Consumers satisfaction of attributes in online product design

Part II. LITERATURE REVIEW AND CONCEPTUAL MODEL

The aim of a literature review is to review critical points of past literature relevant to the online co-design concept and other relating constructs. The first part is a general review of the elements that are used in this study. The second part includes, based on the literature of the aforementioned concepts, the hypotheses of the current study and furthermore the conceptual model will be presented.

2.1 Co-designing

The purpose of this section is to give a comprehensive description of the co-design process and how customers integrate with it. Furthermore, the environment of this involvement will be clarified by the presentation of the platform where this kind of customization takes place. The presumption of this study will start at a visit on the given website. After visiting the website, it is intended to create your own product. There will be an interaction system on the website to start the co-creation process and design the product of desires and unique style. After finalizing the product, the process continues with purchase the product if there is overall satisfaction with the customized product. Then the use of the website comes back in the spotlights. Although the consumer is constantly on the website, the interaction system is overwhelming the thoughts of being on the website, but not using it consciously. Thus the process of this study goes first with being on the website, then the use of the interaction system and finalize with again being on the website. Although, this process, the act, is just an appellation for the reader.

2.1.1 Information systems: Websites

The internet is an important market space in our millennium. The high level of recorded interaction with customers allows for many ways to alter a website a customer’s profile and increase sales or improve communication. Web sites are being widely deployed commercially in the online environment; they can be conceptualized as information repositories that represent organizational or individual sources, while also reflecting the characteristics of those sources through design features of the sites themselves. Web sites play an important role in the overall marketing communication mix (Berthon et al. 1996). They set off direct selling activities, present supplemental material to consumers, project a corporate image, and provide basic company information to customers.

For instance, Loiacono et al (2002) disputed that factors such as information quality, response time, ease of understanding, visual appeal, ease of navigation, consistent image and customer service are relevant when it comes to evaluating online environments. Nowadays, websites evolving into an environment that caters for a range of activities like entertainment, communicating and learning. According to Novak, Hoffmann & Yung (2000) and Wolfingar & Gilly (2001) searching for specific activities is the result of direct needs of users. For example, due to the internet, many online buyers can get information directly without having to go through a sales person; Buying on the website gives consumers more perceived control over the interaction.

Riemer and Tots (2001) note that process and web front-end design is crucial for mass customization success, as the web interface is the initial point-of-contact in the mass customization service value chain and therefore a critical success factor for mass customization activities. From the customers perspective the web-based configuration sequence is a critical part of the overall mass customization process and it shapes its quality perception dramatically.

However just starting doing business on the internet does not necessarily guarantee the competitive advantages. For example, easy access and the information available at websites is an important but frequently underemphasized website design issue (Wolfingar & Gilly 2001). Consumers see each website as a bundle of attributes with varying capacities to satisfy their needs. Several researchers investigated consumer perceptions of websites quality (Barnes et al. 2001; Song & Zinkhan 2003; Loiacono 2002). The overall assumption in these studies seems to be that a website is a key instrument for communication and is primary interface for Internet users. Overall, there is no specific study done about the impact of website attributes on the willingness to pay for a co-designed product. There are some case-studies which measure the influence of website attributes on certain products or services. In their research, Oon & Kalid (2001) compared three mass customization websites. They showed that when the availability of information on a certain website was too little, users had the highest willingness to purchase the product. The amount of information on the website, which is a website attribute, had influence on the purchasing process of the product. Customer satisfaction is not only related to the quality of the customized product (Riemer and Totz 2001) but also to the quality of the web-based configuration process and interface, which essentially determine the customers motivation and capability to adopt required configuration tasks and to finally purchase the customized product.

2.1.2 Interaction systems: Toolkits

As mentioned before evolving customer into the co-designing process is a competent way of serving individual customers both individually and efficiently. Piller (2004) explains that the co-design process of products and services cover the demands of each individual customer with regard to certain product features. All actions needed are executed within a fixed solution space, characterized by stable but still flexible and responsive processes. Thus, the customization costs permit pricing at a level that does not imply a switch in an upper market segment. Piller and Moeslein (2002) emphasize how crucial the interface is between the manufacturer and customer. It offers a solution space of the production facilities and the design instrument for both new and existing customers. Moreover, the interface, as the interaction system, has to contribute to the reduction of the additional transaction costs to the customers connect with the co-design process. Through the interface the supplier has to guarantee that the customers’ expenditure is kept as low as possible, while the gain he receives has to be easily noticeable. Thus, these systems are instruments to reduce cost and to create a design experience for the consumer.

Franke and Piller (2003) emphasizing the possibility to co-design with the help of dedicated tools. These tools, also acknowledged as configurations, toolkits or co-design platforms, are responsible for conducting consumers through the configuration process. Whenever this system is quoted in the literature, it is often used in a technical sense that deals with a software tool. However there is a broad variety of toolkits for customer driven product development and configuration, there are simple configurations where users just allowed choosing from different options (color, size, etc.), whereof Dell Computers is a good example. On the other hand, there are also complicated ones, wherefore you need an expertise or special training.

Although in such systems, the degree of innovativeness is to a certain extent limited. On the other hand, there are toolkits that assign the user a much more active role. In this context, the user actually creates, which allows for radical innovations. According to Von Hippel and Katz (2002), toolkit for user innovation improves the ability of users to innovate for them that fit their own needs better and at a lower cost. However many markets have highly heterogeneity, the other way around should be noted that toolkits are not the appropriate solution for all product development needs. They do allow a greater scope of applying consumers’ needs in a more directly way. Though a comment on that a user must have a need for something different that is strong enough to offset the cost of putting a toolkit to use, otherwise the toolkit capability will simply lie unused in the background. With the use of a toolkit, consumers are able to design their own unique product. Thus, companies have to create new systems and interfaces if they want to move towards customer-driven strategies. A lot of research found that the toolkit usage can lead to more willingness to pay for the product than standard product (Von Hippel 2003).

Also explains Piller and Moeslein (2002) that adopting online product configurators, the companies can outsource the time and costs consuming customization process to the customer. A good example is the example of the customized Nike shoes, which cannot be sold through traditional channels, as the co-design process would take much long in a store to justify 10 dollars of premium, like every product with a small margin.

The term “configurator” is often addressing a software tool. The definition of ‘toolkit’, proposed by Von Hippel (2001) will be used in this study in order to define the concept of co-design. Von Hippel (2001) proposes that an effective toolkit will carry out five important objectives. First, it will fulfill complete cycles of trial and error learning, which means the consumer move through the steps of build and evaluate. When the consumers are not satisfied start over and learn about their needs of the co-designed product. This repeating called learning by doing guides to the best results. Second, the toolkit will offer a ‘solution space’ that encompasses the design they want to create. Third, the toolkit will be user friendly, in other words users will not need specific training to use them. Fourth, the toolkit allows libraries of commonly used modules that the user can integrate into the custom design, in a way to focus on the design efforts and the uniqueness elements of that design. Fifth, properly designed toolkit will ensure that co-designed product will be producible without requiring revisions by manufacture-based engineers. In other words, the toolkit must be convertible without error into the translating of the user designs for production; otherwise the entire purpose of the toolkit is lost.

According to Johan Fuller and Kurt Matzler (2007), a crucial factor for the success of mass customization tools is the user satisfaction. Customer satisfaction (CS) has become a vital concept in marketing and is central to many definitions (Cathy Parker, Brian P. Mathews; 2001). Satisfaction is a major outcome of marketing activity and serves to link processes culminating in purchase and consumption with post purchase phenomena such as attitude change, repeat purchase and brand loyalty (an investigation into the determinants of customer satisfaction). Anderson et al. (1994) explain in their paper that in the past, at managerial level there was trust in the intuitive sense that higher CS would lead to improved company performance. In that sentence, that consequently companies began to implement programs for measuring and improving CS. Widespread acceptance of this relationship is evidence in the growing popular literature and CS, indeed the increasing number of consulting and marketing research firms that promise to improve a customers’ ability to satisfy customers and perhaps, most persuasively from a customer-oriented perspective, actually to respond to the specific needs of the customers’ requirements.

By gaining an understanding of what consumers value and are satisfied with, companies might be able to adapt or change their overall strategies when communicating and engaging in a co-designing process with consumers. One of the most applied theories, underlying the concept of customer satisfaction, is the Expectancy –Disconfirmation theory proposed by Lewin (1938). According to this theory, consumers have expectations regarding products and services prior to consumption. If the consumers’ perceptions regarding a certain product or service exceed their expectations, this would result into consumers being satisfied with the experience, ultimately influencing their behavioural intentions in a positive way (Carpenter 2008; Tse & Peter 1988). Also Hunt (1977) described satisfaction as being an evaluation of emotion, suggesting that satisfaction in essence reflects the degree to which consumers believe that a given product or service evokes positive feelings (Rust & Oliver 1994). Oliver also concurs with this notion and defined satisfaction as being a pleasant experience derived from a product or service given the expectations of the consumer. (Oliver 1977; Oliver 1980 & Oliver 1996).