The Customer as Co-Producer

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The customer as co-producer
Solveig Wikström - School of Business, Stockholm University, Stockholm, Sweden

Introduction
A look at what is happening in the world of business today shows that the focus of business development is now gradually moving away from products and factories. Instead, interest is concentrated on the various processes taking place around the customer. This orientation is not new. Concepts such as “customer orientation”, “close to the customer”, “customer segmentation” and “niche marketing” are well-known and much tested, along with ideas about “direct marketing”, “database marketing” and so on. The common denominator in all these concepts is a greater focus on the customer. Another step forward is the conception of the customer as co-producer. The phrase itself – the customer as co-producer – occurs increasingly often in the literature (Davidow and Malone, 1992; Grönroos, 1990; Gummesson, 1991; 1993; Pine, 1993; Toffler, 1980; 1983), and we have to ask ourselves whether this is simply a variation on earlier attempts to reach the customer, or whether a pattern of action is emerging that is different, involving real rethinking and even new thinking. The most important point, of course, is how much extra value is this procedure capable of producing, and how much commitment and action is required of both the parties involved. And naturally the question also arises: how wide is the range of this new business logic? Is it restricted to industrial markets with few buyers and sellers and a well-established interactive way of working, and to service markets where the customer by definition is part of the production process? Or could it be applied to consumer markets as well? In this paper the focus is on the co-production logic applied to consumer markets, and relating this to the experience and knowledge gained from industrial markets. If we want to identify the basic ingredients in this idea of the customer as co- producer, we should perhaps look at an empirical case in which these ingredients are particularly prominent. But first, some clarification is required regarding the differences between the logic of co-production and that of the traditional transaction. The idea is that when the customer is conceived as co-producer, the inter- action between the parties should generate more value than a traditional transaction process, during which seller and buyer meet briefly, exchange finished products and services and then go their separate ways. Above all the new business logic presupposes a very much longer relationship between buyer and seller, and a highly refined distribution of roles. It is assumed that this will create more value in several ways. In particular it is assumed that the deeper relationship will create opportunities for acquiring more knowledge, thus making the company better able to adapt to the customer and to provide higher quality (Badaracco, 1991; Brown, 1991; Christopher et al., 1991; Milgrom and Roberts, 1990; Wikström et al. 1994; Wikström and Lundkvist, 1995; Womack et al., 1990). The whole process can move more quickly, since the different stages in the sequential transaction process (idea creation – production – marketing – consumption) shift ground and assume a new shape. Furthermore, the deeper interaction between seller and buyer improves the level of creativity on both sides; this in turn is likely to give birth to new ideas and to new ways of doing business. In other words co-production can be seen as a way of acquiring generative knowledge as well. It sounds a seductive idea. But what does it mean in purely concrete terms – “the customer as co-producer”? What are customer and supplier supposed to do? How does the customer-market relation change, and what is the effect on production and organization within the company? We can illustrate this with the case of a company which we would not have expected to have any particularly advanced ideas about business logic, namely a...
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