Consumers satisfaction of attributes in online product design

CONSUMERS SATISFACTION OF ATTRIBUTES IN ONLINE PRODUCT DESIGN

&

IT’S IMPACT ON WILLINGNESS TO PAY
Master Thesis

Master of Science Economic and Business

Master Specialization Marketing

Erasmus University

Author: Semra Kurt

Student number: 282725

Coach: Dimitris Tsekouras

PREFACE

This thesis is a part of completion of the master Marketing of the study Business Economics at the Erasmus University Rotterdam. To receive the Master of Science degree in Marketing is of great value to me. Although I’ve spent five years to complete a whole study, I put out everything I could give in order to successfully complete my courses.

Using this opportunity, I would like to thank several people who gave me fully support during my graduation period.
My special thanks go on the first place to my parents, who gave me the ability to study abroad and were always there to support me.
To Hakan Tekin, not only as a partner but also as my best friend, being side by side on good and bad days for his unlimited patience during the time I’ve spent on writing this thesis. And for sure, it was a long time…

Special thanks to my lovely sisters and dear friends for their support and help. Without them I would not able to collect my data for the thesis so quickly.

Last, but not at least, Dimitris Tsekouras, my supervisor. Without his comments, guidelines and feedback I wasn’t be able to finish my thesis. His patience and support is also very appreciated.

Semra Kurt,

Rotterdam, March 2012

ABSTRACT

Online co-designing, as a new era of personalization, aims to provide individually self-made goods that meet exactly consumers’ needs. The present study seeks to develop a better understanding how co-designing is evaluated by consumers through information and interaction systems. It provides highlights in the process of co-designing a product to own needs or desires. This study focuses on the websites and the toolkits, which are used to actually help consumers to make their own products. By mass customization, the online experience is a critical factor for completing the process and the ability of a merchant is reflected in its ability to handle sales transactions and the expertise to generally conduct business online. When consumers experience superior states of satisfaction, they perceive a high outcome of a trade and therefore are willing to pay more than less satisfied consumers, because this results in a reasonable relation of outcome to input. In this sentence, it is found that Product Satisfaction is the mainly influencer of willingness to pay.

Keywords: Mass Customization, Satisfaction, Online Toolkit, Willingness-To-Pay

TABLE OF CONTENT

PREFACE 2

ABSTRACT 3

TABLE OF CONTENT 4

Part I. INTRODUCTION 4

1.1 Mass customization and importance of online product co-design 4

1.2 Research relevance 6

1.2.1 The current study and the research questions 7

1.3 Outline of the study 8

Part II. LITERATURE REVIEW AND CONCEPTUAL MODEL 10

2.1 Co-designing 10

2.1.1 Information systems: Websites 10

2.1.2 Interaction systems: Toolkits 12

2.2 Theoretical framework 14

2.2.1 Website attributes 15

2.2.2 Toolkit attributes 17

2.2.3 Process Satisfaction and Willingness to pay 21

2.2.4 The effect of moderators 23

2.2.5 Conceptual framework 29

Part III: RESEARCH METHODOLOGY 32

3.1 Data collection 32

3.2 Measurement 33

Part IV: ANALYSIS AND RESULTS 35

4.1 Data preparation 35

4.2 Analysis 35

4.3 Results 37

Relationship between attributes and online process satisfaction 38

Relationship between satisfaction with co-designing process and willingness to pay 41

The effect of the moderators 42

Summary of the results 49

Part V DISCUSSION & CONCLUSIONS 51

5.1 General Conclusions 51

5.2 Managerial implications 52

5.3 Limitations & Future Research 54

REFERENCES 56

APPENDICES 64

Appendix A: Questionnaire 64

Appendix B: Print screen Design Skins 67

Part I. INTRODUCTION

1.1 Mass customization and importance of online product co-design

The idea of integrating consumers into the design and production process is a promising strategy that embraces both a closer reaction to the consumers’ need and efficiency. People are different, different in the sentence that they have different lifestyles, needs, feelings or thoughts. Every customer has a unique demand for products. To meet those differences of consumer demands, firms invite them to cover their uniqueness through mass customization. Mass customization relates to the ability to provide customized products or services through flexible processes in high volumes and at significantly low costs.

There is a large amount of definitions and descriptions in the literature for the term of mass customization. The concept has manifested in the late 1980s, by Davis (1987), who first developed the idea as the ability to provide individually designed products and services to every customer through high process agility, flexibility and integration, in this manner that the perception may thus reach customers as in the mass market but also treat them individually. Many authors propose similar concepts. Pine’s (1993) concept is more at a customer’s point of view. According to Pine’s opinion customers don’t want choices; customers precisely know what they want. The more recent definition of Piller and Muller (2004) is used in this thesis. The authors describes mass customization as the production of goods and services for a relative large market which meet exactly the needs of each individual with regard to certain products characteristics, at costs nearly corresponding to those of standard produced goods. Hence, through mass customization, customers are integrated into the design of a product by configuring, choosing and matching their individual characteristics among several options offered by the firm in a way that customers maximize the fulfillment of their needs and preferences.

Co-designing is a unique principle of mass customization (Piller 2003). The foremost belief of online product co-design is a mechanism for interacting with the customer and obtaining specific information in order to identify and thereafter convert the customer’s needs and requirements ending into a concrete product or service (Zipkin 2001). In general, co-designing construe that consumers can express their product requirements and realize the design process by mapping the requirements into the product (von Hippel 1998). With the importance of co-designing, many firms in various industries have begun to offer their customers the opportunity to design their own products online. In this way, customers can partly design the product. Researchers such as, Prahalad and Ramaswamy (2000) and Vargo and Lusch argue that value is set in the co-design process between the customer and the supplier. This opportunity carries out that the customer shifts from being a passive audience to an active player. In this way, the consumer is incorporated to the value creation of the supplier.

Although, companies are getting increasingly aware of the fact that competition is severe and the expansion of the internet is raising further up, which brings consumers with lot of alternatives, this concept also leaves the firm not only to acquire new consumers but also to sustain them by keeping the consumer satisfied. For example, a great number of companies, like Adidas, Converse or Nike have shoes that fit their preferences through an online process. Indeed like Nike, that allows customers with Nike ID to design their pair of shoes selecting almost all the elements on an online developed interface. The same concept is also triggered by Converse with Make Mine RED. Not only with the shoe industry, but also with the textile industry is the same trend available. Customers can choice from different lettering on thirsts. Furthermore, Lego allows customers to create their own Lego set online. From footwear to clothes and even cars, like BMW are examples of companies which developed co-designing process to provide their customers to create individualized products that meets their customers better. Therefore firms are in the hunt for users in their activities by offering them toolkits for innovation (von Hippel 2001). The primary idea of engaging users in such innovation activities is that users have knowledge about their needs and the setting of use, so that they are better equipped to develop products and services to match their needs. Firms, conversely, design the solution space offered by the user toolkit for innovation in such a way that the solutions developed by the users are producible by the firm.

In line with the online environment, having a successful website is a critical step into the future and a necessary move to stay competitive in this fast moving world. Existing evidence from research showed the importance of website attributes to consumers' online shopping behavior, as well as certain attributes that help create demand for online purchasing and increase store transactions and sales (Lohse & Spiller 1998; Swaminathan et al. 1999; Zellweger 1997). A study notes especially that website attributes influence consumers' current purchases and also future purchase intentions (Watchravesringkan & Shim 2003).