Market concentration and effectiveness of co-creation (2011)

Power to the People!Does market concentration play a role in the effectiveness of co-creation?

What’s coming

1.Background 2.Present study 3.Findings 4.Implications

1

1.Background.

2

What makes co-creation effective?

3

What is co-creation?

4

Company-driven NPD

5

Co-creation: user-driven NPD

6

Success stories

Linux Apache Firefox

7

Success stories

8

Success stories

9

Non-participating users

10

Positive effects

Customer orientation

Innovation ability

11

Negative effects

Design complexity

User expertise

12

Market concentration

13

Market concentration

high concentration low concentration

14

Market control

When crypto-monopoly is assumed it no longer follows that any of the old goals of social efficiency are realised.

“ “15

John K. Galbraith, American Capitalism (1952, p.43)

Market control

Prices Innovation

Technical advance Culture

16

Attitude change: positive

17

Attitude change: negative

18

Consumer resistance

19

Consumer resistance

20

Consumer resistance

21

Consumer resistance

22

Research question

Does market concentration play a role in the effectiveness of co-creation?

23

2.Present study.

24

26

high concentration

Effects of market concentration

25co-creation

low concentration

26

Effects of market concentration

26co-creation

Hypotheses

H0: Consumers prefer user-driven value creation strategies to company-driven ones.

H1: Preference for a user-driven value creation strategy is associated with market concentration.

27

Conceptual model

market concentration

value creation strategy

behavioural intentions

28

Methodology

29

Industry

software for video editing30

VS

2 × 2 between subjects design

company-driven user-driven31

2 × 2 between subjects design

high concentration low concentration

VS VS

32

Functionality & Innovativeness

33

6.4

5.7

Functionality & Innovativeness

34

5.7

6.4

Reliability & Usability

35

5.2

5.9

Reliability & Usability

36

5.9

5.2

?

Which option will they choose?

company-driven user-driven37

3.Findings.

38

Participants

600 invitations

162 usable responses

No reward for participation

39

Mean age: 27 years (SD = 7.90)

Participants

56% male

54% non-student

40

Manipulation and control checks

1.Type of value creation strategy 2.Level of market concentration 3.Differences in attribute rating

✔

41

1.Involvement 2.Product knowledge 3.Expertise

✔

So, did market concentration play a role?

42

Choice shares by market concentration

0%

20%

40%

60%

80%

100%

Low concentration High concentration

31,0%28,2%

69,0%71,8%

User-drivenCompany-driven

Market concentration and preference for type of value creation strategy

43Company type choice by market concentration: χ2(1) = 0.49, p = .48

Choice preference

0

1

2

3

4

5

6

7

Low concentration High concentration

4,72 4,83

3,05 3,28

User-drivenCompany-driven

Market concentration and preference for type of value creation strategy

44Company type preference by market concentration: F = 0.40, p = .53; measured on a seven-point

Lykert type scale (1 = Company "A" and 7 = Company "B")

Option “1” adoption likelihood

0

1

2

3

4

5

6

7

Low concentration High concentration

4,11 3,88

5,214,52

User-drivenCompany-driven

Market concentration and preference for type of value creation strategy

45Company type preference by market concentration: F = 3.13, p = .08; measured on a seven-point

Lykert-type scale (1 = Very unlikely and 7 = Very likely)

Option “2” adoption likelihood

0

1

2

3

4

5

6

7

Low concentration High concentration

5,03 4,85

3,87 4,15

User-drivenCompany-driven

Market concentration and preference for type of value creation strategy

46Company type preference by market concentration: F = 0.41, p = .84; measured on a seven-point

Lykert-type scale (1 = Very unlikely and 7 = Very likely)

H1: Preference for a user-driven value creation strategy is associated with market concentration.

47

Value creation strategy and preference

48

Frequency of choice

0%

20%

40%

60%

80%

100%

32,1%

67,9%

User-drivenCompany-driven

Adoption likelihood

0

1

2

3

4

5

6

7

3,544,88

User-drivenCompany-driven

Value creation strategy and preference

49Company type adoption likelihood: t(161) = 3.90, p < .001; measured on a seven-point Lykert-type

scale (1 = Very unlikely and 7 = Very likely)

Value creation strategy and preference

50Relative contribution of company type description and performance attribute ratings: χ2 = 32.10, p < .001.

Contriubtion to choice preference (R-statistic)

Company type description

Functionality & Innovativeness

Reliability & Usability

0,0 0,2 0,4 0,6 0,8 1,0

0,16

0,14

0,30

Frequency of reasoning behind preference

31%

4%4%

39%

23%Customer orientationTarget segmentDiversityNumbersExpertise

Reasons for co-creation preference

51

Perceived expertise

Perceived Innovation ability

Perceived customer orientation

Frequency of reasoning behind preference

31%

4%4%

39%

23%Customer orientationTarget segmentDiversityNumbersExpertise

Reasons for co-creation preference

52

Perceived expertise

Perceived customer orientation

Frequency of reasoning behind preference

31%

4%4%

39%

23%Customer orientationTarget segmentDiversityNumbersExpertise

Perceived Innovation ability

H0: Consumers prefer user-driven value creation strategies to company-driven ones

53

4.Implications.

54

Theory

1.Generalisability 2.Counter mediation 3.Consumer resistance

55

Practice

1.Focus: A.Novice users B.Target segment

2.Avoid: A.Market structure B.Freedom of choice

56

Limitations

Like the physical, the psychical is not necessarily in reality what it appears to us to be.

“ “57

Sigmund Freud, “The Unconscious” in The Freud Reader (1989, p.577)

Limitations

1.Student sample 2.Atypical product descriptions 3.Experimental design 4.Polar opposites

58

Future research

1.Wider demographic 2.More product categories 3.Different levels of empowerment 4.B2B

59

Conclusion

1.First study 2.Inconclusive evidence 3.Unsolved mysteries 4.More research needed

60

Thank you!