Mark Lett (2016) 27:183–193 DOI 10.1007/s11002-015-9361-2
Brand-embedded interaction: a dynamic and personalized interaction for co-creation Yuna Kim & Rebecca J. Slotegraaf
Published online: 5 March 2015 # Springer Science+Business Media New York 2015
Abstract Recognizing the importance of timely access to market knowledge for successful new product development (NPD), extant research has theoretically argued and empirically shown the value of consumer co-creation during the NPD process. While most research views consumer-generated content as definite or fixed, this paper reveals how firms can enhance the value of consumer-generated ideas by facilitating the exchange of relevant information during co-creation. The authors introduce brandembedded interaction as a process that enables consumers to generate new product ideas that not only reflect user needs but also align with the brand’s goals and capabilities. Results from two quasi-field experiments using Twitter show that a higher degree of dynamic interaction and personalization during co-creation enables consumers to generate more constructive new product ideas or ideas that are valuable to both consumers and firms. Results offer important implications for both theory and practice regarding co-creation and new product development. Keywords Co-creation . Interaction . Knowledge integration . Idea generation
1 Introduction Gaining access to timely and reliable information about consumer needs and preferences is one of the most critical yet challenging pursuits for developing successful new products (Ogawa and Piller 2006). Recent trends reveal that firms are harnessing technological advances to co-create with consumers to generate ideas that reflect current market needs (Prahalad and Ramaswamy 2004). For example, Starbucks leverages its BMy Starbucks Idea^ Web site for new product and service ideas and PepsiCo’s Lay’s brand employs its BDo Us a Flavor^ contest to involve consumers in Y. Kim (*) Mihaylo College of Business and Economics, California State University, Fullerton, Fullerton, CA, USA e-mail:
[email protected] R. J. Slotegraaf Kelley School of Business, Indiana University, Bloomington, Bloomington, IN, USA e-mail:
[email protected]
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creating new flavors. However, industry practice and academic research demonstrate challenges in extracting value from consumer-generated ideas. For example, Starbucks had to sift through more than 100,000 ideas submitted through its BMy Starbucks Idea^ Web site before determining which products to develop and launch. Research also confirms wide variance in the quality of user-generated content (Agichtein et al. 2008). We argue that firms can reduce this variance and enhance the value of consumergenerated ideas by consciously providing the most relevant information during cocreation. Specifically, we introduce brand-embedded interaction as a dynamic exchange of relevant brand information (from the firm) and idiosyncratic information (from the consumer). We emphasize information exchange at the brand level because most large firms have a brand portfolio (Morgan and Rego 2009) and use various positioning strategies and specific language for their different brands. Also, in contrast to extant research that examines consumer-generated content as definite or fixed (e.g., Scheweidel et al. 2012, unpublished; Tirunillai and Tellis 2012), we view this content to be malleable. Therefore, we propose that firms should use brand-embedded interaction as an opportunity to learn about consumers’ needs as well as educate consumers about the brand’s current interests. This will enable consumers to generate ideas that are important to them while also better aligned with the brand’s goals and capabilities, thus enhancing the value of consumer-generated ideas. In this research, we investigate whether and how brand-embedded interaction generates new product ideas that align with user needs and brand strategies to consequently enhance the ideation process.
2 Literature review and hypotheses 2.1 Importance of dynamic information exchange One of the main difficulties in new product development (NPD) is the effective integration of knowledge from different sources to develop products that are not only in line with strategic goals but also meet market wants and needs. As firms attempt to understand consumer needs, the external sources they turn to for new product ideas pose specific advantages and disadvantages. New product ideas from lead users are often leading-edge but not applicable to the mainstream market (Luo and Toubia 2009, unpublished). New product ideas from professional developers tend to have a high chance of being commercialized, but not successful at solving user problems (Kristensson et al. 2004). On the other hand, ideas generated by mainstream consumers tend to involve high creativity but low feasibility (Magnusson 2009). One approach to overcoming this divergent knowledge is the use of Btoolkits^ for user innovation (von Hippel and Katz 2002), which are design tools provided by the firm that enable consumers to develop innovation for themselves. With toolkits, the firm abandons the attempt to understand detailed user needs in favor of transferring need-related aspects to users through solution kits that are specified by the firm (von Hippel and Katz 2002). By allowing users to produce solutions in a space that is most comfortable to them, toolkits eliminate difficulties associated with sticky knowledge transfer and generate efficient involvement of users. However, the solution kits still contain restrictions imposed by the firm and may not uniquely relate to user needs.
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More importantly, limited learning occurs for the firm because the sticky information remains with the user. To overcome this latter concern, Prügl and Schreier (2006) suggest that rather than providing a standardized toolkit, firms should allow users to create their own toolkits and share them with other users. This method increases the scope of innovative ideas, yet the firm’s release of control may dilute the initial objective(s) of the project. We argue that brand-embedded interaction offers an alternative approach to overcome these concerns by reinforcing the importance of a dynamic exchange of information between firms and consumers. Dynamic information exchange occurs when a firm and consumer actively respond to the other party’s information. Consumers engaging in brand-embedded interaction are also provided with a Btool^ (relevant brand information provided by the firm) to generate ideas. However, in contrast to the toolkit methods, which direct consumers to use the toolkit to compartmentalize knowledge, brand-embedded interaction emphasizes knowledge integration by encouraging consumers to use the tool, or brand-specific information, to contextualize and explain their idiosyncratic knowledge. Consumers’ idiosyncratic knowledge is sticky, or tacit, because it is embedded in beliefs, experiences, or values (Nonaka 1994). Therefore, an individual is either unaware of the knowledge she possesses or unable to clearly express her needs and preferences. For example, consumers have expressed difficulty in describing the taste of wine not because they do not taste it, but because they lack the means to express the taste (Melcher and Schooler 1996). However, tacit knowledge can be converted into explicit knowledge through a process of externalization (Nonaka 1994). The externalization process relies on the use of language that enables individuals to Bunderstand one kind of thing in terms of another^ (Lakoff and Johnson 1980, p. 5). Just as providing relevant vocabulary can enable consumers to connect the taste of wine to a verbal concept (e.g., woody, spicy, and oaky) and explicitly describe it to others (West et al. 1996), firms can help consumers convert their tacit knowledge into explicit knowledge by engaging in a dynamic exchange of information. The dynamic exchange ensures that firms provide the most relevant vocabulary, or brand information, to each consumer at the most appropriate time (in response to the consumer), which will increase the probability that consumers use the brand information to externalize their tacit knowledge. H1 New product ideas from consumers who engage in a dynamic exchange of information with a brand compared to those who do not are more likely to use new information to describe their personal experiences.
2.2 Personalization and degree of dynamism When consumers generate new product ideas, the ideas become more constructive when they are more meaningful and valuable to both consumers (e.g., reflecting user or market needs) and the brand (i.e., reflecting brand resources and firm capabilities). As a result, constructive new product ideas are a valuable brand-specific resource. In markets where differentiation is increasingly challenging, firms generate competitive advantage by personalizing the experience for consumers (Peppers and Rogers
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1993; Prahalad and Ramaswamy 2004). Spending time and effort to personalize a response to individuals and their comments or questions demonstrates a firm’s commitment to consumers. In return, consumers become more involved (Gordon et al. 1998) and willing to help (Howard et al. 1995). We assert that when firms personalize their interactions with consumers, it becomes more relevant to consumers and therefore easier for them to make connections between their idiosyncratic knowledge and the newly obtained information. As they incorporate the brand-specific information into their ideation process, they will be more likely to consider ideas that will be valuable to them as consumers as well as more relevant to the brand. Therefore, high personalization within the interaction will increase the likelihood that consumers will process and use the firm-provided brand information and integrate this with their idiosyncratic knowledge to generate more constructive new product ideas. H2 Brand-embedded interaction with high personalization will lead to more constructive consumer-generated new product ideas than brand-embedded interaction with low personalization. With respect to degree of dynamism, we argue that the degree of dynamic information exchange will help to generate more constructive new product ideas. Drawing from organizational learning research, a greater opportunity for feedback, where one party has the opportunity to ask questions about the underlying values and goals of the other party, enhances learning (Argyris and Schön 1974; Toset et al. 2011). This double- or triple-loop learning enables errors to be corrected and changes to be made before final outcomes are decided. Similarly, increased dynamism with brand-embedded interaction reduces misunderstanding with both parties. As firms and consumers continue to exchange information and learn more about each other, they will become better at identifying the most relevant information for each other. Thus, we argue that increased dynamism in brand-embedded interaction will foster more constructive new product ideas. H3 Brand-embedded interaction with a higher degree of dynamism will lead to more constructive consumer-generated new product ideas.
2.3 Brand knowledge Based on concerns that general consumers lack the necessary knowledge to generate valuable new product ideas, early research identified lead users as valuable collaborating partners (von Hippel 1986). However, brand-embedded interaction offers an opportunity for firms to enhance consumers’ brand knowledge. Brand knowledge encapsulates brand-specific information related to its history, future goals, attributes, benefits, and overall associations (Keller 1993, 2003) that enables consumers to differentiate a brand from other brands in the category (Broniarczyk and Alba 1994). The opportunity to provide relevant brand information during brand-embedded interaction reduces the need to seek out consumers with a high level of prior knowledge. Although consumers with more knowledge have a greater ability to encode and analyze new information, they also have higher motivation to uphold their existing
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knowledge base (e.g., Alba and Hutchinson 1987). This behavior stems from confidence in their ability to differentiate relevant from irrelevant information and in the belief that processing beyond what is relevant will not increase knowledge. As a result, among those with greater knowledge, if new information does not match their extant knowledge, then they tend to disregard the new information in favor of their existing knowledge. In contrast, consumers with less knowledge tend to be more accepting of new information and highly motivated to engage in a broader scope of information processing in an effort to reduce uncertainty (Alba and Hutchinson 1987; Hoch and Deighton 1989). Although these individuals may not have the requisite ability, their openness to new information and motivation to process and learn new information fuels an exchange that the firm can use to build the consumer’s brand-related knowledge base. If these individuals engage in a lower degree of dynamism during brandembedded interaction, then they are less likely to fully understand the brand and will consequently offer new product ideas that are less valuable for the brand (and therefore less constructive). Thus, a higher degree of dynamism among consumers with less knowledge is expected to generate more constructive new product ideas. H4 Consumer’s brand knowledge influences constructive new product ideation such that brand-embedded interaction with a higher degree of dynamism will lead to more constructive consumer-generated new product ideas from consumers with less brand knowledge than from consumers with more brand knowledge.
3 Methodology, analysis, and results We conducted two separate quasi-field studies involving undergraduate students, who were recruited to participate for course credit. Across both studies, coffee (product category) and Starbucks (brand) were chosen as the stimuli to ensure variance in the level of prior knowledge. As the cover story, participants were told they will be participating in a study examining the effectiveness of different types of communication mediums used by firms. Throughout the study, participants were asked to describe their experiences with different communication mediums, which also served as filler tasks. All participants were asked to generate new product ideas for Starbucks. 3.1 Study 1 Using a single factor between-subjects design, 185 participants were randomly assigned to one of three conditions (Control × Website × Twitter). In the Control condition, participants did not receive any brand information; in the Website and Twitter conditions, participants were exposed to the same brand information. Brand information was developed during a pre-test and consists of factual and fictitious information about Starbucks that is of interest to participants. The Website condition represents how most firms disseminate brand information to consumers: unidirectional information through mass messaging on a shared platform. A Web site resembling the actual Starbucks Web site was created for the study, and brand information was presented in a graphic format
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and placed in prominent sections and pages on the site. Participants were told to browse the site as they normally navigate any Web site (with no time restriction). The Twitter condition represents dynamic exchange of information and participants received brand information while interacting with an experimenter on Twitter.1 Twitter is a popular social media platform, with 600 million registered users 2 and more than 75 % of Fortune 100 companies using the platform to engage consumers (McNaughton 2011). Twitter is particularly suitable for brand-embedded interaction because it enables dynamic and personalized exchange of Btweets,^ or short messages, in real time. After receiving detailed instructions on how to use Twitter, participants interacted with a Starbucks representative in real-time during the study. An experimenter in a separate room acted as the Starbucks representative and interacted with each participant. In addition to initiating the conversation with participants by presenting the brand information, the experimenter also responded to a participant’s question with the most relevant brand information. Participants were encouraged to actively ask questions and respond to information provided by the representative. There was no restriction on how many times the participants should interact (i.e., exchange tweets) with the representative. Although brand information was the same in the two conditions, the main difference lies in when participants were exposed to brand information. In the Website condition, exposure to brand information was dependent on the participants’ browsing behavior. In the Twitter condition, brand information was provided in response to a real-time conversation with the participants. Providing brand information will positively impact co-creation efforts if consumers process the information, which involves encoding, storing, remembering and using new information to make future judgments or choices (Johnson and Russo 1984). To test H1 and evaluate whether consumers processed or used the new brand information to describe (i.e., externalize) their idiosyncratic information, we center on whether utilization of brand information is evident in the consumer-generated new product ideas. Specifically, we determine whether a consumer generates a new product idea that incorporates not only her idiosyncratic knowledge but also the new brand information that was provided. This reinforces whether the brand information serves as Brelevant vocabulary^ that fosters a shared understanding between the firm and consumer within the context of the brand. As an example: BI really like the idea of having $1 sample cups. That way I can try lots of different drinks without the opportunity cost of not buying a drink that I really like. To expand on this idea, you should have a Bwinter sampler^ that sells for $5 that has 3 sample size drinks from your winter line. I know personally I always have a hard time choosing between the caramel apple spice and the peppermint mocha, so this way I could have both!^
1
Although the actual Twitter platform was used, a fictitious Twitter account was created. Each participant was asked to use a designated, private Twitter account specifically created for the study. At the end of the study, all participants were debriefed that the brand information, Twitter account, and representative were not associated with Starbucks. 2 As of January 2014 (http://www.statisticbrain.com/twitter-statistics).
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This example shows that the participant uses the brand information provided by the experimenter ($1 sample cups) and incorporates it with her own knowledge (e.g., Bpersonally I always have a hard time choosing^) to generate a new product idea (Bwinter sampler^). We measure whether or not an idea responds to or builds upon the brand information that was provided during the study and refers to a personal experience (includes both =1, other =0). Recall that in both the Twitter condition and Website condition, the same brand information was provided to participants. A logistic regression comparing brand information (Twitter and Website) to no brand information (Control) shows a significant difference (β=1.25, χ2 =10.63, p=0.001, Mnobrandinfo =22 %, Mbrandinfo =46 %). To test H1, a logistic regression was conducted between the Twitter condition and Website condition to determine whether those who engage in a dynamic exchange (Twitter) will differ from those who do not (Website). We also controlled for factors that may affect participants’ ability and willingness to generate new product ideas, including prior knowledge of the brand and product category, brand attitude, innate innovativeness, Internet usage behavior, and participant status. 3 Results show that Internet usage behavior (β= −0.18, p =0.07) and participant status (β= −1.09, p=0.08) are significant, and participants in the Twitter condition have a higher probability of including both idiosyncratic and brand information when generating new product ideas compared to participants in the Website condition (β=1.95, χ2 =18.27, p
