Academic journal article Journal of Economics & Management

Customer Knowledge in (Co)creation of Product. A Case Study of IKEA *

Academic journal article Journal of Economics & Management

Customer Knowledge in (Co)creation of Product. A Case Study of IKEA *

Article excerpt

Introduction

Already P.F. Drucker [1999] used to claim that knowledge is the key resource in the 21sth century. Knowledge - as a unique resource - provides the foundation on which an enterprise can build its sustained competitive advantage. Knowledge supports the enterprise in any areas where it operates. It enables the company to establish knowledge relationships, through which cooperating entities share their knowledge in business processes [Gummesson 2012]. Until recently, the customer used to be regarded as a potential source of knowledge and perceived as performing a passive role only [Gibbert, Leibold and Probst 2002]. At present, however, companies are increasingly eager to tap into the knowledge possessed by their customers. This has led to the growing popularity of Customer Knowledge Management, which allows firms to identify, acquire and utilise customer knowledge, in order to boost their revenues, mitigate risk and avoid launching unmarketable products [Gebert et al. 2002]. X.L. Comtesse [2006] claims that we are now, in a sense, departing from the economy which is based on producer knowledge, by replacing it with customer knowledge. This is a kind of revolution which affects the way we think about a modern economy.

Over the last few years the need to establish a closer cooperation with customers and involvement of them in value creation has become more and more apparent [Thomke and von Hippel 2002; Prahalad and Ramaswamy 2004]. Such cooperation clearly appears to be mutually beneficial. On one hand, customers receive an offer which is perfectly tailored to their expectations - in terms of quality and components - and, on the other hand, the company is able to increase its profitability over the long time span. Internet technology plays a key role in the development of this cooperation, by offering an affordable method of business-to-consumer, consumer-to-business and consumer-to-consumer communication. As a consequence, the internet environment makes an ideal setting for working together with customers.

How extensively and thoroughly customer knowledge may be used in business processes depends on industry, although the company itself and the its strategy [Larsson and Bowen 1989; Bitner et al. 1997]. This paper focuses on IKEA, a global group which follows a low-cost strategy1. A low-cost business model is based on a value-for-money advantage, striving to generate profits from low operating costs [Slywotzky, Morrison and Adelman 2000]. Low-cost providers offer good quality products (services) at competitive prices. In order to find a cheaper option, a customer frequently has to get more engaged in the process of service provision. Such an approach differs considerably from the one adopted by more traditional companies, which tend to personalize their client relationships and take over many activities, which would otherwise have to be carried out by customers themselves. Customers of low-cost companies are encouraged to actively participate in their operations, which are facilitated, to a large extent, by self-service technologies.

The article aims to identify the ways in which customer knowledge may be used in creating new products (services) as well as modernizing the existing ones. The last section of the paper, i.e. case studies, presents some examples of activities undertaken by IKEA in their attempts to create products based on customer knowledge and/or co-create products in collaboration with individual customers, online communities and lead users.

1. Customer knowledge and its types

Customer knowledge is becoming a key intangible asset for companies, as it allows them to create and reconfigure value [Rowley 2002]. In addition to that, it is very likely to be seen as an indispensable source of long-lasting competitive advantage in the nearest future [Claycomb, Dröge and Germain 2005]. The benefits gained from customer involvement in value creation include, as listed by Reichwald and Piller [2006], development of new products, lower costs of innovations, better acceptability of new products and higher customer willingness to purchase these products and appreciate their actual newness. …

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