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Value Co-Creation in E-Commerce

A Case-Study of a Swedish E-Retailer

Written by Anonymous

Paper category

Bachelor Thesis


Business Administration>Marketing & Sales




Thesis: Value creation in relationships When participating in stakeholder relationships, both suppliers and customers are faced with so-called co-creation, that is, creating value in a collaborative manner through goods and services and interaction (Grönroos, 2008). In addition, it is said that the entities participating in the co-creation are all participants included in the relationship, and there is no difference in the amount of value that different parts of the relationship can create (Grönroos 2008; Grönroos & Ravald 2011). However, when establishing a long-term relationship, the interests of both parties are much greater. In long-term relationships, factors such as safety, security, credibility, and continuity are believed to increase trust and thereby increase customer loyalty (Ravald & Grönroos, 1996). In addition, Grönroos (2008) claims that customers create value for themselves, while suppliers are only there to support the value creation process. In the end, the situation may arise when the supplier can interactively enhance the customer's ability to create value through a support process called value co-creation (Grönroos, 2008). This supports the theory of Ravald and Grönroos (1996) that customers will be satisfied with the supplier after a certain number of successful economic interactions, thereby building trust. Adding benefits to customers means that there is some added value in the exchange that is considered beneficial by customers. This may be after-sales service or warranty. If the added value is consistent with the core product and provides added value to customers, it will have a positive impact on the perceived quality of customers (Ravald & Grönroos, 1996). Compared with increasing revenue by adding functions or services to core products, it is also possible to increase value by reducing customer-perceived sacrifices (Grönroos & Ravald, 1996). In order to better understand how to achieve this, the company must look at the value exchange from the customer’s perspective, which is the core of relationship marketing (Ravald & Grönroos, 1996; Gummesson, 1994; Grönroos, 1994). When the company makes enough of its products This becomes possible when reviewing to understand the customer’s value chain and how the product meets his needs. Examples of reducing customer perceived sacrifices might be free returns when purchasing online or increasing the comfort of express delivery. Increasing revenue or reducing sacrifices both strive to achieve the same goal, which is to have a positive impact on customers' purchasing decisions. (Ravald & Grönroos, 1996). 2.3 Value co-creation According to Vargo and Lusch (2004), the characteristic of service-centric marketing logic is that value is created in the dual group between customers and suppliers, that is, value co-creation. In addition, the service-centric dominant logic largely anticipates the ongoing process in the relationship, in which the customer is always involved in the value creation process (Vargo & Lusch, 2004, 2008, 2017). In the value co-creation relationship, the two parts of the interaction must participate and participate in the exchange on an equal footing (Grönroos & Ravald, 2011). The basis of interaction is psychological, physical or virtual contact. In this contact, the supplier (supplier) can use the knowledge acquired from the customer to guide the customer’s course of action through direct and indirect interaction (Grönroos and Voi Mar, 2012). 2.3.1 Direct interaction Direct interaction is a phenomenon in which the resources of an enterprise and its customers are connected with each other on a continuous basis. This is done through a dialogue process, and both parties actively participate in order to keep the dialogue active. Direct interaction usually occurs during production and delivery, because this is when most of the dialogue between the supplier and the customer occurs naturally. Having said that, conversations can occur in any type of program (Grönroos & Voima, 2012). In the process of direct interaction, the actions of suppliers and customers are likely to exert influence in the value creation process (Ma & Dube, 2011). If the customer decides that he or she wants to customize something, they may affect the actual production process. For example, if a customer requests a possible upgrade to the service they are about to use, the service provider can influence the customer's value creation process. If the provider agrees to upgrade, this will result in a positive value. On the contrary, this is where suppliers can negatively impact value creation by rejecting customer upgrade requests (Grönroos & Voima, 2012). 2.3.2 Indirect interaction Indirect interaction can be expressed as the situation where customers are using or consuming products or services. In this category, interaction only occurs between the customer and the product or service. This process can be exemplified in a service environment by using a newly washed car, where it creates value for customers by taking pride in their clean cars and gaining praise. Indirect interactions also develop before direct interactions, for example, when a customer conducts research on a website about a product that is about to be purchased. (Grönroos and Voima, 2012). Read Less