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  1. International Journal of Management (IJM) Volume 9, Issue 6, November-December 2018, pp.13–23, Article ID: IJM_09_06_002 Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=9&IType=6 Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510 © IAEME Publication CO-CREATION A NEW METHOD OF BUILDING BRAND LOYALTY & INNOVATION Sunita Kumar and Megha Kandoi Christ University, India ABSTRACT Innovation in any form can bring overall new energy to brand loyalty. In an organization,especially in the service industry, co-creation is a business strategy which is an open innovation for consumers. This paper provides a conceptual understanding of how co-creation can add value in the service industry regarding brand loyalty as well as customer relationship management through some of its basic features of co-creation which include co-designing, collaborating, tinkering, and submitting. Co-creation sources are combined to generate new directional and mutual values. The co-innovation not only includes engagement, but also gives stakeholder co-creation, and compelling experience for value creation. Keyword: Co-creation, Brand, Brand Loyalty, Customer Relationship Management, Brand Awareness, Innovation, Collaboration Partnership. Cite this Article: Sunita Kumar and Megha Kandoi, Co-Creation A New Method of Building Brand Loyalty & Innovation, International Journal of Management, 9 (6), 2018, pp. 13–23. http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=9&IType=6 1. INTRODUCTION Innovation has always been successful when it has been a group activity and is the result of long hours spent on developing the idea of creativity together with others. Co-creation in marketing is a successful strategy which allows consumers of a brand to get actively involved and develop an interacting relationship with the brand to co-construct a product or service which gives them maximum brand satisfaction. Co-creation also helps a brand to get a competitive advantage over the others. In the world of innovation, branding rarely gets referred to, and this is unacceptable as a brand is the fundamental attribute of co-creation. People are mostly misunderstanding the brand,and they consider it to be just a logo or the advertising or the product or service. In reality, the brand is a stakeholder experience and something which might as well influence one’s future intentions. When the consumers actively get, themselves involved in co-creation, they put forward their perception of the brand which influences how they create and evaluate ideas. In the case of co-creation, brand acts as a filtering technique to ascertain which ideas to consider for co-creating products and which ones to discard. As co-created ideas are executed, the brand develops, and the meaning of the brand perceived by the consumer becomes strong. http://www.iaeme.com/IJM/index.asp 13 editor@iaeme.com
  2. Co-Creation A New Method of Building Brand Loyalty & Innovation Service innovation through co-creation comes to the rescue of many companies whose service businesses are under threat and facing challenges surviving in the market. The new wave of service innovation has brought a change in the service industry as it benefits both the service provider and the customers by having a competitive edge over others and building a strong customer base that are loyal to the brand. Nowadays, consumers are seen demanding intermediate personalized services for themselves with greater involvement, co-operation and customization. (Nonika & Hirotima, 1995)recognized that the consumers are associated with social communicationso that a company or an organization assumes that they control the interpretation of the brand, it might as well be proved that the meaning of a brand is created by the consumers and the stakeholders in the procedure of interaction. (Ind & Coates, 2013) Found out from a managerial prospect, that the congregation for the potential of online engagement with the brand and the escalating admiration of the significance of the consumers as the creator of value has encouraged the development of co-creation. “When you need to transform a brand or product, you can’t just do the same things better,” Jeremy Brown, Sense World wide’s Chief Executive said. “You need to do something new. You tap into the creativity of your consumers.” Director of the strategy Brian Miller and Brown have been running co-creation in global online communities and workshops all around the world for more than a decade, and they believe co-creation is not only an innovative process, but it also turns market research into a more dynamic and creative process. Co-creation helps the contact or interaction between a consumer and an organization or brand move away from transactional and become a creative experience. Creation of new value gives the customers an opportunity to connect with the brand and the initiatives for the same are on the rise more and more frequently. This paper attempts to understand how co-creation helps in building strong brands and improve consumer loyalty with innovation in the service industry. 2. LITERATURE REVIEW (Prahalad &Ramaswamy , 2004) Found out that consumers want to interact with firms and “co-create” value after being dissatisfied with available choices. Competitive advantage can be gained by a company when a consumer can co-create unique experiences due to effective interaction. This conceptual paper focuses on exploring the various aspects of co-creation. The organization orchestrates and focuses the overall experience of its consumer involvement in the process of co-creation. To ease the process of co-creation, Dialogue (interaction between both sides), Access, Risk-benefits and Transparency (DART) acts as building blocks of consumer-organization interaction. Carrying out the process of co-creation by an organization is a herculean task, as the concept is often misunderstood and hence it challenges two concepts – exchange of product and service offerings and the coming together of the consumers. Co-creation acts as both value creation and extraction, and the market is viewed as an area of probable experience of co-creation in which an individual’s restrictions and selections explain the will to pay for it. It is a two-way street, and the risk involved is to be equally shared by the consumers as well and not just the organizationitself. According to (Merz & Vargo, 2009) brand value is co-created through network relationships and social communication among the conglomerate of all stakeholders. (Hatch & Schultz, 2010) Demonstrated that co-creation is not just limited to the area of innovation, but as well spreads out to marketing and more specifically to branding. It also expands to co-create ideas with other stakeholders and not only just consumers. The paper presents an integrative constitution of co-creation based on two factors - stakeholder/company involvement (dialogue and access) and organizational self-disclosure (transparency and risk) http://www.iaeme.com/IJM/index.asp 14 editor@iaeme.com
  3. Sunita Kumar and Megha Kandoi by integrating four building blocks of (Prahalad &Ramaswamy , 2004) while co-creating LEGO brand as an example. They found out that branding can create dialogue among different elements such as stakeholders, consumers, customers, fans, employees and critics related to an organization. Branding acts as means of entry to some members involved in the organization as stakeholders’ involvement is possible through the consequences of marketing, corporate communication and human resource. The brand LEGO used the internet as a medium to interact with consumers and a channel for brand engagement. It changed the way organization involved in dialogue with consumers and the enthusiasm from the customers made organization’s efforts to build strong brand possible. The key to increasing brand engagement and building strong brands is dialogue and access which brings in transparency in the organization eventually leading to risk. The organization undertakes the real risk,and this process is to determine to what extent the major part of the world understands their value. (Skaržauskaitė, 2013) Conducted a theoretical analysis to provide a comprehensive idea of co-creation value. The concept of co-creation has changed from what it was in the 1990s with the sole focus on customer participation to coming together with customers at their own free will with the help of social technologies for the betterment of both sides. The focus also drastically shifted to maintain a customer relationship with goods and services dominant market. Through extensive literature review analysis, it was understood that the customer is the sole person on whom the value creation is highly dependent on and without active involvement or the willingness to interact, an amalgamation of efficient resources and spectrum of a prospective method of co-opetition, co-creation experience is unsustainable. (Verleye, 2015) Provides us with an understanding of customer engagement and experience in co-creation of products and other determinants related to it. The paper argues that co-creation depends on the benefits expected by the customer and to the extent to which the customer is ready to fulfil his role as a co-creator. The argument is also put forward to the point that co-creation experience has also depended on the characteristics or the availability of technology in a co-creation environment and connectivity of the resources to customers. From the extensive literature review, it was concluded that the benefits expected from co-creation are hedonic, cognitive, social, personal, pragmatic and economic and the overall experience is dependent on these dimensions. The benefits expected from co-creation is relative as in it varies from customer to customer. The primary source of data was collected with a sample size of 180 students and was assigned to two (technologization: low vs high) by two (connectivity: low vs high) mixed design. The results showed that the overall co-creation experience gets improved by an improvement in hedonic and social experience. The findings tell us that co-creation experience is not affected only by the process of co-creation but also is impacted by the characteristics of its environment and the interaction among co-creators. Overall, it is a multidimensional phenomenon. http://www.iaeme.com/IJM/index.asp 15 editor@iaeme.com
  4. Co-Creation A New Method of Building Brand Loyalty & Innovation Figure 1 Types of Co-creation 3. CHARACTERISTICS OF CO‐‐CREATION TYPES Table: 1 Source :( customer co-creation: a typology and research agenda) Selection Contribution Type of Key Key Prototypical Key Activity Activity Co-Creation Payoffs Challenges Application Studies Protecting Grewal et Reduced intellectual al. (2006) Customer‐Le development property Open source Lakhani Collaborating Open costs Attracting a and Wolf d software Continuous (2005) critical mass product von of improvement Krogh et collaborators al. (2003 Jeppesen Enhanced Policing the and Molin differentiatio content of Modified (2003) n rogue co Tinkering Firm‐Led Open computer Nieborg Virtual test ‐creators games (2005) markets Creating new Prügl and for new competitors Schreier products (2006 Reduced Attracting a Online voting development Ogawa critical mass on Customer‐Le costs and Pillar Co‐designing Fixed of designers customer‐gene d Decreased (2006) Defending rated content risk of and designs Cook against new product (2008) entrants failure Shortened Acquiring product knowledgeabl development e new Füller et Company‐spo cycles al. (2004) Submitting Firm‐Led Fixed co‐creators nsored design Increased competitions Sawhney access to Retaining and et al. novel motivating (2005) customer existing ideas co‐creators http://www.iaeme.com/IJM/index.asp 16 editor@iaeme.com
  5. Sunita Kumar and Megha Kandoi 3.1. Branding Branding is the way through which the attributes, characteristics and values are expressed of an organization or its product or service. It is strategic unlike tactical marketing, and it stays within the minds of a customer associated with the product, service or organization which ultimately determines if the customer is loyal or not. Branding evolves more and more with the behaviour of consumers and is the mental image of how an organization represents to a consumer impacted by the elements, words and creativity that surrounds it. Figure 2.The Dynamic Process of Building Brand The efficacy of brand doesn't just happen before the purchase of product or service, but it's also about the life of the brand of the experience it gives a consumer. Brand not only creates loyal customers, but it creates loyal employees. Brand gives them something to believe in, something to stand behind. It helps them understand the purpose of the organization or the business. 3.2. Thread less New Era of Co-Creation and Building Loyalty “Why wouldn’t you want to make the products that people want you to make?” (Nickell, 2008). Such are the expressions of Jake Nickell, the fellow benefactor and CEO of Thread less, a shirt organization that print their most prevalent sections to the very individuals who voted in favour of them and composed them. The idea of including the buyer in the production of a shirt came to Nickell in 2000 when, with practically no aptitudes in outline or its virtual products, he partook in a London-based plan celebration (Lakhani and Kanji, 2008). Nickell, who won the prize, was animated by that idea and chosen to popularize it. By November of that very year, Nickell and DeHart established an organizationgiven a comparable thought and called it Thread less, a figure of speech between the string of fibre used to make pieces of clothing, and the string additionally known to be a discourse on an online group. Toward the starting, the twosome asked their companions and previous colleagues to present their plans and thoughts to the site. Not knowing which plans to pick when they began streaming, they asked the recently printed group to choose. The plan has since survived, and however it has advanced in the years since, the idea remains consistent with its root. Counting the client in each progression of Thread less' DNA renders it an ideal case of co-creation. 95% of Thread less' clients have purchased a thing, as well as either voted, remarked, submitted or taken an interest in any capacity. Thus, the organization depends vigorously on the fulfilment of its clients to look after itself. In its 14 years and 6,359 printed plans (Thread less, 2015), Thread less has never seen a http://www.iaeme.com/IJM/index.asp 17 editor@iaeme.com
  6. Co-Creation A New Method of Building Brand Loyalty & Innovation solitary slump (Ogawa and Piller, 2006). The reason is very basic: the organizationutilizes crowd funding strategies, implying that, on top of getting enough votes, fashioners must have the capacity to accumulate enough money related venture from different buyers to achieve the base subsidizing limit (Thread less, 2015). In that ensuring Thread less a 100% achievement rate. The sheer energy for planning is strong to the point that buyers will do it for nothing. Thread less not just keeps on being a co-creation model of accomplishment, additionally demonstrates the thousands to come that enthusiasm, esteem and decency can prompt achievement. 3.3. Radiohead (Co-Creation Through Pay What You Want Strategy) Radiohead bewildered the music business by giving its fans a chance to pay what they thought was reasonable for download the band's most recent collection. The rock music industry has likewise explored different avenues regarding co-creation of significant worth. Radiohead's "In Rainbows" collection was sold straightforwardly to more than 2 million purchasers who paid what they felt the music was worth. The symphonic band Renaissance likewise raised more than $92,000 from 860 faithful fans to record another CD called "Grandineil Vento." Everything except one achieved platinum status and they had earned three main three collections on The Billboard 200. Radiohead had part with their record home EMI after 2003's "Hail to the Thief" but kept on ruling on a visit. Different individuals including Thom Yorke and Jonny Greenwood had likewise discharged solo and soundtrack ventures: it was prime time to understand their incentive as an outside the box, subsequently time for some free considering. The British band discharged their next collection "In Rainbows" carefully through their site using a "pay-what-you-need" plot. Fans could purchase for $0.00. Also, Radiohead declared it just ten days early. They later sold the collection by permitting it to different marks, after the world spilt out basic approval for the compensation show. The level of interest and eagerness for Radiohead's compensation what-you-need model was out and out bonkers. No band comparative in scale and reach of Radiohead had ever attempted such a plan sometime recently, thus even with the short dispatch time frame, the madness likely impelled computerized and physical deals and a huge number of requests for the fancy discbox of "In Rainbows." Pre-deals for the compensation what-you-need period alone (Oct. 10–Dec. 10 in 2007) profited for the band than the greater part of the offers of "Hail to the Thief," because of the stunning verbal. In January 2008, the band still figured out how to win No. 1 on the Billboard 200. Radiohead's pay-what-you-want model was a reconsidering of the estimation of a straightforward download, and putting more accentuation on the physical and restricted version discharges. Radiohead's pay-what-you-want plan of action increased inconceivable consideration and hadbeen connected to different divisions as eateries and magazine memberships. An administration rationale approach is connected which includes client interest to co- create new customer esteem together with the brand. It is seen that consumer's co-creation with a brand while building the association with it impacts mark understanding, and thus, mark fulfillment and reliability. Co-creation encourages a brand to work through advancement, and it additionally expands consumer satisfaction and loyalty. 4. LOYALTY AND ITS IMPORTANCE IN BRAND BUILDING (Morgan, 2000) has considered loyalty in the concept of branding as one of the most elucidated conceptualizations in marketing. “Loyalty to the firm’s brands represents a strategic asset which has been identified as a major source of brands’ equity” as said by (Mellens, Dekimpe, & Steenkamp, 1996). (Aaker, 1991) has defined brand loyalty as an http://www.iaeme.com/IJM/index.asp 18 editor@iaeme.com
  7. Sunita Kumar and Megha Kandoi instrument of measure of the attachment that a consumer has with a brand and which defines an exhibit whether a consumer would change to another brand if the brand’s service/product price change or few of its features change. Loyalty is as well as described as an effective behaviour that involves repurchasing, support and offer to purchase (Chegini, 2010). (Khan, 2009) has explained how brand loyalty critical intent of a development process of a product/ service and how it efficiently and effectively contributes to the competitive advantage and success of the organization. Organizations whose consumers have strong loyalty to its brands can gain important competitive marketing advantages such as persistent stream of profit, decrease in operating costs and marketing costs, trade leverage, valuable time to respond to competitive moves at the right time and the ability to attract new customers (Aaker, 1991; Khan, 2009). (Connell, Edgar, & Olex, 2001) has realized the importance of innovation as a crucial factor for the success and sustained the growth of any organization. (Brown, Kozinets, & Sherry, 2003; Coupland, Iacobucci, & Arnould, 2005) analysed that organizations often misinterpret that successful brands and innovation are created as a compliant effect of marketing involvement by the brand managers, and they fail to know that the fact of co- creation procedure involving both the brand representatives and the consumers is the sole reason for the emergence of strong brands. Moreover, it has been studied that a marketing strategy eventually fails and is insufficient if the organization’s product or service does not satisfy the consumer’s wants and needs (Tu, Lin, & Hsu, 2013). (Mascaren has et al., 2004) hasrealized the importance of engaging a company’s target customers, regardless of industry, at any stage of value creation chain. The various stages in product development process are product ideation, concept development, prototype development, design development, prototype-design testing, packaging-label testing, manufacturing, ad testing, product/service bundle testing, product/service price-bundle mix testing, product financing bundle testing, national launch and press-release process or customer service and feedback. Figure 3.Relationship Building through Co-Creation Example of a Co-creation programme creates a different context for the emergence of meaning compared with live. In the outline world, naturally occurring groups and the emergence of the participatoryenvironments such as Wikipedia, YouTube and Face book have http://www.iaeme.com/IJM/index.asp 19 editor@iaeme.com
  8. Co-Creation A New Method of Building Brand Loyalty & Innovation brought the idea of communities to the fore. Consequently, people have become used to online discussion and creation and largely understand the protocols of engagement. From a co-creation perspective, while some of the aspects of online and live can besimilar, there are differences which make them appropriate to certain context and tasks, as shown in figure 3. The attributes of each world offer certain specific benefits, once the co-creation approach is agreed on the specific activities within an event, or a community can be determined based on the nature of the requirement 5. CO-CREATION FOR INNOVATION Figure 4.Conceptual Process how co-Creation work According to Payne (2009), if we look at the literature on innovation, we will find Co- creation especially branding rarely get a name. This looks strange, for the brand both creates a frame for innovation and evolves because of innovations by consumers and other stakeholders. The brand is, in this perspective, a fundamental ingredient of co-creation. The barrier to understand brand in this way may be due to misconceptions about the terminology. Some people think brand as a logo or advertising or the packaging of a product or service. However, the way we see the brand as a stakeholder experience-the result of hearing about, buying and using something that influence future intentions. We buy iPhone, eat at McDonalds, shop with Amazon and Flip kart and donate money to CRY because these choices create a relevant experience that aligns with who we are and how we want to be seen. When managers, consumers and other stakeholders take part in co-creation, events and communities bring their perceptions of the brand with them. It influences how they create and evaluate ideas. The brand provides important filtering mechanism in determining which ideas to progress and which to discard. Intern as ideas from co-creation are implemented, they help to evolve the brand and its meaning for people. The idea of the brand as ever-evolving seems to some people. Certainly, traditional description of the brands has tended to see it as static, communication – driven and only focus on consumers. In 1998, Ries and Ries wrote that the market might change but brand should not – odd ideas somehow suggest that brand is separate from markets they serve. If market change then so brands. So, if consumers are involved their experience with others implies a constant state of change. In service, the dominant logic that argues that brand is co-created with consumers and concepts of experience economy have shifted branding away from communications to personal interactions. In this perspective, branding is about people. It is the individuals inside the http://www.iaeme.com/IJM/index.asp 20 editor@iaeme.com
  9. Sunita Kumar and Megha Kandoi organization who listen to, connect with and deliver service to stakeholders and it is individual stakeholders,and it is individual stakeholders who use and take part in a dialogue about the brand. So, the organization may make a promise about its corporate, service or product brand and it may deliver on that promise, but the brand itself is negotiated and ebbing and flowing space that is subject to a wide variety of influences moving increasingly beyond the control of the organizations. Figure 5.Co-creation as a design workshop The ideology, which can be structured at the corporate and product/service level, try to absorb influences from inside and outside organizations in defining the idea that is both rooted in the past and stenches towards the future. The ideology of a brand creates innovation for the framework. It set outs a certain set of ideas that provide a focuson new product and services that make it more relevant for one company to develop something more than others. Even though the ideology is normally structured to give guidance, we should recognize that brands are fluid entities that are shaped by the interaction between organizational members and external stakeholders. They evolve because of experience and resulting expectation of people they buy, use adapt, discuss and interact with the brand and absorption those experiences with employees who can use that knowledge to restructure and reprint the brand. In the line of thought, co-creation is intimately connected to the brand and brand building. It is the brand ideology that shapes co-creation process both by setting and direction for creativity and by providing a means of evaluating ideas generated through collective effort. On the other hand, the action of customers and other stakeholder taken together with those of the company help to develop the meaning of the brand building. The principals that help to ensure the effectiveness of co-creation method rooted in the idea that co-creation often asks a lot of customers and other stakeholders. It asks them to give themselves to contribute their intelligence and creativity to help the organizations to become more successful. Whereas other research methods ask less of people, the significance of input here moves the connection between the organization and the participants away from the transactional methods. This creates a set of psychological obligations which must be met if people are ready to give ideas. That means adoption of human-centric vies of participants, a willingness to take time at the beginning of the process to build trust, to a commitment to openness and transparency, the guilty to recognize that the question posed at the outset may http://www.iaeme.com/IJM/index.asp 21 editor@iaeme.com
  10. Co-Creation A New Method of Building Brand Loyalty & Innovation not be the right questions. The capability to learn through trial and error of experiments and finally involvement of key decision maker of the processes. Of course, it can be argued that not all these elements need to be in place to have functioning co-creation method, but the likelihood of successful innovation is heightened if an environment is created in which people can genuinely create together. 6. CONCLUSION To conclude a company can have an exemplary process regarding discovery, ideation, development and filtering but still fail to be an effective innovative because the outputs fail to see the light of the day. Leaders and managers and vital gatekeepers who can help to ensure that good ideas make their way to market, or they can be guilty of inertia, to concern with meetings or dealing with ongoing problems to give sufficient emphasis to innovations. When organizations insiders are supportive, then co-creation can yield strong results because it already includes the customer perspective. This may now always be right of course and co- creation is too young to generalize whether it has better record of innovation than more closed models, but it should help to get things to market quicker while reducing risks. In particular, co-creation is adapted at getting to the effective voice of communication. Co-creation can clearly help to design and complements products and services so that the brand as experienced by the customer is relevant and appealing. It is the potential of co-creation to address both tangible and intangible attributes of the brand that make it so interesting. REFERENCES [1] Adler, P., Heckscher, C., &Prusak, L. (2011). Building a collaborative enterprise. Harvard Business Review, 89(7/8), 94-101. [2] Castells, M. (2000). The Rise of the Network Society. 2nd ed., Blackwell, Malden, MA. [3] Chesbrough, H. (2003). Open Innovation: The New Imperative for Creating and Profiting from Technology. Harvard Business School Press, Boston, MA. [4] Chesbrough, H. (2011). Open Service Innovation, Jossey-Bass. San Francisco, CA. [5] Duncan, D.E. (2005). Masterminds: Genius, DNA, and the Quest to Rewrite Life. Harper Perennial, New York, NY. [6] Friedman, T.L. (2005). The World is flat: A Brief History of the Twenty-first Century. Farrar, Straus and Giroux, New York, NY. [7] Friedman, F. (2011). The Next Decade: Where we’ve been and Where We’re Going. Doubleday, New York, NY. [8] Ghemawat, P. (2007). Managing differences: the central challenge of global strategy. Harvard Business Review, 85 (3)59-68. [9] Gupta, A. and Govindarajan, V. (2003). Global Strategy and the Organization. Wiley, New York, NY. [10] Hatch, M. J., & Schultz, M. (2010). Toward a theory of brand co-creation with implications for brand governance. Journal of brand management. [11] Ind, N., & Coates, N. (2013). The meanings of co-creation. [12] Johnson, S. (2001). Emergence: The Connected Lives of Ants, Brains, Cities, and Software. Touchstone, New York, NY. [13] Kauffman, S. (2000). Investigations, Oxford University Press, New York, NY. [14] Kim, W.C. and Mauborgne, R. (2005), Blue Ocean Strategy. Harvard Business School Press, Boston, MA. [15] Kurzweil, R. (2005). The Singularity is Near: When Humans Transcend Biology. Penguin Books, New York, NY. http://www.iaeme.com/IJM/index.asp 22 editor@iaeme.com
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