When introducing a new product, marketers typically have two options: they can either pick an attractive market segment and design a product for it or design a product and try to match it up with a market. In both of these options, it is possible for the new product to not meet the customer’s requirements. One solution to this problem is to involve the customer in one or more aspects of the new product development process. This solution, called product co-creation, adds a new dynamic to the producer/customer relationship by engaging customers directly in the production or distribution of value. Through product co-creation, businesses are able to turn their best customers in their best businesses.
The hardest part of marketing is often placing yourself in your customer or target market’s shoes. It easy to make incorrect assumptions about your target market if you are not actually involving them at some point in a new product’s development. While the product co-creation concept has been around since 1979, the introduction and widespread adoption of the Internet popularized the practice. Here are some web entities that owe their whole existence to product co-creation.:
The world’s sixth largest website in terms of traffic and the biggest online nonprofit, Wikipedia, is a great example of product co-creation. The whole entirety of Wikipedia’s millions upon millions of encyclopedic pages were written (for free) by volunteers throughout the world. Wikipedia allows anyone with Internet access to edit or add information on a particular topic. The world’s largest encyclopedia is entirely product co-created.
Kickstarter is the world’s largest crowdfunding platform. The company’s mission is to help bring creative projects to life. Since its launch, more than 5 million people have funded more than 50,000 creative projects, such as films, music,stage shows, comics, journalism, video games, and food-related projects. People who back Kickstarter projects are offered tangible rewards and one-of-kind experiences in exchange for their pledges.
Kickstarter is a way for individuals to fund their creative ideas and ventures through the power of the crowd. While some perceive Kickstarter to be an easy, go-to way to get fast funding for their projects, Business Insider’s “How Raising $291,000 on Kickstarter Nearly Killed Underwear Startup Flint and Tinder” highlights six potential issues with Kickstarter projects.
Problem #1: It’s not clear who’s supposed to vet Kickstarter projects.
Problem #2: Backers don’t always know what they’re purchasing.
Problem #3: There’s no way to cap a total fundraising goal.
Problem #4: Kickstarter inadvertently exposes key financials about companies.
Problem #5: There’s no good way to refund all the backers after the first month or two of a campaign.
Problem #6: Kickstarter only solves a (relatively) small problem for aspiring entrepreneurs
Potential Risks With Product Co-Creation
- Legal – violating copyrights or intellectual property laws
- Brand co-creation can diminish a brand’s value
- Goal Divergence – customers and producers bring opposing objectives
- Effort – co creation requires greater effort
- Equity of Returns – customers and producers want different levels of return for different efforts
Consumer Motivators for Co-Creation
- Financial – monetary rewards or profit sharing form the firm
- Social benefits – titles, forms of recognition, status, good citizenship
- Desire to gain knowledge – reap important cognitive benefits of information acquisition
- Psychological – enhance intrinsic motivation, high satisfaction or dissatisfaction.
Firm-Level Co-Creation Impediments
- Concerns about secrecy – firms with a hesitation to become transparent
- Issues with ownership of property – does the firm own the co-created material or do the consumers?
- Information overload – too large of volumes of consumer input
Firm-Level Co-Creation Stimulators
- Increase the benefits that customers receive from participating in the co-creation process.
- Reducing the costs to consumers participating in cocreation.