How value co-creation models influence customer

utility and satisfaction

– the role of technologies for adoption of more

sustainable business modelsAlbena Antonova, Sofia University,

Faculty of Economics and Business Administration,

People will be gradually replaced by machines in the

next 10-15 years

March 2014

Robots and software innovations

Main challenges

New technologies will change substantially the existing value formation processes – in production and services.

Introducing technologies means

Economy

• Increase wealth

• Decrease costs

Environment

• Improve resource use

• Improve quality

Society

• Social justice

• Improve access

Some of the benefits for using ET:

• Use resources more effectively• Energy efficiency• Better delivery time, • Improve quality, • Better personalization and adaptation to the customers’ needs,

• Take into account the context • Effectiveness of the production processes. • Learning systems;• Local production

But if we become able to produce everything alone what will be the main unit of

exchange?

• Product?• Service?• Process?

Branded and protected designs

Production codesPattern

IPRPrivacy?

Value• Value is generally considered to describe either the importance of something or its worth;

• What will be the value – the REASON the customer to purchase a product or service?

Value can be:• Use value, exchange value, aesthetic value, identity value, instrumental value, economic value, social values, shareholder value, symbolic value, functional value, utilitarian value, hedonic value, perceived value, community values, emotional value, expected value, and brand value

- there are many examples of different notions of value, which are frequently used without having an explicit conceptual understanding.

Damaran (2014)

Value for the customer• “Perceived value is the consumer’s overall assessment of the utility of a product based on perceptions of what is received and what is given, and value represents a trade off of the salient give and get components.”

• According to Naumann (1995) the customers’ perception of value depends from the service quality, product quality, price and image.

More practically oriented:

Customers thought of value in four ways:

• value is low price; • value is whatever I want in a product;

• value is the quality I get for the price I pay;

• value is what I get for what I give.

Value co-creation• Involving customer in the process of value creation:

• Co-generating value in production/service • Self-service

• Value co-creation relies on resource integration and creating value in-use out of resource sharing. Hence, value co-creation necessitates that stakeholders engage in and become participants in the production process (Grönroos and Ravald,2011).

3 examples of value co-creation

• Pay What You Want – customers involved in the price definition;

• A fully functional 3D-printed vehicle designed and developed with a global community.

• Social Innovations – Eliodomestico - System for water purification;

• value is low price;

• value is whatever I want in a product;

• value is the quality I get for the price I pay;

• value is what I get for what I give.

PWYW• Customer define its own price, actively taking part in the value formation process;

– Customers tend to try to understand the fair value; information asymmetries;

– Customer mainly take into account the variable costs, neglecting fixed costs; (Greiff, Eghbert & Xhangolli, 2014)

Pay-what-you-want restaurants around the world

How new technologies can improve PWYW mechanisms?

• Reduce fixed assets – adopt universal systems – universal robot, 3D printers;

• Predominant variable costs, that would be easy to assume –easier FAIR price definition;

• Internet platforms and e-markets for exchange;

• Promote new ethics

Local Motors• A fully functional 3D-printed vehicle designed and developed with a global community.

• A free online and physical workspace to make your vehicle innovations into reality. You'll always be recognized and rewarded for your contributions.

Everybody can design and produce his own vehicle;

Eliodomestico – clean water for the world

• Open source designed product to serve the needs of people.

• Solar oven that makes salt water drinkable

3 examples of value co-creation

• Pay What You Want – customers involved in the price definition;

• A fully functional 3D-printed vehicle designed and developed with a global community.

• Social Innovations – Eliodomestico - Solar oven for drinkable water;

• value is low price;

• value is whatever I want in a product;

• value is the quality I get for the price I pay;

• value is what I get for what I give.

Conclusions• We can estimate that new technologies increase value to the customers by:

• Decreasing transaction costs; - decrease production costs; decrease the fixed costs; decrease labor costs; decrease switching costs;

• Improve product visibility – improve design for the consumer;

• Increase product variety – adapted functionality and contextualized products/services;

• Exploit the long tail approach; • Improve access to products in area with lacking infrastructure;

• Improve knowledge and personal involvement- active vs passive;

So we will h

ave more tim

e to

focus on the

important

issues!

Thank you for your attention!