Customer the new product (Brockhoff, 2003; Stenmark, Tinnsten

 

 

 

 

 

 

 

 

Customer Involvement in New Product
Development

 

 

Zainab Khaleel Ali

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02-17-00063

 

 

Marketing Management

EMBA504

Dr. Heja Sindi

 

 

 

 

 

 

 

 

Introduction:

Customers involvement in new product
development is not new, however, it was an indirect involvement through market
research, questionnaires, feedbacks and suggestions. Many new products have
been produced, launched and failed due to the lack of deep understanding of
what customers really need; that urged companies to find new ways to involve customers
and ensure a continuous collaboration through the new product development
process. In this literature review we will go through what have been discussed
about customers’ involvement in new product development in a number of
researches to shed the light on the importance of this collaboration on the
success of new products in the market.

One of the crucial factors for company’s
growth and strength is developing new products to compete other companies in
the market. However, not all new products have the chance to succeed (Geise,
2017). Statistics rates of new products success show that one from every four
new products becomes commercially successful (Light Minds, 2005). Involving customers in new
product development could be of great value and can play a role in the success
of the new product (Brockhoff, 2003; Stenmark, Tinnsten & Wiklund, 2011). Eriksson
and Hilletofh (2010) argue that during the new product development, deep
understanding of customer needs should be considered rather than the technology
of the product. In the 70s, customers were considered as passive buyers and
their roles was defined in the consumption stage while in today’s market, customers
considered as partners who participate in the creation process (Agafitei and Avasilcal,2016).
Co-creation is the term that used to describe the collaboration between the
company and its customers to develop a new product (Liljedal, 2016). According
to Agafitei and Avasilcal (2016), the term co-creation has been mentioned for
the first time in 2000 and it defined the active customers who participate in
defining the value of the new product or service. Cheron and Pera (2016) described
the co-creation as a booming activity that has been implemented nowadays by
companies to include their customers in the creation process by generating
ideas and giving an insight to the company to develop a new product or improve
an existing one.  

Customer Involvement:

Sanden (2007) stated that “customer
involvement effort should start with a definition of the project’s
prerequisites in terms of corporate, marketing and innovation strategies, and
cultural and organizational factors such as skills and competences needed and
the organization of the project”. Customer participation defined as the extent
to which they are involved in the new product development (Fang, 2008). Brockhoff
(2003) mentioned that the degree of customers’ co-creation should be measured
and they should be selected based on their potential stage of contribution. A
research by Fang, Palmatier and Evans (2008) measured customer participation by
breadth and depth of co-creation. The breadth refers to the range of customer
involvement in the NDP stages (concept generation, prototyping, and product
testing) while the depth refers to the level of customer involvement in each
stage of the NDP. Another research by Hoyer, Chandy, Dorotic, Kraftt and Singh
(2010) measured customer participation by scope and intensity of co-creation.
The scope refers to the tendency of the company to collaborate with customers
through the NPD process stages while the intensity refers to which extent the
company is relying on co-creation in the NPD different stages. Fuchs and
Schreier (2011) referred to customer empowerment and argue that involving
customers in NPD enable companies to develop better products and to reduce the
risk of product failure by using customers’ valuable input. Nambisan (2002)
relate the customer role in NPD to four areas: customer and value creation,
customer as resource, customer as co-creator and customer as user. Geise (2017)
emphasized on the importance of customers as valuable resources for the
companies that work with open innovation strategy to generate new ideas.

Companies find customer co-creation, a
successful approach for ideas generation and mirroring closely what customers
need (Hoyer, Chandy, Dorotic, Kraftt and Singh, 2010). Ideas generation was a
manufacturer-active role rather than a customer-active role, Hippel (1978)
developed a new customer-active paradigm where companies develop new products
according to the customers’ request who communicate their needs opposite to the
manufacturer-active paradigm where companies search for customers’ needs then
develop the product. Therefore, Sanden (2007) argue that outsourcing parts of
the creation process puts demands on the company and requires a shift in
mindset; customers should be considered and treated as partners by the
company’s employees who take part in that collaboration.

The development of new communication
technologies participated in changing the producer-customer relationship and
has its implications on the NDP (Nambisan, 2002). According to Luo and Toubia
(2015), online platforms for idea generation give companies access to customers’
ideas, categorize ideas and offer free navigation to customers across these categories.
Vere (2014) argue that social media enabled a new way of consumerism where consumers
are playing an active role in product design and production through the virtual
communities.  Roberts and Piller (2016)
mentioned that social media is not limited in Facebook and Twitter but it
includes special forums and blogs which provide information that lead to
successful new products. Companies across industries start establishing virtual
customer communities where customers share knowledge and participate in new
product development (Nambisan, 2002).

Customer involvement can go beyond ideas
generation to product test and product support; involving customers in product
test stage can help the company to detect flows in an early stage of developing
cycle which can reduce the cost of redesigning the product (Nambisan, 2002). Fuchs
and Schreier (2011) argue that marketers can use customer empowerment as an
effective approach to enhance customer orientation and as positioning strategy
that can be used to gain competitive advantages in the market. Johnson (2007) found
that information can be obtained from customers through three stages of NPD:
ideas generation, product development, and product launch; this approach
disagrees with the idea of involving customers only in early stage of NPD
process and expand the role of customers to all NPD stages.

Customer Motivation:

One of the important aspects in customer
involvement in NPD is to understand what motivates customers to be part of
generating ideas and testing or evaluating the product (Agafitei and Avasilcal,
2016). Understanding customers’ motivation to participate in the new product
development process can be beneficial for both customers and producers
(Brockhoff, 2003). Some of the motivation factors according to Hoyer et al.
(2010) can be financial rewards or social benefits. Companies should
communicate the reasons that will motivate the customers and show the value
that they will get from their participation (Liljedal, 2016).  From the other side, Brockhoff (2003) argue
that customers also should clarify their involvement strategy in the NPD
process to get an equivalent value for their participation. Fernandes and
Remelhe (2016) found that the most important motivation factors for customers’
participation in new product development are knowledge acquisition and
intrinsic motivations while rewards were not among the most important
motivation factors for the customers.

Challenges:

Nambisan (2002) discussed a number of
challenges related to customer involvement in NPD such as finding innovative
customers in cost-effective way, creating incentives to encourage customers to
contribute in the process and capturing the customer knowledge. Customer
involvement in many cases can be limited to interviews and product testing due
to two reasons; first, it can be costly for the company and second, many
companies do not agree to reveal information about any new products before
releasing it (Stenmark, Tinnsten and Wikland, 2011). Another challenge is
managing the co-creation process between the company and the customers; any
misbehaver from the company (intentionally or accidentally) might have a
negative influence on the process and might lead to lose the trust and the
commitment of the customers (Cheron and Pera, 2016). Therefore, customers’
co-creation activities should be managed carefully to ensure the efficiency and
effectivity of the process (Nambisan, 2002).

 

 

Conclusion:

As a conclusion, traditional new product
development model, in which producers are responsible for generating ideas and
deciding which product should be produced, is facing a challenge by innovation
management approach which support the democratizing of innovation by involving
customers and empowering them to take an active role in NPD. This approach
become workable because of the internet, social media and virtual customer
communities that provide the chance to companies to build an online
communication medium where they can get access to thousands of ideas from all
over the world (Fuchs and Schreier, 2011). Beer (as cited in Hoyer, 2010) has
outlined Jeffrey Kalmikoff, Chief Creative Officer of Threadless.com words:

“We don’t advertise at all. All our
efforts are toward finding ways of expanding word of mouth. If you’re a
designer and you want to get chosen, you’re going to tell everyone you know to
go to the site and vote. If you’re going to do that, why wouldn’t we give you
the tools to do that better? Banners for your site, the ability to send mass
e-mails and stuff like that. It also grows our site because in order to vote,
people need to register and get a username, which gets more people on our
newsletter. Is it marketing? Of course”.

 

 

 

 

References:

–       
Agafitei, I., & Avasilcal, S. (2016). New
Product Development: Implications of Co-Creation. Fascicle of Management and
Technological Engineering, 2, 101-106.

–       
Brockhoff, K. (2003). Customers’ Perspectives
of Involvement in New Product Development. International Journal of
Technology Management, 26, 464-481.

–       
Cheron, Ch., & Pera, G. (2016). Co-Creation
dering New Product Development: Downsides and effects of a booming activity
(Master’s thesis). Umeå School of Business and Economics, Umeå, Sweden.

–       
Eriksson, D., & Hilletofth (2010). The Role
of Consumer Insight in New Product Development and Its Impact on Supply Chain
Management: A Swedish Case Study. Retrieved from:

https://www.diva-portal.org/smash/get/diva2:1073381/FULLTEXT01.pdf

–       
Fang, E. (2008). Customer Participation and the
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Marketing, 72(4), 90-104.

–       
Fang, E., Palmatier, W., & Evans, K.
(2008). Influence of customer participation on creating and sharing of new
product value. Journal of the Academy of Marketing Science, 36, 322-336.

–       
Fernandes, T., & Remelhe, P. (2015). How to
engage customers in co-creation: customer’s motivations for collaborative
innovation. Journal of Strategic Marketing, 24(3-4), 311-326.

–       
Fuchs, Ch., & Schreier, M. (2011). Customer
Empowerment in New Product Development. Journal of Product Innovation
Management, 28, 17-32.

–       
Geise, F. (2017). Integration of Consumers into
New Product Development by Social Media-Based Crowdsourcing – Findings from the
Consumers Goods Industry in Germany. Advances in Advertising Research, 7, 15-27.

–       
Hippel, E. (1978). Successful Industrial
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–       
Hoyer, W., Chandy, R., Dorotic, M., Krafft, M.,
& Singh S. (2010). Consumer Cocreation in New Product Development. Journal
of Service Research, 13(3), 283-296.

–       
Johnson, J. (2007). The Role of the Customer
in the New Product Development of Radical Innovations (PhD thesis). Graduate
School of Vanderbilt University, University in Nashville, Tennessee.

–       
Light Minds (2005). Understanding customer need
during new product development white paper. Retrieved from: http://www.lightminds.co.uk/WhitePaper.pdf

–       
Liljedal, K. (2016). Communicated Consumer
Co-creation: Consumer Response to Consumer Co-creation in New Product and
Service Development (PhD thesis). Stockholm School of Economics, Sweden.

–       
Luo, L., & Toubia, O. (2015). Improving
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Basis of Consumers’ Domain-Specific Knowledge. Journal of Marketing, 79,
100-114.

–       
Nambisan, S. (2002). Designing Virtual Customer
Environments for New Product Development: Toward a Theory. The Academy of
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–       
Roberts, D., & Piller, F. (2016). Finding
the Right Role for Social Media in Innovation. MIT Sloan Management Review,
57(3), 41-47.

–       
Sanden, B. (2007). The Customer’s Role in
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Karlstad, Sweden.

–       
Stenmark, P., Tinnsten, M., & Wiklund, H.
(2011). Customer involvement in product development: Experiences from
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–       
Vere, I. (2014). A New Consumerism: The
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