lpu Final Presentation

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Composite Expertise for Unique Value Creation Presented by Rita (PhD)

Transcript of lpu Final Presentation

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Role of Resource Integration and

Composite Expertise for Unique Value Creation

Presented by Rita

(PhD)

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Introduction Research to date suggests that relatively little is

known about how consumers integrate their resources and engage in co-creation of value with the service provider. Thus, the present study develops a framework of the facilitators or antecedents of the co-creation of value for understanding and managing creation of unique value. Thus, the study examines the co-creation efforts of the customers of fashionable boutiques of a Jammu city.

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CONCEPTUAL FRAMEWORK1) Resource Integration2) Composite Expertise3) Customer Participation4) Value Co-Creation5) Unique Offerings

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RESOURCE INTEGRATION• Resource Integration generally means combining supplier’s

and customer’s knowledge, skills, activities, efforts, time and money so that they work together. The resources have been classified as mental, physical and emotional (Rodie and Kleine 2000) .Two dimensions of resource integration are:

• Information sharing• Co-ordiness effectiveness.

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Expertise• Expertise is defined as the understanding of the skills associated with a

particular component, including design, production, and marketing knowledge as well as other skills related to a good or service (Grant, 1996; Wernerfelt, 1984).

• Supplier firms with expertise related to a particular component typically are able to produce the component more efficiently and effectively than firms without such expertise because they possess appropriate personnel, equipment, and knowledge (Penrose, 1959; Conner, 1991; Grant, 1996; Rubin, 1973).

• Customer expertise represents a customer’s accrued knowledge about how a product should perform and a general understanding of the average performance of similar brands in a product category (Sharma and Patterson, 2000). Customer expertise, therefore, encompasses not only firm-specific knowledge but also market-based knowledge .

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CUSTOMER PARTICIPATION• Customer participation is defined as “the degree

to which the customer is involved in producing and delivering the service” (Dabholkar 1990, p. 484).

• Customer participation is defined as the extent to which customers share information, provide suggestions and engage in shared decision making process. It reflects customer’s effort in co- producing a service ( Chan et al. 2010).

• When a customer participates in a supplier's NPD process, each party knows the pertinent knowledge possessed by the other, which helps them evaluate and recognise what information to share and increases the efficiency of their co-ordination effort (Dyer and Singh 1998; Larson 1992).

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Co-Creation of Value As customers work as “partial employees” in the design process, their

expertise directly influences the quality of the work. The manner in which a customer engages in value co-creation is determined by the customer’s ability, role clarity, and perceived value for co-creation (Meuter et al. 2005).

Normann and Ramirez (1993) argued that the goal of business is not to create value for customers but rather to mobilise customers to co- create value

According to a service-dominant view of marketing, “value can only be created with and determined by the user” (Lusch and Vargo 2006, p. 284), thus the customer is always a co-creator of value. The co-creation of value helps firms to understand customers’ point of view, identify their needs and wants (Lusch and Vargo 2006; Payne, Storbacka, and Frow 2008).

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Dimensions of Co-creation of Value

Ability in co-creation refers to customers’ knowledge and skills that enable them to perform effectively in value co-creation, i.e., what they “can do” rather than what they “want to do” or “know how to do” (Meuter et al. 2005).

 Customer role clarity in co-creation is defined as the extent to which the procedures, goals, criteria, and knowledge of consequences are clear to a customer and influence his/her likelihood of co-creation. In addition, the role the customer plays as a value co-creator (“partial employee”) has a direct

influence on service quality.

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Perceived value in co-creation refers to customer’s subjective evaluation of the benefits of co-creation. For example, when customers decide to use self-service technologies instead of using interpersonal services, the potential rewards can be feelings of accomplishment and enhanced self-efficacy, and enjoyment of the self-serving process (Meutere at al., 2005).

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UNIQUE OFFERINGS

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Consumer need for uniqueness

• The “perceived uniqueness” of a product is the degree to which a customer looks upon the product as different from other products in the same class (Tian et al. 2001). The significance of uniqueness is very much emphasised in the Theory of Consumers’ Need for Uniqueness, which explains how an individual’s need for uniqueness can influence brand responses and the need to be distinct from others (Ryan 2008; Tian, Bearden, and Hunter 2001) through the possession of material goods (Knight and Kim 2007). According to this theory, an individual looks for differentiation (Clark, Zboja, and Goldsmith 2006) and intentionally ignores pre-arranged social standards and customs in order to distinguish himself or herself from the group (Snyder and Fromkin 1977). A consumer shares his pleasure or displeasure with the service and service provider by exchanging thoughts, ideas, or comments with other consumers (Bone 1992).

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UNIQUENESS ARIVES FROM

Market Differentiation: It occurs when a firm creates a unique image in the market-

place and achieves customer loyalty throughmeeting customer’s particular needs.

Innovation Differentiation: It arises when a firm creates the most up-to-date and attractive products by leading competitors in quality, efficiency, design innovations and style.

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Innovativeness From Customers’ Perspective

Innovativeness is the consumer’s propensity to buy new and different products rather than remain with prior choices and consumption patterns (Im et al., 2003). It can also be defined as the degree to which a consumer is willing to adopt new ideas relatively earlier than other members in a social system (Rogers, 1995).

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Research Gap Previous researchers (Kleinaltenkamp et al. 2013;

Arnould, Price, and Malshe 2006; Vargo and Lusch 2006) have suggested that there is a need to better understand how consumers integrate resources and use their expertise to create value. As consumers increasingly engage in creative activities and experiences, it is important to understand what value consumer creativity brings to brands and how it can be encouraged and harnessed. Moreover, firms must understand how consumers juggle their own and firm resources and expertise in order to compensate for specific types of operant resource deficits.

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• Thus, the contribution of this paper is to add to an understanding of consumers as resource integrators through a detailed study of consumer interactions and shared expertise in the context of apparels designing in the boutiques.

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HypothesesH1: Resource integration significantly predicts

customer participation.

H2: Customer expertise and supplier’s expertise significantly influence customer participation.

H3: Customer participation significantly affects co-creation of value.

H4: Co-creation of value leads to unique innovative offerings.

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Research Methodology• Item survey:

Sr.No Construct/Dimensions Source of Information

1. Resource Integration

Information sharing Subramaniyam and Venkatraman (2003);

Subramaniyam and Henderson (1999), Heide and

John (1990).

Co-ordination Effectiveness Jap (1999).

2. Expertise

Customer Expertise Feick and Price (1987); Angur (1997) and Burton

(2002).

Supplier Expertise Walker and Weber (1984); Stump and Heide (1996).

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3. Customer Participation Chan et al. (2010); Auh et al. (2007); Betton

Court (1997); Claycomb, Lengnick-Hall and

Ink (2001); Hsieh,Yen and Chin (2004)

4. Co-creation of Value

Ability in future co-

creation

Meuter et al. (2005)

Role clarity in future co-

creation

Meuter et al. (2005)

Perceived value in future

co- creation

Meuter et al. (2005)

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5 Unique

offerings

Market

Differentiation

Chandler and Hanks (1994); Brewer, (1991, 1993); Timmor and

Katz-Navon (2008); Tigert et al. (1976); Sivadas and Machleit

(1994).

Innovation

Differentiation

Chandler and Hanks (1994); De Wulf, Odekerken Schröder, and

Iacobucci (2001); Goldsmith et al. (1998).

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• II. Respondents: The study is confined to Jammu city only and the respondents were the female members of Amar Singh club of Jammu.

• III. Sample size: As on 2012, the total number of members was 1196. The sample size was calculated by using the formula given by Burns and Bush (2007, p. 378). The formula is as under-

n=S2 Z2/e2

The sample size arrived at 204. The nth number that got generated (1196/204) was 6. Accordingly, a list of every sixth member of the club to be contacted from the director was prepared.

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OUTLIERS

Outliers are those observed data, which completely differ from other respondents of the sample. Two graphical techniques for identifying outliers are scatter plot and box plot. In the present study outliers were checked item-wise through box plot. There were 204 respondents out of which we observed 8 outliers, finally deleted from the data set. Thus, the usable sample arrived at 196 only.

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RESEARCH TOOLS

The statistical tools used for testing the data were:

1.Confirmatory Factor Analysis (CFA)2.Structural Equation Modelling (SEM)

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I. Confirmatory Factor Analysis:• CFA is a deductive approach and multivariate

statistical technique that is used to test how well the measured variables represent the construct and model building. It is conducted with the objective of verifying the fitness of each latent construct.

• In the present study, it was performed to assess the fitness, reliability and validity of 5 measured constructs, viz., RI, CE, CP, CCV and UO. Reliability was assessed through the computation of Cronbach’s alpha, composite reliability and average variance extracted (Table 1, 2 and 3).

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TABLE 1: RESULTS OF FIT INDICES

CONSTRUCT CMIN/DF GFI CFI NFI TLI RAMSEA

R.I 1.333 .993 1.000 .997 .999 .026

EXP 1.885 .961 .986 .971 .979 .067

C.P 1.595 .996 .999 .998 .996 .055

C.C.V 2.153 .947 .991 .983 .985 .077

UO 2.014 .929 .983 .968 .977 .072

Final Model 2.526 .901 .969 .949 .955 .08

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TABLE: 2 RELIABILITY AND VALIDITY OF LATENT CONSTRUCTS

Constructs AVE Composite Reliability

Cronbach’s Alpha

RI .932 .900 .973

EXP .766 .999 .855

CP .863 .997 .962

CCV .868 .998 .969

UO .680 .998 .929

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TABLE: 2 Discriminant Validity of Latent Constructs

RI EXP CP CCV UO

RI (.996) .849 .849 .900 .795

EXP .378 (.999) .814 .817 .712

CP .722 .300 (.997) .865 .761

CCV .603 .502 .454 (.998) .763

UO .525 .564 .425 .599 (.998)

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II. STRUCTURAL EQUATION MODELLING

After applying CFA, SEM was conducted by using AMOS 16.0 to assess fitness of the structural model. A structural model is a conceptual representation of the relationship between latent constructs. With the help of SEM, we examined the direct relationship between all the antecedents and consequences of co-creation of value.

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RELATIONSHIPS IN THE MODEL

RI-CP Maglio and Spohrer (2008); Spohrer et al. (2008); Vargo, Maglio and Akaka (2008)

Exp-CP Korkman (2006) and Vargo and Lusch (2008)

CP-CCV Fang, Palmatier and Evans (2007) and Chan, Yim, and Lam (2010)

CCV-CM Fiore et al. (2004) and Merle et al. (2008)

CCV-CA Cardoso, Costo and Novais (2010)

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Theorised Model

IS

CE

CSE

SE

CP1 CP4 CP5 CP6 ID MD

CCVP

CCVR

CCVF

RI

CE

CP CCV UO

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HYPOTHESES TESTING

Hypothesis SRW P value

Accept/Reject

H1a: Resource integration is the significant predictor of customer participation.

.88 .000 Accepted

H2: Composite Expertise significantly predicts customer participation

.18 .000 Accepted

H3: Customer participation significantly predicts co-creation of value.

.72 .000 Accepted

H4: Uniqueness is strongly influenced by co-creation of value .

.84 .000 Accepted

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Conclusion• The contribution of the present research to the literature on consumer

creativity is threefold. First, we showed, and illustrated that value is created when consumers integrate and share resources and expertise with the service providers. Then, it is demonstrated that resource integration and sharing expertise is in fact an act of creativity and that every act of consumption is an opportunity for a consumer to craft a solution that is both novel and appropriate, the two widely accepted characteristics of creative acts (Hennessey and Amabile 2010). Our final key finding is that creativity consists of specific types of everyday socio-cultural processes, including consumption, that lead to novel and appropriate solutions. We argued that value is continuously (re-)created through consumers’ relationships with their social (other consumers, employees etc) and material (brands, products, services etc) environments and that this creative process is inherent in all acts of consumption.

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Managerial Implications

• Effective Communication, Collaboration and Coordination Effective communication, collaboration, and coordination are important

contributing factors in achieving success in unique value creation. There are various channels of communication, but face-to-face communication is found to be the most effective as it provides instant feedback and multiple cues like expression, emotions, and personal focus to the designers. The knowledge acquired through face-to-face communication can be retained for a limited time, then it starts diminishing gradually. So, some tools like papers, whiteboards, and so forth, may be used by apparel designers to store information intended for future use.

In addition, it is important that apparel designers of Jammu and customers create opportunities to work together and fulfil the designated need, as combined efforts are more effective. It would also help the customer to design the product exclusively tailored according to her taste and preference.

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• Customer Expertise and Experience Designers are realising that the fastest way to win is by

working with customers and improving their expertise by encouraging them to enhance their knowledge about the latest trends viewed through advertisements about ethnic wears and procure some new, fresh and innovative ideas about the designs. In the context of our study, increasing customer education and hence expertise will lead to customers focusing increasingly on technical elements of the service offering. Education initiatives should develop accordingly. Thus, designers have to recognise the complexity and urgency of generating customer experience, so as to inculcate a sense of involvement and achievement among target customers.

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• Co-creation of Value Co-created products are considered significantly more

attractive, innovative, unique and better suited to the needs as compared to the product that is presented as non co-created. However, very few organisations and individuals are following it in practice as creating value in the constellation is a complex process.

Thus, Designers should consider the fact that consumers are the source of value creation and competitive advantage and thus they should invite consumers to collaborate with them, exert influence, gain recognition and enjoy themselves. Consumers should be motivated to voice their opinion about the product and get involved in the co- creation process.

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• Unique Offerings As the marketplace becomes increasingly crowded with

products and services, it is becoming difficult for companies to stand out amidst the noise, clutter and cut throat competition. To anticipate the shift in consumer preferences, designers should produce unique products or services in their efforts to remain viable and competitive. Designers should adopt the strategy of customisation, which aims at providing products and services that are best adapted to individual customer preferences. The more a designer knows about her customers' needs, the better she can serve them to their satisfaction. The more satisfied the customer is by the perceived uniqueness of a product or a service, the higher the differentiation both the customer and service provider will enjoy.

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Limitations and Future Research • This research breaks new ground in addressing the

complicated phenomenon of resource integration and composite expertise through customer participation in NPD. As such, the study is subject to several limitations. These limitations suggest areas and directions for further research. First, the study is confined to the female members of only one Club and thus, other clubs in the city were not included. As the responses were obtained from female customers only, the issue of gender biasness cannot be ruled out. Secondly, the service experience or the word of mouth (positive or negative) of customer has not been measured. Thus, present research can be extended to dyadic relationship, in which the views of both parties (customers as well as the source person) can be analysed simultaneously.

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• Further, focus can also be laid on other dimensions like re-patronage and new customer acquisition. Moreover, the study has considered the role of customers in the co-creation and unique offerings of only apparels; further studies can consider other services of similar nature like interior decoration, event management, jewellery and ornament designing.

• Lastly, further research shall be conducted on is the extent to which consumers overcome environmental resistances and use the external environment as a resource and integrate it, imaginatively and creatively with their combined operant resources to achieve value in an experiential episode.

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