advertising. Consumers are talking about your products in real time via Facebook, Twitter, Tumblr and on any number of ... and efficiency gains through cost-.
REVIEW
ExEcutive SUMMARY NEW VOICES
Involving consumers in new product development Wayne D Hoyer, Rajesh Chandy, Matilda Dorotic, Manfred Krafft and Siddharth S Singh,‘Consumer cocreation in new product development’, Journal of Service Research 13, no. 3, 2010. Social media is now so powerful that it threatens to supplant traditional advertising. Consumers are talking about your products in real time via Facebook, Twitter, Tumblr and on any number of other networks. This has led them to desire greater interaction with companies, even
in the process of value creation. Rajesh Chandy (Professor of Marketing and the Tony and Maureen Wheeler Chair in Entrepreneurship at London Business School) and four colleagues from other universities (Wayne Hoyer, Matilda Dorotic, Manfred Kraft and Siddharth Singh) studied this trend to find out the risks and rewards that occur when consumers are invited, even encouraged, to participate in new product development (NPD). As noted at the beginning of their article: “One important outcome of this increased consumer empowerment is that consumers now desire to play a greater role in the process of value creation. This process is referred to as cocreation and can occur in a variety of contexts.” The researchers found potential competitive advantages from ‘cocreation’: increased productivity and efficiency gains through costminimisation (by using consumer input in product or service development, rather than employee input) and increased effectiveness of cocreated products (through their closer fit to consumer needs and higher commercial potential). But, opening your shop to the public has risks. For instance, the
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authors noted that when General Motors invited users to take existing video clips of its Chevrolet Tahoe SUV and insert their own words to create new versions of the ads, the most popular ads were satires that attacked the vehicle for its low gas mileage. The potential for diminished control over strategic planning (especially concerning incremental vs. radical innovation) was also shown to be an area of concern, as was the increased complexity of managing the firm’s objectives and the interests of diverse stakeholders. Another obvious risk is that cocreators, armed with tools identical to those provided for in-house developers, may pose a competitive threat. On the other hand, the researchers found that significant cost savings can be gained by soliciting opinions during the product/service development stage of NPD: reducing the need for in-house market research, diminishing the risk of product failure and potentially lowering inventory-holding costs. Furthermore, continuous product improvement and new usages are likely to emerge more quickly. Efficiency, product/service turnover, employee satisfaction and, ultimately, increased profitability are potential advantages of social networking. One example cited is Threadless. com, a T-shirt manufacturer, which has fully engaged its customers in the cocreation process. Consumers vote on new designs submitted by customers and the most popular are sent into production and sale, with several new designs offered each week. The winning designers are paid and are allowed to keep the rights to their artwork. Of course, there’s a big difference when comparing the stages of NPD as applied to vehicle manufacturing and T-shirt production. The authors point out the need for a conceptual framework to help define appropriate situations for including consumers in NPD. In any case, social networking is here to stay; and firms would be wise to acknowledge the new, nonemployee voices eagerly waiting to speak during corporate discussions about new product development.
