Customer Involvement in Service Innovation Francisco Espanola University of Phoenix New product and service development is an extremely unsafe process for large and small firms. Rates of failure in launching products and services are superior to 50%, and close to 90% in some types of products, services and markets (Kettle & Keller, 2009). Launching of new products and services may fail for different reasons, but one of the most important is the deficient involvement of customers in during the innovation process.
Companies could prevent expensive failures Just by integrating customers into the process of innovation (Gawk & Filler, 2006). Some companies and leaders consider so normal to have high rates of failure that they even compel their people to fail (Kettle & Keller, 2009), but the price of failures is finally transferred to the customers through the successful products and services, and billions of dollars are lost by the inefficiencies.
Customer involvement in service innovation has been strongly recommended for several years (Christensen, 1997; Advertised, Magnusson, Gustafson, & Christenson, 2006); yet, despite firms are convinced of its high benefits, hey do not pay the costs; most of times for lack of managers’ ability to work together with the customers, and to obtain their cooperation (Advertised et al. , 2006). This study attempts to contribute to the understanding of the phenomenon of customer involvement in the service innovation process.
It will focus on customer involvement in business-to-business service companies, which?although small?is an important section of the entire phenomenon, as is demonstrated by the interest that the Marketing Science Institute has shown on the subject. This research study plan, which will investigate the degree of association between the customer involvement and the degree of success in launching a service, would be Just one step in a large Journey of studies required to fully understand the whole problem.
With this idea in mind, the problem statement, the purpose of the study, the research questions, and the hypotheses will be stated, choosing a research method, a study design, and using an appropriate theoretical framework. Problem Statement The Marketing Science Institute presented innovation in business-to-business service companies through customer involvement (co-creation) and ROI of marketing expenditures as two of the six most important issues for research for the period 008-2010 (MS’, 2009).
Michael, Gallant, and Brown (2007) indicate the need for research on co-creation in service offerings and its impact on innovation. Other researchers (Magellan, Knox, & Riyals, 2008; Miller, Raja, & Westerners, 2008 ) point out the strong new trend to innovation through co-creation and the lack of firms’ experience on this new marketing tool. The problem is that little is known in business-to-business service companies about the relationship between success in launching new services and involving customers in the innovation process. Relational study will investigate, through surveys to international business-to- equines companies having headquarters in the USA, the degree of success of the new services introduced during the last 10 years, and the degree of customer involvement during the innovation process. Marketing managers, Coos, business consultants, and marketing professors would be interested in the results of this study, since it will be the basis for future cause-effect research among the two mentioned variables, and subsequent knowledge on the profitability of co-creation marketing expenses.
Purpose Statement The purpose of this quantitative correlation prediction study is to describe the allegations between the degree of success of new services’ launching (criterion variable) during the last 10 years, and the customer involvement during the innovation process (predictor variable). The degree of success in launching new services will be calculated through dividing the real sales of the new service by the expected sales of the new service; for which a one year period of sales after launching will be considered.
The degree of customers’ participation during the innovation process will be graded according to their involvement in the first four phases of a product development: idea generation, concept, prototype, and racketing strategy design. Data will be collected through surveys to marketing managers of international business-to-business service companies having headquarters in the USA. New services launched will be excluded from the study if they do not have the required information for defining the variables.
Data will be analyzed via descriptive statistics. Research Questions and Hypotheses Two research questions and three corresponding hypotheses for each question, including the null hypotheses, are proposed. One of the questions is directed to know the strength of the associations between the criterion and the predictor rabbles; the other is directed to know the degree of change that occurs over time between the two mentioned variables.
Two hypotheses are proposed for each research question besides the null one, one directional and another non-directional. This will permit to test more deeply the association between the variables. The first research question will be this: How strong is the association between the degree of customer involvement in the innovation process and the degree of success in launching a new service? And its hypotheses will be: (a) null hypothesis: There is o association between the degree of customer involvement in the innovation process and the degree of success in launching a new service; (b) alternate hypothesis one (non-directional): There is significant level of association between the in launching a new service; and (c) alternate hypothesis two (directional): A customer involvement in the innovation process intensifies, the degree of success in launching a new service increases.
The second research question will be this: To what degree does association between success in launching a new service and customer involvement in the innovation process change over time? ND its hypotheses will be: (a) null hypothesis: No change over time is observed in the degree of association between customer involvement in the innovation process and success in launching a new service; (b) alternate hypothesis one (non-directional): Significant change is observed over time in the degree of association between customer involvement in the innovation process and success in launching a new service; (c) alternate hypothesis two (directional): The degree of association increases over time between customer involvement in the innovation process and success in launching a new service.
Theoretical Framework Several authors have proposed conceptual frameworks for analyzing the product/ service development process (Kettle & Keller, 2009; Kaplan & Norton, 2003), but most of them coincide in a basic framework that includes the following steps: (a) detection of the need, (b) concept development, (c) prototype development, (d) marketing strategy design, (e) marketing strategy tests, (f) product/service launching, and (g) assessment of launching results. In this theory, the first four steps are the most valuable for customer involvement.
The process initiates with a new idea, a possible reduce or service that could be offered in the market, but this idea must be based on an unfulfilled need in the market, otherwise it will not be accepted. In the second step, the idea is elaborated into a concept, which is Just a text explaining the new product or service, and is tested through surveys to see if the customer likes it; in this step, the customer segment to be targeted is also detected. If the concept trial is positive, a prototype is developed and tested in different ways until an acceptable model is obtained.
Once the prototype is ready, the marketers develop the rest of the strategy, I. . The price, the communications program, and the distribution channels plan. Then, the strategy design is tested in the market, and adjusts are performed in the design. Finally, the product or service, with a complete strategy, is introduced to the market, and control and measurement systems are implemented to evaluate the success of the launching. Regarding the customer involvement in the innovation process, Advertised et al. 2006) propose a logical conceptual framework which considers three elements: (a) the kind of customer to be involved, (b) the degree of involvement, and (c) the manner technique) of involvement. These elements interact with each of the first four parts of the product/service development process previously mentioned. Thus, the main theoretical framework to be addressed in this study will be a combination of two interacting conceptual frameworks. The predictor variable (customer involvement) in this study represents the second element of the Advertised et al. 2006) framework, while the criterion variable (the success in launching the new service) is the last to the elements to the Kettle and Keller (2009) framework. The degree of customer involvement will be collected in such a way that will permit to distinguish to which of the first four steps of the development process it refers, and at the same time to obtain a general degree of involvement. Hence, the information coming from the tests of the hypotheses will be valuable for future studies, which would try to investigate cause-and-effect relationships between the variables.
The other two elements of the customer involvement framework will be variables to consider in future studies, since the knowledge of their association with the new service launching success will provide a more integral vision of the elements that are elated in the phenomenon being studied. Research Method and Design As mentioned before, this will be a quantitative correlation prediction study. The study is quantitative, because it has well defined quantitative variables to investigate the phenomenon, and it implies the use of statistical analyses to attain the results (Marcy, Demented, & Festering, 2005).
The variables are quantitative because they vary in amount, not in kind, as qualitative variables do. The variables will be measured formally and systematically for their use in statistics. The study must be a correlation prediction research (Sealskin, 2003; Crewel, 005) because it pretends to investigate the degree to which changes in one variable ?the degree of involvement of customers in the innovation process, the predictor variable?may be associated with other variable?the degree of success in launching a service, the criterion variable.
Prediction research designs investigate the association between variables that are at different points in time; the predictor variable comes at one time, and the criterion variable occurs later in time (Crewel, 2005). In the phenomenon studied here, customer involvement comes first, and the munching of the service comes months later. The other type of correlation research, the explanatory or relational research design (Cohen, Anton, & Morrison, 2007) looks for a more simple association among variables, without interest in the timing of the events. This study must not be an ex post facto research (Cohen et al. 2007), since it investigates association between the variables, not a cause-and-effect relationship. Future studies recommended here with the aim of deepening the knowledge of the phenomenon being studied may be correlation (with other variables) or ex post ACTA (with these and other variables) studies. Other possible confusion would be with descriptive research, but this study is not descriptive, since it does not pretend just to describe facts or characteristics in a given population (without looking for association between variables, nor testing hypotheses).
Finally, this study is not experimental, since it does not pretend to manipulate the variables (as a meaner to look for cause-and-effect relationships).