumar 2009;

Verhoef et al.2009). “The customer experience construct is holistic in nature and involves the

customer’s cognitive, affective, emotional, social and physical responses to the retailer” (Verhoef,

Lemon, Parasuraman, Roggeveen, Tsiros, Schlesinger 2009). This experience is created not only by

those elements which the retailer can control (e.g., service inter-face, retail atmosphere,

assortment, price), but also by elements that are outside of the retailer’s control (e.g., influence of

others, purpose of shopping)” (Verhoef et al. 2009, p. 32). Increasing the engagement could create

superior customer experience. The fourth category of technology is Big Data Collection & Usage that

refers to the use of an enormous quantity of data transforming them into information in order to

provide products that customer want. The last category is Analytics & Profitability that means to

implement new strategies thanks to the analytics, for instance omnichannel experiences, dynamic

pricing and mobile targeting. The authors conclude saying that newer forces will influence how

shoppers select channels, choose products and services, and make purchases and that the key to

success in the future retailing is knowing what is different and what is similar in the online and

offline words, as well as how new technologies are going to impact both. For sure innovations make

life easier for customers but retailers must be prepared and embrace these innovations to make

their customers even more engaged.

Services are dominating all the industries around the world and even manufacturing companies

have started to add services in order to differentiate themselves from competitors. Some

researchers have focused the attention on the importance of services in the current economies and

some have highlighted the significance of innovating services. In fact, this increasing importance of

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services and of the developing of new services has shifted the focus of the literature on service

innovation. Some authors consider service innovation and new service development (NSD) as

synonyms, while others think that there is a small difference. Literature on NSD has evolved during

the years, during the 80’ the first studies used qualitative methods to explore the nature and stages

of the service innovation process (Bowers, 1989; Easingwood, 1986; Johne and Harborne, 1985).

Then, quantitative studies have followed to identify key success factors and to highlight the

difference from new product development (NPD). Even if some scholars are convinced that the

literature is now mature (Bryson and Monnoyer, 2004), the majority of scholars emphasize that the

NSD domain remains underdeveloped and that much additional research is needed (Toivonen and

Tuominen, 2009). One of the most active sectors in terms of innovation is the retail.

Instead, some scholars have focused the attention on customer experience, as it is the next step in

what we call the progression of economic value (Pine and Gilmore, 1998). In fact, Pine and Gilmore

were the first scholars to focus the attention of the research on what it was under the eyes of

everyone but investigated by no one: the experience. They were able to see that companies were

selling experiences and not anymore products and services. Experience is what provides the

competitive advantage in the new economics, and therefore provides value to customers. Since

experiences are personal and exist only in the mind of individuals who has been engaged on an

emotional, physical, intellectual, or even spiritual level (Pine and Gilmore, 1998), it is impossible for

two individuals to feel the same experience. Therefore, the is a big issue for companies: how to

provide the intended experience to each customer? Pine and Gilmore set this problem in 1998, but

it is still current. Indeed, it is the same problem companies that adopt innovation of meaning have

when they want to provide the meaning to consumers. For this reason, researchers have done

studies on what are the factors that influence customer experience. Some researches were on the

marketing variables that influence the store experiences such as brand, price, advertising and

location but the main focus is on how to create an immersive experience that engages customers.

In fact, it seems that customers love to be engaged by the brand. All the characteristics of the new

store mentioned above have the same aim of engaging customers in the store. Even if technologies

are becoming commodities and the online channel is spreading, customers still prefer to go to the

physical store at least once in their customer journey. To solve this issue, some companies have

customer experience managers instead of customer relationship managers (Palmer 2010) because

they have noticed that what really matters is not to manage the relationship with the customers

but to manage the experience that customers have when come into contact with the brand through

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the different channels. In fact, it has been demonstrated that the store environment influence

shoppers’ emotions and mood, which in turn influence shoppers’ behaviour (Sacheva & Goel 2015).

This means that companies have to find new ways to engage customers, and here it comes

innovation.

It has been done plenty of research on innovation. In the 70’ the attention was on technology push

innovation, then it has shifted to an innovation pulled by the market and now it is on design driven

innovation. According to Verganti (Verganti 2008), design driven innovation is a radical

improvement of the technologies and a generation of a new meaning, which means that there is an

overlap between technology push and design driven innovation that leads to the adoption and

adaptation of theories on technology management to investigate design-driven innovation. In

addition to this, Verganti has discussed the fact that the market is not given a priori but is the result

of an interaction between consumers and firms (Verganti 2006). Therefore, needs are co-created.

This hypothesis has led researchers to investigate the generation of new meanings and their

translation into new products and services. Regarding this topic, since design driven innovation has

a strong correlation with consumers who help in understanding new meanings, much research has

been done in order to identify a framework that helps to design the process of transferring the new

meaning into a new product or service. Even if there is abundant literature, there is a need to

deepen the research since there is a lack in defining all the steps of the process. Indeed, some

scholars have focused in designing a model for developing a new service, others for developing a

new innovation in services while others have focused on the capabilities that a company needs to

do design driven innovation. But the problem of all this kind of studies is that is not properly clear

how to transfer a new meaning into a solution. It would be interesting to analyse how firms creates

solutions that highlight the new meanings generated and how make customers aware of the new

meanings.

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4.2 The purpose of the research

While new product development (NPD) has been studied for several years by researchers, resulting

in a large and well documented body of knowledge about the NPD process and its key success

factors, the literature on NSD is less developed. Indeed, NSD domain does not have a coherent body

of knowledge because it lacks a scientific community of top scholars conducting high-quality

research that is published in A-level journals and widely disseminated via conferences (Wim G.

Biemans, Abbie Griffin, and Rudy K. Moenaert 2015). Thus, this leads to the fact that there is not a

clear and coherent idea of NSD process. In fact, first there is not a definition of services and of NSD

adopted by all the scholars. This confusion creates misunderstandings in the definition of standards,

and it is not only a theoretical issue but impacts also the definition of an NSD process recognised by

all the researchers. The existent literature highlights the customer involvement in the process, the

role of service employees and the key success factors of NSD but, on the contrary of NPD, does not

provide a framework to follow. Considering the complexity of the service contexts, it is not possible

to have a general model but probably it is necessary to adapt it to the context (Jaakkola, Meiren,

Witell, Edvardsson, Schäfer, Reynoso, Sebastiani, Weitlaner 2015). Indeed, key NSD factors should

be refined, taking into consideration the service context and how it impacts on the process, and not

considering services at large just to have a great sample for statistical analysis (Wim G. Biemans,

Abbie Griffin, and Rudy K. Moenaert 2015). Then, the NSD literature needs a shift in the approach

because it has to pass from qualitative surveys to in-depth analysis such as cases research, action

research, ethnographic research, and participant observation in order to have a clear view of how

companies develop services. In order to fill these significant gaps in the literature, there is a need of

continuing the research, also because they create problem not only to the theory but also the

practice. Indeed, companies does not have a coherent point of reference to follow in developing

new services. Since there is not an integrated body of knowledge about NSD, every researcher has

her own ideas and so do the companies. Therefore, it happens that companies develop new services

in different ways and the ones able to adopt a successful process, succeed.

Product and service development is key to gain competitive advantage and being able to innovate

them could contribute to the success of a firm, but there are not references, or at least there are

references, actually there are thousands of papers on NSD, but they do not agree. For instance,

there is not a stage process for NSD adopted by the majority of the scholars. The issue is that the

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literature does not answer to the questions of the companies that are in this situation. How do they

know that their NSD process is the right one? And what capabilities are needed? The reason to the

failure of some firms that have recognized a new need and want to answer with a new service could

be this.

As said, there is a lack in the literature regarding frameworks that should help companies

transferring an innovation of meaning into services. In this case, the focus is on retail services. The

purpose of this research is to understand how co-creation could help retailers to highlight the

meaning of the experience in the store. The study starts with an analysis if the literature in order to

clarify the situation of the research in order to demonstrate that the current literature has some

lacks and to find the basis from which to start the analysis. Then there will be analyses four case

studies. The cases that will be taken into consideration are companies that have already identified

a new meaning and have transferred it into a successful retail solution. The study wants to

understand how the companies were able to realize a successful solution for the intended meaning,

in order to design a model that can help other companies to do the same with new meanings. The

reason behind this research is that the retail is a dynamic and interesting context in which

companies are forced to innovated in order to be competitive. Therefore, we are seeing several

radical innovative retailers, but even if there are plenty of companies that are successful, there is

still a good percentage that discovers a new meaning, but it is not able to transform it into a

successful solution. The current literature does not satisfy this need because proposes frameworks

that do not include specific guidelines to do this step. The majority of the current studies focuses

on the steps to do to create a new meaning but then does not go further with indications to realize

a solution. Then other studies focus on how to engage customers in the store but do not consider

the different kinds of innovation. Several retailers use innovation to engage customers, for instance

some use the virtual reality or QR codes, but these innovations are technological and do not change

radically the meaning of the experience. Adding new features to an experience does not mean to

change the meaning. A successful example of innovation of meaning in the retail is IKEA that had

put pencils inside the store in order to stimulate the customers to do it yourself. Some firms are

using the interaction inside the store to make customers perceive the new meaning generated, but

there are still several retailers that fail to highlight the new meaning during the experience in the

store. Therefore, companies face difficulties and it seems that the only useful tool to overcome this

issue is intuition: if the intuition is good, the solution would be successful, otherwise it would be a

failure. This thesis wants to substitute the intuition with specific guidelines that can be applied in

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different retail contexts in order to help companies in providing the intended innovation of meaning

through the co-creation opportunities between firm and customers during an experience in the

store.

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5 Innovation in services

Innovation in services is a topic that has been touched several times by different scholars and it is

still not fully understood. Thanks to the servitisation of the society, more attention has been

dedicated to service innovation by scholars. The literature has evolved from considering both radical

and incremental innovation as two different kinds of innovation, to considering different sources of

innovation and not only R&D. The nature of services makes difficult to understand the innovation.

Indeed, innovation in services is often the result of non-structured process driving from an analysis

of the consumers’ needs and sometimes it is even difficult to recognize them as innovations. In fact,

it is difficult to notice a change in a service rather than in a product, since it is easily recognizable a

new product, but it is not easy to detach a new service, as it is intangible. Then, is also hard to

distinguish between service innovation and process innovation because services are simultaneously

both products and processes (Toivonen and Tuominen 2009). This leads us to the conclusion that

there is a need of research in service innovation, even if some authors have tried to do a literature

review to make some order.

Combs and Miles have done an analysis of the literature and have found that there are three

different perspectives on service innovation (Combs and Miles 2000):

- The assimilation perspective views service innovation basically as a technological innovation.

It follows the Schumpeterian approach in which the innovation is given by the technology it

is an outcome new to the world that creates exchange value for the firm. This view focuses

on the internal perspective of innovation.

- For the demarcation perspective service innovation differs in nature and character from

product innovation. The definitions of service innovation focus on inventions that are new

to the firm and suggest that the change in the offering does not need to be substantially

new, introduced in the market, or make a substantial profit in order to be considered a

service innovation. In practice, this means that all service firms develop service innovations.

But this concept creates more confusion because it is not clear the distinction between new

and innovative. In fact, if every service firm that develop new services, develop service

innovation, it means that all the new services are innovations, but this is a step behind to

the Schumpetrian definitions of innovation and of the distinction between new and

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innovation. A new service is like an invention, an innovative service is a new service that has

already created value for the firm that has develop it and has changed the market allowing

the frim to become a leader.

- The synthesis perspective provides an integrative perspective that considers both the

outcome and the process. This view goes beyond the Schumpeter’s perspective but creates

difficulties in understanding what is a successful service innovation, since it is not clear if it

is the process or the outcome.

In the following table there are some definition of service innovation according to these three

different perspectives.

Affiliation perspective

Authors and year Definition Giannopoulou et al. (2014)

“A type of product innovation involving the introduction of a service that is new or significantly improved with respect to its characteristics or to its intended uses”

Henrike and Schultz (2014)

“Creation of solutions, which can either be emerging incremental adaptations or completely new solutions for products, services, or processes to significantly benefit the care situation of patients”

Kuo, Kuo, and Ho (2014)

“A new way of business thinking to reform relatively conservative and inflexible operational procedures and processes, which can transform organizations to better meet the needs of their markets”

Demarcation perspective

Authors and year Definition Cheng and Krumwiede (2010)

“Fundamental change in services that represent revolutionary changes in technology or service benefits.”

Lin, Chen, and Chiu (2010)

“Manufacturers' engagement in various innovation activities to enhance customer satisfaction, including after-sale services, warranty policy, maintenance routines, and order placement systems.”

Love, Roper, and Hewitt-Dundas (2010)

“New or significantly improved service”

Salunke, Weerawardena, and McColl-Kennedy (2011)

“As the extent to which new knowledge is integrated by the firm into service offerings, which directly or indirectly results in value for the firm and its customers/clients.”

Enz (2012) “The introduction of novel ideas that focus on services that provides new ways of delivering a benefit, new service concepts, or new service business models through continuous operational improvement,

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technology, investment in employee performance, or management of the customer experience.”

Jian and Wang (2013)

“Enterprises' intangible activities formed in the process of service, using a variety of innovative ways to meet customer needs and maintain competitive advantage.”

Den Hertog, Van der Aa & De Jong, 2010

“New service experience or service solution that consists of one or several of the following dimensions: a new service concept, new customer interaction, new value system/business partners, new revenue mode or new organizational or technological service delivery system”

Synthesis perspective

Authors and year Definition Toivonen and Tuominen (2009)

“New service or such a renewal of an existing service which is put into practice and which provides benefit to the organisation that has developed it; the benefit usually derives from the added value that the renewal provides the customers. In addition, to be an innovation the renewal must be new not only to its developer, but in a broader context, and it must involve some element that can be repeated in new situations, i.e. it must show some generalizable feature(s).”

Ordanini and Parasuraman (2010)

“Offering not previously available to the firm's customers—either an addition to the current service mix or a change in the service delivery process—that requires modifications in the sets of competences applied by service providers and/or customers”

Cho, Park, and Kim (2012)

“Introduction of new or significantly improved services and products.”

Santamaría, Jesús Nieto, and Miles (2012)

“New services have been introduced into the market, or existing services have been significantly improved or important changes have been made to their basic characteristics, intangible components or desired purposes.”

Skålén et al. (2014) “The creation of new value propositions by means of developing existing or creating new practices and/or resources, or by means of integrating practices and resources in new ways”

Biemans, Griffin, and Moenaert (2015)

“Service innovation as the process of devising a new or improved service, from idea or concept generation to market launch.”

TEKES “Service innovation is a new or significantly improved service concept that is taken into practice”

Table 2 - Service innovation definitions

As we can see, there is not a clear concept of service innovation and therefore it is difficult to

distinguish it from NSD. For what concerns our study, the affiliation perspective is not suitable

because service innovation in the retail context is not generated only by the technology, even if

without the technology we could not have innovative stores. Even the demarcation perspective is

not appropriate because it implies that all the service firms do service innovation and therefore, we

could analyse any company. The synthesis perspective has more fit with our purpose since it

includes the process and the outcome and also the market launch of the service in order to consider

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the generated value for the consumers. The problem of considering both the process and the

outcome is that then the concepts of service innovation and NSD are the same. Indeed, the

definition of service innovation provided by Biemans, Griffin, and Moenaert in 2015 is valid also for

NSD, as they consider them as synonymous. Therefore, for our purpose, the best definition is

“Service innovation is a new or significantly improved service concept that is taken into practice”

because it considers service innovation as the outcome and NSD as the process. This definition is

the one considered by the Finnish research agency TEKES, that also describe service innovation as

something based on technology even if the innovation is not necessarily related to a new technology

but to non-technological areas.

This definition excludes to consider the innovation process that leads to the development of the

new services and this bring us to the NSD concept. We will come back later on this topic when we

will address the NSD concept. There it is explained what is NSD, what is the difference from service

innovation and why do we need to consider it but first we will analyse two different kind of

innovations, radical and incremental, since the outcome and the process of developing them could

be very different.

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5.1 Radical service innovation

Radical innovation, or discontinuous or ad hoc innovation, consists in a completely new technology

in a new market, which means that no one has that technology and that there is not something

similar in the market. Indeed, radical innovation is very innovative and therefore requires high

commitment. Companies have to invest a considerable amount of capital without being sure of the

success. There is a high degree of risk but then if it is successful, the company is able to gain

outstanding profits and to achieve a major competitive advantage (Griffin 1997). This view is shared

also by the 1995 PDMA best practice study and by Storey and Easyngwood in 1998, while

Kleinschmidt and Cooper in 1991 and de Brentani in 1995 agree on the fact that both radical and

incremental innovations could be equally successful because usually firms obtain the competitive

advantage thanks to the radical innovation but then they can sustain the advantage only with

incremental improvements. So, the question is: “Should companies develop radical or

incremental?” There is not a correct answer, but the study done by de Brentani in 2001 suggests

being successful in incremental and radical new services is essential for the long-term performance.

Therefore, it is necessary both to radically innovate and then to add several incremental

improvements. In our research, we focus on radical service innovation because as said in the

introduction, the retail filed is continually changing and more and more retailers are disrupting the

market. Radical service innovation is definitely more interesting nowadays and there more

possibilities to gain outstanding profits, so companies can benefit more and can also obtain

significant competitive advantages.

Now the question is: “What companies have to do to develop successful radical services?” De

Brentani in his study analyse some factors that have an impact on the success of the radical

innovation and also the fact that the kind of innovation influences the activities to do to develop

the new service. She suggests that a radical service innovation requires a different NSD process from

the one of an incremental service innovation and that a well-planned NSD process can provide

important benefits. Regarding radical service innovation, she said that having an open and highly

innovative new product culture within the firm is a primary route to success. Then, having highly

trained experts who have an intimate knowledge of the product and the customer and

understanding and responding to the specialized and long-term needs of customers play an

important role in the success of the service.

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The study conducted by Song and Montoya-Weiss instead highlights that usually service companies

that develop incremental innovation focus the attention on the strategic planning activity while the

ones that develop radical innovations do not place sufficient emphasis on this activity; and this is

the opposite of the order that the study recommends.

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5.1.1 Design driven innovation

There are two kinds of radical innovation: technology push and design driven. A technology push

radical innovation is a completely new product given by a new technological discovery while a design

drive innovation (DDI) is an innovation of meaning. While the literature on technology push is

mature and well understood by researchers, DDI literature is quite confuse. This is because

definition of design is fluid. There are several interpretations of design and scholars tend to accept

that the concept of design is broad. Starting from the first authors who tried to define design, we

see that design is strictly correlated with product development. For László Moholy-Nagy in 1947

design is an attitude that has many connotations and it is the balance of elements such as materials,

shape, colour, volume and space. For Tomas Maldonado design determines the formal qualities of

products (Maldonado 1969) and for Eames the design depends on constraints such as price, size

and surface (Eames 1969). Then some interpretations are closer to user centred design and to the

market research and branding. For Dreyfuss design has a strong relationship with people and

designers should make people happy (Dreyfuss 1955). This is the reason why many people think

that design is the aesthetic and the style of a product. Recently, the World Design Organization has

tried to find a new and more current definition for design that respects the new role that design has

in the industrial context it defines industrial design as “a strategic problem-solving process that

drives innovation, builds business success, and leads to a better quality of life through innovative

products, systems, services, and experiences”. As we can see from this definition, there are new key

words that characterize design: design is strategic in the sense that has a fundamental role in the

strategy of the company and is a problem solving process that contributes to innovate products and

services. This concept is certainly more actual and reflects the DDI principles. We will not go deeper

in finding the correct definition of design, but we have to clarify what is design when we talk about

DDI. For DDI, design derives from the awareness that every product has a meaning and from the

fact that people buy meanings and not products. In other words, products have for people

emotional and symbolic meanings that does not result from market evolution. This is valid also for

services that have a meaning too. Indeed, just look at what Starbucks did: Starbucks was able to

innovate the meaning of the café, that is now a home away from home. Starbucks has changed the

meaning of the traditional café because, by putting the client’s name on the mug, has become a

home away from home. This change of meaning has implied also a change in the price. Starbucks

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requires a premium price and has changed the market of coffee. Before Starbucks, premium price

coffees were only the 3% of all coffee, in 2000 were 40% (The Starbucks Effect, Vishwanath and

Harding 2000, Harvard Business Review). Even Nespresso is now a premium coffee and has designed

another change of meaning: in a Nespresso store, customers can taste coffee and listen to coffee

explanations becoming themselves coffee experts. Why do we see innovations of meaning?

Meanings change over the years and firms must be able to understand these changes in order to

obtain the competitive advantage. The process through which a company can innovate the meaning

of a product is design. “Design is making sense of things” (Peter Butenschon). Design innovates

meanings, and meanings make difference in the market. During the recent years, we have seen

several innovations of meanings, some examples are the Nest thermostat, the Swatch watches, the

Yankee candles, the IKEA do it yourself, and so on. There are evidences that some changes are

happening, and innovation of meaning can exploit those changes. Therefore, companies have the

opportunity to benefit from this. Indeed, design-driven innovation has significant implications for

company’s economics: profit, assets, investments, and shareholder value (Verganti 2009). Design-

driven innovation creates products with strong personality thus boosts the company’s sales volume

because people are willing to pay a high premium price for a more meaningful product. It also

contributes to brand equity since meanings are authentic and contribute to the image of the

company. Then, DDI requires low investments. In fact, there are several design drive innovations

provided by small-medium firms. All these benefits impact on the value of the company for the

shareholders.

How do companies develop a design drive innovation? The following process is the one developed

by Verganti in Overcrowded in 2018. The DDI process starts from us, as individuals. We begin by

envisioning our own hypothesis about what we would love that people love. The way we envision

possible hypothesis is not based on ideation but on reflection and self-criticism. We focus on the

meaning of our proposal, on why customers would love it rather than focusing on how problems

can be solved. We do not have to think to a solution, as we will see, solutions come after. Then we

have to move outside and the most delicate way to do it is to work in pairs because pairs are two

individuals who are envisioning similar directions. By challenging each other they will naturally tend

to go deeper in their reflections, without killing their visions. The next step is to move to a newer

direction. We want to compare and combine different hypothesis in order to search for

unprecedented interpretations. For this reason, the pairs assemble into a larger group that we call

a radical circle. Circle because participants have been carefully selected and they work closely

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together, typically in the format of an intense workshop. The next step is to go outside the

organisation, first to interpreters, i.e. experts from far-flung fields who address our strategic context

but from different perspectives and finally to customers, i.e. those who will hopefully love our

products. As we can see from the process, DDI is different from user centred innovation that is based

on users. User centred innovation wants to get close to users in order to understand their needs

and to find the solution that answer to those needs, while DDI comes from inside and from the

capabilities to attract interpreters in order to share knowledge (Verganti 2008). This is based on the

assumption that the market is not given a priori but is the result of an interaction between

consumers and firms: needs are co-created (Verganti 2008). Actually, DDI is closer to technology

push rather than to user centred innovation (Verganti 2008). In fact, market pull innovation start

form an analysis of the users’ needs and then search technologies and languages that can satisfy

those needs. User centred is included in market pull innovation, as both starts from users. Instead,

technology push derives from the discovery of a new technology and DDI propose radical new

meanings that implies a change in sociocultural regimes. As we see in Figure 24, there is an overlap

between technology push and design-driven innovation in the upper left corner that means that

radical technological changes are often associated with radical changes in meanings. This highlights

the fact that shifts in technological paradigms comes with shifts in sociocultural regimes. Indeed, it

happens often that a DDI is realizable thanks to a new technology as for the Nintendo Wii, that has

exploited new sensors for the game field, and that new technologic innovations have to analyse

users’ needs otherwise there is the risk of producing products that nobody wants.

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Figure 3 - Innovations strategies (Verganti 2008)


helps retailers to implement innovations. For instance, the integration of the online and offline

channels and the omnichannel retailing are the new technologies that allow firms to implement the

new concept of seamless store. This technological dimension is part of the construct that has been

drafted thanks to empirical research and it is called “how-solution” of retail service innovation

strategy. It regards decisions about new technical solutions that improve end-to-end operations and

satisfy utilitarian needs (Pinto, Dell’Era, Verganti, Bellini 2017). Another dimension regards the

market. Marketing policies and 4Ps have a relevant role in the retail innovation strategies because

value is generated through an analysis of consumers’ needs and behaviours (Berry et al., 1990;

Homburg et al., 2002). The aim is the creation of the perfect experience that attract and engage

customers on a personal level. This market dimension is called “what-experience” of retail service

innovation strategies. It regards decisions about new forms of interaction that satisfy hedonic needs

(Pinto, Dell’Era, Verganti, Bellini 2017). Then, there is the design dimension that in which there is an

innovation of the semantic dimension of the product. Meanings are not given but can be innovated

due to the evolution of the socio-cultural context and the discovery of new technologies (Pinto,

Dell’Era, Verganti, Bellini 2017). This dimension is defined as the “why-meaning” of retail service

innovation strategy and it regards the new meanings of visiting a store. In figure 2, it is summarized

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the construct explained before. The figure explains how retail firms use DDI to obtain competitive

advantage.

Figure 4 - How, What, Why (Pinto, Dell’Era, Verganti, Bellini 2017)

The figure above shows the correlation between the intended meaning found by the firm and the

proposed solution to costumers, but it is not clear how do firm pass from a meaning to a solution.

Are there some steps to follow or is it only a matter of intuition? The framework proposed by

Verganti in 2018 explained before, illustrates some steps but still do not explain how to transform

into practice solution the intended meaning. Therefore, we see now how the literature on NSD has

evolved in order to find an answer to this issue.

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5.2 New Service Development (NSD)

New service development is relatively new compared to new product development and this is a

challenge for companies that have to manage NSD. Regarding NPD, the literature is mature and

convergent to a unique conclusion and the effectiveness of the NPD has been already proven. In

fact, the product development process is a set of activities that the company performs in order to

deliver a new product to the market. The most recognized process by scholars is the one proposed

by Booz, Allen and Hamilton in 1982. The framework has seven stages:

1. New product strategy development: set objectives and requirements that the new product

should comply with

2. Idea generation: search for new product ideas, both internally and externally to the

company;

3. Screening and evaluation: filter all the ideas generated in order to find those ones that are

good and achievable;

4. Business analysis: evaluate the attractiveness of the market, the predicted costs and sales

and to understand if all those constraints satisfy the goals in order to move the concept to

the product development phase;

5. Development: the concept has to become physical. If the company want to test the product,

the R&D should develop a prototype without investing too much, then the prototype is

tested;

6. Testing: the product and its proposed marketing program are tested in realistic market

settings;

7. Commercialization: if the tests are satisfying, the company decide to put the product into

market.

These seven stages are the result of years of studies and nowadays the field agree on this process,

but we cannot say the same for NSD. As said previously, there is a need to have a structured model

for services because the current literature does not fill this gap. Before considering this issue, we

have to understand if we really need a different process for NSD or if can use the same process of

NPD.

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Here there are some divergences among authors. The first researcher who has tried to answer to

this question is Gebauer, who has proved that a structured process for NSD is key for having a

successful NSD (Gebauer 2007). However, this study has a limitation: it concentrates only on

manufacturing companies. Therefore, it is not fully applicable to all the service companies. Anyway,

this research has put the attention on the issue and has attracted other authors such as Edvardsson.

In one of his papers, Edvardsson together with other scholars, has said that what Gebauer has

demonstrated is not true at all but that it depends on the innovation modes. In fact, for some kinds

of innovation, it is necessary a structured process of NSD different from NPD, while for others is not

the key point. Indeed, what really counts for service development is the fit between different

innovation modes and the NSD process, rather than the NSD process per se. This means that NSD

could be different for a radical innovation respect to an incremental innovation. But this discovery

has the same limitation of the Gebauer research: it focuses only on the manufacturing companies.

So, the problem still remains. What if a service company should develop a new service? Can it follow

the NPD process, or it is better to have a different and structured process? Even if the focus was on

manufacturing companies, they agree on the fact that for radical innovation (or ad hoc innovation)

it is necessary a structured process separated form NPD. Edvardssson et al. just add that for a

manufacturing company is not needed to have structured processes different from NPD processes

for an incremental innovation of a complementary service since their focus is on the product. Well,

now considering only service firms, we should understand if they can develop successful services

following NPD processes. The answer is no. Indeed, products and services have different

characteristics that do not allow this. This is the reason why companies do not follow the NSD

process for developing new services (Gremyr, Witell, Löfberg, Edvardsson and Fundin 2014):

because it is built on NPD process without considering the differences between products and

services. There are several factors that are different to products and that affect the development

process (Table 1), one of these is the role that users and service staff can play in NSD.

Product Service

Tangibility Intangibility

Separability Inseparability

Imperishability Perishability

Non-heterogeneity Heterogeneity

Ownership Non-ownership

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Non-fluctuating demand Fluctuating demand

Quality easily measurable Quality difficult to measure

Table 3 – Characteristics of products and services

In fact, subsequently other authors have posed the question of whether it is right to have a unique

process for all the services (Jaakkola, Meiren, Witell, Edvardsson, Schäfer, Reynoso, Sebastiani,

Weitlaner 2017). In fact, services can be very different from each other and therefore, the NSD

process should be adapted to the context. So, if we should have different processes according to

the contexts, it is reasonable to think to have different and separated processes also for NPD and

NSD. Probably the best alternative is to have a structured process for NSD that can be adapted to

the different contexts and innovation modes. In particular, we need a structured process for radical

innovation since it is the more innovative and therefore risky. But even if it is an incremental

innovation, there is a need to have a structured process, otherwise companies will continue to

follow their own processes that are sometimes integrated with NPD processes or that are coincident

to the NPD processes their selves, with more probabilities to fail.

Now that is clear the need of a structured NSD process, let’s try to define NSD. Even on this point

there is not a coherent idea. In fact, some authors follow the more common tradition and consider

NSD a synonymous of service innovation while others consider them two different concepts. As said,

we consider service innovation as “a new or significantly improved service concept that is taken into

practice” because the other definitions of the synthesis perspective overlap with the concept of NSD

process. In fact, we can consider as definition of NSD the one provided by Biemans, Griffin, and

Moenaert in 2015 for both service innovation and NSD “as the process of devising a new or

improved service, from idea or concept generation to market launch”. We use this definition only

for NSD because for what concerns our study it is better to differentiate between the outcome and

the process of a service innovation otherwise it becomes hard to understand why some innovations

succeed and some fail. And since, this is the best definition for the NSD process because it considers

the entire process form the idea to the market launch giving an internal perspective, without

considering the generated value for the consumers, as it would has mean to consider also the

outcome of the process and this is not what we want to do.

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Now that we have a clear idea of what is service innovation and NSD, we have to analyse the NSD

process in order to understand in detail what the companies do to develop a new service. Some

authors have focused on the frameworks, other on the key success factors and best practices. We

see first the key success factors and best practices and then the different frameworks. Edvardsson

and Olsson have argued that it is essential to develop and provide services of the right quality in a

resource effective manner because customers are affected by the perceived quality of the service

(Edvardsson and Olsson 1996). In order to develop the right quality from the start, the process

should adapt to the customers’ logic. In addition, they suggest to develop the service concept that

is the prototype of the service, the service system that are the needed resources and the service

process that is the chain of activities in order to provide the service. If the company is able to adapt

these three developments to the customers’ behaviour, the result is a quality service offer. The

concept of service quality was highlighted also by de Brentani, who suggested that a key success

factor is the developing of improved functional and experiential quality that makes the service

superior to the competitors’ offers (de Brentani 1991). Then, the process and the strengths of the

firm contribute to the developing of the necessary quality. Probably this concept is suitable for the

services in 1990s but, for current services that have to compete in a dynamic, challengeable and

continually innovative environment it is not sufficient to provide a better quality and to adapt to the

customers to be successful, or at least it is sufficient for market pull and technology push innovations

but maybe not for design driven innovation. DDI comes from the individuals and not from an analysis

of the customers’ needs because customers cannot know to have a need of a service that does not

exist yet. Then, the focus has shifted to identifying the customers’ role in the NSD process. For some

managers the customer’s involvement is fundamental, especially for the cocreation. Some authors

have demonstrated that customer co-creation is less critical than previously thought and that it is

important not only to collect data about customers but also to understand what kind of information

are and to integrate that information in the NSD process (Edvardsson, Meiren, Schäfer, and Witell

2013; von Hippel 1994). Managers should focus on how teams interact with customers because the

process should be able to internalize external knowledge in the right stage in order to save time and

money. To do this successfully it is needed a service development strategy that fit existing business,

resources and skills (Edvardsson, Meiren, Schäfer, and Witell 2013). This is a great shift of the

concept of service, from a market category to resources in customers’ value creation process, that

is exactly the idea of service-dominant logic (Vargo and Lusch 2004; 2008; 2017). If managers do not

understand the importance of having a service development strategy that aligns the strategy of the

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firm with the design of the new service, they will pay low attention to the integration of customer’s

information and to the alignment between strategy and resources, capabilities and organizational

units; this will lead to low investments and to a higher probability of failure (Edvardsson, Meiren,

Schäfer, and Witell 2013). Managers should balance the internal resources so that they will have a

higher probability to succeed.

Regarding the frameworks, the first models were drafted by Boers and by Scheuing and Johnson in

1989. The former is an 8-stage model in which the phases are linear and sequential, the latter is a

15-stage model. The model proposed by Bowers has the following stages: New product strategy,

Idea generation, Screening and Evaluation, Business analysis, Development, Market testing,

Commercialization. While the model proposed by Scheuing and Johnson has the following stages:

New service objective and strategy, Idea generation, Idea screening, Concept development, Concept

testing, Business analysis, Project authorization, Service design and testing, Process system design

and testing, Market program design and testing, Personnel training, Service testing and pilot run,

Test marketing, Full scale launch, Post launch review. The model proposed by Scheuing and Johnson

is more comprehensive, probably too much, but still does not include the formation of cross

functional teams, parallel processing of the development stages and cycle time reduction that have

been highlighted in the NPD models. Then, these models have another limitation: they do not

include the interaction with customer even if for service firms, the customer plays an important

role. To solve these problems, Alam and Perry (Alam and Perry 2002) have proposed a new model

that can be both linear and overlapping (Figure 3) and that consider the customer in each stage. The

study highlights an important discovery: small organisations tend to use parallel stages, while large

organisations sequential stages. Even if the research suggests to use a sequential model, as other

authors have concluded (Cooper and Edgett, 1996; de Brentani, 1989; Edvardsson and Olsson,

1996), there are some contexts in which it is better a parallel model. Indeed, in dynamic contexts in

which there is a need to develop services quickly, overlapping stages are more suitable. Overlapping

stages allow firms to start a new phase even if the previous one in not finished yet and therefore to

save time and this is particularly useful in services because innovations are copied quickly in service

industries (Johne and Storey, 1998). The study has given a great contribute to the NSD literature

even the focus was only in business to business financial services. Therefore, other studies in other

fields should prove that it is possible to generalize the model.

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Figure 5 - Alam and Perry linear and parallel models (Alam and Perry 2002)

In another study, Alam has proposed the same model but with other considerations (Figure 4). It

highlights the activities performed by firms and by users as the previous one. Users are essential to

NSD process, they contribute to each stage. Indeed, the customers’ involvement provide several

benefits to the NSD process, according to the study. First, thanks to users’ involvement it is possible

to create differentiated services that provide unique value to customers, then, the cycle time is

reduced as the NSD process can be stimulated. It also helps to tell users how to engage into the

service, about the use and attributes of the new services. Then, for sure there is a more rapid

diffusion of the service that accelerates the market acceptance. This point leads to another benefit

that is the improvement of public relations with customers. The last benefit is the creation of long-

term relationships with users. The study identifies also some modes to engage users: face to face

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interviews, user visit and meetings, brainstorming, users’ observation and feedback, phone, faxes

and emails and focus groups discussion. Interviews and users’ visit and meetings were the most

preferred ones by firms because are less expensive and easier to organize.

Figure 6 - Activities at various stages of the development process (Alam 2002)

This is a comprehensive model that take into consideration different aspects of NSD process.

However, it presents the same limitations of the previous model: the study has considered only

business to business financial services. Then, one could argue that users should not participate in

the stage 5 because how can user select team members if they do not know the internal

organization? As underlined by Alam himself, the creation of cross functional teams is fundamental

for NSD process (Alam and Perry 2002) and if the team is not built correctly, the result could be a

disaster. Therefore, why should external users participate in this decision? Nevertheless, the model

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is improved thanks to the addition of the stage of “formation of cross-functional team”, the

involvement of users and for the fact that it is possible to overlap some stages. In Figure 5 we can

see the comparison between all the models.

Figure 7 - Comparison between NPD and NSD models

The last explained model is the one that has been accepted the most in the field even if in the recent

years Alam and Edvardsson have discussed the importance of having ad hoc model for services since

the environment has now become dynamic. Alam sustains that in dynamic contexts the process

should adapt to the situation, market conditions and type of service and proposes a new model with

only four stages because there is a need of saving time in order to be the first in the market. This

framework is the result of a research conducted in US, Australia and India considering the financial

sector. Therefore, Alam suggest that this new study is more adapt to the new context in which

companies are international. The findings are interesting. Indeed, the research has demonstrated

that the other models are not current anymore because all those stages are redundant and

ineffective. For instance, the strategic planning phase is not used anymore and even the formation

of cross functional teams, that in the previous model was fundamental, is eliminated because there

is a need to have more informal processes and faster NSD cycle time. Customer are still involved in

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all the phases and play a critical role and the first three stages can overlap, so that the cycle time

will be very short. The process is the following and it is showed in Figure 6 and the activities

performed by the customers are showed in Table 3.

Figure 8 - NSD process (Alam 2014)

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Table 4 - Activities performed by the customers (Alam 2002)

This model seems more contemporaneous; however, it has some limitations. First, it focuses only

on financial services and only in three countries. Therefore, it is necessary to extend the research.

Then, the study has collected qualitative data and has suggested conclusion without quantitative

data and did not measure the success or failure of the analysed services, so, it is not clear if the

model works. Another thing is that several service companies still have the stages of strategic

planning and testing, especially start-ups that use the lean start-up approach (Ries, 2011).

Edvardsson and other authors agrees on the fact that it is difficult to have a structured process for

every kind of service and instead it is better that the process adapt to the situation (Jaakkola,

Meiren, Witell, Edvardsson, Schäfer, Reynoso, Sebastiani, Weitlaner 2017). The study provides some

insights for managers regarding the use of an NSD process. Indeed, managers should be flexible and

in particular the author distinguishes between low and high contact intensity and low and high

technological complexity (Figure 7). Contact intensity refers to the degree of contact with the

customers and technological complexity to the complexity and intensity of the involved technology.

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Figure 9 - Services' typologies (Jaakkola, Meiren, Witell, Edvardsson, Schäfer, Reynoso, Sebastiani, Weitlaner

2017)

Each cluster have different methods and tools, for instance knowledge-intensive services use more

formalized process with the interaction with customers and external parties, the opposite of

routine-intensive services. It is interesting the finding that knowledge-intensive services have a high

number of developed services and the highest number of survived services. An explanation could

be that the customers’ involvement helps in the developing of new services with a high contact with

the customers and it seems that contact intensive services should pay a particular attention to the

customization.

In the recent years it is emerged the idea of customers’ involvement in the process and nowadays

it is accepted by the scholars, as they agree on the fundamental role of the customers for developing

new services. This reminds us to the service-dominant logic in which the value is generated through

the cocreation. The underlying idea is that people apply their skills in a reciprocal exchange system

in which someone benefit someone else and in exchange she receives a benefit (Lusch and Vargo,

2014, Vargo and Lusch 2016). Since the interaction with users is a feature of service (John and Storey

1998), the NSD process should focus not only on the service itself by also to the nature of interaction

with users (Shekar 2007). The findings prove that users’ involvement provide benefits to the firms

and managers have to be more proactive in collaborating with users since the first stages (Alam

2002).

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6 Customer Experience

In the recent literature, attention to customer experience has grown, a great number of papers had

touched the topic and companies are more and more attentive to customer experience developing

frameworks and processes to manage it in a proper way. Customer experience, if managed properly,

can provide several benefits to companies because affects customer satisfaction (Liljander and

Strandvik 1997), delivers customer loyalty (Yu and Dean 2001, Pullman and Gross 2004,

Mascarenhas et al. 2006), influences expectations (Johnson and Mathews 1997, Flanagan et al.

2005), instils confidence (Flanagan et al. 2005), supports the brand (Grace and O’Cass 2004, Berry

and Carbone 2007) and also creates emotional bonds with customers or, conversely, leads to

emotional scarring (Pullman and Gross 2004).

Several authors have talked about customer experience as a way to gain competitive differentiation

(Pine and Gilmore 1998, Prahalad and Ramaswamy 2004, Meyer and Schwager 2007). Christopher

et al. (1991) argued that during 1950s and 1960s the differentiation was based on tangible goods

and when tangible goods became a commodity in 1970s, the differentiations moved to services.

Then also services began generic and therefore the differentiation started to be based on

experiences in 1980s. This argument has been taken over by Pine and Gilmore in their “Welcome to

the experience economy” (1998). Another framework to explain the increasing interest in customer

experience is the relationship marketing. Relationship marketing focuses on customer retention and

satisfaction because recognizes the long term value of customer relationships and expands the

communication not only to promotional messages but to a true experience. In fact, a new body of

literature focuses on the emotional aspects of the customer experience given by the service

encounter (Oliver, 1993; Richins, 1997; Barsky and Nash, 2002). But relationship marketing is

challenged by the fact that customers who are satisfied with their relationship may nevertheless

not return to a service provider (Brady and Cronin, 2001; Gerpott et al., 2001), and therefore it has

been criticized. Another framework is the environmental response model which states that since

customer experience regards non utilitarian benefits, it could be expected that interest in customer

experience advances during periods of prolonged economic prosperity. These frameworks present

different perspectives and it is difficult to extract a unified theory; however, the first model finds

more followers, but this confusion does not help. In fact, literature on customer experience has a

gap in defining the nature of experience and in providing the tools that companies can use to

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improve customer experience. From the first perspective we can deduce that that customer

experience is an evolution of the service experience, while the service is a process, customer

experience is the personal interpretation of the service process and interaction and involvement

with it during the journey through the touch points, and how those things make the customers feel

(Csikszentmihalyi 2000, Johnston and Clark 2008, Meyer and Schwager 2007, Pullman and Gross

2004, Shaw and Ivens 2002).

According to Pine and Gilmore, experiences are a distinct economic offering (Pine and Gilmore

1998). In fact, an experience is memorable and personal because exists only in the mind of the

customer. This means that even if customers participate at the same event, they do not live the

same experience because it depends on the personal mood of that moment which is given by

several factors, including past experiences.

Figure 10 - Economic distinctions (Pine and Gilmore 1998)

According to this view, experiences differentiate the offering. Experiences are the next step after

services and in order to be competitive, a company has to stage experiences that sell. It is not

enough to provide a simple experience around goods or services to sell them better, but it is

fundamental to create experiences that require a fee.

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Figure 11 - The progression of economic value

In analysing customer experience, we should consider two perspectives: the traditional information-

processing and decision-oriented approach and the experiential perspective (Payne and Frow 2007).

The former refers to as the cognition, affect and behaviour (CAB) approach, and suggests that the

customers is involved in goal-directed activities, which means to sacrifice something in order to

satisfy a need, while the latter refers to the emotional and non-utilitarian aspects of consumption,

which means that the value resides in the experience of consumption and not in the object (Payne

and Frow 2007). If the company is engaged in a b2b context, it should focus on an information

processing approach as it is a more rational approach, while if the company is in a b2c context, it

should focus on an experiential perspective. However, both perspectives are important it is

necessary to take both of them into consideration. Focusing the attention to the information-

processing means to consider the traditional marketing process that uses leverages such as product,

price, place and promotion in order to catch the attention of customers and creating value selling

products that satisfy their needs. But this approach is not enough, since consumers receive different

stimuli that influence the experience of buying a product or of using a service. Therefore, it is needed

to consider all those aspects that in some ways affect his buying process, for example past

experiences. The reasons behind this is that while goods and services are external to the buyer,

experiences are inherently personal, existing only in the mind of an individual who has been

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engaged on an emotional, physical, intellectual, or even spiritual level. These affirmations seem to

define customer experience as a market entity that differs from goods and services, as Pine and

Gilmore explained in their study (Pine and Gilmore 1998). They also tried to figure out the

characteristic of the experience and identify two axes: customer participation and connection.

Customer participation refers to the degree of the participation of the customer which can be active

if she plays key roles in creating the performance or passive if she does not affect the performance.

Connection instead, refers to absorption in which the customer assimilates the event or immersion

which means that the customer is fully immersed into the experience. Crossing those variables, we

obtain four categories of experiences: entertainment, educational, escapist, aesthetic (Figure 10).

Figure 12 - Dimensions of customer experience

These categories divide customer experience in four types while the two axes are the variables that

allow the distinction, but none of these really describe customer experience. We should first try to

give a definition of customer experience and then figure out the characteristics.

Starting from the definition, we can analyse the definitions provided by the dictionaries, as done by

Palmer (Palmer 2010). The Collins English Dictionary describes experience as “The accumulation of

knowledge or skill that results from direct participation in events or activities” and “…the content of

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direct observation or participation in an event” (Collins, 2007). For the Oxford English Dictionary

experience refers to “Active participation in events or activities, leading to the accumulation of

knowledge or skill” (OUP, 2006). Bothe definitions talk about an outcome and not about a process,

instead a more affective and process based definitions is provided by the American Heritage

Dictionary of the English Language (2006), which defines experience as “The feeling of emotions and

sensations as opposed to thinking” and “…involvement in what is happening rather than abstract

reflection on an event”. According to the Italian dictionary Il Vocabolario Treccani, experience is

“Knowledge of the practical reality considered as a whole” and “…the sum of the knowledge

acquired with the observation and direct contact of life in its many aspects” (Treccani 2017). From

these definitions, we can deduce that there is confusion about the concept of experience. Generally,

it is only an accumulation of knowledge that is translated in a skill but is also the sensation that a

client feels when is engaged in an event. This event implies a direct interaction between the client

and the company and about this argument, there is a quite general consent but still there is

confusion in defining the outcome and the process. This confusion is generated by the fact that the

word experience is both a noun and a verb. Discussions on experiences started during the 50s, when

authors began to notice that people wanted not only products, but experiences. More precisely:

“What people really desire is not products, but satisfying experiences. Experiences are attained

through activities. In order that activities may be carried out, physical objects for the services of

human beings are usually needed. Here lies the connecting link between men’s inner world and the

outer world of economic activity. People want products because they want the experience which

they hope the products will render.” (Abbott 1955). Then Dewey added the characteristic of

uniqueness that makes the experience different from the others, concept that has been taken back

by Pine and Gilmore (1998) in terms of memorable experiences. Recently some authors have

focused the attention to the emotional aspect rather than the utilitarian one. For instance, Schmitt

(1999) stated that experiences “… provide sensory, emotional, cognitive, behavioural and relational

values that replace functional values”. Another similar concept but more all-embracing, is provided

by Gupta and Vajic (2000) who state that “an experience occurs when a customer has any sensation

or knowledge acquisition resulting from some level of interaction with different elements of a

context created by the service provider”. These definitions are more hedonistic and describe

experience as something similar to a delight or a surprise and do not consider the utilitarian aspect

of consumption. This contradicts the marketing view according to which experiences satisfy the

customer needs as well as goods and services. Palmer (2010) argued that the interest in non-

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utilitarian aspects derives from the economic prosperity of the context. In fact, in periods in which

the gap between the richest and poorest segments in UK and US society has widened, this disparity

could be correlated to the rapid growth in “low cost, low frills” operators in sectors as diverse as

retailing, hotels and airlines.

Analysing these definitions, it is clear that there are two different and complementary perspective

regarding the concept customer experience: one refers to the emotional and hedonic aspect and

one refers to the utilitarian and marketing aspect of experience. This distinction creates confusion

in determining a complete definition of the concept and in understanding what are the main

characteristic in order to create a framework that helps company to manage customer experience.

It is clear that customer experience differentiates the offering of a company, but it is still not clear

what is and how to manage it. Palmer has proposed a framework for the construct of customer

experience in which basic stimuli, converged into three higher order constructs and leads to the

development of an attitude. Tangible and process quality refers to the service quality that

contributes to customer satisfaction, for instance the experience of a dining in a restaurant may be

influenced by the lack of parking. Then, brand has become more and more important for consumers

who establish emotional relationships with brands. Brands are chosen when the image that they

create matches the needs, values and lifestyles of the buyer. Even interpersonal relationships are

linked to the brands, especially for service companies because customers have the opportunity to

experience the brand personally in the service encounter. Several authors have highlighted the

importance of designing memorable experiences and According to Chatman (1978), experiences

should have a sequence structure with a story structured in a manner similar to musical pieces.

Creating stories provides sequences of emotions similar to episodes in human life (Deighton, 1992).

Sequencing issues are addressed in discussion of “flow”, described as an experiential state “so

desirable that one wishes to replicate it as often as possible” (Csikszentmihalyi, 1988, p. 16). To

remain in flow, an individual must be presented with progressively more challenging scenarios in

order to ensure that the level of complexity is consistent with their motivation and skills. A way to

provide a story is to use cues, as suggested also by Pine and Gilmore (1998). According to them, in

order to design memorable experience, in addition to them the experience, engage the five sense,

mix in memorabilia, there are harmonize with positive cues and eliminate negative cues. Positive

cues affirm the nature of the experiences to customers. Then, customers are influenced by those

cues and feel different emotions that change over time. Even attitude is likely to be not stable over

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time. It is the attitude that pertains over time that is most likely to subsequently influence

behaviour.

Figure 13 - A conceptual framework for the construct of customer experience (Palmer 2010)

There is evidence of the increasing interest in customer experience looking at the numbers of papers

and also looking at the new solutions proposed by firms that try to manage successfully the

relationships with customers. More and more companies are appointing customer experience

managers who have the role of being integrators in order to deliver value to customers in the form

of the experience that they are looking for. Generally, they fail because there is not a specific process

or framework as a reference that helps those managers in managing the customer experience, even

because from experience derives the value, as Prahald & Ramaswamy (2013) defined value creation

“Value creation is defined by the experience of the specific customer, at a specific point in time &

location, in the context of a specific event”. The encounter is the space in which the experience

happens, and generally it is the store. Therefore, it is interesting to analyse how to design properly

the retail environment.

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6.1 Retail customer experience

Retail customer experience has been addressed by the marketing research for many years, as the

Journal of Retailing demonstrates which has been established in 1925. Marketers have always tried

to understand and enhance the customer experience both in consumer-packaged goods

manufacturing and retailing fields but is still a critical point. Retailing environment evolves fast as

consumers habits and lifestyles change and digital technologies innovate the field. The online

channel has become fundamental, but it is not enough as customers tend to prefer seamless

experiences in order to do not renounce the experience in the store as the store has become the

place in which customers built strong relationship with the brand. Then, nowadays the choice of

products and services available on the market for customer is infinite and therefore they search

cognitive shortcuts in purchasing decision making. Preferences are not consolidated during store

visits, but already in the previous phases during which their needs arise. These considerations

highlight the importance of the research in the retail field that nowadays does not capture all these

changes even if researchers continue the studies trying to provide the literature with new models

that are aligned with the new trends.

One of the most famous models is the organizing framework proposed by Grewal, Levy and Kumar

(2009) showed in Figure 5. According to the framework, there different factors that influence the

retail customer experience: some can be controlled by the firm and some that are external. The

external factors are called Macro factors and refer to the political and economic situation. For

instance, the political and financial stability of the country, the taxes’ regulations and the price

fluctuations are Macro Factors that have an impact on customers’ needs and desire to buy and this

influence the retailing experience that should be offered to customers. If customers live in

prosperity without any worries about their incomes, are more likely to search an experience inside

the store and to build relationships with brands, while if customers have economic difficulties,

maybe are not interested in additional services but want only to satisfy their basic needs. The firm

controlled factors instead are internal because are established by the companies and are:

promotion, price, merchandise, supply chain and location. Generally, it is recognized the importance

of promotions for retailers, that can take different forms such as price promotions, loss leaders, and

in-store displays, but not all the researchers agree. Some analyses have demonstrated the

immediate increase in sales of a promoted item is substantial (Bijmolt, van Heerde, and Pieters

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2005; Pan and Shankar 2008)., while Ailawadi et al.’s (2009) review indicates that consumer “cherry

picking” for special prices has a relatively minor impact on retailer profits; they also conclude that

not all promotions have a positive revenue impact for retailers though. The, price is a very important

factor for a company. It is the fourth marketing P that captures the value generated by the other

three Ps. Setting the right price is fundamental in order to maximize the profit. Indeed, a low price

could indicate low quality and could discourage consumers to buy, while a high price could exclude

some customers from the purchasing. Merchandise is fundamental too, as putting the wrong

products in a store could decrease the profits and could give a wrong image to the brand. In order

to take the right decision, several variables should be considered such as consumers demand,

location of the stores, distribution and costs. Another important factor the influence the retail

customer experience is the supply chain. Years ago, it was common to think that supply chain issues

regard only the company and do not have an impact on customers, but it is wrong, and nowadays

companies are changing their mind. In fact, as the Zara example demonstrates, companies could

gain significant competitive advantages. Recently, companies have offered omnichannel

experiences in order to satisfy customers’ needs and it was successful. Then, the last internal factor

is location. As several scholars have demonstrated (e.g. Samuel, Ghosh, and McLafferty 1984),

location is a key issue for a company success. Some researchers have developed models that help

to take the decision for the best retail sites (Durvasula, Sharma, and Andrews 1992; Ghosh and Craig

1991; Garg et al. 2005; Kaufmann and Dant 1996). Then, it should be noticed the importance of

marketing and financial metrics that help to improve performances. Some metrics are brand value,

customer value, word-of-mouth and referral value, retention and acquisition, cross-buying and up-

buying, multiple channels, and product returns, but there is a need to develop new metrics that are

aligned with the new retail formats. In fact, they should consider other metrics in order to be more

competitive. For instance, it could be an idea to consider the product returns. More than $100 billion

worth of goods get returned every year. How do retailers handle the returns, and can they create a

better customer experience? If handled properly, customers who return products will not only

salvage the sale but also become high value customers (Petersen and Kumar in press).

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Figure 14 - Organizing framework (D. Grewal et al. - 2009)

Another important framework of reference is the conceptual model for experience creation

proposed by Verhoef in 2009. They have tried to fill the gap of the scarcity of systematic scholarly

research on the customer experience construct and customer experience management proposing a

theory-based conceptual framework that can serve as a stimulus and foundation for such research.

The model considers several determinants of customer experience in a certain period t. The first

determinant is social environment. In fact, customers can influence each other by sharing opinions

or simply by watching what the others are doing. Generally, the focus was on creating bonds with

customers and no attention has been given to creating bonds between customers. Indeed,

companies can obtain advantages by managing relationships between customers, for instance

companies can use customers as partial employees not for the production but in order to

disseminate useful customer knowledge that can influence the customer’s experience. Then, it is

relevant how the encounter has been designed, how the company present itself to customers.

Therefore, the service interface is crucial. The behaviour of salespersons, the use of some

technologies or even the possibility to co-create experiences with customers as it happens in

Klepierre inspiration corridor, in which customers can try virtually the clothes, influence customer

experience. Similar to the service interface is the retail atmosphere that is still how the company

present itself to customers, but regards the environment, the design of the spaces. Even the

assortment of products in the stores have an impact on customer experiences, as underlined also

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by Grewal et al. (2009). The variety and quality of products placed on the shelves influence the

perception that customers have about the firm. Another determinant is the price that not only

influences the desire to purchase but also the experience in the store. Then other experiences had

in other channels or in the same store but in the past (t-1) have an impact on customer experience

in the present (t). Indeed, having positive memories of past experiences help the customer to live

positively the new experience but can also turn against the company if it stimulates a comparison

that may not be up to par. The last determinant is the retail brand. The image the company give to

its customers is like a story that they tell, it represents what the product is and what is not, bringing

with it the values of the company as differentiates a product in the marketplace. Then, all these

factors, with the exception of past customer experience, are filtered by situation and consumers

moderators. These moderators are similar to the macro factor of the model proposed by Grewal et

al. (2009). Situation moderators refer to external variables that regards a specific situation such as

the culture or the economic climate and consumer moderators refers to external variables that

regards the customers, such as their attitudes or their willingness of being involved.

Figure 15 - Conceptual model for customer experience creation (Verhoef et al. - 2009)

This framework has the merit of considering past experiences and alternative channels and not only

the 4 Ps. This concept makes the model more dynamic. Another interesting consideration is about

the role of situation and consumer moderators, factors that influence the customer experience but

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that cannot be controlled by the firm, the only thing that the firm can do is to adapt to these factors

and to offer the right service to the right customers in the right situation. However, it does not take

into consideration how consumers respond to the variables that affect customer experience. The

avoidance model proposed by Mehrabian and Russell (1974) instead focus on the emotional and

behavioural responses of consumers to the environment. Indeed, it has been demonstrated that

the shopping environments invoke emotional responses (Machleit and Eroglu, 2000) and that those

emotions influence customer behaviours inside the stores (Donovan and Rossiter, 1982; Darden and

Babin 1994; Sherman et al., 1997). Retailers have to design the store in order to enhance positive

feelings to customers so that they stay inside the store the long as possible, because the longer a

consumer spends in a retail environment, the more he is likely to spend (Donovan et al., 1994;

Wakefield and Baker, 1998).

Figure 16 - Mehrabian and Russell approach - avoidance model (Mehrabian and Russell - 1974)

The Mehrabian and Russell model explains how individuals react to the shopping environment.

Some researchers have demonstrated that individuals affect and are affected by the physical

surroundings, according to the mood they are in while entering the store (Bitner, 1992). For

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Mehrabian and Russell, environmental stimuli and approach-avoidance behaviour is linked through

three states of emotion: pleasure (P), arousal (A) and dominance (D), which they referred to as PAD.

Pleasure refers to affective emotional responses, arousal to activity and intensity of the customer’s

behaviour and dominance to how the behaviour is influenced or autonomous. These primary

emotional responses are caused by, in addition to the personal characteristics of the customers, the

characteristics of the store and personnel such as colours and relationships. Another study tries to

understand the factors that contribute to the customer experiences, how do they contribute. It is

the study conducted by Arnold, Reynolds, Ponder, Lueg (2005). The first table summarizes the

factors and the correspondent sample incidents that are associated with delightful shopping

experiences. They are divided into two categories: interpersonal and non-interpersonal.

Interpersonal factors refer to situations where the actions of the salespersons and service provider

influence the delightful experience, while non-interpersonal factors relate to situations where the

basis of the delightful experience comes out from product procurement or value attainment. Then

there are the outcomes, that summarize if the experience was good or not. The interpersonal

factors regard how the behaviour of the personnel influence the customer experience, for instance

if the salesperson has engaged the customer or has tried to solve the customer problem. The non-

interpersonal factors are more related to the products and therefore for instance of the customer

has found what she was searching or if the price was correct or not. Then the outcomes regard the

whole experience, so, if the customers would recommend the experience or it the experience was

convenient because has satisfied the needs.

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Figure 17 – Samples incidents of delightful shopping experiences (Arnold, Reynolds, Ponder, Lueg – 2005)

The other table refers to terrible experiences it is similar to the previous one as contains the same

variables, but in addition contains also interpersonal factors related to other customers and non-

interpersonal factors related to customers. Interpersonal factors related to other customers are

variables that depend on the other customers present in the store that maybe have made the

experience worse because of their behaviour, for instance they were rude, or the store was too

crowded. The salespersons’ behaviour in order to respond to these situations influence the

shopping experience and the judgement of the customers. Non-interpersonal factors related to

customers, instead, are related to the mood of the customer or the timing of the experience. for

example, if the customer was in a bad mood when she entered the store or if she has waited till the

last minute to do the purchasing (e.g. Christmas Eve).

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Figure 18 - Samples incidents of terrible shopping experiences (Arnold, Reynolds, Ponder, Lueg – 2005)

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Figure 16 (Continues) - Samples incidents of terrible shopping experiences (Arnold, Reynolds, Ponder, Lueg –

2005)

The results of the study are interesting for retailers as it highlights factors that contribute to make

a shopping experience delightful or terrible. Therefore, retailers could focus on these factors when

have to design the encounter and to recruit and train frontline employees.

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6.1.1 Designing the encounter

Recently, a growing attention has been given to the customer shopping experience design in the

retail sector. Retailers want to provide customers with a memorable shopping experience in order

to improve motivation of purchase, built loyalty and manage the relationship with customers, in this

sense the retail becomes a space when events happen. Several studies show that customer

satisfaction can be reached by using cues, stimuli and service encounters (J. Baker, A. Parasuraman,

D. Grewal and G.B. Voss, 2002; M.J. Bitner, 1992; M.K. Brady and J. Cronin, 2001; D. Brocato) at the

touchpoints of the customer journey. There different techniques in the literature that helps to draw

and measure customer experience such as interviews, surveys, ethnographic research and analysis,

etc. However, most researches in this field stops at the definition of the emotional curve

superimposed to the detected map, without proposing a structured method to support designers

and marketing analysts in the identification of use scenarios, interactions at touchpoints, customer

satisfaction evaluation and design of touchpoints to improve CX. Giraldi, Mengoni and Bevilacqua

(2016) try to fill the gap proposing an approach to improve customer experience (CX) in retail in

order to design successful retail touchpoints. Since, the model is for the retail sector, it considers

only the contacts between the company and the customer that occurs in stores. The approach

proposes the following steps:

1. Analysis of customers in retail stores through the direct observation of people interacting

with products and personnel in a specific atmosphere with also Video Interaction Analysis

technique (VIA)

2. Representation of the Customer Journey Map in order to identify the main digital and

physical touchpoints in the store. It is a 2D cartesian space where the x-axis reports the

episodes of the journey and the y-axis the achieved level of loyalty.

3. Identification of critical events by creating an emotional curve in order to represent the level

of customers’ satisfaction and to recognize which touchpoints need to be redesigned. At this

stage, the designer has to list all possible strategies for improving customer satisfaction and

select the best one. At the end of this step, the firm should have the touchpoint

requirements to apply the CX strategy.

4. Design the touchpoints and prototyping the solutions by implementing the identified

strategy.

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5. Experimentation of the prototyped solution in real retail stores and measurement of

customers’ satisfaction. There are different tools such as by ethnographic research or

interviews. Then there is the elaboration of the collected data by representing the feedbacks

in a new emotional curve and by the definition of guidelines to improve CX.

The study conducted by Giraldi, Mengoni, Bevilaqua (2016) is interesting because first analyses the

emotional curve of customers during the journey in the store and try to improve, providing simple

experiences, the moments in which the customer is not satisfied. Then it analyses the differences

mapping the new emotional curve, following the steps listed above. Even if the study concentrates

on fashion stores, it is interesting how the emotional curve can help to design better encounters

and how a simple solution can help to satisfy customers. in that case, the new experience provided

was a game at the end of the journey inside the store. Researchers have noticed that customers

during the payment were annoyed and tried to transform that feeling into a positive emotion. The

solution was a simple game in which customers had to fish from the box a ball. The ball could contain

a prize. It has been noticed that customers felt different emotions such as curiosity and happiness

connected respectively to the possibility to game and to win a prize. In the images below, it is

showed how the emotional curve has changed with the game.

Figure 19 - The emotional curve mapped in the customer journey in fashion stores (Giraldi, Mengoni,

Bevilacqua - 2016)

Figure 20 - The differences in the emotional curves (Giraldi, Mengoni, Bevilacqua - 2016)

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6.2 Co-creation of experience

The model that has given birth to the studies on cocreation is the Service-Dominant logic. Service-

Dominant logic (S-D logic) is a meta-theoretical framework that explains value creations through

service exchange. The underlying idea of S-D logic is that humans apply their competences to benefit

others and reciprocally benefit from others' applied competences through service-for-service

exchange (Vargo and Lusch, 2004). Service-Dominant logic is an alternative to the traditional goods

dominant logic for understanding economic exchange and value creation. The ideas are formulated

into foundational premises.

Table 5 - S-D logic original foundational premises

The first foundational premise FP1 means that the service is at the basis of the economy as the

application of specialized skill(s) and knowledge is basically the definition of service and this the

reason why subsequently Vargo and Lusch modified FP1 substituting the first part of the sentence

with the word service. Then, another change has been made because the expression unit of

exchange seems to refer to goods and not to services. Therefore, the word unit has been replaced

by the word basis. FP2 refers to the fact that the fundamental basis of exchange is not always

apparent. Since there is again the word unit, also this premise has been changed with the word

basis. FP3 highlights the importance of value-in-use because goods gain value when are used, that

is the provided service. FP4 means that the ability to cause desired changes creates the competitive

advantage and this ability is given by the knowledge. Vargo and Lusch modified the premise using

the words operant resources instead of knowledge because it is not only theoretical knowledge but

includes also skills. Ballantyne and Varey (2006) called it knowledge renewal, as the processes of

knowledge renewal operating at micro level are fundamental to gain competitive advantage, but

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Vargo and Lusch preferred to call it operant resources as knowledge renewal seems to be an

elaboration of the premise rather than an integration. FP5 is derived by FP1 but has been modified

by Vargo and Lusch who have substituted services with service, at the singular form. Services refer

to the unit of output, but this is a concept near to the G-D logic, while service refers to the process

of using resources in order to benefit someone. FP6 focuses on co-creation and suggests that value

creation is interactional, and that the customer is one of the actors. Clearly, the lexicon used for this

premise refers again to G-D logic because production is associated to goods. Therefore, is has been

modified with the expression cocreator of value even if the authors have explained that production

could find space in co-creation since is a part of it, is the creation of the core offer but to do not

create misunderstandings, it is better to use co-creation of value. Co-creation has been defined by

Prahalad and Ramaswamy (2004) as “The joint creation of value by the company and the customer;

allowing the customer to co-construct the service experience to suit their context”. Prahalad and

Ramaswamy highlight the importance of co-creating experiences with the customers so that value

is created jointly together with the customer. FP7 is derived from FP6 because it means that the

firm does not creates value alone, but the value is created with the customer and the firm can only

propose the value. In order to make this concept clearer, the premise has been edited, specifying

that the firm cannot deliver the value, but only offer value propositions. FP8 suggests that value

creation is relational in the sense that is an interactive process in which the firm offers value and

the customer is the beneficiary who determines the value. As the customer is the beneficiary,

creation of value is customer-oriented. Vargo and Lusch decided to add the word inherently because

it is not needed a customer orientation on S-D logic as value is always determined by the beneficiary.

Customer orientation was referred more to G-D than to S-D logic, it was a fix to G-D logic, but for S-

D logic it is not needed this fix. Therefore, it has been added inherently. These foundational premises

were the original ones presented by Vargo and Lusch in 2004, then in 2006 it was added FP9.

Table 6 - Foundational premise 9 (2006)

FP9 highlights the role of organizations that are resource integrators. Then it has been edited

because not only organisations are resource integrators but also individuals and households.

The following table summarizes the foundational premises proposed by Vargo and Lusch in 2007.

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Table 7 - S-D logic foundational premises changed by Vargo and Lusch in 2007

As we can see, it has been added FP10 in order to clarify that value is always determined by the

beneficiary. It was not clear because previously value has been defined as experiential and this

concept creates confusion as it reminds to experience such as “Disneyworld event”. Here,

experiential means the phenomenological aspect of value. Then in 2016 the foundational premises

have been updated by Vargo and Lusch, adding also the notion of axiom, that is a foundational

premise that is the basis for other ones. It has been added the FP11, that is also Axiom 5. It focuses

the attention on role of the institutions, that are “humanly devised rules, norms, and beliefs that

enable and constrain action and make social life predictable and meaningful” (Scott 2001). The

following table reports the current axioms and foundational premises of S-D logic, modified in 2016

(Vargo and Lusch 2016).

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Table 8 - S-D Axioms and foundational premises

At the heart of S-D logic there is the identification of service as the fundamental basis of exchange

and this is a profound change respect to the traditional economic system based on goods. It is

interesting to notice that for S-D logic, goods are a distribution mechanism for service provision

(FP3) and therefore all economies are service economies (FP5). Those premises come from the fact

that goods derive their value through use, the service they provide.

Axiom 2 contradicts the traditional view in which the company provides the value and the customer

buys the good or the service in order to satisfy a need. Regarding this point, the literature has

focused the attention on the emerging concept of co-creation and the needs to address. Several

authors have discussed the importance for the firm to develop opportunities to co-create value with

customers but there are few studies about the process of co-creation. The traditional view, the

provider service logic, sees the provider as the creator of value by creating interactions with

customers, while for S-D logic the customer is always involved in co-creation of value. The provider

service logic or goods dominant logic (G-D logic), aims at producing goods to be sold. The production

process of companies, which includes sometimes resources from other companies, embeds value

into the goods, and the value of the goods is then represented by the price. G-D logic therefore

refers to value-in-exchange because does not take into consideration the customer perspective

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about the value and considers only the value provided by the firms and that is then exchanged for

money. For S-D logic value is co-created through the combined efforts of firms, employees,

customers, stockholders, government agencies, and other entities related to any given exchange,

but is always determined by the beneficiary (e.g., customer). Thus, the S-D logic notion of value co-

creation suggests that ‘‘there is no value until an offering is used – experience and perception are

essential to value determination’’ (Vargo and Lusch, 2006). This means that when using resources

provided by a firm together with other resources and applying skills held by them, customers create

value for themselves in their everyday practices, while when creating interactive contacts with

customers during their use of goods and services, the firm develops opportunities to co-create value

with them and for them (Grönroos 2008). The main characteristics of the two perspectives are

summarized in the following table (Figure 19).

Figure 21 - Differences between G-D logic and S-D logic (Vargo, Maglio and Akaka 2008)

Another way to highlight the differences between G-D and S-D logics (or also called provider-

dominant and customer-dominant logics) has been done by Heinonen, Strandvik, and Voima in

2013. They differentiate in terms of How, Where, When, What and Who. They argue that value

formation is not always an active process, which challenges the term “creation”, but is multi-

contextual and multiple dynamic contexts in the life of the customer continuously that influence

how value is longitudinally experienced and formed.

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Figure 22 - Provider-dominant logic to a customer-dominant logic

S-D logic focuses on the value-creating processes that involve the customer as a co-creator of value

(Lusch and Vargo 2006). While the subject of customer value has been addressed by a number of

researchers (e.g., Holbrook 1994; Woodruff 1997), and more recently in the context of S-D logic

(e.g., Berthon and John 2006; Holbrook 2006), there is relatively little direction about how to engage

customers in the co-creation process and therefore hoe to design the process (Payne, Storbacka

and Frow 2008). Payne, Storbacka and Frow propose a framework based on the processes of the

supplier, the customer and the encounter. Customer value-creating processes in a business-to

consumer relationship, refer to the processes, resources and practices which customers use to

manage their activities, while in a business-to-business relationship, the processes are ones which

the customer organization uses to manage its business and its relationships with suppliers. Supplier

value-creating processes refer to the processes, resources and practices which the supplier uses to

manage its business and its relationships with customer. Encounter processes are the processes and

practices of interaction and exchange that take place within customer and supplier relationships

and which need to be managed in order to develop successful co-creation opportunities (Payne,

Storbacka and Frow 2008). The framework is represented in Figure 21.

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Figure 23 - Co-creation framework (Payne, Storbacka and Frow 2008)

From the figure above, we can see that those processes are interconnected, the arrows in the

middle that point in both directions, illustrate the interconnected nature of the encounter process.

Instead, the arrows between Customer process and Customer learning highlights that the customer

is involved in a learning process based on the experience that she lives during the interaction and

this learning process will have an impact in future interactions conditioning the experience. While

the arrows between Supplier process and Organizational learning indicate that as the supplier learns

more about the customer, more opportunities become available for the supplier to further improve

the design of the relationship experience and enhance co-creation with customers. The Customer

process is not only a set of activities that the customer does in order to achieve a goal, but is more

about relationships which the customer has vis-à-vis the total offering. It is a dynamic, interactive,

non-linear, and often unconscious processes. The Relationship experience is divided in three

components: emotion, cognition and behaviour. Cognition focuses on memory-based activities,

while emotion and behaviour regard attitudes and preferences. Then, the customer’s experience of

a supplier and its products is a culmination of the customer’s cognitions, emotions and behaviour

during the relationship. Since Relationship experience leads to Customer learning, the supplier

should be able to influence the interaction which customers perceive as helping them utilize their

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resources. Then customer learning can be divided in three types: remembering, internalization and

proportioning. Remembering regards customer attention and is what marketing focuses the

attention on. Internalization happens when the customer assimilates and reworks the message

while proportioning is the more complex level and is when the customer takes some time to think

about the experience and it could happen that she changes her mind. This reflection will have an

impact on future behaviours. The Supplier processes focus on designing and delivering relevant

customer experiences and facilitating Organizational learning starting from understanding the

customer’s value creating process. Starting with the customer’s process, the supplier can design its

process in a way that is aligned to one of the customers. This is a significant improvement of the

customer-oriented perspective. We start from co-creation opportunities, that are “strategic options

for creating value” and then we analyse planning, testing and prototyping value co-creation

opportunities with customers, implementing customer solutions and managing customer

encounters and developing metrics to assess whether the enterprise is making appropriate value

propositions. Suppliers consider the following types of co-creation opportunities depending on the

nature of the industry: opportunities provided by technological breakthroughs, opportunities

provided by changes in industry logics and opportunities provided by changes in customer

preferences and lifestyles. The first type refers to technology push innovation that creates new way

to engage customer in value co-creation. The second type regards opportunities provided by the

market (market pull innovation), for example the creation of new channels or new industries, while

the third type refers to design driven innovation and is given by changes in people lifestyles.

Contrary to traditional business strategies that are inside-out in the sense that firms plan the

strategy considering their own competences. S-D logic instead is outside-in because starts from

understanding the value creating process of the customer and planning for co-creation aims at

supporting in order to have a better co-creation of value. This means that marketing has to shift

from “making, selling and servicing” to “listening, customizing and co-creating”. Regarding

implementation, prototyping is a fundamental tool to understand customer’s preferences and as of

metrics, developing the rights indicators is a key issue. Payne and Frow (2005) stated that generally

companies use inappropriate metrics to measure and monitor the performance of their customer

relationships. Marketing metrics should be developed in order to assess the value co-creation

potential of customer relationships. Organizational learning is the capacity of the firm to use

acquired knowledge and learning to improve the supplier’s process. There is a quite abundant

literature about knowledge, some authors have spoken about tacit and explicit knowledge (Polanyi

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1958), while others about know-how, know-what, know-why and know-who (Ryle 1945). Mokyr

(2002) has divided knowledge in propositional, which is abstract and prescriptive, which refers to

skills and competences. Apart from these distinctions, knowledge about customers should be not

only theoretical and based only on several data but has to be a deep understanding of the customer

value creating process. The encounter process instead, is represented by two-way arrows that link

the customer processes with the supplier processes because S-D logic is based on a continuous

relationship with the customer. This process involves different functions of the firm, for instance

marketing advertises the service, sales engage the customer and logistic deliver it to the customer.

According to the authors, there are three types of encounters that facilitate value co-creation:

communication encounters, usage encounters and service encounters. Communication encounters

are activities that aim at connecting with customers, usage encounters are activities performed by

customers when using a product or a service, while service encounters are customer interactions

with service personnel or application.

Encounter processes help the firm to be able to provide customers with suitable opportunities to

co-create value. It is a virtuous circle in which the customer becomes aware about the opportunities

provided by the firm that learns how to design better experiences. Each encounter favourites this

process, therefore encounters should be designed from a customer learning perspective. In order

to reach this objective, it is needed to map the processes. There are several techniques suggested

by researchers that help to perform this activity such as flowcharts and business process

reengineering. These include process mapping, service-blueprinting, activity mapping, and

customer–firm touch point analysis (e.g., Shostack 1984; Kingman-Brundage 1989; Grönroos 2003;

Sawhney et al. 2004). Doing so, the company can see the opportunities and the weaknesses and to

redesign the processes in order to provide the best services for the customers. The proposed

approach is based on these concepts but concentrates on the integrative mapping of customer,

supplier and encounter processes. It is necessary to take into considerations that experiences are

non-linear and interactive. The authors have done a study on a European travel company in which

it has been done a workshop with managers and front-line employees. The result is showed in Figure

16. It has been focused the attention on the different types of encounters. In fact, the customer

processes “goals in life” and “travel plans” refers to communication encounters because consider

advertisements and brochures and on service encounters as regards customer consultations and

contact requests, while the following activities such as “decision making” and “preparations” refer

to usage encounters because involve good-to-know information and instruction for use. As Figure

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16 shows, customers have different types of goals according to whether the encounter involves

communication, usage or service, and therefore, taking into account different types of encounters

help in designing the processes. If we analyse the supplier processes, we can see that there are

activities that must be performed by different functions, reinforcing the need for cross-functional

alignment. The resulting customer experience depends on the fit between the content and

execution of different because the promises given to customers in the early stages of the

relationship process need to be met in the later stages. The strength of this framework is that

suppliers can enable customers’ active participation in the process, allowing them to understand

the opportunities available so that value can be created.

Figure 24 - Mapping of Customer, Supplier and Encounter processes (Payne, Storbacka and Frow 2008)

This framework is recognized as one of the most important in the co-creation literature because it

provides several benefits to existent literature and also from a practical perspective. First, it

integrates S-D logic literature as the customer is a co-creator of value together with the supplier,

marketing as a ‘structurer’ of relationships, encounters and dialog, knowledge as a fundamental

source of competitive advantage and the focus on operant resources as the key unit of exchange. It

also focuses on value-in-use and provides a tool for identifying competences as in FP9 of S-D logic.

Then, there are several managerial implications that help managers in managing the process of

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value co-creation. One of all are the required competences to manage co-creation. In fact, the

interdependence of the customer and the supplier processes requires skills that go beyond the limits

of the company. Then, it illustrates the benefits of engaging the customer from the beginning of the

service development and therefore companies should start to consider new co-development

offerings. For instance, prototyping could be a solution. In fact, more and more firms are adopting

prototyping to test the product or service such as Kickstarter, probably it will become more

widespread. Another implication is that encounters are fundamental to engage the customer and

to co-create value and is therefore important to learn to manage encounters in a way to create

positive experiences for the customers. For this purpose, marketing and communication are

extremely important. Then, co-creation opportunities are nothing less than potential value

creations proposed by the suppliers to the customers who are guided in the process. It is also

important to notice that in this framework, relationship experiences are interactive, longitudinal,

individual and contextual and that goods and services development processes are flexible and no

static. The framework has several strengths but the second image that refers to specific processes

is limited to the European travel companies industries, but is a good step forward in the value co-

creation literature and we can see it also from the number of citations that this paper has received.

Even if the paper has been written in 2008, is still the most appreciated in the field.

It must be said that different authors have contributed to the different definitions of value, value

creation and value co-creation. For instance, Grönroos (2008) has defined value in this way “Value

for customers means that after they have been assisted by a self-service process (cooking a meal or

withdrawing cash from an ATM) or a full-service process (eating out at a restaurant or withdrawing

cash over the counter in a bank) they are or feel better off than before.” This is a generic definition

suitable everywhere but that do not consider where value is created. Then Grönroos (2008) defines

also value creation as the customer’s creation of value-in-use. This means that the other parts of

the process such as the planning and the design of the product/service and the production are not

part of co-creation if the customer Is not involved. The value creation concept proposed by

Grönroos reflects the S-D logic because for S-D logic, value-in-use is generated by users during

usage. As shown in Figure 10, if one chooses to use the latter notion of value creation, one cannot

accept value-in-use as a value creation concept. Value for customers is created or in the customer

sphere during the usage or by both the provider and the user in an all-encompassing value-creating

process.

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Figure 25 - Value creation as the customer’s creation of value-in-use or as an all-encompassing process (Grönroos 2011)

The considerations made on the definitions have led to other revisiting of some S-D logic

foundational premises as shown in the following table. The first foundational premise has been

edited in order to highlights the role of the service in the value creating process, that is a mediating

factor and the two-sided aspect of the value creating process that considers the customer and the

provider. FP2 underlines instead the importance of all the resources. Not only goods are a mean for

service provision but all the resources. FP6 is has been modified since the previous one was not

accurate. Indeed, customer and firm are not always value co-creators, but only under certain

circumstances but the user is always a value creator. FP7 has been divided in two statements. The

first one is modified in “Fundamentally, the firm is a facilitator of value for the customer” (No. 7a/1)

for the same reason of the change of FP6. If value creation is the customer creation of value-is-use,

the customer is the value creator and what is the role of the firm? The firm provides the potential

value that can be transformed into value-in-use by the customers. It has also been added “Provided

that the firm can engage with its customers’ value-creating process during direct interactions, it has

opportunities to co-create value jointly with them as well” (No. 7a/2) as the firm can interact with

customers and therefore there is co-creation. Then the other statement of FP7 seems to be aligned

with the goods perspective rather than with the service one. In fact, in S-D logic the firm can

influence customers’ behaviours and value creation. In order to align FP7, it has been changed in

this way “The firm is not restricted to making value propositions but has an opportunity to directly

and actively influence its customers’ value creation as well” (No. 7b). Then FP10 has been edited

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because value creation is defined not as an entity that exists in a particular moment but emerges

over time and the experience of value and the value creation process accumulates as a dynamic

process. Therefore, FP10 becomes “Value is accumulating throughout the customer’s value-creating

process” (No. 10/1) and “Value is always uniquely experientially and contextually perceived and

determined by the customer” (No. 10/2).

Table 9 - Value creation and co-creation revisited (Grönroos 2011)

Another great contribution to the literature has been done by Heinonen, Strandvik, Mickelsson,

Edvardsson, Sundström, and Andersson in 2010. They have included in the framework, as done by

Payne, Storbacka and Frow in their model, the customer’s other activities and life as a whole. The

authors suggest that the focus of companies is not the act of service alone, but customers’

intentions as well as the resultant activities and experiences. Firms should try to understand how

their offer fits in the customers’ life and context. Here it arises the great question of marketers about

how to approach the problem. Marketers have to communicate that the service has a utility that

generates value for customers. This concept is based on the marketing concept defined by Drucker

(1974) when he said “what the customer buys and considers value is never a product. It is always

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utility, that is, what a product or service does for him.” This is in contrast to the classical way to see

the marketing that is sum up in this sentence by Levitt (1960) that describes marketing as “the idea

of satisfying the needs of the product and the whole cluster of things associated with creating,

delivering, and finally consuming it”.

Other succeeding papers try to understand the nature of value and the difference between value

per se, value-in-use and value-in-exchange. Grönroos and Voima (2013) analyse the creation of

value-in-use and value-in-exchange considering value-in-exchange the outcome of value created by

the provider before the interaction with users and value-in-use the value created by the customers

during the usage. They do not consider creation of value-in-use before the interaction between

users and firms and do not focus on co-creation, assuming that is the firm alone that provide the

value that then is transformed in value-in-use by the customer. In this case, the firm provides

potential value-in-use becoming in this way a value facilitator. Then during the interaction, the

customer is co-creator of value together with the firm, while during the usage the customer creates

alone the value.

Figure 26 – Value creation (Grönroos and Voima 2013)

The authors, as in the previous paper, divide the process in three spheres: provider sphere, joint

sphere and customer sphere. The provider sphere generates potential value and the firm’s role is

to be the value facilitator. Here the customer does not have a role. In the joint sphere firm and

customers co-create value, while in the customer sphere the customer uses the product/service

transforming value-in-exchange into value-in-use without the involvement of the firm.

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Figure 27 - Value creation spheres (Grönroos and Voima 2013)

As it is possible to see in the image above, co-creation can only happen in the joint sphere through

direct interactions. Direct interaction then influences customers’ behaviours and may lead to value

destruction if not managed properly, for instance if the firm decides to interact with customers

when they do not want, there is a risk of value destruction. This risk must be reduced by interacting

with customer before the launch of the product or service in order to understanding the customer

process and the context which influence customers’ behaviours. This action is possible because the

sphere in the previous image are not steady but are flexible and it could happen that there is a direct

interaction during the production. The boundaries of the sphere can move introducing broaden

spaces for co-creation with customers. The following figure highlights the provider and customer

roles during the process.

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Figure 28 - Direct and indirect interactions: defining the roles of the customer and service provider

(Grönroos and Voima 2013)

The flexibility of the boundaries aligns the framework to the one proposed by Payne et al. in 2008

and explained in the previous paragraphs. However, there is a small difference between the two

models and relies in the customer sphere. In fact, in the customer sphere the provider plays a

passive role and do not participate in the customer process, while in the model proposed by Payne

et al. the involvement is in every phase of the process allowing the firm to get feedbacks and obtain

organizational learning from the usage by the customers. Customer experience is a constantly

evolving process that makes value creation a temporally accumulative process, emerging through

past, present, and future experiences (Helkkula et al. 2012; Voima et al. 2010). In the reality

interactions happen always from the design to the usage of the product/service thanks to big data

and social networks. For instance, customers ask on social networks or on the company website for

the price of the products/services or for additional information and after the purchase maybe post

the photo on social networks and the company can obtain data for future improvements and

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developments. This kind of interaction is called indirect interaction and is considered by the

framework in the provider and in the customer spheres but is not considered part of the co-creation.

The framework proposed by Grönroos and Voima provide the literature with a discussion on the

concept of value. The authors define value as value-in-use, created by the user during usage of

resources and processes and value creation is the customer’s creation of value-in-use. Then they

propose a reformulation of some foundational premises of S-D logic as in Table 5. FP6 is quite the

same of the one proposed in the previous study and FP7a has been made more precise by adding

“by providing potential value”. The other premises are the same of the previous study.

Table 10 - Revisited foundational premises (Grönroos and Voima 2013)

This framework presents different implication from both the theoretical and the practical point of

view. First of all, it contributes to the clarification of the definitions of value, value creation and

value co-creation and to the distinction of the three spheres, provider, customer and joint. Value

co-creation is related only to direct interactions that happen in the joint sphere in which customers

and firm get in touch. Then, it is noteworthy that the firm creates potential value and has the power

to influence the customers’ experience creating or destroying value. In this sense, marketing and

communication play a fundamental role because have the possibility to attract the customers and

engage them into the co-creation process. Firms not only influence the present experience but also

customers’ future purchasing and consumption behaviour. Firms should make the most of direct

interactions and should create new possibilities for direct interactions. In order to create positive

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effects, companies have to analyse the behavioural logic of their customers so that they can obtain

organizational learning to exploit in the future.

Figure 29 - Customer-dominant logic of service contrasted with service management and service-dominant

logic (Heinonen, Strandvik, Mickelsson, Edvardsson, Sundström, and Andersson, 2010)

This leads to some managerial implications showed in the following table. What is evident is the

managerial aspect of the framework, for instance it is interesting the visibility concept that

highlights that maybe the firms should focus on invisible aspects that lead to value emergence.

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Table 11 - Implications of the customer dominant logic

Payne and Frow instead insert value creation process as a part of the CRM strategy (2005). They

position the value creation process between the strategy development process and the

multichannel integration process with the support of the information management process. In

particular they distinguish between the value the customer receives and the value the organization

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receives. The value the customer receives is the benefits that customer obtains by buying the

product/service the company offers. These benefits are the value propositions that satisfy their

needs and lead to a relationship with the firm. The value the organization receives is instead the

outcome of the coproduction of value, the deployment of improved acquisition and retention

strategies, and the utilization of effective channel management. Value creation process is

fundamental for CRM because it transfer the firm’s strategy into value propositions that

demonstrate what value is to be delivered to customers, and explains what value is to be received

by the organization, including the potential for cocreation. Even if this framework has the merit to

insert value creation process into a strategic vision, it does not go deeper and does not analyse the

customer and the provider roles in the process. The authors just say that the customer and the firm

gain some benefits and that it can happen co-creation between them.

Figure 30 - Value creation process inside the conceptual framework for CRM strategy

The framework below focuses on the degree of co-creation, which includes the scope and the

intensity of co-creation. The scope is how companies are willing to collaborate with customers

across the stages of the NPD process, while intensity is extent to which firms rely on cocreation to

develop products within a particular stage of NPD. An example of a firms that has a great scope and

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intensity is the t-shirt manufacture Threadless.com. Threadless.com works in the following way:

designers submit their designs to Threadless.com, then the community votes what are the more

beautiful and interesting designs and the most voted are sent into production and sale. Designers

obtain a reward for their sold t-shirts. The company’s cocreation efforts do not end with ideation

and product development: they also extend to commercialization and postlaunch activities. Indeed,

Jeffrey Kalmikoff, Chief Creative Officer of Threadless.com has declared “All our efforts are toward

finding ways of expanding word of mouth. If you’re a designer and you want to get chosen, you’re

going to tell everyone you know to go to the site and vote.”

Figure 31 - Conceptual framework of consumer Cocreation (Hoyer, W. D., Chandy, R., Dorotic, M., Krafft, M.,

& Singh, S. S. - 2010)

There are three variables that influence the degree of co-creation: consumer motivators, firm

stimulators and firm impediments. Another interesting aspect of the model is that authors explain

that co-creation can be valuable at all stages of the NPD process which include: ideation, product

development, commercialization, and postlaunch. Then, the degree of co-creation leads to the

outcomes that are firm related and customer related. Regarding consumer motivators, it depends

on the type of consumers. There are customers who are more motivated to co-create and others

who are only interested in buying the products. In order to understand what the motivators are that

drive the co-creation among consumers, it is useful to divide consumers in these segments:

• Innovators: consumers who are the earliest to adopt new products (Moore 1991)

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• Lead users: are people who understand the needs before others in the marketplace and are

therefore well positioned to solve these needs themselves (von Hippel 1986)

• Emergent consumers: individuals who are used to apply intuition and judgments to

improve products’ concepts (Hoffman, Kopalle, and Novak 2010)

• Market mavens: customers who have information about products, stores and markets and

generally start discussions and respond to information requests from other consumers (Feick

and Price 1987).

The consumers listed above are more likely to participate to co-creation activities with firms. Co-

creation involves monetary and psychological aspects, time and efforts by the consumers.

Consumers compare costs and benefits of collaborating. Some financial benefits are monetary

prizing or the sharing of intellectual property rights, then there are social benefits such as visibility,

the status, the social esteem or the recognition of being a unique and important customer for the

firm. Maybe others are interested to gain technology knowledge by participating in forums and

development groups run by the manufacturer. For instance, several companies have forums and

blogs that attract consumers who participate in all stages of the cocreation process and gain

technology knowledge from exchanging ideas and inputs from others in the community. Finally,

some customers are interested in co-creation for psychological reasons such as sense of self-

expression and pride (Csikszentmihalyi 1996; Etgar 2008), positive affect (Burroughs and Mick 2004)

and enjoyment of contributing (Evans and Wolf 2005; Nambisan and Baron 2009). Then, others

participate only for altruism. Then, firms can vary the degree of co-creation because maybe have a

lower propensity to engage in intensive co-creation activities due to organizational impediments.

For instance, sometimes firms do not want to have spillover issues or do not want to share the

property rights with consumers. Then is also depends on the type or product or service because

there are some products for which is very difficult to engage customers for co-creation or it would

complicate the production process. But on the other hand, firms can increase the consumer benefits

and reduce the consumer costs.

An interesting feature of the framework is the co-creation at the postlaunch phase of the NPD

process. As highlighted by the model presented by Payne, Storbacka and Frow in 2008, there are

several opportunities of creating value after the sale. For instance, companies ask for opinions that

can improve the products. Then, the positive or negative outcomes of co-creation can be firm

related or customer related. Firms can increase productivity through incrementing efficiency (e.g.,

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by reducing operational costs) and improve effectiveness (e.g., through an enhancement of a

product value, innovativeness and learning capabilities, and a better fit with consumer needs).

Customers can gain the benefits explained above and therefore are more satisfied and in addition

to this contributing to the improvement to the products, they can have a more fit with their needs

and can increase the relationship with the company.

All those frameworks concentrate on the interaction between firm and customers and in most of

the cases the interactions happen inside the stores. Therefore, it becomes crucial to design the retail

in a way that attracts customers.

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6.2.1 Co-creation and innovation of meaning

Co-creation, even if has been studied quite deeply in the innovation area, it has not been studied in

the field of innovation of meaning. It could be interesting to understand how it could be possible to

develop a co-creation service for an innovation of meaning concept. Even if there is a gap in the

literature, there are already some examples of co-creation of value for an innovation of meaning. A

good example of co-creation and innovation of meaning inside a retail store is Build-A-Bear. Build-

A-Bear is a soft toys shop in which customers can create their own soft toy assembling together

different parts of the toy and inserting the filling. The co-creation happens inside the store and is

generated by an innovation of meaning that allows customers to be the creators of their own soft

toys. It is not only a matter of do it yourself, it is an innovation designed from the beginning, it is

transfer of the meaning identified in the vision into a real solution. In this case the meaning is simple,

immediate and not mis-interpretable. This example demonstrates that co-creation and innovation

of meaning can coexist even if there is a great difference between them. Innovation of meaning is

inside-out and does not consider the user during the planning of the meaning and the designing of

the solution while for co-creation the engagement of the user is a fundamental part and it happens

from the beginning. Even if innovation of meaning does not consider the engagement of the user,

then however there is an interaction with the user. It could be interesting to analyse how an

innovation of meaning is transferred into a co-creation solution. Companies could be interested in

this concept because they need to create memorable experiences and innovation of meaning could

be the successful way to innovate the meaning behind the co-creation experience.

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6.2.2 Measuring co-creation

There are few studies that have systematically explored the nature of the dimensions of customer

value co-creation behaviour. Some studies consider multidimensions approach (e.g., Bettencourt,

1997; Bove, Pervan, Beatty, & Shiu, 2008) to capture the value of the co-creation, while others are

unidimensional (e.g., Cermak, File, & Prince, 1994; Dellande, Gilly, & Graham, 2004; Fang, Palmatier,

& Evans, 2008). However, none of these studies explores the relationship between the overall

construct and its dimensions. The study proposed by Yi and Gong (2013) develops a scale to measure

customer value co-creation behaviour. The model conceptualizes customer value co-creation

behaviour as a multidimensional concept consisting of two higher-order factors, each made up of

multiple dimensions. The two factors are customer participation behaviour and customer

citizenship behaviour. Customer participation behaviour refers to required behaviour necessary for

successful value co-creation and comprise information seeking, information sharing, responsible

behaviour and personal interaction. Information seeking relates to the information that customers

look for when try a service. Generally, customers need information in order to understand if the

service satisfy their needs and to know what to do as co-creators during the experience. giving them

that information, reduces customer uncertainty and enables customers to understand and control

their co-creation environments and their roles as co-creators allowing them to be part of the co-

creation process. Customers seek information in different ways such as asking to other customers

or to the company maybe on the website or on platforms such as TripAdvisor. Information sharing

refers to the information customers have to provide to salespersons so that they can satisfy

customers’ needs. Responsible behaviour relates to the behaviour of the customers in order to

participate to the experience as partial employees. Customers have to be cooperative, observe rules

and accept directions from employees. Personal interaction refers to the relationship between

customers and employees. In order to have a successful value co-creation, customers must have

interpersonal relations with employees as the value co-creation happens in a social context. If the

environment is pleasant, it is more probable that the customers feel a positive experience.

Customer citizenship behaviour is the voluntary behaviour that provides extraordinary value to the

firm but is not necessarily required for value co-creation and includes factors as feedback, advocacy,

helping and tolerance. Feedback includes that information that customers provide to employees

and that help them to improve the service. It is not a requisite for successful service delivery but

contributes to the firm’s promotion and image. Advocacy is the recommendation of the service to

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other people. Advocacy could be done by word-of-mouth and is an indicator of customer loyalty

because does not provide any advantage to the customer. It contributes to firm promotion and

reputation but is not necessary for successful value co-creation. Helping relates to the situations in

which some customers help other customers by teaching them how to use the service or giving

them some advices. Tolerance refers to the customers willingness to be patient when the service is

not delivered correctly or in time.

Table 12 - Customer value co-creation behaviour scale (Yi, Gong - 2013)

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The study presents several contributions to the literature about measuring co-creation of

experience and the findings also suggest a number of important managerial implications. The

proposed scale can help managers in evaluating and rewarding customer performance so that

customer will be more willing to engage in value co-creating activities.

Another important study on value co-creation measurement is the one conducted by Ranjan and

Read (2016). The study presents two dimensions that have an impact on value co-creation: co-

production and value-in-use. Co-production is direct or indirect “coworking with customers” (Hu

and McLoughlin 2012; Nuttavuthisit 2010) or participation in the product/service design process

(Auh et al. 2007; Dato-on and Beasley 2005; Etgar 2008; Fang et al. 2008). It could have different

aspects, for instance it can happen with the sharing of knowledge and information or with the

engagement of the customers in some activities. The model identifies three sub-dimensions of co-

production: knowledge, equity and interaction. Knowledge refers to the sharing of knowledge, ideas

and creativity of customers with the firm. The sharing of information results into better outcomes

as allows to provide customers to what they are looking for. Then, equity refers to the willingness

of the firm to share control with customers. Interaction is the direct participation, engagement and

dialog of customers with the firm. Value-in-use instead, is derived from the user’s use context and

processes, for instance time, location and perceptions. Customers determine the value on the basis

of the specificity of their usage (Edvardsson et al. 2011; Vargo and Lusch 2004, 2008). The model

identifies three components of value-in-use: experience, personalization and relationship.

Experience is the empathetic, emotional, and memorable interaction between customers and firm.

Personalization refers to the uniqueness of the actual or perceived use process, the value being

contingent on individual characteristics. Then, the last factor is relationship that enables

collaboration between customers and firm which results into the creation of value.

The study provides the literature with an important step forward in the direction of illustrating the

complete multidimensional theoretical nature of value co-creation and developing a measurement

instrument aligned with theory. It highlights also the need of other research, for instance better

alignment with the service dominant logic as co-production is not a concept included in the

approach. Co-production reminds to the concept of goods, while for service dominant logic the firm

proposes value through market offerings and then customers continues value creation through use.

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Table 13 - Dimensions of value co-creation (Ranjan, Read - 2016)

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7 Research questions

Having analysed the state of the literature on customer experience and on innovation in services, it

is clear that there is a gap. Service dominant logic has given birth to the studies on co-creation that

is the creation of value together with the customer. Co-creation has been studied first for goods

companies and then for service companies, without considering the typology if innovation that the

firm is pursuing. There are no studies on co-creation of experience for a service firm that has

implemented an innovation of meaning, even if there are already some examples.

Several authors have focused the attention on customer experience, for instance Christopher et al.

(1991) argued that during 1950s and 1960s the differentiation was based on tangible goods and

when tangible goods became a commodity in 1970s, the differentiations moved to services. Then

when services began generic, the differentiation started to be based on experiences in 1980s. From

1980s experiences became the point of difference of the offering and therefore a firm if wants to

be competitive, must stage experiences that sell. Retailers could gain several advantages from the

right management of the customer experience as from experience derives the value. Prahald &

Ramaswamy (2013) defined value creation “Value creation is defined by the experience of the

specific customer, at a specific point in time & location, in the context of a specific event”. The

encounter is the space in which the experience happens, and generally it is the store.

Marketing literature has always focused the attention to the retail. In fact, several researchers have

tried to identify the marketing mix that influence the retail experience and how to enhance the

retail customer experience in order to provide customers with memorable experiences that

convince them to spend more time in the store and to come back several times, but it is still a critical

issue because technological innovation has changed completely the retail environment and

consumers habits and lifestyles has changed during the years. For instance, the online channel has

become a must have but still do not satisfy the need of customers to build strong relationship with

the brand. Then, nowadays customers have the possibility to search information about products,

services and experiences even before entering the store and they infinite choices of products

available on the market. Therefore, it becomes hard for retailers to satisfy customers’ needs in a

brick-and-mortar store. Why should a customer go to a store instead of purchasing online?

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A famous example in the retail is Build-A-Bear, a firm that has been able to change the meaning of

the store offering co-creation with customers in order to provide them with personalized products

and services. The has transformed the store in a workshop. This example highlights that innovation

of meaning and co-creation can coexist and can be successful providing a better customer

experience to customers. In particular, co-creation helps consumers to understand the new

meaning.


helps retailers to implement innovations and this dimension is called “how-solution” of retail service

innovation strategy. Another dimension regards the market and is called “what-experience” of retail

service innovation strategies. It regards decisions about new forms of interaction that satisfy

hedonic needs (Pinto, Dell’Era, Verganti, Bellini 2017). Then, there is the design dimension that in

which there is an innovation of the semantic dimension of the product. Meanings are not given but

can be innovated due to the evolution of the socio-cultural context and the discovery of new

technologies (Pinto, Dell’Era, Verganti, Bellini 2017). This dimension is defined as the “why-

meaning” of retail service innovation strategy and it regards the new meanings of visiting a store.

Currently it seems that co-creation literature and service innovation literature are two separated

literatures as there are no tries of making them converge as the Build-A-Bear examples shows.

Therefore, there is a gap in the literature that would be interesting to fulfil. There are already

frameworks on the variables that affect co-creation and frameworks on how or develop successful

innovation of meaning, but how to implement the meaning generated into a retail solution? And

What if the solution is a co-creation experience? It would be interesting to understand if there is a

correlation between co-creation and innovation of meaning and if customers who co-create,

perceive the meaning of the experience. Thus, the research question is the following:

How does the co-creation enable the perception of the new meaning?

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8 Methodology

As mentioned previously, this study wants to examine how retail firms use co-creation to enable

the perception of the new meaning generated. In particular, this research uses the framework

proposed by Payne, Storbacka and Frow (2008) in order to find what are the co-creation activities

that help customers to perceive the innovation of meaning in the retail. Indeed, in order to

understand what the customers perceive, it has been conducted an analysis based on surveys. For

the analysis it has been selected four case studies of retail firms that use co-creation to make

customers aware of the new meaning. The case studies are: Lush, Leroy Merlin, Adidas Runbase and

La Feltrinelli RED. Lush differentiates itself in the cosmetic industry for selling handmade and solid

cosmetics, Leroy Merlin is in the do it yourself and home improvement sector, Adidas Runbase is

one of the major leaders in the sporty wear market and La Feltrinelli RED is a bistro by the famous

Italian publishing company La Feltrinelli.

The survey has been designed taking into considerations the different variables that affect co-

creation according to the co-creation framework. The first section of the survey is dedicated to the

demographic information in order to have a general picture of the kind of people who have

answered the survey and the second section is for segmenting customers according their motivation

to co-create. Then, the other sections were dedicated to what kinds of interaction happen between

customers and firm before, during and after the experience inside the store, according to the co-

creation framework. In particular, it has been dedicated a part to Customer learning to see if

customers perception of the firm and memories of previous experiences affect the present

experience inside the store. Another part has been directed to the relationship experience in order

to capture the kind of relationship that customers have with the company and with the retail. Then,

some questions were dedicated to value creation and value-in-use with the aim of catching the

moment in which value is co-create with the customers. Then the last section has been dedicated

to the innovation of meaning to see if customers perceive that the experience proposed by the retail

firm is radically different form the ones proposed by competitors and to see if customers understand

the meaning of the experience.

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Figure 32 - Co-creation framework (Payne, Storbacka and Frow 2008)

As the first section aimed to capture the demographic information of participants, it was not used

a validation scale (see Attachments 14.1). For the other questions it has been decided to use the

Likert scale as validation scale. The Likert scale is a psychometric scale commonly involved in

research that employs questionnaires. It is the most widely used approach to scaling responses in

survey research.

A Likert item is a statement that the respondent is asked to evaluate by giving it a quantitative value

on any kind of subjective or objective dimension, with level of agreement/disagreement being the

dimension most commonly used. Likert items exhibit both "symmetry" and "balance". Symmetry

means that they contain equal numbers of positive and negative positions whose respective

distances apart are bilaterally symmetric about the "neutral"/zero value (whether or not that value

is presented as a candidate). Balance means that the distance between each candidate value is the

same, allowing for quantitative comparisons such as averaging to be valid across items containing

more than two candidate values. In this case, it was decided to use the five levels scale designed in

the following way:

1. Strongly disagree

2. Disagree

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3. Indifferent

4. Agree

5. Strongly agree

It has been decided to use the Likert scale instead of other scales such as the Thurstone scale

because of its several advantages. First of all, the Likert scale is very clear. In fact, the levels are

unmistakable and help participants to make a net decision. It allows also to order the categories in

a continuum of answers that are translated in numbers, thing that form the statistical analysis point

of view is easily manageable. On the other hand, the levels oblige interviewees to choose a modality

of answer even when she does not know what to answer. Another con is that the third level does

not correspond to a decision, it is like if the interviewee don not know what to answer. Then, the

number of levels could create uncertainty in the mind of the interviewees. For instance, in the seven

levels scale, it could be difficult to choose an answer between the first three choices or between the

last three choices, as they are very similar. For this reason, for this study it has been decided to use

the five levels scale. The Thurstone scale has been discarded because for this study is too much

complex to be managed and more difficult for interviewees to understand.

For this study, four surveys were prepared, one for each selected company. As for statistical reasons,

it is better to have answers from the same interviewees in order to have reliable data, the ideal

situation would have been to have one questionnaire divided in four parts. As the large number of

questions for each case study, the decision has been to predispose two surveys, one for two

companies and the other for the remaining two companies. One survey was dedicated to Lush and

La Feltrinelli RED, while the other one to Adidas Runbase and Leroy Merlin. The questions were the

same for the four firms, except for few differences due to the differences in the service offerings.

During the distribution of the surveys, particular attention was paid to the recommendation to

answer to both the questionnaires. The desired number of answers was around 80-90, in order to

have a sufficient large number of data to complete all the statistical analysis. The complete list of

questions of the two questionnaires is in the Attachment chapter.

For the analysis of the surveys, first of all it has been done a screening of the answers in order to

see if all the answers were reliable. It has been decided to discard the answers of all the people who

have answered “1” to the question “I remember well that I was in a X store” (the X corresponds the

firm to which the survey refers), because their answers were not credible as they probably have not

visited those stores recently and could not answer to the kind of interaction that happens inside the

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store or to the meaning of the experience. Then, the remaining answers were analysed in order to

find the correlation between co-creation and innovation of meaning. To accomplish this task, for

each case study, the answers have been divided in two groups:

1. The first group refers to interviewees who have recognized the meaning generated by the

firm and implemented in the retail, that for Lush and Leroy Merlin is Experiment, for Adidas

Runbase is Sharing and for La Feltrinelli RED is Entertainment;

2. The second group refers to interviewees who have not recognized the meaning mentioned

above.

Then, it has been done an analysis of the questions related to co-creations that enable the

perception of the meaning implemented in the retail in order to identify what are the co-creation

factors that enable that perception. After having selected the questions, it has been done a division

of the answers according to the two groups explained above. The result of this operation is a table

with two groups of answer for each question that affects the perception of the meaning. Since the

aim of the surveys is to prove that there are some co-creation features that enable the perception

of the meaning and therefore, people who participate to co-creation perceive the meaning while

people who do not participate to co-creation do not understand the meaning, the statistical analysis

that allows this research is the T-test. Therefore, it has been conducted a T-test for each question

in order to demonstrate the hypothesis that the averages of answers of the two groups are

statistically different and that that difference is not due to the case. In addition to this, confidence

intervals are used to accompany the estimate of the average with a plausible range of values for

that average.

In order to accomplish the T-test, it would be easier if the data follow a normal distribution and

therefore, we apply a test of normality. It has been decided to apply the Shapiro-Wilk test. The

Shapiro–Wilk test tests the null hypothesis that a sample x1, ..., xn came from a normally distributed

population. The test statistic is:

𝑊 =(∑ 𝑎' ∗ 𝑥('))+

',-.

∑ (𝑥' − �̅�).+',-

Where:

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• xi (with parentheses enclosing the subscript index i; not to be confused with x(i)) is the ith order

statistic, i.e., the ith-smallest number in the sample;

• �̅� = (123⋯315)+

is the sample mean

The coefficients ai are given by:

𝑎' = (𝑎- + ⋯+𝑎+) =𝑚8𝑉:-

𝐶

Where:

• C is a vector norm: 𝐶 = ‖𝑉:-𝑚‖ = (𝑚8𝑉:-𝑉:-𝑚)-/.

• Vector m, 𝑚 = (𝑚- +⋯+𝑚+)8 , is made of the expected values of the order statistics of

independent and identically distributed random variables sampled from the standard normal

distribution

• V is the covariance matrix of those normal order statistics.

The W statistic can have values from 0 to 1 and if is too low, the test rejects the null hypothesis that

the sample values are not normally distributed. Then, it necessary to calculate the correspondent

p-value (or probability value) that is the probability for a given statistical model that, when the null

hypothesis is true, the statistical summary (such as the sample mean difference between two

compared groups) would be greater than or equal to the actual observed results. The null-

hypothesis of the Shapiro-Wilk test is that the population is normally distributed. Thus, on the one

hand, if the p-value is less than the chosen alpha level, then the null hypothesis is rejected and there

is evidence that the data tested are not normally distributed. On the other hand, if the p-value is

greater than the chosen alpha level, then the null hypothesis that the data came from a normally

distributed population cannot be rejected.

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Figure 33 - Explanation of the p-value

If the H0 is rejected, it means that the data are not normally distributed. In this case, we can assume

that the data are distributed according to an unknown distribution, that is not the normal one. We

do not conduct other tests as for the T-test is not necessary to know the distribution of the data.

We go on with the T-test as is a parametric test that can be conducted also for unknown

distributions.

Therefore, we proceed with the T-test in the case in which the two variances are known. We start

from two independent samples, that we can call X1, X2, … , Xn and Y1, Y2, … , Ym coming from two

normal distribution N(𝜇x, 𝜎2x) and N(𝜇y, 𝜎2

y), where µ is the average of the sample, s is the standard

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deviation and therefore 𝜎2 is the variance. The null hypothesis corresponds to the equality of the

two averages, while the hypothesis one to the inequality:

H0: 𝜇x=𝜇y

H1: 𝜇x¹𝜇y

We reject the null hypothesis H0 if:

|𝑋B −𝑌B|

D𝜎1.

𝑛 +𝜎F.𝑚

> 𝑧I.

While we can accept the null hypothesis if:

|𝑋B −𝑌B|

D𝜎1.

𝑛 +𝜎F.𝑚

≤ 𝑧I.

Where 𝑧KL is the z-score corresponding to right-tailed area of α/2.

The T-test has been performed on the Excel software using the formula TTEST(array1; array2; tails;

type), where array1 refers to the first group of values, array2 to the second group of values; tails

indicates if the test is the test is one-tailed or two-tailed and in this case the test is two-tailed as we

are verifying if the average of the two groups of values are equal or not, then the type refers to the

kind of test to perform and can assume three values:

• type=1 if the test is paired

• type=2 if the test if the variances are equal

• type=3 if the test if the variances are not equal

in our case the variances are not equal, therefore the type is 3. The result of the formula is the p-

value, that is the probability associated to the T-test and if the value is lower of 0.05 (we are

considering a=0.05), we can reject the null hypothesis and affirm that there is statistical difference

between the averages and this difference is not due the case.

After the T-test, confidence intervals have been used to understand if the difference between the

two averages is relevant. A confidence interval is the range of values for which we have a certain

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level of confidence that the average that the average belongs to that range. In order to construct a

confidence interval of the mean μ of the population, we need to use the fact that the distribution

of the random variable

�̅� − 𝜇

D𝜎.

𝑛

is approximately equal to that of a Student's t with n - 1 degrees of freedom, where n is the size of

the sample extracted and that approximation improves with the increase of n. We observe that with

the 95% of confidence:

�̅� − 𝑡+:-,I.𝜎√𝑛

< 𝜇 < �̅� + 𝑡+:-,I.𝜎√𝑛

Where 𝑡+:-,KL is the quantile of order 1 - I

. of a Student's t of n - 1 degrees of freedom, that is the

point that on its left there is an area below the t equal to 1 - I.. And therefore, the real average of

the distribution belongs to the following interval:

Q�̅� − 𝑡+:-,I.𝜎√𝑛

, �̅� + 𝑡+:-,I.𝜎√𝑛R

The intervals of confidence have been performed on Excel using the following function:

CONFIDENCE:T(a, standard_dev, size), where a=0.05 because we are considering a confidence of

95%, standard_dev is the standard deviation of the sample and size is the numerosity of the sample.

Then, comparing the intervals of the two group of values, if they do not overlap, it is another

confirmation of the fact that there is a relevant difference between the averages of the two groups

of values.

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9 Case study analysis

As said in the previous chapter, here are presented four case studies that are the object of the

analysis aimed at designing a framework that helps companies to co-create with customers in the

case of innovation of meaning in a retail service. The following companies have been selected

because are particularly innovative, specifically they have developed innovations of meaning and

present a certain level of co-creation.

For each case, it is presented the company, the innovation of meaning using the framework “how,

what, why” presented in the design driven innovation chapter, the characteristics of the store and

how the meaning is reflected in the store and the main competitors of the firm, paying attention on

the differences of the store and the innovation of meaning between the firm and its competitors.

Figure 34 - How, What, Why (Pinto, Dell’Era, Verganti, Bellini 2017)

The results of the surveys are the following:

Lush La Feltrinelli RED Adidas Runbase Leroy Merlin

Total answers 89 89 86 86 Not reliable

answers 10 9 12 6

Total reliable answers 79 80 74 80

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Table 14 - The results of the surveys

The not reliable questions refer to selection explained in chapter 7 Methodology. Now in the charts

below are presented the demographic information regarding the interviewees of the surveys,

without considering the not reliable answers.

Gender


Female 59% 57% 51% 52% Male 41% 43% 49% 48%

Age


£18 3% 2% 8% 7% 19-39 68% 66% 49% 51% 40-59 25% 28% 28% 28% ³60 4% 4% 15% 14%

Education


High School 27% 27% 43% 42% Degree 73% 73% 57% 58%

Occupation


Student 20% 20% 16% 15% Worker 79% 79% 84% 84%

Unemployed 1% 1% 0% 1%

Live in a big city


Yes 90% 87% 88% 89% No 10% 13% 12% 11%

Table 15 - Demographic information of reliable answers

As table 14 demonstrates, comparing the demographic information of the answers of the surveys

of the four case studies, we can observe that the percentages are very similar, with some differences

due to the different customer segments. This demonstration allows us to consider reliable the data

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of the surveys as they have been compilated by the same people. Instead, regarding the no reliable

answers that have been discarded we can see from the table below that those interviewees have

similar characteristics to the interviewees who have been accepted.

Gender


Female 40% 55,56% 75% 50% Male 60% 44,44% 25% 50%

Age


£18 0% 0% 0% 0% 19-39 50% 66,67% 91,67% 66,67% 40-59 20% 0% 0% 16,67% ³60 30% 33,33% 8,33% 16,67%

Education


High School 50% 33,33% 66,67% 33,33% Degree 50% 66,67% 33,33% 66,67%

Occupation


Student 10% 22,22% 8,33% 33,33% Worker 90% 77,78% 75% 66,67%

Unemployed 0% 0% 16,67% 0% Live in a big city


Yes 70% 88,89% 91,67% 83,33% No 30% 11,11% 8,33% 16,67%

Table 16 - Demographic information of not reliable answers

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9.1 Lush

Lush is a cosmetic company with stores located all over the world. It is an English firm famous for

producing solid cosmetics such as creams, soaps, shampoos, shower gels, lotions, moisturizers,

scrubs, masks using only vegetarian or vegan recipes. It has been founded in 1995 by Mark and Mo

Constantine, Liz Weir, Helen Ambrosen, Rowena Bird and Paul Greaves. Originally Mark

Constantine, a trichologist (the trichology is a branch of the dermatology that deals with the

scientific study of the health of hair and scalp), and Liz Weir started as Constantine & Weir, a supplier

to The Body Shop. They developed recipes for bath and beauty products until The Body Shop has

bought the rights of Constantine & Weir's recipes for £11 million. After 5 years, Constantine and

Weir set up a mail order cosmetics company called Cosmetics-To-Go. In 1995 Constantine and Weir

have sold Cosmetics-To-Go because of administration difficulties. Then in 1995 Constantine and

Weir together with Mo Constantine, Helen Ambrosen, Rowena Bird and Paul Greaves from

Cosmetics-To-Go, decided to buy fresh fruits and vegetables at the market and to sell their hand

made products in a shop where at the first floor there were the production and downstairs the

selling. Initially they were used to buy the perfumes but then decided to make them by themselves

as they find out that the perfumes were not always pure. They decided to name the company Lush,

as it means fresh, green, and verdant.

Figure 35 - Lush logo

Nowadays Lush is one of the most famous cosmetic company not only for the quality of the products

but also for the ethics with which they carry out their work. They not only produce fresh hand made

products but have also other principles to respect such as vegetarian, ethical buying, fighting animal

testing, freshest cosmetics online, handmade, naked packaging. These principles reflect a moral

social responsibility that is behind every single decision described by this statement on their

website.

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Figure 36 – The We believe statement

These ethical principles are also fundamental for the marketing activity. In fact, Lush has a “No

advertising policy” that allows only users-generates content. The only activity they do regards the

brand. They manage the brand in a way that when you think at Lush, you link immediately the ethics

behind. Indeed, they put their slogan “Fighting animal testing” on every Lush bag. Fighting animal

testing is not only a statement but is a real practice. Indeed, Lush buy ingredients only from

companies that do test on animals and it is a practice that lasts from 30 years, as they communicate

on their website “We’ve been against animal testing for over 30 years and will continue to inform,

encourage and participate in the fight for animal rights. We’re proud to say that the founders of

LUSH have been passionately fighting against animal testing during all of this time, long before LUSH

was even an idea.” Fighting animal testing contributes to the quality of the product and to the safety

of the customers and to incentive other companies in doing so, they have established the Lush Prize

the award researchers the conduct alternative testing. This is a smart way to end animal testing.

Since they are very proud of this principle, they use to put the Fighting animal testing logo on their

shopping bags.

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Figure 37 - Lush shopping bag

As the do with the fighting animal testing, they use the same philosophy for all the other principles.

They visit personally the suppliers all over the world to trace the ingredients and to assure that each

supplier work with responsibility to the environment and to the employees. In addition to this, the

contribute to the positive change in small communities in poor countries. This assures Lush to have

the freshest products, even for the online channel. The exploit these principles to promote

campaigns that support the social responsibility and the positive change. For instance, it is been

already ten years that Lush fight the plastic bags because they harm the planet and they do it with

charity campaigns. Lush supports also other charity campaigns that aim at giving rights to people

who do not have and at fighting activity that destroy the planet and that harm animals and humans.

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Figure 38 - The "Ban your Bag" campaign

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9.1.1 Products and services

Another particularity related to the charity campaign is the naked packaging. In fact, Lush has always

delivered products without packaging and this has two important meanings: first, it supports the

campaign against plastic and second, it allows to see that products are fresh. This peculiarity has

been always appreciated by the customers and it has been become a point of difference. Indeed,

Lush products are famous for the particular and funny shapes and the naked packaging allows

customers to see directly the real shape and colours.

Figure 26 – Example of products

These colourful products reflect not only the principles explained above but also a young and

innovative culture that attracts the customer segment known as young adult women ages 18 and

45. Usually they are urban young adult women who live in highly populated cities. This is the reason

why Lush is located only in prime areas. This customer segment is used to post on social network a

great part of the activity they do, and they feel part of a community. In order to incentive the feeling

of community, on the Lush website there are Lush stories that embody the sensations of being a

Lush customer. Another important feature is Lush labs, project that allows customer to test new

products in the development phase and not already on the market giving feedbacks to the company.

It is a digital solution that enables the digital community to discover new products and to participate

to discussions with other members contributing to the developing of new innovative products.

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Figure 27 – Lush Labs App

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9.1.2 The store

Lush stores are the greatest representation of the principles explained above in terms of design and

of experience. First of all, the stores are colourful and scented, characteristic that immerse totally

the customer into the Lush experience. They are similar to groceries as employees wear an apron

and as the client enter the shop, they immediately ask if clients need help and guide them into the

shop helping them to find what they need, by showing the different products.

Figure 39 - An example of Lush store

Customers are involved through the five senses. Indeed, the taste is stimulated through the

presence of pieces of vegetables, spices and fresh fruit in season. The mix of essential oils, which is

released from its products, is so intense that it also becomes an effective tool for attracting people

near the store. Even touch is stimulated thanks to the naked packaging of the products and

customers are invited by employees to try the products. As for the view, the polychrome of the Lush

store should be highlighted, characterized by the multiplicity of the colours of its products. It should

be highlighted also the furnishing that characterizes the shops, where the choice of wood for the

shelves and the counters where the different portions of the products find place prevails. Other

cosmetics are placed on exhibitors that recall the greengrocers' counters or in white refrigerators

necessary for the preservation of some products. Even the choice of music in stores is a component

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that contributes to create the particular atmosphere of Lush. Usually music is chosen characterized

by cheerful and funny rhythms, adapted also according to the time and the season. In addition to

this, the display cases are always colourful, full of products with multiple shapes. The store is also

full of blackboards, strictly black, on which you read sentences that invite the customer to interact

with the products and the Lush’s world. These boards accompany the consumer, with cheerful

phrases, along the entire path in the shop. The atmosphere of Lush stores becomes the main

communication tool thanks to which the company manages to reach its consumers even without

using advertising. By communicating personal values and of a more general nature (ethics, ecology)

and positioning itself diametrically opposite to its competitors, Lush has thus succeeded in

aggregating a universe of consumers.

Figure 26 – Interaction with customers in Lush stores

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9.1.3 Innovation of meaning

In this section, it is presented the retail innovations adopted by Lush based on the three constructs

previously presented: functional solution (how), customer experience (what) and meaning (why).

The analysis focuses on forms of innovation that are considered most representative of retail

services. The most important construct is the Why because represents the meaning behind what

the firm is doing, it is like a guide line for all that the firm wants to do. Lush reflects the meaning of

its values into the store providing customers with an immersive and memorable experience. The

store is like a lab or a workshop in which customer can touch and try the products. Salesperson

explain how to use the products and let the customers participate by asking questions and making

their hands dirty and having fun. In addition to this, the whole environment is designed to create an

immersive experience as it is colourful and scented, and it is similar to a grocery. Indeed, salesperson

wear aprons and products are placed on wood shelves with blackboard that explain the products.

Therefore, we could say that the new meaning proposed by the Lush retail is “Experiment with the

beauty”. Then, the second construct is the What and it is the experience the Lush provides to

customers, while the third construct is the How and represents the solutions that the firm is

implementing.

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Figure 40 - Solution, Experience and Meaning offered through Lush store

The meaning generated by Lush turned out to be a success as the store is attracting more and more

customers and people recognize the meaning. In fact, as the survey demonstrates, the majority of

people who have answered to the survey has recognised that the experience proposed by Lush has

the meaning of “Experiment”.

Meaning Number of answers Percentage

Sharing 1 1,27%

Experiment 46 58,22%

Sustainability 11 13,92%

Entertainment 10 12,66%

No Meaning 10 12,66%

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Other 1 1,27%

Table 17 - Lush meanings

Figure 41 - Percentage of Lush meanings

Table 13 and Figure 38 show that the 58,22% of the answers to the question 26 “The lived experience

contains a meaning similar to…” is experiment. It is clear that people recognize Lush as a store in

which they can make their hands dirty touching and trying products. This finding is in line with the

innovation of meaning generated by Lush and means that people recognise the meaning that Lush

wants to communicate. Another interesting finding is related to the fact that generally, the people

who have recognised that the Lush experience is radically different (question number 26), have

recognised experiment as meaning. In fact, as shown in Table14, the majority of people who have

answered 4 or 5 to question 26, have answered experiment to the question 28.

D 26 D 28

1 2

Experiment 1

No meaning 1

Sharing; 1,27%

Experiment; 58,22%

Sustainability; 13,92%

Entertainment; 12,66%

No Meaning; 12,66%Other; 1,27%

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2 3

Entertainment 1

No meaning 2

3 10

Entertainment 2

Experiment 4

No meaning 2

Sustainability 2

4 30

Other 1

Sharing 1

Entertainment 6

Experiment 14

No meaning 4

Sustainability 4

5 34

Entertainment 1

Experiment 27

No meaning 1

Sustainability 5

Grand Total 79

Table 18 - Correlation between questions 26 and 28

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Figure 42 – Correlation between questions 26 and 28

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Correlation between questions 26 and 28

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9.1.4 Competitors

The main competitor is The Body Shop. The Body Shop is a British cosmetics company founded in

1976 which is very similar to Lush. Indeed, they have the same ethical values: they fight animal

testing, support the fair trade, defend human rights, protect the planet and use the slogan “Enrich,

not exploit”. Even if the principles are quite the same, it does not seem if we look at the stores.

Indeed, as we can see from the images below, The Body Shop stores are tidier and more enlightened

and since they do not have the technology that allows to produce solid shampoos and creams, are

obliged to use the packaging. Therefore, customers cannot touch the products with their hands and

are not immersed into the experience. Then, another difference is the behaviour of the salesmen

who do not make the customers try the products. Even if the two firms are similar, actually Lush

was a supplier of The Body Shop, and have also similar meanings, they have different ways of

demonstrating it. Analysing the data, it seems that Lush is more successful than The Body Shop. In

fact, Lush net income is more than two times the Body Shop income even if The Body Shop has more

stores around the world. Even the interest on social media in higher for Lush.

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Figure 43 - An example of The Body Shop store

Lush is great example of how a successful innovation of meaning is implemented in a retail

environment. Lush was able to transfer to the store the values behind the company. We could

summarize the meaning of The Body Shop in this sentence: “Beauty from the nature”. It is very

similar to the meaning of Lush as they both fight animal testing and use vegan ingredients, but The

Body Shop store does not represent at all the meaning. We could say that The Body Shop was able

to radically innovate the offering, as Lush, but not to innovate the store. As figure 40 shows, The

Body Shop is different form the other cosmetic retailers such as Sephora or L’Oréal because of the

new experience that provides but the meaning of the store has not changed, while Lush has been

able to radically innovate both the experience and the meaning.

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Figure 44 - Comparison between Lush and The Body Shop

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9.1.5 Co-creation

The first results showed regards the categories of questions:

• Customers learning: questions 9-11

• Emotion – Cognition – Behaviour: questions 12-20

• Value creation – Value-in-use: questions 21-25

The first five questions refer to demographic information and the last three questions refer to

meaning, therefore have not been considered for the T-test.

Table 19 - T-test results for Lush, according to the categories of questions

The first line reports the average p-value of the questions of the different categories of questions,

that means that it has been performed the T-test on the average of answers of the questions,

category per category. While the second line refers to the average of the answers of the categories.

The p-value is below 0.05 for all the three categories, which means that there is not a statistical

difference between the group of people who have recognised the meaning and the group of people

who had not recognised the meaning of the Lush experience. The average, instead, shows how

interviewees have answered in general to the questions, category per category. Regarding

Customers learning, we can observe that the average is quite low, which means that this category

does not influence the perception of meaning and the p-value demonstrate that the two groups

have answered similarly. Instead, for Emotion – Cognition – Behaviour and Value creation – Value-

in-use, the average is above 3.5 and the p-value shows that there is a difference between the

answers of the two groups and therefore that these categories affect the perception of the meaning.

The value of the average means that there are several people who have answered with high values

and those people are the ones who have recognised the meaning.

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Now we have to understand if there are particular questions that have affected the general results

of the categories. The results of the T-test performed on the questions from 6 to 25 is showed in

the table below.

Table 20 - T-test results for Lush

If we look at the Customers learning category, we observe that questions 9 and 10 present statistical

differences between the averages of the two groups, while the averages of question 11 are similar.

Question 9 is “I remember well that I was in a Lush store” and therefore that fact there is a difference

between the two groups is due to the fact that who remember well the store it is easier that she

recognizes the meaning. Question 10 is “I remember seeing Lush's charity campaigns” refers to the

capacity of the brand to use the marketing in order to spread its image. It is how customers

remember the brand and internalize it. Question 11 is “I Follow Lush on social networks” and refers

to the same variables. For question 9 we observe also that the average is generally high, while for

questions 10 and 11 is quite low, which means that one of the two groups of interviewees has

answered with high scores, and that group is the one composed of people who have recognised the

meaning. For question 10 the two averages are different but low, therefore we cannot assume that

this element influences the perception of meaning. We can assume the same for question 11, as

there is not a statistical difference between the averages.

Focusing on Emotion – Cognition – Behaviour, we see that questions 12, 15, 16,18 and 19 affect the

perception of the meaning, as there is a difference between the averages of the groups and the

average of each question is high. These questions are the following:

• Question 12: “I look for product information before going to the store”

• Question 15: “Salespersons help me to find the products I am looking for”

• Question 16: “Salespersons offer me the most suitable products for me”

• Question 18: “In the store, I am free to search and try products”

• Question 19: “In the store, I talk with salespersons and other clients”

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For Value creation – Value-in-use category, questions 21, 22, 23, 24 influence the perception of the

meaning and are the following:

• Question 21: “I have enjoyed the experience in the store”

• Question 22: “I am always satisfied of the purchased products”

• Question 23: “The use of technological tool improves the instore experience”

• Question 24: “Every visit to the store is different from the others”

The section regarding customer segments comprises questions 6, 7 and 8 and show which kind of

customers recognises the meaning. In fact, question 6 “I like to try new products / new technologies

as they come out” identify the Innovators, question 7 “I often answer to company questionnaires by

providing opinions on products” refers to Emergent consumers and question 8 “I often exchange

product information with other customers” regards Market mavens. In the case of Lush, Market

mavens have recognised the meaning.


the averages can be considered statistically different. For each group it is presented the average

and the two ends of the intervals, the positive and the negative ends. We can see in the table below,

that there are some questions in which the two groups present confidence intervals that do not

overlap or that overlap just a bit. The table is divided in the groups of answers of the ones that have

not perceived the meaning and the of answers of the ones that have perceived the meaning. We

can observe that these questions correspond to the questions that the T-test has demonstrated that

have averages statistically different. This is another evidence.

Table 21 - Confidence intervals (Lush)

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9.2 Leroy Merlin

Leroy Merlin is a French company operating in the large-scale retail trade, specializing do-it-yourself

(DIY), construction, gardening, decoration and bathroom furniture. It has stores in Europe, Asia,

South America and Africa. Leroy Merlin was born in France in 1923 by Adolph Leroy and Rose Merlin

who opened a shop in Noeux-Les-Mines of war residues. After a journey of 53 years, which passes

through the inclusion of new collaborators and types of products more oriented to DIY, arrives in

Italy in 1996 with the opening of the first store in Solbiate Arno (VA). Today it has 48 stores

distributed throughout the country with more than 6,900 employees and a turnover of over 1.5

billion euros. Worldwide, Leroy Merlin has 456 stores in 12 countries with over 88,000 employees.

Figure 45 - The Leroy Merlin logo

Leroy Merlin is part of the Group of which Adeo is the parent company. Adeo was founded in 2007

by Adolphe Leroy et Rose Merlin. The director of Adeo, Philipp Zimmermann, defines Adeo as “ADEO

is a community of open, interconnected, human-scale companies. This is a community of 112,000

employees who create new ideas and help people all over the world to make their dream of a better

home come true. Our strength and driving force is to feel useful in everything we do - useful to

ourselves, to those around us, to others, and to the world.”

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Figure 46 - The Adeo logo

Adeo is involved in social and environmental actions in order to make positive contributions to the

world, for instance developing poor communities and assuring responsible wood sources. The Adeo

values must be respected by all the companies of the Group and are Simplicity, Proximity, Spirit of

performance, Generosity, Honesty, Consistency and Respect for others. all the ADEO companies are

autonomous and share the same desire to define themselves by human values. All their actions are

rooted in everyday values, a common ambition, experience and resource sharing.

Figure 47 - Adeo values

The companies of the Group are illustrated in Figure 30 and are present in 15 countries. The Adeo

group is specialised in DIY covers all areas of home improvement, in particular Group companies are

subdivided in the following way:

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• For private individuals:

o Leroy Merlin

o Weldom

o Brico Center

o AKI

o Kbane

o Quotatis

o tikitamoon

o light online

o decoclico

• For home life:

o Zodio

o Alice delice

• For professionals:

o BricoMan

o DomPro

o PROBOX

Figure 48 - The Adeo group around the world

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The Leroy Merlin sells tools and materials for self-home and gardening improving therefore the

target customers are people who like DIY or who have to renew their home or garden, generally

between 30 and 60 years old. Some examples of products are tiles, parquet, tools such as drills,

saws, wood cutting machines and electric tools.

Figure 49 - An example of Leroy Merlin catalogue and advertising

Since clients are more and more willing to undertake DIY projects but most of the time, they do not

have the right competences, Leroy Merlin provide clients with free courses inside the stores. The

courses are true DIY lessons about how to use the tools in order to be able to do some works at

home by themselves. Inside the stores there is a room dedicates to the lessons in which employees

explain how to do small house improvements. There are different difficulties and clients have to

subscribe because there are limited spots. Some examples of course are “Place a laminate and vinyl

floor”, “Pruning of fruit trees” and “How to save on the water, light and heating bills”. Some courses

are held outside the stores, for instance there is the category “Bricolage del cuore”, literally “DIY of

the heart”, that are volunteering experiences organised by Leroy Merlin stores in order to help the

community. They are “lessons for good” in which people learn DIY helping needy people, for

instance the Leroy Merlin located in Curno has organised to help an elderly man who needed to

secure some parts of his house. Then on the website, Leroy Merlin tell the story to the community

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and also clients have the opportunity to share DIY experiences or to ask for help. Leroy Merlin was

able to create a network of people who share the DIY passion and to put into practice the values of

the Group regarding the responsibility to the community.

Figure 50 - Examples of Leroy Merlin courses

Another great initiative is the Design Lab, that is a section of the website in which Leroy Merlyn

designers explain with short tutorials how to create original DIY objects. This is an opportunity for

clients to create design objects for the home with the satisfaction of being the builder and the

economic savings. The designers explain what the user has to do in a video and there is also a step

by step guide a list of the needed tools and the link to the online shop. Even this initiative contributes

to the creation of the community of DIYers because provides the tools to become a

designer/builder. This is possible because people do not just want to fix things at home but want to

be creative getting their hands dirty.

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Figure 51 - The Design Lab

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9.2.2 The store

Being a firm for home improvement, Leroy Merlin is a large-scale distribution retail and the stores

are really enormous. The Italian average dimension is around 6500 m2 for the indoor stores and

around 2000 m2 for the outdoor space or expositions and those numbers are smaller respect to the

European average. The internal structure of the store is similar to the large-scale distribution retails

of competitors, there are sections dedicated to home areas such as kitchen, living room, bathroom

and garden and sections dedicated to tools such as ironmongery, tiles and parquet, lighting and

décor. The only differences are the colours that remind to the Leroy Merlin logo and the rooms

dedicated to the lessons. There is no difference also between the employee’s behaviour that is equal

to that of competitors. Recently Leroy Merlin has opened a new store format that is the showroom.

The showroom allows customers to see the products in a real home environment. The showroom is

placed near the retail and which immediately allows the customer to put at his ease, in a space

where she can appreciate - through a renewed dynamic exhibition - the products already present in

the store. The experience of visiting the store starts from the Agora, the new form of relationship

between the customer and the collaborator. There is a unique collaborator who follows the client

inside the showroom from the estimate to the final payment, providing indications on everything

that can be useful: from tax deductions to the Laying Service with selected artisans, or on the

delivery of the products the customer intends to purchase. There is also the possibility of asking for

a team of professionals composed of Architects and Interior Designers, in order to receive a photo

book of their project, also supplied with matching accessories and furnishing accessories. At each

“Punto Consiglio”, and in the central area, it is positioned a “Saltacoda”, a practical system that

allows customers to book their turn, through the withdrawal of a number, to treat every request in

an orderly manner, avoiding the queue; during the waiting, the customer can have a look at the

materials in order to have his own project clearer. There is also a section of the website dedicated

to the showroom which reminds to the online shop.

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Figure 52 - A Leroy Merlin store seen from above

Figure 53 - A Leroy Merlin Showroom

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In this section, it is presented the retail innovations adopted by Leroy Merlin based on the three

constructs previously presented, as done in the Lush chapter. Leroy Merlin, being a company that

sells tools and products for DIY and having seen the more and more increasing willingness pf people

to create their own style at home, has adopted the new meaning “Express your DIY”. In order to

allow customers to be real DIYs, has understood that was necessary to transfer knowledge and skills

to them. Therefore, Leroy Merlin has realised inside the store the DIY courses that are free and short

courses with expert who help participants to understand the basis of DIY, let them realise simple

products. Another feature is the Design Lab that contribute to transfer skills to DIYs. In addition to

this, Leroy Merlin has been able to create a real community of DIYs thanks to the DIY stories on the

website and to the charitable initiatives of the DIY community organized by Leroy Merlin.

Figure 54 - Solution, Experience and Meaning offered through Leroy Merlin store

Even the meaning generated by Leroy Merlin has turned out to be a success. In fact, the Leroy Merlin

stores are attracting more and more customers and people recognize the meaning, thanks to the

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free course and to design lab. The survey demonstrates that the majority of people who have

answered to the survey has recognised that the experience proposed by Lush has the meaning of

“Experiment”.


Sharing 6 7,5%

Experiment 43 53,75%



No Meaning 13 16,25%

Other 2 2,5%

Table 22 - Leroy Merlin meanings

Figure 55 - Percentage of Leroy Merlin meanings

Sharing; 7,50%

Experiment; 53,75%Sustainability; 6,25%


No Meaning; 16,25%

Other; 2,50%

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contains a meaning similar to…” is experiment. The finding is coherent with the new meaning

generated by Leroy Merlin and demonstrates that the firm is able to communicate effectively to

customers the meaning thought the retail. Then, even for Leroy Merlin people who have recognised

that the experience is radically different (question number 60), have recognised experiment as

meaning. In fact, as shown in Table 22, the majority of people who have answered 4 or 5 to question

60, have answered experiment to the question 62.

D 60 D 62 1 5

Experiment 1 No meaning 3 Sustainability 1

2 5 Other 1 Experiment 3 Sustainability 1

3 27 Sharing 1 Entertainment 5 Experiment 11 No meaning 8 Sustainability 2

4 38 Other 1 Sharing 5 Entertainment 5 Experiment 24 No meaning 2 Sustainability 1

5 8 Entertainment 1 Experiment 6 No meaning 1

Grand Total 83


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Figure 56 - Correlation between questions 60 and 62

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9.2.4 Competitors

One of the major competitors of Leroy Merlin is OBI. OBI is a German multinational home

improvement supplies retailing company. Founded in 1970, Obi is the largest DIY retailer in Europe,

and the third largest in the world, behind The Home Depot and Lowe's. It belongs to the Tengelmann

Group.

Figure 57 - An OBI store

OBI and Leroy Merlin sell the same typology of products and the meaning is quite the same. The

difference is that OBI has not been able to create the community of DIYers. OBI does not use its

stores to communicate the meaning, their stores are similar to the other competitor stores, while

Leroy Merlin provides customers with free courses and a website that answers to all the needs of

the DIYers community. We can say that OBI’s meaning is “Be a DIYer” as it offers products for DIY

and does not offer a radical experience to customers. The store is similar to the other competitors’

stores. The differences in solution, experience and meaning are summarized in the figure below.

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Figure 58 - Comparison between Leroy Merlin and OBI

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9.2.5 Co-creation





As for Lush, the first five questions refer to demographic information and the last three questions

refer to meaning, therefore have not been considered for the T-test.

Table 24 - T-test results for Leroy Merlin, according to the categories of questions

The p-value is higher than 0.05 for all the first two categories, while is lower for the third category.

The average, instead, shows how interviewees have answered in general to the questions, category

per category. Regarding Customers learning, we can observe that the average is quite low. Instead,

for Emotion – Cognition – Behaviour and Value creation – Value-in-use, the average is above 3. The

value of the average means that there are several people who have answered with high values and

those people are the ones who have recognised the meaning.

Table 25 - T-test results for Leroy Merlin

Looking at the Customers learning category, we observe that al the three questions do not present

statistical differences between the averages of the two groups. The questions are the same of the

Lush case study, with the exception of the question 43 that refers to advertising campaigns and not

to charity campaigns. The averages indicate that questions 43 and 44 have a low score, while the

average of question 42 is quite high. For Emotion – Cognition – Behaviour, only question 51, which

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is “In the store, I am free to search and try products” present differences in the averages while there

are some questions that have a high average but is high in general, with no difference between the

two groups. Instead, Value creation – Value-in-use have two question that affect the perception of

the meanings, that are question 54 “I have enjoyed the experience in the store” and question 55 “I

am always satisfied of the purchased products”. Regarding the Customer segments, as for Lush,

Market mavens have recognised the meaning.


the averages can be considered statistically different. We can observe that almost all of these

questions correspond to the questions that the T-test has demonstrated that have averages

statistically different.

Table 26 - Confidence intervals (Leroy Merlin)

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9.3 Adidas Runbase

Adidas Runbase is the base for the Adidas runners community and is located in the major city of the

world such as Dubai, New York, London, Sydney, Tokyo or Milan. It is an idea coming from Adidas,

that is a multinational corporation, founded and headquartered in Germany, that designs and

manufactures shoes, clothing and accessories. It is the largest sportswear manufacturer in Europe,

and the second largest in the world, after Nike. It is the holding company for the Adidas Group,

which consists of the Reebok sportswear company, TaylorMade golf company (including Ashworth),

Runtastic, an Austrian fitness technology company and 8.33% of German football club Bayern

Munich. The company was started by Adolf Dassler in his mother's house; he was joined by his elder

brother Rudolf in 1924 under the name Dassler Brothers Shoe Factory. Adolf took care of making

the shoes material while Rudolf took care of the distribution and the managerial part. The company

immediately achieved great success and gained international prominence as early as the 1936

Olympic Games, involving the runner Jesse Owens. In 1949, following a breakdown in the

relationship between the brothers, Adolf created Adidas, and Rudolf established Puma, which

became Adidas' business rival. Adidas' logo is three stripes, which is used on the company's clothing

and shoe designs as a marketing aid. The branding, which Adidas bought in 1952 from Finnish sports

company Karhu Sports, became so successful that Dassler described Adidas as "The three stripes

company". The brand name is uncapitalized and is stylized with a lower case "a".

Figure 59 - The Adidas Runners logo

Nowadays Adidas is the supplier of soccer balls used in the World Cup, in the European football

league, in the UEFA Champions League and in the Europa League, in the Africa Cup and in various

football competitions. It is also the technical sponsor of several football clubs in the world and of

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some football national teams. Even if several famous football players sponsor the brand Adidas,

Adidas does not only offer football products, but offers footwear, clothing and accessories for the

following sports: taekwondo, athletics, soccer, running, tennis, basketball, golf, field hockey, cricket,

lacrosse, rugby, gymnastics, skateboarding, karate, judo and motoring, fencing. Recently, these

products have also been joined by the offer of sports accessories and other products such as

perfumes, sports glasses, watches. It has also become a status for different rap lovers, as some

famous rappers and hip-hop bands have started to wear Adidas sneakers and clothes. Regarding

the running, Adidas is also the sponsor of some city marathons such as the Boston Marathon.

Adidas strategy is called Creating the new and aims to translates that competence in sports into

streetwear and fashion because sport is an attitude and a lifestyle. It is built around three strategic

choices:

• Speed – How we deliver: the aim is to provide customers with fresh and desirable products

where and when they want them in order to become the first true fast sports company.

• Cities – Where we deliver: Adidas bets on big cities as most of the global population lives in

cities and cities are shaping global trends and consumers’ perception, perspectives and

buying decisions. They have identified six key cities where to over-proportionally grow share

of mind, share of market and share of trend: London, Los Angeles, New York, Paris, Shanghai

and Tokyo.

• Open Source – How we create: Adidas open the doors to athletes, consumers and partners

to co-create the future of sport and sports culture in order to be innovative, collaborating,

learning and sharing together.

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Figure 60 - Adidas strategy

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Adidas sells sporty clothes and accessorises, but Adidas Runbase is not a point of sale. Adidas

Runbase is a meeting point for the urban runners’ community, in which they have the possibility to

use the place as a locker room with showers. In addition to this, there are planned trainings with

expert trainers, for every day of the week, so that is a customer wants to go to Runbase, she knows

that there is always someone else there. The interesting fact is that the experience takes place both

inside and outside the store. It is an interesting way to use a store, because it is not a sales point.

Customers do not buy anything in the store, they just use a service and live an experience.

Sometimes it happens that customers do not enter the store and live the experience outside using

the store as a meeting point. It is for sure an innovative concept.

Another interesting feature it is the possibility to test Adidas shoes for free so that customers can

try them before buying. As the Milano Runbase manager said, “In this way, we prepare runners for

the purchasing”. Indeed, after five runs it is required an Adidas running purchase and after 20 runs

a complete running outfit. With the first purchase, customers receive the Adidas Runners t-shirt.

This is to make sure that clients wear Adidas clothes, to increase the sensation of community.

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Figure 61 - The Adidas Runners t-shirt

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9.3.2 The store

Adidas has been able to create a great community of runners giving them a base that is for runners

a sort of home away from home. Adidas Runbase was born from the need of runners of being part

of a community that shares the same interest: the run. The number of runners is increasing every

year and it has been a real boom after the economic crisis. Indeed, being a runner is cheap because

you only need a good pair of shoes and everybody is able to run, there is no need to do courses to

learn to run. No other sport requires such a basic and economical level of equipment. Before the

creation of Adidas Runbase, there were already several runners in the major cities of the world, but

Adidas Runbase was able to exploit the opportunity. They have transformed the traditional store in

a locker room in order to allow runners to have a place where to meet and to start to run together.

In an Adidas Runbase there is a space dedicated to the exposition of new Adidas products for

runners, a locker room and a place to train. Adidas Runbase organise events for every day of the

week, generally with limited spots, in which people have to subscribe and then the there are some

trainers that guide the runners during the training. Runners can test the new products and

participate to indoor or outdoor trainings and runs with the help of expert trainers. Everything for

free. The Adidas Runbase are located in the city centre so that it is easy to reach them, and people

can go there before or after work. Several people work or study in the city centre, therefore having

a locker room with showers reachable in few minutes is a good opportunity. In addition to this, big

cities in the centre have several pedestrian areas, therefore it is safe to run and runners do not have

to worry for the traffic.

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Figure 62 - The entrance of an Adidas Runbase with the new Adidas products that clients can test

Figure 63 - Adidas Runbase

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Generally, Adidas runners are people who live in big cities as it is easier to get access to Adidas

Runbase and to the community. A study conducted by Brooks shows that the average age for men

is 43 and 39 for women. 8 out of 10 practice it regularly 12 months a year, between 3 and 4 times a

week, with no fear of winter ice or 35 degrees of August. They run to get fit (77%), to stay healthy

(76%) and to have fun (61%). The most frequented races are half marathons (75%), more than 5 km

(55%) and 10 km (54%). But almost one in two runners (47%) completed at least one marathon. In

Italy there are more or less 6 millions of runners. It is a great community that stay in touch also on

social network. Every Adidas Runbase is on Facebook and on Instagram and people continuously

share their training, results and entertainment in running together. What Adidas has created is not

only a sport club, but a place to meet other people with the same interests. It is the weakly

appointment they wait for, where clients meet other clients to run with and not to compete against

and it has become so popular among runners that when they visit a new city, they go the Adidas

Runbase. This sense of community is shared also by the Group. Indeed, the initiative Gameplan A

created by Adidas, is an online platform where people can share their stories and tell the people

how the sporty attitude helps to be a playmaker and not a spectator. The stories inspire people to

begin the life they want to live.

Figure 64 - Adidas Runners community

It must be also noticed that the design of the store reflects the urban spirit of runners. Stores are

modern, designed with an urban style in which the main materials are metal and wood and the main

colours are grey and yellow that lights the environment providing a creative spirit.

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In this section, it is presented the retail innovations adopted by Adidas Runbase based on the three

constructs previously presented. The strength of Adidas Runbase is feeling of community. Indeed,

it is not a point of sales but a meeting point for runners. In addition to this, for the Adidas runners

the group is very important. They do everything together, not only the trainings. For instance, where

there is a marathon, they train together with the same goal to reach and the day of the run they

meet at Adidas Runbase and eat the breakfast together, then run together wearing the Adidas

runners t-shirt and party together after the run and at the finish line there is always someone that

wait for the Adidas runners. All these features strengthen the feeling of community. The new

meaning of the store is radical and could be expressed by this sentence “Be part of the community

of urban running lovers”. In fact, what is radical is the fact that the experience is outside the store

and is free. In this way Adidas changed completely the meaning of a store that is not anymore a

place where to sell products. It is also fundamental that there is a daily and fixed programming of

the trainings in order to give to runners the feeling of being part of a family. The fact that runners

do everything in group, help them to reach the goal. Indeed, as the Milano Runbase manager has

said “Achieving the goal you have set for the race because it gives you satisfaction. Understand that

you have managed to achieve a goal thanks to the efforts you have made and thanks to the support

of the community. But also, the satisfaction of completing the workouts. I hear so many customers

saying "If I had done this training alone, I would never have done it".” Then, the free runs attract a

wider range of customers as they do not have to pay for using the service. All those characteristics

transmit the positive values of sport, such as the fair play that normally is not associated to the run.

In fact, as the Milano Runbase manager has said “Beyond the running itself, the primary purpose is

to transmit positive values of sport such as fair play, a value that normally people do not associate

with running. Running together highlights this value.”

All these concepts are summarized in the figure below.

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Figure 65 - Solution, Experience and Meaning offered through adidas Runbase store

Even the meaning generated by Leroy Merlin has turned out to be a success. In fact, the Leroy Merlin

stores are attracting more and more customers and people recognize the meaning, thanks to the

free course and to design lab. The survey demonstrates that the majority of people who have

answered to the survey has recognised that the experience proposed by Lush has the meaning of

“Experiment”.


Sharing 40 54,05%

Experiment 6 8,11%


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No Meaning 3 4,05%

Other 1 1,35%

Table 27 - Adidas Runbase meanings

Figure 66 - Percentage of Adidas Runbase meanings


contains a meaning similar to…” is sharing. People recognize the importance of the community of

Adidas runners and recognise that Adidas Runbase is the place that allows them to meet and be

part of the community sharing everything together. Then, even for Adidas Runbase people who

have recognised that the experience is radically different (question number 31), have recognised

sharing as meaning. In fact, as shown in Table 27, the majority of people who have answered 4 or 5

to question 31, have answered experiment to the question 33.

Sharing; 54,05%

Experiment; 8,11%

Sustainability; 5,41%


No Meaning; 4,05% Other; 1,35%

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D 31 D 33

1 1 Sharing 1

2 2 Entertainment 1 Sustainability 1

3 5 Entertainment 4 Sustainability 1

4 26 Sharing 9 Entertainment 8 Experiment 5 No meaning 2 Sustainability 2

5 43 Other (fair play) 1 Sharing 33 Entertainment 7 Experiment 1 No meaning 1

Grand Total 77



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9.3.4 Competitors

The main competitor of Adidas is Nike. Nike is an American multinational corporation that is

engaged in the design, development, manufacturing, and worldwide marketing and sales of

footwear, apparel, equipment, accessories, and services. It is the world's largest supplier of athletic

shoes and apparel and a major manufacturer of sports equipment. As of 2012, it employed more

than 44,000 people worldwide. In 2014 the brand alone was valued at $19 billion, making it the

most valuable brand among sports businesses. Nowadays it does not sell only technical sporty

products but also more urban sporty clothes. Nike has caught the running boom and has tried to

give an answer, offering an app for runners and organizing events. Nike has developed the app Nike+

Run Club for iOS devices that is the ideal partner for a runner. The app is designed to assist users

before, during and after the run. The app stores the workouts, offering a program tailored to the

users’ level and goals, and with Apple Watch she can monitor in detail the performances. There is

also the possibility to compete with friends and with other users thanks to the rankings and the

ability to share the results with the runners community. Then, with the Nike + Run Club playlist, the

best athletes will encourage other users.

Figure 68 - Some screenshots of the app Nike+ Run Club

Nike has been able to see the opportunity of creating a new service for runners but has not caught

the new meaning. Instead of understanding the importance of the community, Nike has continued

to see the running as a solitary sport. We can summarize the meaning proposed by Nike in this

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sentence: “The ideal partner for your runs”. Indeed, the Nike app is the partner for the runner who

runs alone. Then, Nike does not have a place in which runners can meet and change their clothes

like Adidas Runbase. Another feature that is successful for Adidas Runbase, but that is not

implemented by Nike is the daily programming of trainings. All the solutions implemented by Nike

are built around the concept that running is not for a community, that is actually the strength of

Adidas Runbase. Indeed, even the daily trainings hep to maintain the community united.

Figure 69 - Comparison between Adidas Runbase and Nike+ Run Club

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9.3.5 Co-creation





As for the other case studies, the first five questions refer to demographic information and the last

three questions refer to meaning, therefore have not been considered for the T-test.

Table 29 - T-test results for Adidas Runbase, according to the categories of questions

Customers learning and Emotion – Cognition – Behaviour categories have a p-values higher than

0.05, while Value creation – Value-in-use lower than 0.05. The averages are similar, only Value

creation – Value-in-use average is a bit higher.

Table 30 - T-test results for Adidas Runbase

Looking at Customers learning, only question 9 “I remember well that I was in an Adidas Runbase

store” affects the perception of the meaning. For Emotion – Cognition – Behaviour only question 20

has a p-value lower than 0.05 but the average is around 2 and therefore cannot be considered a

variable that impacts the perception of the meaning. Instead, if we look at Value creation – Value-

in-use, we see that questions 23, 24, 28 and 29 have an effect on the perception of the meanings.

The questions are the following:

• Question 23: “I enjoy being part of the Adidas Runners community”

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• Question 24: “I participate to the runs in order to be part of the Adidas Runners community”

• Question 28: “Inside the store, I am free to test the new Adidas products”


Regarding Customers’ segments, question 6 “I like to try new products / new technologies as they

come out” that identifies the Innovators, has a p-value higher than 0.05, which means that

Innovators perceive the new meaning in the retail.


the averages can be considered statistically different. We can observe that, as for the other cases,

almost all of these questions correspond to the questions that the T-test has demonstrated that

have averages statistically different.

Table 31 - Confidence intervals (Adidas Runbase)

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9.4 La Feltrinelli RED

La Feltrinelli RED is the bistro created by the Italian publishing company La Feltrinelli. RED is the

acronym of Read, Eat, Dream because it is a bookshop in which customers can find books and music

albums, eat the Italian cuisine and participate to events such as live music, aperitifs speaking a

foreign language and literary meetings. It is a place where to discover quality foods and books,

where to spend time between events, workshops for children and many other occasions to meet

and socialize. Nowadays, there are five RED in Milan, one in Rome, one in Florence and one in

Verona.

Figure 70 - The La Feltrinelli RED logo

The publishing company was born at the end of 1954 in Milan. Giangiacomo Feltrinelli is its founder,

who in 1949 had given life to the "G. Feltrinelli Library" for the study of contemporary history and

social movements, first transformed into an institute and subsequently into the Giangiacomo

Feltrinelli Foundation. In 2005 the Holding Effe 2005 was founded, which reports under its wing

both the publishing company and the Feltrinelli bookcases. The first result of this new structure is

the La Feltrinelli.it online store. In 2008 the Feltrinelli Group acquired the majority of PDE

(Promozione Distribuzione Publishing), which with its 5,000 points of sale is the second Italian

distribution company. In 2014 Messaggerie and the Feltrinelli Group created a joint venture,

creating a distribution hub of 70 million books a year. In January 2017 it enters with a 37.5% stake

in the SEM (Società Editoriale Milanese) founded a few months earlier by the former head of

Mondadori Libri, Riccardo Cavallero. In October 2017 it acquired 40% of the Marsilio publishing

house with the commitment to reach 55% after two years. With 124 stores in 58 cities, La Feltrinelli

is one of the leading Italian chains of bookstores and music stores

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Figure 71 - Read, Eat, Dream

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La Feltrinelli RED, as the other stores of La Feltrinelli, sells books and music albums. It is not specific

for a typology of books or music and therefore the clients’ range is wide. There are books for

everyone, from kids to adults, and music from everyone, selling not only CDs but also vinyl. It is

difficult to identify a specific customers segment, it does not depend on the age and on the gender.

We could say that La Feltrinelli attract people interested in culture. In particular, La Feltrinelli RED

attracts customers who are interested also to have fun in a cultural environment.

Figure 72 - La Feltrinelli RED

Since La Feltrinelli is also a publishing house, one of the products offered is the books series, that

are collections of books published by Feltrinelli Editore with similar characteristics. On example is

FOX CRIME/Feltrinelli, that collects mysteries books. Then, La Feltrinelli library is not the only service

offered by La Feltrinelli, there are different points of sales that are divided into different types,

based on products sold and location:

• La Feltrinelli librerie, the most traditional Feltrinelli store, the first of which opened in Pisa in

1957 (32 bookshops)

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• La Feltrinelli Libri and Musica, in which the book offer is supplemented by discs, DVDs and video

games, with 30 stores

• La Feltrinelli Village, 27 bookcases located inside shopping centres

• La Feltrinelli Express, 11 points of sale located inside stations and airports

• La Feltrinelli RED, the modern bistro

• La Feltrinelli Point, a franchise of 15 bookshops open in small and medium-sized cities

In addition to this, on 11 May 2013 the television channel La EFFE was launched, with the

collaboration of the publishing group L'Espresso, on channel 50 of digital terrestrial and on channel

139 of Sky. In 2012, the Feltrinelli Group entered with a 49.8% stake in the share capital of the Scuola

Holden, the writing and storytelling school founded by Alessandro Baricco in 1994.

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9.4.2 The store

Regarding RED, it is interesting how the store has been designed. The customers live a unique

experience for each of the three parts Read, Eat and Dream. The stores are furnished with a modern

style and generally are 350-400 m2 large with around 80 seats and more than 10000 books. The

client, when enters the store, has the perception of being at home as the atmosphere is cosy and

there is an open kitchen. The books welcome and surround the audience in the main hall. There is

also a department of literature in foreign languages, an offer designed for the large tourist crowd

that crowds the neighbourhood every day. A room is reserved for the "Kidz" department, while

there are spaces dedicated to art, contemporary architecture and comics. Then, there is a collection

of vinyl and gifts. The restaurant/café part is interesting too. The menu is packaged like a real book

to browse for an inspiration. Index, chapters and texts tell about dishes, cocktails and desserts.

Stories become suggestions for culinary combinations, or the direct source of recipes. In the list,

each dish is accompanied by a literary quote or by the indication of the novel from which it is taken.

Some examples: the maccheroni with Sicilian ragù are directly inspired by the "Gattopardo" of

Giuseppe Tomasi di Lampedusa; the vegan burger recipe is instead a tribute to "Eating animals" -

the environmental essay by Jonathan Safran Foer, while the black bread with butter and anchovies

wants to recall the pages of Elena Ferrante's "L’amica geniale". The cocoa cake with a melting heart

cannot fail to have a phrase from Roald Dahl's " Charlie and the Chocolate Factory ". And no one

better than Charles Bukowski can talk about wines and drinks.

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Figure 73 - An example of La Feltrinelli RED

In addition to this, RED organizes events such as aperitives in a foreign language, presentations of

new books or CDs and live music. It is a modern bistro in which customers can sit and read a book

or eat and participate to events.

189

Figure 74 - The RED in Milan in Isola

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In this section, it is presented the retail innovations adopted by La Feltrinelli RED based on the three

constructs previously presented, as done in the for the other cases. La Feltrinelli RED proposes a

new format of library that not only give the possibility to customers to buy books, but also to spend

time there to read books, to participate to books or music album presentations, to listen to live

music, to eat excellent food from the Italian tradition or to do aperitives in a foreign language. All

these offerings give the possibility to customers to live the library in a different way. In fact, the new

meaning behind this experience is “Bistro for investing time in culture”.

Figure 75 - Solution, Experience and Meaning offered through La Feltrinelli RED store

The meaning generated by La Feltrinelli RED turned out to be a success as the store is attracting

more and more customers and people recognize the meaning. In fact, as the survey demonstrates,

the majority of people who have answered to the survey has recognised that the experience

proposed by La Feltrinelli RED has the meaning of “Entertainment”.

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Sharing 21 26,25%

Experiment 9 11,25%

Sustainability 4 5%


No Meaning 8 10%

Other 0 0%

Table 32 - La Feltrinelli RED meanings

Figure 76 - Percentage of La Feltrinelli RED meanings

The table and figure above show that the 47,5% of the answers to the question 56 “The lived

experience contains a meaning similar to…” is entertainment. It is clear that people recognize La

Feltrinelli RED as a place in which having fun and not only where to buy books. The fun is related to

the culture as all the planned events are related to culture. This is an interesting finding because it

is not obvious that people see a library as a place where having fun. Even for RED people who have

Sharing; 26,25%

Experiment; 11,25%

Sustainability; 5%


No Meaning; 10% Other; 0%

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recognised that the RED experience is radically different (question number 54), have recognised

entertainment as meaning. In fact, as shown in Table 32, the majority of people who have answered

4 or 5 to question 54, have answered Entertainment to the question 56.

Q 54 Q 56

2 9 Sharing 3

Entertainment 3

No meaning 3

3 15 Sharing 2

Entertainment 7

No meaning 3

Sustainability 3

4 48 Sharing 14 Entertainment 25

Experiment 6 No meaning 2

Sustainability 1

5 8 Sharing 1 Entertainment 6 No meaning 1

Grand Total 80


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9.4.4 Competitors

The main competitor of La Feltrinellli RED is Mondadori, in particular the Mondadori Megastore, a

retail owned by the Arnoldo Mondadori Editore company. The Arnoldo Mondadori Editore, better

known as Mondadori, is the largest Italian publishing house, based in Segrate (MI). it has been

founded in 1907 by Arnoldo Mondadori and is currently controlled by the Fininvest Group.

Mondadori publishes books and newspapers (also in the digital format) in Italy and all over the

world, has an extensive chain of stores, also with the franchising formula, has an advertising

concession in a joint venture with Publitalia 80 and holds 20% of Monradio srl, a company that

produces Radio 101. It is also listed on the Milan Stock Exchange in the FTSE Italy Small Cap and FTSE

Italia STAR indexes. The company's mission is to encourage the dissemination of culture and ideas,

through products, activities and services aimed at satisfying the needs and tastes of the broadest

possible range of people, bringing together a love of culture and editorial quality with a capacity to

identify and anticipate changes in the world of media and communications.

Figure 78 - The Mondadori Megastore in Milan

Mondadori is very similar to La Feltrinelli, it sells the same typology of products and the customers’

segment is the same. Mondadori Megastore has even a bar in order to allow customers to take a

break or to socialise with other customers. However, Mondadori Megastore does not organise

events and this is not the only difference between them. Another difference is the meaning. In fact,

even if the two meanings are similar, La Feltrinelli RED has been able to implement the meaning

effectively in the retail, while Mondadori Megastore is not. We could say that the meaning of

Mondadori Megastore is “Reading and entertainment”, but is transferred to the retail only through

the bar service, the rest is equal to the other competitors such as Giunti library. Adding a bar or a

196

cafeteria to the other services is not a radical improvement of the experience, while the concept

developed by La Feltrinelli RED has been implemented in a way that the experience proposed

underlines the new meaning generated (Figure 77).

Figure 79 - Comparison between La Feltrinelli RED and Mondadori Megastore

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9.4.5 Co-creation





As for the other case studies, the first five questions refer to demographic information and the last

three questions refer to meaning, therefore have not been considered for the T-test.

Table 34 - T-test results for La Feltrinelli RED, according to the categories of questions

Customers learning category has a p-values higher than 0.05, while Emotion – Cognition – Behaviour

and Value creation – Value-in-use lower than 0.05. The average of Customers learning is low, while

the other two average are quite the same.

Table 35 - T-test results for La Feltrinelli RED

Looking at Customers learning, it is interesting to see that none of the questions has a p-value lower

than 0.05, therefore none of those variables affect the perception of the meaning. For Emotion –

Cognition – Behaviour, questions 40, 43 and 46 have an impact on the perception of the meaning.

• Question 40: “I look for product information before going to the store”

• Question 43: “Salespersons help me to find the products I am looking for”

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Instead, if we look at Value creation – Value-in-use, we see that the questions that have an impact

on the perception of the meaning are the following:

• Question 47: “I am free to talk with other customers during the events organised by RED”

• Question 48: “I have enjoyed the experience in the store”

• Question 50: “The use of technological tool improves the instore experience”


Regarding the Customer segments, as for Lush, Market mavens have recognised the meaning.


the averages can be considered statistically different. We can observe that, as for the other cases,

almost all of these questions correspond to the questions that the T-test has demonstrated that

have averages statistically different.

Table 36 - Confidence intervals (La Feltrinelli RED)

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10 Discussion

If we analyse the results, we see that for Lush, Leroy Merlin and La Feltrinelli RED, Market Mavens

are the customer segment who in majority has recognised the meaning of the experience, while for

Adidas Runbase, Innovators have recognised the meaning in majority. This is an interesting finding

and demonstrates that the meaning of the Adidas Runbase experience is perceived by more

innovative customers who generally are the first ones to try new things. After this finding we can

proceed to see what are the categories that enable the perception of the meaning and in particular

what are the variables, for each case study.

Customer learning enables the perception of the meaning of the retail experience for Lush and

Adidas Runbase and in particular the variable that influence this finding is the fact of remembering

previous experience in the store, while advertising does not play a critical role. For Leroy Merlin and

La Feltrinelli RED, Customer learning is not critical to perception of the meaning. The explanation

could be that these are store which customers visit with a lower frequency respect to Lush and

Adidas Runbase that sell products that people buy often. Emotion – Cognition – Behaviour, that

refers to the Relationship Experience, enables the perception of the meaning for Lush, Leroy Merlin

and La Feltrinelli RED. It means that for these cases, the interaction between customers and

personnel influences the perception of the meaning, while for Adidas Runbase does not happen.

This is because these retails have a great interaction. In fact, in Lush stores the salespersons engage

customers and let them try the products explain how to use them, in Leroy Merlin there are experts

who teach the basis of the DIY and in La Feltrinelli RED there are events such as aperitives in a foreign

language in which customers are invited to talk with other customers. For Adidas Runbase instead

it is different because the sense of community goes beyond the experience in the store or outside

during the runs. There are evidences of these findings: the variables of Lush and La Feltrinelli RED

that affect the perception of the meaning are the search of information before going to the store,

the interaction inside the store with personnel and other customers and the freedom to search and

touch products. For Leroy Merlin is the freedom to search and touch products.

Value creation – Value-in-use enables the perception of the meaning for all the four case studies. In

particular, the variables that allow this are, for Lush, the liking of the experience, the satisfaction of

the purchasing, the use of technology and the fact that evert visit is different from the others. For

200

Leroy Merlin, the liking of the experience and the satisfaction of the purchasing. For Adidas Runbase,

the sense of community, the freedom to test the new products and the fact that evert visit is

different from the others. While for La Feltrinelli RED, the liking of the experience, the use of

technology and the freedom to talk with other clients. This finding is important as highlights the

critical role of the encounter during the experience, that is the place in which co-creation happens.

Even for Adidas Runbase we can consider the store as the place where co-creation happens because

the experience starts and ends at the store. Therefore, there are evidences that co-creation in a

retail help to perceive the meaning generated by the firm. All these considerations are summarised

in the constructs below.

We see that for Lush all the three categories, Customer Learning, Relationship Experience and

Encounter Process, enable the perception of the meaning, which means that the co-creation

components that regard the customers of the co-creation framework proposed by Payne, Storbacka

and Frow (2008) have a role in the perception of the meaning generated by the firm and

implemented in the retail. Therefore, there is a link between co-creation and innovation of meaning.

In particular, we could say that the potential value provided by the firm (FP 7a revisited) is embed

in the meaning of the experience and the firm by interacting with customers have the possibility to

influence the customers’ value creation (FP 7b revisited). In fact, the customer is the value creator

(FP6 revisited) as is the one that perceive the meaning by using the service.

Figure 80 - Lush construct

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For Leroy Merlin, only the Relationship Experience and the Encounter Process enable the perception

of the meaning. Customer learning is not a differentiator for the perception of the meaning of the

experience. An explanation could be that Leroy Merlin is a store in which people do not go often,

but only when they need something for their house. The only reason to go more there often is for

the DIY free courses. Therefore, customers maybe do not follow the Leroy Merlin brand as much as

they follow other favourite brands. Despite this, customers have built strong relationships with the

personnel, which allows to have a direct interaction with them. Indeed, it is the fact that they can

build products and use tools inside the store that creates the value.

For Adidas Runbase, Customer Learning and the Encounter Process enable the perception of the

meaning and Relationship Experience does not enable it. The influence of Customer Learning is

probably due to the recognition that the experience is radically different from the ones offered by

competitors. In fact, Nike does not have a store dedicated to runners and does not sponsor the

sense of community among runners. The Encounter is the place and the moment of the interaction

and for Adidas Runbase is fundamental to create the sense of community, and this is the reason

why the Encounter influences the perception of the meaning. Instead, Relationship Experience is

not something that affects the perception of the meaning. The reason is the fact that the majority

of the interviewees has answered that search information before going to the store and inside the

store talk with the personnel and with other clients. Therefore, this category is not something that

makes the difference in the perception n of the meaning. Another consideration should be made

about the customers segment who this service is designed for. Indeed, the majority of people who

Figure 81 - Leroy Merlin construct

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have recognized the meaning is an Innovator and not a Market Maven as for the other case studies.

Innovators are different from Market Maven as they are the first to do something innovative and to

recognize the innovativeness of an experience. Therefore, they have a different way to behave.

For La Feltrinelli RED, Relationship Experience and the Encounter Process enable the perception of

the meaning, Customer Learning does not. It is equal to Leroy Merlin case and therefore the

explanation is the same. It could be that La Feltrinelli RED is a store in which people do not go often,

but only when they need a book or when want to spend some time in a cultural environment.

Therefore, customers maybe do not follow La Feltrinelli RED brand as much as they follow other

favourite brands. Despite this, customers have built strong relationships with the personnel, which

allows to have a direct interaction with them. Indeed, customers look for information before

entering the store and also ask for help to the salespersons and have a certain degree of freedom

inside the store. The behaviours reflect unconscious processes that stem from the experience that

they feel.

Figure 82 - Adidas Runbase construct

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Therefore, it has been demonstrated that co-creation enables the perception of the meaning

implemented into a retail experience by a firm and that in particular the co-creation components

Customer Learning, Relationship Experience and Encounter Process enable the perception of the

meaning. There are some differences due to the diversity of the cases studies, but the Encounter

Process is the only one category that enables the perception of the new meaning in all the case

studies. This finding answers to the research question and confirms that the Encounter Process is

the place and moment in which co-creation happens and in addition to this, this kind of co-creation

due to direct interaction with salespersons contributes to highlight the meaning implemented into

the retail solution and make easier for customers to perceive it. Therefore, interaction in the

encounter makes easier for customers to perceive the meaning that has been generated by the firm

and that has been transferred to a retail solution.

Figure 83 - La Feltrinelli RED construct

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the radically different experience and the recognition of the meaning of the experience. This is the

confirmation of the already demonstrated fact that the innovation of meaning is a radical

innovation. In fact, according to the innovation strategies framework proposed by Verganti (2008),

the generation of new meanings is a radical innovation. Therefore, the finding is in line with the

literature in design driven innovation.

Figure 85 - Innovation strategies (Verganti 2008)

Figure 84 - How co-creation enables the perception of the new meaning

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11 Conclusion

The results of the study have led to some key points. First the consideration that co-creation and

innovation of meaning are not two separated entities but have a correlation. This correlation is given

by the fact that the customers perceive the meaning that’s has been generated by the firm and

implemented into a retail solution, thanks to co-creation. In fact, the results of the surveys have

highlighted in each of the four cases, that the interaction given by the encounter process, for

instance participation into the personalization of the product or moment of running together with

the community of runners, enable customers to perceive the innovation of meaning. Therefore, we

can link the co-creation with the innovation of meaning frameworks, as the supplier process

generates the meaning that is then transformed into a retail solution and then perceived by

customers thanks to the encounter process.

This study has a particular importance for the literature that has never addressed the topic before

and for practitioners who can gain several advantages. The hope is that this study will be a point of

start for future researchers. There are already several research on co-creation and design driven

innovation. Indeed, the growing attention to design driven innovation has contributed to improve

the research and to create awareness around a topic that has been underestimated for years, the

design as a process and not as the aesthetics of a product, and the more and more in-depth research

on co-creation has enabled firms to create better and meaningful experiences. There is still the need

of continuing the research, and this thesis could be a great start.

In the following sections, are presented the theoretical and managerial implications, the limitation

of the study and some suggestion for possible further researches.

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11.1 Theoretical implications

This study contributes to the co-creation and innovation literature in the sense that opens a

direction for further researches. The impact of co-creation in an innovation of meaning experience

has not been studied until now as it was always thought that they were two separate entities, rather,

it has even always been thought that they were in contrast. Indeed, innovation of meaning comes

from us as individuals and do not involve customers during the generation of the new meaning. This

is because is based on the assumption that the market is not given a priori but is the result of an

interaction between consumers and firms: needs are co-created (Verganti 2008). It is different from

user centred innovation that wants to understand the needs of the users and provided them with

the best solution that answers their needs. Innovation of meaning comes from inside, but at a

certain point of the process, there is the contact with customers, it is unavoidable. When the

solution is offered to customers, there is the contact with them. While, co-creation is based on the

involvement of customers. In fact, co-created value derives from the value-in-use, which is none

other than the personalized unique experience of the customers, and from the relationships that

the firm has with its customers, which provide the firm with organizational learning, and the

customers with new valuable experiences. Therefore, co-creation happens if at a certain point of

the use of the service proposition, customers participate to the experience and personalize it.

Apparently, it seems that innovation of meaning and co-creation cannot have something in

common, rather, they look like two opposite. But, we have already seen that there are examples of

retailers that use co-creation inside the store to help customers to perceive the meaning of the

experience and this has been confirmed by this study. This thesis wants to contribute to possibility

of investigating on the use of co-creation to make the store experience reflect the meaning

generated by the firm and therefore has tried to demonstrate that there is a possible correlation

between the two topics. For sure this is not an end but a starting point for further researches.

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11.2 Managerial implications

In addition to the theoretical implication, this thesis contributes also to the practice. In fact, there

are several implications for retailers as the proposed framework can help firms to design innovative

retail solutions. The findings suggest using co-creation to highlight the meaning of the in-store

experience. Generating innovative shopping experiences results in many positive outcomes, but

also has the effect of ‘‘raising the bar’’ in the customer’s mind regarding the future performance of

the retailer. The key to successfully deploying delight-producing strategies lies in the selective use

of such approaches. A way to accomplish this is by empowering salespersons to interact in the best

way with customers. For instance, in Lush stores all the salespersons behave in the same way, they

involve customers in some products’ tests explaining them how to use those products. The

behaviour of the personnel reflects the meaning of the experience like the design of the store. The

factors related to direct interaction that happen in the encounter process identified in this study

may also help retailers understand how employees can more effectively interact with customers.

The findings reported here can also assist retailers in differentiating their offering relative to

competitors. Many retailers are recognizing the importance of the shopping experience as the key

differentiating variable in the retail marketplace. Customers are searching more and more

uniqueness and providing them with a new meaning is a way to differentiate the experience. The

study identifies some co-creation variables that affect the encounter process and that if managed

well, can help retailers to reflect the meaning into the store. Of course, there are factors that might

seem external to the firms, for example the mood of the customers or their willingness to spend

time into the store, but these factors can be influenced by the employees’ behaviour with strategies

based on creating an entertaining and fun retail environment.

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11.3 Limitations and further research

The research conducted in this thesis has focused only on four retailers and on a limited sample of

interviewees. Indeed, the surveys have been compiled only by 79 interviewees for Lush, 80 for Leroy

Merlin and La Feltrinelli RED, 74 for Adidas Runbase. It is clear that the number of the sample is not

enough to prove that the framework proposed is valid. Then, in addition to the small number of the

sample, the interviewees are all from Milan or near Milan, and the majority of them is relatively

young being from 19 to 39 years old, and worker with a degree. The study should be expanded by

considering other categories of people in order to generalize the framework. For instance, it could

be interesting to see if students or people who are over 40 years old have the same characteristics

of the sample and recognize the meaning with the same percentage as the others and also if people

who do not live in Milan, that is for sure one of the most innovative cities in Italy and in Europe,

perceive the meaning of the retail experiences. Indeed, the perception of the meaning could change

according to the culture and to the local context. It could be interesting to analyse if people from

different continents and lifestyles live the same experiences and recognize the same meanings.

Although this study illustrates the advantages of co-creation for retailer that have generated new

meanings, the study relates only to four case studies, that even if are international, apart from La

Feltrinelli RED that is present only in Italy, and offer different services, are limited in the terms of

the degree to which industry and relationship specific inferences can be drawn. It is required further

research to test the framework in other retailers that offer other services but that have generated

new meanings and have tried to implement those meanings into the retail solution. Then, it could

be interesting also to expand the research to retailers that innovates in a way that is different form

the innovation of meaning, as the technology push and the market pull innovations. Some examples

could be found in the luxury cars industry that is more and more using the new technology to display

new cars to potential customers in the store. Then, another possibility is to look at other services

different from the retail.

Customer experience and innovation are not new concepts, and historically many successful

companies have used essentially qualitative research techniques to develop distinctive customer

experiences. Developing innovative customer experiences require the involvement of resources,

the willingness to do something new, for sure it is risky but then the advantages are large. One only

needs to find the courage to start the adventure.

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Indeed, the purpose of this thesis has not been to solve a problem, but to activate. Definitive

answers to research on innovation of meaning and on co-creation have not been provided herein.

The goal has been to create awareness about the need of research and to suggest possible directions

for further researches, in a field that is still largely unexplored. The hope is that this thesis is only a

first step in a long exploration effort to come.

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12 Index of Figures and Tables Figure 1 - How co-creation enables the perception of the new meaning ........................................ 22 Figure 2 -How co-creation enables the perception of the new meaning ......................................... 23 Figure 3 - Innovations strategies (Verganti 2008) ............................................................................ 46 Figure 4 - How, What, Why (Pinto, Dell’Era, Verganti, Bellini 2017) ................................................ 47 Figure 5 - Alam and Perry linear and parallel models (Alam and Perry 2002) .................................. 54 Figure 6 - Activities at various stages of the development process (Alam 2002) ............................. 55 Figure 7 - Comparison between NPD and NSD models .................................................................... 56 Figure 8 - NSD process (Alam 2014) ................................................................................................. 57 Figure 9 - Services' typologies (Jaakkola, Meiren, Witell, Edvardsson, Schäfer, Reynoso, Sebastiani, Weitlaner 2017) ................................................................................................................................ 59 Figure 10 - Economic distinctions (Pine and Gilmore 1998) ............................................................. 62 Figure 11 - The progression of economic value ................................................................................ 63 Figure 12 - Dimensions of customer experience .............................................................................. 64 Figure 13 - A conceptual framework for the construct of customer experience (Palmer 2010) ...... 67 Figure 14 - Organizing framework (D. Grewal et al. - 2009) ............................................................. 71 Figure 15 - Conceptual model for customer experience creation (Verhoef et al. - 2009) ................ 72 Figure 16 - Mehrabian and Russell approach - avoidance model (Mehrabian and Russell - 1974) .. 73 Figure 17 – Samples incidents of delightful shopping experiences (Arnold, Reynolds, Ponder, Lueg – 2005) .............................................................................................................................................. 75 Figure 18 - Samples incidents of terrible shopping experiences (Arnold, Reynolds, Ponder, Lueg – 2005) ................................................................................................................................................. 76 Figure 19 - The emotional curve mapped in the customer journey in fashion stores (Giraldi, Mengoni, Bevilacqua - 2016) ............................................................................................................ 80 Figure 20 - The differences in the emotional curves (Giraldi, Mengoni, Bevilacqua - 2016) ............ 80 Figure 21 - Differences between G-D logic and S-D logic (Vargo, Maglio and Akaka 2008) ............. 85 Figure 22 - Provider-dominant logic to a customer-dominant logic ................................................. 86 Figure 23 - Co-creation framework (Payne, Storbacka and Frow 2008) ........................................... 87 Figure 24 - Mapping of Customer, Supplier and Encounter processes (Payne, Storbacka and Frow 2008) ................................................................................................................................................. 90 Figure 25 - Value creation as the customer’s creation of value-in-use or as an all-encompassing process (Grönroos 2011) .................................................................................................................. 92 Figure 26 – Value creation (Grönroos and Voima 2013) .................................................................. 94 Figure 27 - Value creation spheres (Grönroos and Voima 2013) ...................................................... 95 Figure 28 - Direct and indirect interactions: defining the roles of the customer and service provider (Grönroos and Voima 2013) ............................................................................................................. 96 Figure 29 - Customer-dominant logic of service contrasted with service management and service-dominant logic (Heinonen, Strandvik, Mickelsson, Edvardsson, Sundström, and Andersson, 2010) .......................................................................................................................................................... 98 Figure 30 - Value creation process inside the conceptual framework for CRM strategy ............... 101 Figure 31 - Conceptual framework of consumer Cocreation (Hoyer, W. D., Chandy, R., Dorotic, M., Krafft, M., & Singh, S. S. - 2010) ...................................................................................................... 102 Figure 32 - Co-creation framework (Payne, Storbacka and Frow 2008) ......................................... 114 Figure 33 - Explanation of the p-value ............................................................................................ 118 Figure 34 - How, What, Why (Pinto, Dell’Era, Verganti, Bellini 2017) ............................................ 121 Figure 35 - Lush logo ....................................................................................................................... 125 Figure 36 – The We believe statement ........................................................................................... 126

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Figure 37 - Lush shopping bag ........................................................................................................ 127 Figure 38 - The "Ban your Bag" campaign ...................................................................................... 128 Figure 39 - An example of Lush store ............................................................................................. 131 Figure 40 - Solution, Experience and Meaning offered through Lush store ................................... 134 Figure 41 - Percentage of Lush meanings ....................................................................................... 135 Figure 42 – Correlation between questions 26 and 28 ................................................................... 137 Figure 43 - An example of The Body Shop store ............................................................................. 140 Figure 44 - Comparison between Lush and The Body Shop ........................................................... 141 Figure 45 - The Leroy Merlin logo ................................................................................................... 147 Figure 46 - The Adeo logo ............................................................................................................... 148 Figure 47 - Adeo values .................................................................................................................. 148 Figure 48 - The Adeo group around the world ............................................................................... 149 Figure 49 - An example of Leroy Merlin catalogue and advertising ............................................... 151 Figure 50 - Examples of Leroy Merlin courses ................................................................................ 152 Figure 51 - The Design Lab .............................................................................................................. 153 Figure 52 - A Leroy Merlin store seen from above ......................................................................... 156 Figure 53 - A Leroy Merlin Showroom ............................................................................................ 156 Figure 54 - Solution, Experience and Meaning offered through Leroy Merlin store ...................... 157 Figure 55 - Percentage of Leroy Merlin meanings .......................................................................... 158 Figure 56 - Correlation between questions 60 and 62 ................................................................... 160 Figure 57 - An OBI store .................................................................................................................. 161 Figure 58 - Comparison between Leroy Merlin and OBI ................................................................ 162 Figure 59 - The Adidas Runners logo .............................................................................................. 165 Figure 60 - Adidas strategy ............................................................................................................. 167 Figure 61 - The Adidas Runners t-shirt ........................................................................................... 170 Figure 62 - The entrance of an Adidas Runbase with the new Adidas products that clients can test ........................................................................................................................................................ 172 Figure 63 - Adidas Runbase ............................................................................................................ 172 Figure 64 - Adidas Runners community .......................................................................................... 173 Figure 65 - Solution, Experience and Meaning offered through adidas Runbase store ................. 176 Figure 66 - Percentage of Adidas Runbase meanings ..................................................................... 177 Figure 67 - Correlation between questions 31 and 33 ................................................................... 178 Figure 68 - Some screenshots of the app Nike+ Run Club .............................................................. 179 Figure 69 - Comparison between Adidas Runbase and Nike+ Run Club ......................................... 180 Figure 70 - The La Feltrinelli RED logo ............................................................................................ 183 Figure 71 - Read, Eat, Dream .......................................................................................................... 184 Figure 72 - La Feltrinelli RED ........................................................................................................... 185 Figure 73 - An example of La Feltrinelli RED ................................................................................... 188 Figure 74 - The RED in Milan in Isola .............................................................................................. 189 Figure 75 - Solution, Experience and Meaning offered through La Feltrinelli RED store ............... 191 Figure 76 - Percentage of La Feltrinelli RED meanings ................................................................... 192 Figure 77 - Correlation between questions 54 and 56 ................................................................... 194 Figure 78 - The Mondadori Megastore in Milan ............................................................................. 195 Figure 79 - Comparison between La Feltrinelli RED and Mondadori Megastore ........................... 196 Figure 80 - Lush construct .............................................................................................................. 200 Figure 81 - Leroy Merlin construct ................................................................................................. 201 Figure 82 - Adidas Runbase construct ............................................................................................ 202 Figure 83 - La Feltrinelli RED construct ........................................................................................... 203

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Figure 84 - How co-creation enables the perception of the new meaning .................................... 204 Figure 85 - Innovation strategies (Verganti 2008) .......................................................................... 204 Table 1 - Results of the surveys ........................................................................................................ 22 Table 2 - Service innovation definitions ........................................................................................... 39 Table 2 – Characteristics of products and services ........................................................................... 51 Table 3 - Activities performed by the customers (Alam 2002) ......................................................... 58 Table 4 - S-D logic original foundational premises ........................................................................... 81 Table 5 - Foundational premise 9 (2006) .......................................................................................... 82 Table 6 - S-D logic foundational premises changed by Vargo and Lusch in 2007 ............................. 83 Table 7 - S-D Axioms and foundational premises ............................................................................. 84 Table 8 - Value creation and co-creation revisited (Grönroos 2011) ............................................... 93 Table 9 - Revisited foundational premises (Grönroos and Voima 2013) .......................................... 97 Table 10 - Implications of the customer dominant logic ................................................................ 100 Table 11 - Customer value co-creation behaviour scale (Yi, Gong - 2013) ..................................... 108 Table 12 - Dimensions of value co-creation (Ranjan, Read - 2016) ................................................ 110 Table 13 - The results of the surveys .............................................................................................. 122 Table 14 - Demographic information of reliable answers .............................................................. 122 Table 15 - Demographic information of not reliable answers ........................................................ 123 Table 16 - Lush meanings ............................................................................................................... 135 Table 17 - Correlation between questions 26 and 28 ..................................................................... 136 Table 18 - T-test results for Lush, according to the categories of questions .................................. 143 Table 19 - T-test results for Lush .................................................................................................... 144 Table 20 - Confidence intervals (Lush) ............................................................................................ 145 Table 21 - Leroy Merlin meanings .................................................................................................. 158 Table 22 - Correlation between questions 60 and 62 ..................................................................... 159 Table 23 - T-test results for Leroy Merlin, according to the categories of questions ..................... 163 Table 24 - T-test results for Leroy Merlin ....................................................................................... 163 Table 25 - Confidence intervals (Leroy Merlin) .............................................................................. 164 Table 26 - Adidas Runbase meanings ............................................................................................. 177 Table 27 - Correlation between questions 31 and 33 ..................................................................... 178 Table 28 - T-test results for Adidas Runbase, according to the categories of questions ................ 181 Table 29 - T-test results for Adidas Runbase .................................................................................. 181 Table 30 - Confidence intervals (Adidas Runbase) ......................................................................... 182 Table 31 - La Feltrinelli RED meanings ............................................................................................ 192 Table 32 - Correlation between questions 54 and 56 ..................................................................... 193 Table 33 - T-test results for La Feltrinelli RED, according to the categories of questions .............. 197 Table 34 - T-test results for La Feltrinelli RED ................................................................................. 197 Table 35 - Confidence intervals (La Feltrinelli RED) ........................................................................ 198

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14 Attachments 14.1 Surveys

14.1.1 Lush

Informazioni demografiche 1 Genere: � M � F 2 Età: � £18 � 19-39 � 40-59 � ³60 3 Istruzione: � Scuola superiore � Laurea 4 Occupazione: � Lavoratore � Studente � Disoccupato 5 Vivo in una grande città: � Sì � No Consumers’ segments 6 Mi piace provare nuovi prodotti/nuove tecnologie appena escono: � 1 � 2 � 3 � 4 � 5 7 Rispondo spesso ai questionari delle aziende fornendo opinioni sui prodotti: � 1 � 2 � 3 � 4

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� 5 8 Scambio spesso informazioni sui prodotti con altri clienti: � 1 � 2 � 3 � 4 � 5 Customer learning 9 Mi ricordo bene di quando sono stato/a in un negozio Lush: � 1 � 2 � 3 � 4 � 5 10 Mi ricordo di aver visto campagne di beneficenza di Lush: � 1 � 2 � 3 � 4 � 5 11 Seguo Lush sui social: � 1 � 2 � 3 � 4 � 5 Emotion – Cognition – Behaviour 12 Prima di andare in negozio cerco informazioni sui prodotti: � 1 � 2 � 3 � 4 � 5 13 Prima di andare in negozio cerco informazioni su esperienze di altri clienti: � 1 � 2 � 3 � 4 � 5

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14 Chiedo informazioni sui prodotti in negozio: � 1 � 2 � 3 � 4 � 5 15 I commessi mi aiutano a trovare i prodotti che cerco: � 1 � 2 � 3 � 4 � 5 16 I commessi mi propongono i prodotti più adatti a me: � 1 � 2 � 3 � 4 � 5 17 Altri clienti mi aiutano a trovare i prodotti che cerco: � 1 � 2 � 3 � 4 � 5 18 Mentre sono in negozio sono libero/a di cercare e provare i prodotti che voglio: � 1 � 2 � 3 � 4 � 5 19 In negozio parlo con commessi e altri clienti: � 1 � 2 � 3 � 4 � 5 20 Partecipo a discussioni su blog e/o social sui prodotti e sul brand: � 1 � 2 � 3 � 4

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� 5 Value creation – Value-in-Use [Experience, Relationship, Personalization] 21 Mi è piaciuta molto l’esperienza in negozio: � 1 � 2 � 3 � 4 � 5 22 Sono sempre soddisfatto/a dei prodotti comprati: � 1 � 2 � 3 � 4 � 5 23 L’utilizzo di strumenti tecnologici in negozio migliora l’esperienza: � 1 � 2 � 3 � 4 � 5 24 La visita in negozio è diversa ogni volta: � 1 � 2 � 3 � 4 � 5 25 I commessi hanno mostrato interesse nell’ascoltare la mia opinione: � 1 � 2 � 3 � 4 � 5 Meaning 26 L’esperienza vissuta in negozio è radicalmente diversa rispetto alle esperienze proposte da concorrenti: � 1 � 2 � 3 � 4 � 5

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27 E’ stata un’esperienza memorabile per me: � 1 � 2 � 3 � 4 � 5 28 L’esperienza vissuta racchiude un significato simile a: � Condivisione � Esperimento � Sostenibilità � Divertimento � Altro: … � Non ha un significato

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14.1.2 Leroy Merlin

Informazioni demografiche 34 Genere: � M � F 35 Età: � £18 � 19-39 � 40-59 � ³60 36 Istruzione: � Scuola superiore � Laurea 37 Occupazione: � Lavoratore � Studente � Disoccupato 38 Vivo in una grande città: � Sì � No Consumers’ segments 39 Mi piace provare nuovi prodotti/nuove tecnologie appena escono: � 1 � 2 � 3 � 4 � 5 40 Rispondo spesso ai questionari delle aziende fornendo opinioni sui prodotti: � 1 � 2 � 3 � 4 � 5 41 Scambio spesso informazioni sui prodotti con altri clienti: � 1 � 2 � 3

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� 4 � 5 Customer learning 42 Mi ricordo bene di quando sono stato/a in un negozio Leroy Merlin: � 1 � 2 � 3 � 4 � 5 43 Mi ricordo di aver visto campagne pubblicitarie di Leroy Merlin: � 1 � 2 � 3 � 4 � 5 44 Seguo Leroy Merlin sui social e/o sul sito: � 1 � 2 � 3 � 4 � 5 Emotion – Cognition – Behaviour 45 Prima di andare in negozio cerco informazioni sui prodotti: � 1 � 2 � 3 � 4 � 5 46 Prima di andare in negozio cerco informazioni su esperienze di altri clienti: � 1 � 2 � 3 � 4 � 5 47 Chiedo informazioni sui prodotti in negozio: � 1 � 2 � 3 � 4

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� 5 48 I commessi mi aiutano a trovare i prodotti che cerco: � 1 � 2 � 3 � 4 � 5 49 I commessi mi propongono i prodotti più adatti a me: � 1 � 2 � 3 � 4 � 5 50 Altri clienti mi aiutano a trovare i prodotti che cerco: � 1 � 2 � 3 � 4 � 5 51 Mentre sono in negozio sono libero/a di cercare e provare i prodotti che voglio: � 1 � 2 � 3 � 4 � 5 52 Partecipo a discussioni su blog e/o social sui prodotti e sul brand: � 1 � 2 � 3 � 4 � 5 Value creation – Value-in-Use [Experience, Relationship, Personalization] 53 Durante i corsi in negozio, posso personalizzare il prodotto che costruisco: � 1 � 2 � 3 � 4 � 5 54 Mi è piaciuta molto l’esperienza in negozio:

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� 1 � 2 � 3 � 4 � 5 55 Sono sempre soddisfatto/a dei prodotti comprati: � 1 � 2 � 3 � 4 � 5 56 L’utilizzo di strumenti tecnologici in negozio migliora l’esperienza: � 1 � 2 � 3 � 4 � 5 57 In negozio sono libero di guardare e toccare i prodotti: � 1 � 2 � 3 � 4 � 5 58 La visita in negozio è diversa ogni volta: � 1 � 2 � 3 � 4 � 5 59 I commessi hanno mostrato interesse nell’ascoltare la mia opinione: � 1 � 2 � 3 � 4 � 5 Meaning 60 L’esperienza vissuta in negozio è radicalmente diversa rispetto alle esperienze proposte da concorrenti: � 1 � 2

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� 3 � 4 � 5 61 E’ stata un’esperienza memorabile per me: � 1 � 2 � 3 � 4 � 5 62 L’esperienza vissuta racchiude un significato simile a: � Condivisione � Esperimento � Sostenibilità � Divertimento � Altro: … � Non ha un significato

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� 4 � 5 Customer learning 9 Mi ricordo bene di quando sono stato/a in un negozio Adidas Runbase: � 1 � 2 � 3 � 4 � 5 10 Mi ricordo di aver visto campagne pubblicitarie di Adidas Runners: � 1 � 2 � 3 � 4 � 5 11 Seguo Adidas Runners sui social: � 1 � 2 � 3 � 4 � 5 Emotion – Cognition – Behaviour 12 Prima di andare in negozio cerco informazioni sul servizio: � 1 � 2 � 3 � 4 � 5 13 Prima di andare in negozio cerco informazioni su esperienze di altri clienti: � 1 � 2 � 3 � 4 � 5 14 In negozio chiedo informazioni sul servizio: � 1 � 2 � 3

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� 4 � 5 15 Il personale mi aiuta a trovare il piano di allenamento di adatto a me: � 1 � 2 � 3 � 4 � 5 16 Il personale mi propone il servizio più adatto a me: � 1 � 2 � 3 � 4 � 5 17 Altri clienti mi aiutano a trovare il piano di allenamento che cerco: � 1 � 2 � 3 � 4 � 5 18 Sono libero/a di scegliere il piano di allenamento che voglio: � 1 � 2 � 3 � 4 � 5 19 In negozio parlo con commessi e altri clienti: � 1 � 2 � 3 � 4 � 5 20 Partecipo a discussioni su blog e/o social sui prodotti e sul brand: � 1 � 2 � 3 � 4 � 5 Value creation – Value-in-Use [Experience, Relationship, Personalization] 21 Posso personalizzare il piano d’allenamento scegliendo gli esercizi:

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� 1 � 2 � 3 � 4 � 5 22 Mi è piaciuta molto l’esperienza in negozio: � 1 � 2 � 3 � 4 � 5 23 Mi piace far parte della community degli Adidas Runners: � 1 � 2 � 3 � 4 � 5 24 Partecipo alle corse per far parte della community degli Adidas Runners: � 1 � 2 � 3 � 4 � 5 25 Mantengo i contatti con gli Adidas Runners sui social (es. gruppo Facebook, Instagram): � 1 � 2 � 3 � 4 � 5 26 Sono sempre soddisfatto/a dei prodotti comprati: � 1 � 2 � 3 � 4 � 5 27 L’utilizzo di strumenti tecnologici in negozio migliora l’esperienza: � 1 � 2 � 3 � 4

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� 5 28 In negozio sono libero di testare i nuovi prodotti Adidas: � 1 � 2 � 3 � 4 � 5 29 La visita in negozio è diversa ogni volta: � 1 � 2 � 3 � 4 � 5 30 I commessi hanno mostrato interesse nell’ascoltare la mia opinione: � 1 � 2 � 3 � 4 � 5 Meaning 31 L’esperienza vissuta in negozio è radicalmente diversa rispetto alle esperienze proposte da concorrenti: � 1 � 2 � 3 � 4 � 5 32 E’ stata un’esperienza memorabile per me: � 1 � 2 � 3 � 4 � 5 33 L’esperienza vissuta racchiude un significato simile a: � Condivisione � Esperimento � Sostenibilità � Divertimento � Altro: … � Non ha un significato

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� 4 � 5 Customer learning 37 Mi ricordo bene di quando sono stato/a in un negozio La Feltrinelli RED: � 1 � 2 � 3 � 4 � 5 38 Mi ricordo di aver visto campagne pubblicitarie di La Feltrinelli RED: � 1 � 2 � 3 � 4 � 5 39 Seguo La Feltrinelli RED sui social: � 1 � 2 � 3 � 4 � 5 Emotion – Cognition – Behaviour 40 Prima di andare in negozio cerco informazioni sui prodotti: � 1 � 2 � 3 � 4 � 5 41 Prima di andare in negozio cerco informazioni su esperienze di altri clienti: � 1 � 2 � 3 � 4 � 5 42 Chiedo informazioni sui prodotti in negozio: � 1 � 2 � 3 � 4

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� 5 43 I commessi mi aiutano a trovare i prodotti che cerco: � 1 � 2 � 3 � 4 � 5 44 I commessi mi propongono i prodotti più adatti a me: � 1 � 2 � 3 � 4 � 5 45 Altri clienti mi aiutano a trovare i prodotti che cerco: � 1 � 2 � 3 � 4 � 5 46 Partecipo a discussioni su blog e/o social su RED, prodotti o eventi: � 1 � 2 � 3 � 4 � 5 Value creation – Value-in-Use [Experience, Relationship, Personalization] 47 Sono libero/a di parlare con altri clienti durante gli eventi organizzati da RED: � 1 � 2 � 3 � 4 � 5 48 Mi è piaciuta molto l’esperienza in negozio: � 1 � 2 � 3 � 4 � 5 49 Sono sempre soddisfatto/a dei prodotti comprati:

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� 1 � 2 � 3 � 4 � 5 50 L’utilizzo di strumenti tecnologici in negozio migliora l’esperienza: � 1 � 2 � 3 � 4 � 5 51 In negozio sono libero di guardare e toccare i prodotti: � 1 � 2 � 3 � 4 � 5 52 La visita in negozio è diversa ogni volta: � 1 � 2 � 3 � 4 � 5 53 I commessi hanno mostrato interesse nell’ascoltare la mia opinione: � 1 � 2 � 3 � 4 � 5 Meaning 54 L’esperienza vissuta in negozio è radicalmente diversa rispetto alle esperienze proposte da concorrenti: � 1 � 2 � 3 � 4 � 5 55 E’ stata un’esperienza memorabile per me: � 1 � 2

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� 3 � 4 � 5 56 L’esperienza vissuta racchiude un significato simile a: � Condivisione � Esperimento � Sostenibilità � Divertimento � Altro: … � Non ha un significato

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14.2 Results of the surveys

14.2.1 Lush

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14.2.2 Leroy Merlin

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Retail service co-creation: a tool for understanding and ... - POLITesi

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Transcript of Retail service co-creation: a tool for understanding and ... - POLITesi