Abstract - Erasmus University Rotterdam Web viewSuch well-known brands as Dell, Starbucks, Unilever,...
Transcript of Abstract - Erasmus University Rotterdam Web viewSuch well-known brands as Dell, Starbucks, Unilever,...
Study program: Marketing
Kristina, MACIULYTE
Student number: 381562
THE IMPACT OF CUSTOMER EMPOWERMENT ON WILLINGNESS TO PAY AND
INTENTION TO PURCHASE
Master thesis
Supervisor: Assistant professor dr. Nuno Camacho
Rotterdam, 2014
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AbstractNow more than ever, customers are active, connected and informed. If companies want to retain
them, they have to empower them. In this paper I distinguish three levels of customer empowerment
and assume that each of these levels will have different impact on customers’ willingness to pay and
intention to purchase. Moreover, I hypothesise that customers’ need for autonomy can shape this
relationship. I used between-subjects design to test my model that included 249 respondents from
different countries. Contrary to what was expected, the test results showed that there is a negative
direct relationship between middle level of customer empowerment and willingness to pay, but no
significant results were found for purchase intention. Similarly, I found that the lower customers’
need for autonomy, the more willing he/she is to pay for a good produced using zero customer
empowerment strategy. These findings have important implications to the literature on customer
empowerment as well as managers responsible for implementing marketing strategies.
Keywords: customer co-creation, customer empowerment, levels of customer empowerment,
customers’ need for autonomy, customer behaviour, between-subject research design, non-
empowered customer
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AcknowledgmentWriting this thesis was as extremely challenging experience. It not only enriched me with the
knowledge about the topic, but also made me learn self-discipline and self-motivation. I would like
to express my deepest appreciation and thanks to Nuno Camacho who supervised the writing
process of this thesis. His insightful remarks and comments were always very helpful and
indispensable throughout. Moreover, I would like to thank my family and friends who encouraged
me and supported me morally as well as people who donated their time to participate in the surveys
and helped to conduct this research.
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TABLE OF CONTENTSAbstract...............................................................................................................................................2
Acknowledgment................................................................................................................................3
1. Introduction.................................................................................................................................5
1.1 Introduction to the Topic.......................................................................................................5
1.2 Problem Statement and Research Objective..........................................................................6
1.3 Structure of the Thesis...........................................................................................................7
2. Theory..........................................................................................................................................8
2.1 Customer Empowerment: Construct Definition....................................................................8
2.2 Psychological Consequences of Customer Empowerment..................................................10
2.2.1 Psychological Benefits of Customer Empowerment....................................................10
2.2.2 Psychological Drawbacks of Customer Empowerment...............................................11
2.3 Levels of Customer Empowerment.....................................................................................12
2.4 Customers’ Need for Autonomy..........................................................................................14
3. Asymmetric Effects of Customer Empowerment on Customer Behaviour.........................16
4. Research Methodology.............................................................................................................20
4.1 Experimental Design...........................................................................................................20
4.2 The Measurement................................................................................................................21
4.3 Data Sample.........................................................................................................................22
4.4 The Method of Analysis......................................................................................................22
5. Results........................................................................................................................................24
5.1 Descriptive Statistics...........................................................................................................24
5.2 Analyses...............................................................................................................................26
5.3 Robustness Checks..............................................................................................................30
6. General Discussion....................................................................................................................32
6.1 Conclusion...........................................................................................................................32
6.2 Implications.........................................................................................................................33
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6.3 Limitations and future research...........................................................................................34
Reference List...................................................................................................................................36
Appendix A. Between-Subjects Design Questionnaire in English...............................................41
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1. Introduction
1.1 Introduction to the Topic“The companies that are smart are going to be really transparent and say “hey consumer, work
with us”. The companies that are less smart are going to be the ones that put up a polished surface
and pretend.”
Martin Lindstrom
Branding expert and best-selling author1
For a long time companies fostered company-centric value creation system. The traditional way for
a new product development was for a company to come up with new ideas for the product as well
as to decide which of these ideas should be actually marketed. However, the latter view recently is
being more and more criticised and challenged not only by academics but practitioners as well (e.g.
Pitt et al., 2006; von Hippel and Katz, 2002). In a business environment, one of the most common
topics is that firms should shift their value creation process from product driven to customer driven,
from innovating for customers to innovating with/by customers.
The increasing use of the Internet and digital technologies have also greatly contributed to customer
empowerment. With the help of these tools companies can create online communities that are cost-
efficient and can reach customers all over the world more easily (Dahan and Hauser, 2002;
Nambisan, 2002; Prandelli et al., 2005). Companies are not only able to listen to complains and
suggestions, but also to integrate customers in various stages of a new product development or
encouraging them to take part in improving an existing product (Desouza et al., 2008).
Customers are now more connected, informed, and active than they used to be and the best way for
a company to retain them is to empower them. A lot of well-known companies have already
engaged in customer empowerment activities to increase loyalty, goodwill and advocacy of its
customers: Crayola lets its customers to come up with new names for new crayon colours, Converse
fans are creating advertisements for them, BMW established virtual innovation labs, where
customers participate in new product development, Google involves its customers in pre-launch
research trials.2
However, with these initiatives there are still several question that have to be answered, like: are
customers competent enough to be involved in new product development processes and especially,
1 http://www.mediacom.com/media/2088012/mediacom%20the%20insider_the%20empowered%20consumer_whitepaper.pdf2 http://www.marketingprofs.com/5/marsdenoetting1.asp
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how much power should the company give to the customer to satisfy his/her need and not to
jeopardise the quality of the final product or brand image?
1.2 Problem Statement and Research ObjectiveCompanies put a lot of resources in developing and implementing platforms suitable for customer
co-creation (Piller and Franke, 2004). It makes economic sense only if these systems can generate
value: increase sales. In order to do that, companies should be aware of how the customer
involvement in product creation process can affect their willingness to pay and intention to buy the
final product as well as what can make this intention stronger.
The effects of customer empowerment have been discussed before however, most of the studies just
emphasise the ability to develop higher quality products at lower costs (Dahan and Hauser 2002;
Kalaignanam and Varadarajan, 2006; Nambisan, 2002; Ogawa and Piller, 2006; Prahalad and
Ramaswamy, 2000; Prandelli et al., 2006; von Hippel, 2005; Magnusson et al., 2003). Only very
few researches look closer at the construct identifying that there are different levels of empowering
the customer and they can even generate different value for the customers and for the company
(Fuchs and Schreier, 2011; Hoyer et al., 2010).
This research is intended to contribute to ongoing studies about customer experience during co-
creation process and help to define the power level that company should give to the customer in
new product development process in order to reinforce his/her willingness to pay or intention to
purchase.
Therefore, the research question emerges:
How does the level of customer empowerment affect the willingness to pay and intention to
purchase?
In order to provide thorough and consistent answer to this research question, the following sub-
questions will be analyses:
o What levels of customer empowerment can be distinguished?
o What are the consequences of customer empowerment on customers?
o Can the characteristics of the customer have an influence on how they respond to customer
empowerment?
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1.3 Structure of the ThesisAn overview of the structure of this paper is hereby provided. The second chapter introduces the
main perceptions of customer empowerment. The literature suggests that by involving customers in
new product development companies can evoke positive as well as negative psychological
consequences. The outcomes may vary depending on the level of customer empowerment that the
company is engaged in and personal characteristics of target customer such as his/her need for
autonomy.
The third chapter offers a closer look at the research model. With the theoretical background of the
research constructs, the study hypotheses are developed. The expected relationships between the
independent variable and the dependent variables are presented in the conceptual framework at the
end of the chapter.
The fourth chapter defines the methods of how the study was conducted. In this paper I used
questionnaire survey with four different versions of the survey in order to manipulate the
independent variable: three treatments with each level and a within subject design. The data was
collected using online channels as it was the best way to reach the target audience.
The thesis ends with the fifth chapter that presents the results regarding the research question and
the sixth chapter that is dedicated to the discussion of the conclusions, limitations and future
research.
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2. TheoryThis part concentrates on the theoretical analysis of the most relevant issues regarding the
relationship between customer empowerment and willingness to pay and intention to buy. The
chapter starts with an overview of the customer empowerment construct. Further it looks into its
psychological consequences covering advantages and disadvantages. Finally, the chapter ends with
the discussion of the moderators of the consequences of customer empowerment: levels of customer
empowerment and customers’ need for autonomy.
2.1Customer Empowerment: Construct DefinitionResearchers such as Prahalad and Ramaswamy (2000), Lusch and Vargo (2004) and Payne et al.,
(2009) noticed the changing roles of customer in the business relationship between producer and its
target audience: from passive customer to an active participant.
With customers becoming more active in creating value, their wants are also altering. They wish to
shape the experiences, both individually and with experts or other customers, rather than just accept
them from the companies (Prahalad and Ramaswamy, 2000). Prahalad (2004) proposes that old
industry model is changing towards a new one where value is created by experiences rather than
from services and goods.
Lusch and Vargo (2004) introduced Goods-Dominant Logic and Service-Dominant Logic to value
co-creation theory. The main concept of this logic is that firms can only make value propositions
and it is up to the customers to unlock that value. In their further work they used term “value-in-
use” to emphasise that value can only be created when product or service is consumed (Lusch and
Vargo, 2006). Moreover, the value co-creation is a joint process between active customer and the
company that gives an opportunity for both parties to exchange their knowledge and skills (Lusch
and Vargo, 2008). Due to that, the involvement of the customer in value creation is beneficial for
the company as well as for the customer (Ramirez, 1999).
Though by leveraging customer competence companies can gain competitive advantage (Prahalad
and Ramaswamy, 2000; Woodruff, 1997), firms find it difficult to manage large bases of customers.
Various authors (Payne et al., 2008; Rogers, 2005; Vargo and Lusch, 2004) agree that customer –
producer relationship is based on dialogue and interactions. Prahalad and Ramaswamy (2004a)
improved this “toolkit” and proposed DART model – the building blocks of interactions between
the company and customer that should help enrich value co-creation experiences – dialogue, access,
risk-benefits, and transparency (see Table 1).
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Table 1. DART model for understanding value co-creation
Source: Prahalad and Ramaswamy, 2004a
Every building block is related to each other: dialogue might be challenging when customers do not
have the right amount of access and transparency of information; dialogue, access and transparency
lead to better understanding of the risk-benefits that customer might face (Prahald and Ramaswamy,
2004b). Due to that, by combining and mixing these building blocks, companies can better manage
customer collaboration process.
To describe customers’ perceived influence on product development and decision making in co-
creating processes the term “customer empowerment” is used. Fuller et al. (2009) found that
customer engaging in a co-creation process leads to empowerment. O’Cass and Ngo (2011) added
that customer empowerment is an essential mechanism through which the customer and company
are co-creating the value.
For a long time in marketing literature there were two definitions of customer empowerment. One
saw customer empowerment as an increase of the power of customer through greater information
and better understanding (e.g., Brennan and Ritters 2004; Cutler and Nye 2000; Rust and Oliver
1994). When the other one defined customer empowerment as an increase of the control level that
customer has on new product development (Wathieu et al. 2002).
Recent studies distinguish other forms of customer empowerment construct: informational
empowerment and decisional empowerment (Camacho et al., 2014). Authors state that the former
“occurs when the customer and the expert share solution-relevant information” while the latter form
of empowerment “occurs when the expert leaves the final decision to the customer”.
In this paper I will focus on the decisional empowerment concept which means that companies
allow customers to make decisions in new product development that used to be responsibility of the
firms.
The increasing use of Internet allows companies to reach customer in a lot easier way than before
(Dahan and Hauser, 2002; Nambisan, 2002; Prandelli et al., 2005). Social media and online
communities contribute the most to empowering customers through the use of co-creation (Fuller et
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al., 2009). In many ways, these user innovations are considered to have a high commercial value
(Franke et al., 2006; Schreier and Prugl, 2008). Due to that, companies are more actively engaging
customers into processes and activities that exclusively marketers were used to responsible for.
Such well-known brands as Dell, Starbucks, Unilever, and Philips have their own online platforms
where customers (more specifically – their ideas) are integrated into new product development
processes (Pitt et al., 2006; Prandelli et al., 2005).
Authors argue that companies that empower customers in new product development are better
positioned to develop superior products. Furthermore, in this way firms can not only reduce costs
but also decrease the risks as customers are delivering their valuable input as well (e.g. Dahan and
Hauser, 2002; Lilien et al., 2002).
Wathieu and Bertini (2007) argue that companies can earn greater profits as decisional
empowerment leads to decreased price sensitivity of customers. They consider that the knowledge
that the product or service they are about to purchase was developed empowering customers reduce
the deliberation that customers have about the value and benefit of that product or service.
Consequently, customers lower their interest in price and put more focus on the uniqueness of the
offering emphasising other dimensions of the value.
However, to gain from customer empowerment, first of all, companies should understand how the
customer itself feels about being involved in new product development and how he/she perceives a
company that is engaged in this activity.
2.2Psychological Consequences of Customer EmpowermentThere is a strong discussion about the effect of customer empowerment. While some researchers
propose it to bring beneficial outcomes, others discuss the drawbacks of empowering customers
(see Table 2). I will further talk about each of these views.
2.2.1 Psychological Benefits of Customer Empowerment
Commonly, companies believe that by empowering their users they will gain more as by customers
any increase in control is perceived as benefit. This assumption of control leading to better match
between individual needs and what companies are offering is mainly based on the standard axioms
of classical economic theory stating that when customer can choose what they want, when they
want it, and according to their terms, it is obviously a benefit (e.g., Kreps 1979).
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Based on the studies, companies have better chances of fulfilling customer needs and wants when
involving them in product development process as there is a positive relationship between customer
empowerment and their satisfaction (Hunter and Garnefeld, 2008; O’cas and Ngo, 2011).
Evidences also show that the greater the customer involvement in decision-making process the
better decisions he/she makes (Koriat, et al., 1980). Moreover, Muthukrishnan and Kardes (2001)
argue that those customers that are empowered involve “in more persistent patterns of
consumption”. Customers tend to be more related to the products or services and purchase and
consume them with greater confidence (Wathieu et al., 2002).
Based on the assumption that there are more benefits of empowerment than those directly related
with innovation outcomes, Prandelli et al. (2005) noted that it might as well increase the intention to
buy. Authors argue that empowered customers have closer bond with the underlying product thus
are more willing to purchase it. Further research of Fuchs et al., (2010) discovered that because of
the feeling of psychological ownership the same customers drive the whole demand (that was
measured in terms of willingness to pay and purchase intention) of underlying products and called it
“empowerment-product demand effect”.
2.2.2 Psychological Drawbacks of Customer Empowerment
On the other hand, companies should be very careful when using customer empowerment as it
might cause reverse outcome than expected. For example, it is found that customer empowerment is
the most effective if company is successful because in other way close customer-supplier
relationship can just emphasis the overall dissatisfaction (Goodman et al., 1995).
Recent studies show that increase in customer control may result in lower compelling choice
experience (Wathieu et al., 2002). Authors add that there is a great possibility of empowered
customer making wrong decisions about what can increase their satisfaction the most. As
Kahneman (1994) says, it is because majority of customers are not able to accurately predict the
level of satisfaction they will feel after seeing the final product.
Iyengar and Lepper (2000) argue that lowering the empowerment and leaving customers with fewer
options increases his/her satisfaction as it is easier for him/her to make a decision and not the other
way around.
Fuchs et al., (2010) discuss one more very important drawback that companies using customer
empowerment might face – losing the “perceived fit”. The researchers argue that by giving too
much control to the customer the final product of co-creation process might no longer reflect the
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expectations and needs of the larger target market. It may happen due to the fact that customers tend
to include less-favoured attributes rather than commonly liked items when they have more control
in new product development (Ratner et al., 1999). Real life experience from Ben & Jerry’s where
flavours (like Pepperoni Pizza with Anchovy Swirl or Peanut Butter and Jelly Sandwich) suggested
by their fans were not successful in the ice cream market just proves how customers might be “too
creative”.3
Table 2. Benefits and drawbacks of customer empowerment
Considering all mentioned above, in this paper I propose that the effects of customer involvement
can be moderated by two key variables that has an impact on psychological consequences of
customer empowerment: 1) The level of customer empowerment and 2) customers’ desire for
autonomy. Based on these two variables I will try to explain the heterogeneity in the psychological
effects of customer empowerment uncovered in the literature.
2.3Levels of Customer EmpowermentResearch has shown that companies can create different levels of commitment at which customers
would be able to interact with them (Prandelli et al., 2005). Depending on interests and desired
payoffs from this interaction, companies can modify the degree of customer involvement: the closer
the relationship between the company and customer, the more effect it has on customer’s overall
perception of the firm (Goodman et al., 1995).
The main idea behind managing the levels of customer involvement is to maximise their satisfaction
(Goodman et al., 1995) but at the same time avoid “potential traps of preference distortion”
(Wathieu et al., 2002).
Fuchs and Schreier (2011) proposed to think of customer empowerment in new product
development as empowerment to create a product and empowerment to select a product. In other
words, customers can be involved by submitting their ideas for a new product or by “voting” on 3 http://www.chiefmarketer.com/news/ben-jerrys-launches-ice-cream-flavor-contest-16032006
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which idea of the product should be produced. Based on these criteria they developed different
customer empowerment strategies (Figure 1):
With zero-empowerment company is fully in charge of a new product: from developing the
concept to making a decision which concept should be sold. Mostly it is considered to be the
traditional way of bringing new products into the market and called mass-marketing
products.
Empowerment to “create” allows customers to propose their own concepts of new products.
An illustrative example from practise could be Ben & Jerry’s innovation contest “Do the
World a Flavour”: fans had to submit their ideas for future flavour ice cream and judges
selected by the company had to choose the winner.4
Empowerment to “select” gives an opportunity for customers to participate in screening
process and determine which innovation (from those given by the company) is worth to be
marketed. The snack brand Lay’s uses this strategy as second part of innovation contest
where the team of professionals selected several options from all submitted product concepts
and by voting customers decide which one of them will be produced.5
With full empowerment company is completely giving the control into hands of customers:
they are sharing their ideas as well as voting for the ones they like the most. This strategy is
really popular and many companies (like Starbucks, Lego, Dell, Marriot) have established
their online innovation platforms to be closer to the customer.
Figure 1. Customer empowerment strategies
Source: Fuchs and Schreier, 2011
Other authors tend to look at the levels of customer empowerment from a different angle. They see
the customer as an adaptor or as an innovator. Adaptor is the one who is involved in innovation 4 uk.ashoka.org/sites/uk.ashoka.org/files/JOC-FAQs.doc5 https://www.surveymonkey.com/blog/en/blog/2013/04/17/lays-contest-surveymonkey-audience/
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development through the concepts suggested by the company (Iansiti and MacCormack 1997,
Prahalad and Ramaswamy 2000). Surprisingly enough, sometimes customers prefer to use the
guidelines provided by the company and are too scared to create a concept on their own (Hill,
2003). On the other hand, the innovator is the one who is producing original ideas for new products
(Mullins and Sutherland, 1998) as research has shown some customers can come up with more
innovative concepts than professionals (Magnusson et al., 2003). This type of customers can also be
called lead users (von Hippel, 1986).
One of the most recent studies of Schreier et al. (2012) discusses only two levels (extremes) of
customer empowerment in new product development and names them by using the word “common”
to highlight the usage of co-created products in broad markets. Though, common products are
traditionally created by professionals, due to changing use of this mode, authors suggests to call the
extremes: products by company and common products by users.
Based on these views about different types of customer empowerment and opposing literature
denying the benefit from giving the control to customer (the second chapter), three customer
empowerment levels will be used in this paper: zero customer empowerment strategy, where the
company has the control of a new product development, i.e. it creates a concept of a new product
and selects which of the concepts are to be produced; middle customer empowerment strategy,
where company and customers share the control of a new product development, i.e. customers
propose the concept of a new product and the company selects which of the concepts are to be
produced6; and full customer empowerment strategy, where the customers have the control of a new
product development, i.e. customers create a concept of a new product and select which of the
concepts are to be produced.
2.4Customers’ Need for Autonomy Autonomy is a very commonly discussed phenomenon in the literature, however lacking theoretical
homogeneity and consistent definition. Hmel and Pincus (2002) distinguished three mostly used
theoretical approaches of autonomy: autonomy as self-governance – a psychological need to be able
to make own independent and free choices (Deci and Ryan, 2000); autonomy as separation – need
to separate self from the others (Wiggins, 1997); autonomy as vulnerability – a personality
construct that might cause depression if there is any threat to the values that highly autonomous
individuals cherish (Beck et al., 1983).
6 In order to keep the research design manageable, I focused only on empowerment to “create” rather than empowerment to “select”, as the former is more common in the real market
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One could say that first and second views quite differ, however, Koestner and Losier (1996) suggest
that the most evident distinction between these two forms is customers’ reaction to social influence.
Moreover, the essence of autonomy as self-governance (making choices based on self-awareness)
and autonomy as separation (making decisions that are independent of others) goes along with the
concept of customer empowerment. Due to that, in this paper I will use these two descriptions of
need for autonomy as synonyms.
It is believed that the higher degree of autonomy the customer has, the more engaged, productive,
and creative he/she is (Amabile et al., 1996). However, each customer has unique needs (Franke
and von Hippel, 2003), thus, not all of them embody high need for autonomy. Researchers
distinguish different peoples’ need for autonomy through the level of personality functioning: from
controlled to true self-regulation (Deci and Ryan, 2000).
According to Murray (1938), individuals with high need for autonomy are “independent, free, and
wilful” as well as likely “to love adventure and change”. They are also proactive customers and
enjoy decision-making opportunity (Tellis et al., 2009). Burgess et al. (2001) identifies those people
as open to change for whom stimulation and self-direction values are essential.
On the other hand individuals with low need for autonomy are the opposite: they like to follow the
rules and are more likely to choose the same path as most of the others. (Murray, 1938). Moreover,
they prefer to be traditional as it is secure way of dealing with problems. As contrary to open to
change customers Burgess et al. (2001) suggest to call them conservative customers.
To sum up, in this paper I will use the term customers’ need for autonomy referring to conservative
customers as customers with low need for autonomy and open to change customers as customer
with high need for autonomy as a predictors of levels of customer empowerment.
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3. Asymmetric Effects of Customer Empowerment on Customer
BehaviourDue to the fact, that customer empowerment has psychological benefits as well as psychological
drawbacks, in this paper I suggest that the relationship between levels of customer empowerment
and willingness to pay and intention to purchase is curvilinear (inverted U-shaped relationship),
meaning that the middle customer empowerment strategy will have the strongest impact on WTP
and intention to buy (see Figure 2).
The literature suggests that customer satisfaction and intrinsic motivation increases with increased
number of choices (Schulz and Hanusa, 1978; Glass and Singer, 1972). However, researchers also
argue that too many options can be too difficult to handle and customers prefer fewer choices as it is
easier for them to make a decision (Schwartz, 2000; Iyengar and Lepper, 2000).
The same is applicable to customer empowerment – the higher level the better, however, there is a
point where giving more power to the customers is not worth the outcome. Iyengar and Lepper
(2000) use term the choice overload to explain this phenomenon. Customers are confronted with
too many options: they have to come up with the idea as well as to select which one of them have to
be produced. In other words, the experience of decision making can be hurt due to increased
customer control (Wathieu et al. 2002).
Figure 2. Inverted U-shaped relationship between levels of customer empowerment and willingness to pay and intention to purchase
Furthermore, based on the literature review, the psychological benefits of customer empowerment
increases with increased customer involvement in product development process, however, so do the
drawbacks. According to negativity bias theory, negative effects have stronger impact than positive
ones (e.g. Rozin and Royzman, 2001), meaning that in full customer empowerment strategy,
drawbacks of involvement will be felt more clearly by the customers than benefits and they will
choose products from middle customer empowerment strategy rather than seeking for more power.
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Due to the fact, that higher level of customer empowerment can cause more negative effects than
middle one, there is expected to see inverted U-shaped relationship between levels of customer
empowerment and willingness to pay and intention to purchase.
H1a: When company is involved in the middle customer empowerment strategy it has more
positive effect on willingness to pay than both zero and full empowerment strategies
H1b: When company is involved in the middle customer empowerment strategy it has more
positive effect on intention to purchase than both zero and full empowerment strategies
The level of zero customer empowerment is a traditional way for a company to develop a new
product. Moreau and Herd (2010) say that often product ideas developed by the professionals are
perceived as superior due to their expertise, knowledge, and education. This is especially evident in
cases when customers perceive products to be technologically complex (Schreier et al., 2012).
The idea of customers participating in product development is incongruent with values and believes
that conservative customers share – tradition, security and consistency (Burgess et al., 2001). Botti
and Iyengar (2006) argue that the customer is satisfied with the product not only when it matches
his/her preferences but also when it goes along with his/her social values.
The research has shown that customers with low need for autonomy might find the idea of customer
empowerment paralyzing rather than liberating (Grant and Schwartz, 2011). It is best seen in cases
when customers have to select which one of the proposed product concepts will be produced – they
feel too much responsibility for the consequences of their decision (Botti and McGill, 2006).
The literature also suggests that individuals who have low need for autonomy are highly concerned
with getting social approval (Zerbe and Paulhus, 1987) but at the same time are afraid of receiving
evaluation (Watson and Friend, 1969). Due to that, conservative customers try to avoid the
activities, where they might be judged or evaluated (Leary, 1983), meaning that they might even be
unwilling to purchase from a company that encourages its customers to participate in new product
development.
Furthermore, conservative customers might see customer empowerment as a company’s attempt to
shift the responsibility for new product development from the firm to the customers (Etgar, 2008).
This attitude might create their distrust with the company so that they would feel uncomfortable
buying products that were co-created with the customers.
There are also incontrovertible evidence that sometimes the adoption of new products can fail due
to too conservative customers (Heiskanen et al., 2007; Daghfous et al., 1999), supporting the
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attitude that customers with low need for autonomy prefer traditional way of developing a new
product and customer co-creation in this process might be the cause of rejecting the outcome of this
collaboration, meaning lower willingness to pay and intention to purchase.
H2a: For customers with low need for autonomy, the zero customer empowerment strategy has
positive effect on willingness to pay
H2b: For customers with low need for autonomy, the zero customer empowerment strategy has
positive effect on intention to purchase
There is no doubt that customer empowerment initiatives influence the attitudes towards the
company and the products it produces. Fuchs and Schreier (2011) argue that customers perceive
companies to be more customer orientated, form more favourable corporate attitudes, and stronger
behavioural intentions (having control of the quality of the product) towards the company that is
empowering customers compared with the one that does not.
Moreover, the research of Prandelli et al. (2005) adds that customer involvement in new product
development not only nurtures closer relationships between the producer and its empowered
customer but also creates an image that customer co-created products are more creative and
innovative.
However, these views are formed only in the eyes of the customers who are open to change as they
are the ones who appreciate and seek for this kind of experiences – creating, participating, and
choosing on their own (Burgess et al., 2001). For this kind of customers, autonomy is one of the key
human need that is parallel to seeking for self-determination and self-realization (Deci and Ryan,
2000). The literature suggests that satisfaction of this need leads customers to be more loyal and
engaged with the company thus more willing to purchase its products (Prandelli et al., 2005).
Furthermore, customer empowerment is more attractive to customers with high need for autonomy
as through participation in this activity they get an opportunity to satisfy their need to be unique and
able to express oneself (Tian et al., 2001). The ability to be involved in product development
process helps to develop a feeling of psychological ownership and responsibility for the outcomes
of this activity both that are relevant for this type of customers – they feel valuable and important
(Huang et al., 2010)
Due to the fact, that customer empowerment supports all the above mentioned aspirations and
beliefs of customers who are high in need for autonomy, in this paper I assume that they will form
more positive attitude towards customer involvement in new product development, meaning that
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they will be more willing to pay and have higher intention to purchase those products that were
customer co-created.
H3a: For customers with high need for autonomy, the full customer empowerment strategy has
positive effect on willingness to pay
H3b: For customers with high need for autonomy, the full customer empowerment strategy has
positive effect on intention to purchase
Based on the analysis of various theoretical sources and empirical studies on customer involvement
in new product development, Figure 3 presents the conceptual framework of this study. Each arrow
that connects the model constructs represents the relationship between the dependent and
independent variables with customers’ need for autonomy and other (socio-demographic) variables
shaping this link.
Figure 3. The conceptual framework of the study with the hypotheses and expected effects next to the corresponding arrows
Zero-Empowerment
Need for Autonomy
Willingness to Pay
Intention to Purchase
Control Variable
Middle-Empowerment
Full-Empowerment
H1b (-)
H1a (+)
H1b (+)H1a (-)
H1b (-) H2a (+)H2b (+)
H3a (+)H3b (+)
H1a (-)
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4. Research MethodologyAfter setting-up the theoretical background, conceptual model and developing the hypothesis, this
part of the paper presents the research method applied to the study of customer empowerment and
its impact to willingness to pay and intention to buy. The section starts with the explanation of the
research design. Further it provides the description of the measures such as dependent, independent
and other variables and how these variables are going to be measured. The chapter ends with the
clarification of the data sample and how it was collected.
4.1Experimental DesignTaking into consideration defined objective of this paper, I decided to use theoretical-
methodological research study type. The aim of this research is to find out how different levels of
customer empowerment drives customer’s willingness to pay and intention to purchase. Due to that,
the questionnaire survey was used in this empirical study.
The hypothesis were tested in laptop cases market. I have chosen this product category due to the
fact that it reflects very well the objective of customer empowerment described in this paper – it is
not technologically complex and customers can free their mind and be as creative as they want
without jeopardising the quality and the purpose of the product.
To eliminate the effects of any existing company knowledge or familiarity with the brands, in this
research I used fake names of the firms calling them Company A, Company B, and Company C,
where:
Company A is engaged in zero customer empowerment strategy – the firm hires
professionals to develop new possible products for the market and after that, the Company’s
A board of directors decides which of the concepts is worth to be produced.
Company B is engaged in middle customer empowerment strategy – the firm gives an
opportunity for its customers to suggest new possible products for the market and after that,
the Company’s B board of directors decides which of the concepts is worth to be produced.
Company C is engaged in full customer empowerment strategy – the firm gives an
opportunity for its customers to suggest new possible products for the market and they are
also empowered to decide which of the concepts is worth to be produced.
In order to test the hypotheses, I used an experimental approach. There is an ongoing debate
between the choice of a between-subjects design and within-subjects design due to the fact that both
22
of the approaches have theirs positive and negative sides7. In this paper, I decided to use a between-
subjects design, which results I report in the following chapter (the fifth chapter). However, to make
sure that my findings are not biased by the choice of an experimental approach, I randomly
allocated part of the respondents (26,5%) to a within-subjects research design. This will let me to
test the robustness of the findings that are also reported in the fifth chapter.
All surveys have the same layout: first of all, respondents are provided with the background
information on how the company develops its new products. There is also given an example of the
product they have recently produced. Next, respondents are asked what is the maximum price they
would be willing to pay for that item indicating the price on the payment scale. In the third part of
the survey, there are idea quality perception questions. Respondents are invited to evaluate the
characteristics of that particular product. However, these measures are omitted from the further
analysis as they have no influence on the final results. Then, they are asked to indicate their
intention to purchase the laptop case if they would be looking for one at the moment. In the fifth
section, there is a scale to measure the need for autonomy of the respondents. Further, I included
questions related to laptop gadgets to know how the respondents are involved in this product
category. The survey ends with the collection of demographic data. Respondents are asked to
provide information on their gender, age, and education (for a complete questionnaire in English,
see Appendix A).
4.2The MeasurementThe study consists of four questionnaires in order to manipulate the independent variable – levels of
customer empowerment: three treatments with each level and a within subject design. This research
incorporates two dependent variables – willingness to pay and intention to purchase and a
moderating variable – customer’s need for autonomy that will be discussed in more detail below.
Need for autonomy. I used 12-item Autonomy subscale from the Personality Research Form (PRF)
to measure the customers’ need for autonomy. The PRF was developed by Jackson (1974) to
measure normal personality. This measurement tool consists of 22 unique traits of personality (in
this paper I used only one) that stems from Murray’s system of needs. According to Stricker (1974),
this scale has high level of reliability (the reliability coefficients ranging from 0.62 to 0.86).
The respondents had to answer true or false to 11 descriptive statements (I eliminated one sentence
due to its mismatch with the context of the study). Each question scores 0 for false and 1 for true
7 http://management.ucsd.edu/docs/faculty/rest%20published.pdfhttp://faculty.washington.edu/agg/pdf/Gwald_PsychBull_1976.OCR.pdf
23
reaching the highest of 11 points for those who are high in need for autonomy (Rosenfield et al.,
2005). Autonomy scale involves items about respondents’ desire to feel unattached and independent
as well as to what extend they are affected by the opinions of other customers.
Willingness to pay (WTP). The literature suggest diverse methods of measuring customer’s
willingness to pay. In this study I chose to use payment scale approach to elicit this measure – each
respondent had to choose a value from the same pre-specified and ordered list. I decided to use this
type of scale in order to make the valuation process more comprehensible to the respondents
(Donaldson et al., 1997).
In the survey, the respondents were asked to indicate the maximum value on a payment scale they
would pay for the laptop case. The payment scale went up in intervals of €5 from €5 to €100 (euro
was the currency of the research due to the fact, that the survey was distributed in European
countries). I chose the wide range in order to reflect the prices of laptop cases in real market as
close as possible.
Intention to purchase (PI). In this study I adopted five-point “Definitely not – Definitely yes” scale
to measure respondent’s intention to purchase a laptop case, if he/she would be looking for one at
the moment as according to Johnson (1979) this scale is the most popular one.
4.3Data SampleFor a data collection I chose to use non-probability sampling method due to the fact that it allowed
me to select the respondents upon the personal judgement. The research was conducted among adult
individuals, mostly students, including respondents from different nationalities and cultural
backgrounds. In order to reach the target audience – the laptop users, the participants of the survey
were approach via online channels such as Skype, Facebook.com, LinkedIn.com and e-mails.
Each respondent received a survey link that re-directed him/her to one of the four questionnaire
versions. From the total of 700 participants approached, there were 339 respondents that answered
the survey with the response rate of 48,4%. Due to the fact, that all questions were compulsory in
order to finish the survey, all 339 participants validated as successfully completed the questionnaire.
4.4The Method of AnalysisIn this paper I present some investigation to give thorough overview of the collected data. After
that, the hypotheses are tested.
24
First of all, I run some descriptive statistics for the population of the study as well as comparisons
for dependent and moderating variables. The tables summarising the results are presented. Then, the
categorical variable, level of customer empowerment, was transferred into dummy variables.
Hypotheses in this research were tested using linear regression model. First, I used two models to
test the direct relationship between independent and dependent variables:
WTP=β0+ β1 middle+β2 full+ε
PI=β0+ β1 middle+β2 full+ε
After that I included moderating effect of customers’ need for autonomy in the study:
WTP=β0+ β1 middle+β2 full+β3 nfa+ β4 nfa×middle+β5 nfa× full+ε
PI=β0+ β1 middle+β2 full+ β3 nfa+ β4 nfa×middle+β5 nfa× full+ε, where
WTP: customers’ willingness to pay for a laptop case
PI: customer’s intention to purchase a laptop case
Middle: 1 if company uses middle level of customer empowerment and 0 if otherwise
Full: 1 if company uses full level of customer empowerment and 0 if otherwise
Nfa: score of customers’ need for autonomy
Nfa × middle: interaction effect of customers’ need for autonomy when company uses
middle level of customer empowerment
Nfa × full: interaction effect of customers’ need for autonomy when company uses full level
of customer empowerment
Finally, I used ordinary least squares (OLS) to estimate the parameters.
25
5. ResultsThis section of the paper provides an overview of how the analysis was done. The chapter starts
with the analysis of descriptive statistics of the study population that includes respondents from all
four versions of the questionnaire. Further, in order to test the hypotheses, I present the comparison
of WTP and intention to purchase in different customer empowerment strategies and describe the
results of the regression analysis from between-subjects research design. The chapter ends with
robustness check.
5.1Descriptive StatisticsTable 3. Descriptive statistics of the study population
Variable Levels Frequency PercentCumulative
Percent
The version of the questionnaire
Within-Subjects Design
All Strategies 90 26,5 26,5
Between-Subjects Design
Full Empowerment 88 26 52,5Middle Empowerment 94 27,7 80,2Zero Empowerment 67 19,8 100Total 339 100
GenderFemale 194 57,2 57,2Male 145 42,8 100Total 339 100
Age
20-29 256 75,5 75,530-39 36 10,6 86,140-49 16 4,7 90,8Less than 20 23 6,8 97,650 and more 8 2,4 100Total 339 100
Education
Bachelor's degree 172 50,7 50,7Doctorate degree 10 2,9 53,7Lower than Bachelor 31 9,1 62,8Master's degree 126 37,2 100Total 339 100
The data collected from questionnaire was processed using Excel and SPSS programs. A total of
339 respondents completed the questionnaire (see Table 3): 249 were exposed to between-subjects
design (67 – zero customer empowerment strategy; 94 – middle customer empowerment strategy;
88 – full customer empowerment strategy) and 90 respondents were subjected to within-subjects
design. The number of the respondents per each version of the survey is approximately equal and
accounts for a bit more than a quarter of the sample, except for the zero customer empowerment
strategy that represents only close to one-fifth of the study population.
26
In terms of gender, the number of male and female participants were nearly equal. However, female
respondents accounted for a slightly bigger part of the sample (n = 194, 57,2% and n = 145; 42,8%
respectively) (see Table 3).
Taking into consideration the age groups, the majority of the respondents were between 20 and 29
years old (n = 256, 75,5%). There were only about 7% of the respondents that were 40 and older
(4,7% of the age group of 40-49 and 2,4% of the age group of 50 and more). Survey participants
from 30 to 39 years old accounted for 10,6%, when age group of less than 20 accounted for 6,8% of
total number of the respondents (see Table 3).
Two biggest groups of the respondents were found to have either Bachelor’s degree or Master’s
degree (n = 172, 50,7% and n = 126, 37,2% respectively). Those that have lower than Bachelor’s
degree or Doctorate degree are the minority of the study population (n = 31, 9,1% and n = 10, 2,9%
respectively; see Table 3).
Table 4. Descriptive statistics of the respondents’ engagement in laptop gadget market by gender
Variable Levels Frequency PercentCumulative
PercentGender
Female Male
How often do you visit stores for
laptop gadgets?
Never 93 27,4 27,4 63 30Less than once a month 222 65,5 92,9 126 96At least once a month 23 6,8 99,7 4 19At least once a week 1 0,3 100 1 0More than once a week 0 0 0 0 0Total 339 100 194 145
How often do you usually buy cases
for laptop?
Never 90 26,5 26,5 48 42One case for one laptop 242 71,4 97,9 140 102More than one case for one laptop
7 2,1 100 6 1
Total 339 100 194 145
How many cases for laptop do you
own?
None 51 15 15 22 29One case for one laptop 267 78,8 93,8 160 107More than one case for one laptop
21 6,2 100 12 9
Total 339 100 194 145
Most of the respondents visit stores for laptop gadgets less than once a month (n = 222, 65,5%,
where nF8 = 126 and nM
9 = 96) or never at all (n = 93, 27,4%, where nF = 63 and nM = 30). Only 7,1%
of the survey participants visit the store at least once a month (n = 24, where nF = 5 and nM = = 19;
see Table 4).
8 nF stands for number of females9 nM stands for number of males
27
However, 71,4% of the study population usually buys at least one case for their laptop (n = 242,
where nF = 140 and nM = 102) and only 2,1% of them usually buys more than one case for their
gadget (n = 7, where nF = 6 and nM = 1). On the other hand, there are 26,5%, that is 90 respondents,
that have never bought a laptop case (nF = 48 and nM = 42; see Table 4).
During the study, the majority of respondents owned one laptop case per laptop (n = 267, 78,8%,
where nF = 160 and nM = 107). 51 participant of the survey said that they have no case for their
laptop and that is 15,0% of the total survey population (nF = 22 and nM = 29), when only 6,2%
claimed to have more than one laptop case per laptop (n = 21, where nF = 12 and nM = 9; see Table
4).
Table 5. Descriptive statistics of respondents’ need for autonomy
Condition N Minimum Maximum Mean Std. Deviation
Between-Subjects Design
Zero Empowerment 67 0 9 5,78 1,68Middle Empowerment 94 2 10 5,95 1,75Full Empowerment 88 3 8 6,19 1,27
Within-Subjects Design
90 2 11 7,13 1,98
Regarding customers’ need for autonomy of a total study population, it varied from 0 to 9 in zero
customer empowerment condition with the mean of 5,78, from 2 to 10 in middle customer
empowerment condition with the mean of 5,95, from 3 to 8 in full customer empowerment
condition with the mean of 6,19, and from 2 to 11 in a within-subjects design with the mean of 7,13
(see Table 5).
5.2 AnalysesFor 249 respondents that were exposed to one of customer empowerment levels, maximum
willingness to pay for a laptop case was, on average, €28,36, for respondents assigned to the zero
customer empowerment strategy. Respondents exposed to the middle level of customer
empowerment had an average WTP of €22,71. Respondents assigned to the full customer
empowerment strategy had an average WTP of €29,26. Moreover, One-way ANOVA test showed
that there is statistically significant difference between those means (p = 0,017; see Figure 4).
The intention to purchase a laptop case on average differ only marginally among all three levels of
customer empowerment for 249 respondents ( = 2,94 when it is zero customer empowerment
strategy, = 2,95 – middle customer empowerment strategy, and = 2,89 – full customer
empowerment strategy). One-way ANOVA test confirmed that there is no statistically significant
difference between those means (see Figure 4).
28
Zero Empowerment Middle Empowerment Full Empowerment0tan28aa566028
0tan4aa56604
0tan9aa56609
0tan14aa566014
0tan19aa566019
0tan24aa566024
0tan29aa566029
0tan4aa56604
24tan27aa566027
24tan21aa566021
24tan28aa566028
36tan1aa56601 0tan1aa56601 36tan1aa56601
WTP PI
Figure 4. Comparison of willingness to pay and purchase intention across different customer empowerment strategies in between-subjects design
Note: significant difference between levels of customer empowerment in WTP (p = 0,017); no significant difference between levels of customer empowerment in PI (p = 0,906)
In order to test previously formulated hypotheses, I had to perform a dummy coding as categorical
variable has more than two levels: zero customer empowerment, middle customer empowerment,
and full customer empowerment. Variable Zero Customer Empowerment was used as a baseline in
a further analysis. I used linear regression analysis to test all the hypotheses.
Table 6. Results of the regression analysis for level of customer empowerment and WTP
Variable B Sig.
(Constant) 28,358 0,000Dummy for Middle Customer Empowerment
-5,645 0,033
Dummy for Full Customer Empowerment
0,903 0,735
R Square 0,033 F Value 4,166Sig. 0,017
The first part of the H1 tested the direct relationship between levels of customer empowerment and
willingness to pay assuming that middle level will have positive and stronger effect than zero and
full empowerment. Table 6 represents results for this regression. Though, the model is significant at
the 5% level (F = 4,166, Sig. = 0,017), only 3,3% of the variance in WTP can be explained by this
regression model. Moreover, there is no statistically significant evidence (p = 0,735) that companies
involved in full customer empowerment strategy affect willingness to pay differently than those
29
involved in zero customer empowerment strategy. On the other hand, regression coefficient for
level of middle customer empowerment is significant but negative (B = -5,645, Sig. = 0,033). That
means that firms that are engaged in middle customer empowerment strategy affect 5,645 less WTP
than those engaged in zero customer empowerment strategy, thus rejecting H1a.
The second part of the H1 tested the positive and stronger effect of middle customer empowerment
on intention to purchase compared with the levels of zero and full customer empowerment. The
results of the regression are presented in Table 7. The analysis revealed that this model is not
significant (F = 0,099, Sig. = 0,906), meaning that the effect of level of customer empowerment on
intention to purchase cannot be tested. Therefore, H1b is not supported.
Table 7. Results of the regression analysis for levels of customer empowerment and PI
Variable B Sig.
(Constant) 2,940 0,000Dummy for Middle Customer Empowerment
0,007 0,967
Dummy for Full Customer Empowerment
-0,054 0,735
R Square 0,001 F value 0,099Sig. 0,906
In order to test the hypotheses 2 and 3 the moderating variable – need for autonomy, was introduced
in the model.
Regarding H2a, the effect of the level of zero customer empowerment on willingness to pay was
expected to be positive for customers with low need for autonomy. This model is significant at the
5% level and explained 9,0% of the variance of the model (F = 4,827, Sig. = 0,000; see Table 8).
With the introduction of a new variable in the model, there is still no statistically significant
evidence (p = 0,299) that companies involved in full customer empowerment strategy affect WTP
differently than those involved in zero customer empowerment strategy when customers’ need for
autonomy is held constant. Moreover, regression analysis shows that companies engaged in middle
customer empowerment strategy also does not affect customers’ WTP differently than those using
zero customer empowerment strategy (p = 0,125).
For testing the H2a, following equation for the level of zero customer empowerment was introduced:
WTP=43,281−2,584 × Need for Autonomy
30
Table 8. Results of the regression analysis for levels of customer empowerment, customers’ need for autonomy and WTP Variable B Sig.
(Constant) 43,281 0,000Dummy for Middle Customer Empowerment -14,169 0,125
Dummy for Full Customer Empowerment 11,576 0,299
Need for Autonomy -2,584 0,029Interaction of Need for Autonomy and Dummy for Middle Customer Empowerment
1,507 0,320
Interaction of Need for Autonomy and Dummy for Full Customer Empowerment
-1,549 0,389
R Square 0,090 F value 4,827 Sig. 0,000
From the equation it is seen that the lower customers’ need for autonomy, the higher the effect of
zero customer empowerment strategy to WTP. Therefore, H2a is supported.
Table 9. Results of the regression analysis for levels of customer empowerment, customers’ need for autonomy and PIVariable Beta Sig.(Constant) 3,030 0,000Dummy for Middle Customer Empowerment -0,558 0,324
Dummy for Full Customer Empowerment -0,141 0,836
Need for Autonomy -0,016 0,829Interaction of Need for Autonomy and Dummy for Middle Customer Empowerment
0,095 0,305
Interaction of Need for Autonomy and Dummy for Full Customer Empowerment
0,015 0,891
R Square 0,009 F value 0,423 Sig. 0,832
Taking into consideration H3a - for customers with high need for autonomy, the full customer
empowerment strategy has positive effect on WTP, the effect of moderating variable was calculated
using the following equation:
WTP=43,281−2,584 × Need for Autonomy
31
As it is seen, the higher customers’ need for autonomy, the lower WTP when company is engaged
in full customer empowerment strategy. These results contradicts the hypothesis, thus H3a is
rejected.
To test the same hypothesis on intention to purchase, another regression analysis was performed.
However, the results showed that model is not significant (F = 0,423, Sig. = 0,832), so it was not
possible to perform the analysis for H2b and H3b (see Table 9). Due to that, H2b and H3b are not
supported.
5.3Robustness ChecksIn order to check the robustness of the study, I conducted a within-subjects design survey that
delivers slightly different results comparing with the between-subjects design.
Zero Empowerment Middle Empowerment Full Empowerment0tan28aa566028
0tan4aa56604
0tan9aa56609
0tan14aa566014
0tan19aa566019
0tan24aa566024
0tan29aa566029
0tan4aa56604
12tan25aa566025 12tan26aa56602648tan23aa566023
24tan27aa566027
24tan21aa566021
24tan28aa566028
Within-Subjects Design Between-Subjects Design
Figure 5. Comparison of willingness to pay across different customer empowerment strategies and between-subjects design and within-subjects design
Note: significant difference between levels of customer empowerment in WTP in within-subjects design (p = 0,001); significant difference between levels of customer empowerment in WTP in between-subjects design (p = 0,017)
The 90 respondents who answered within-subjects design survey, had mean willingness to pay
value of €26,33 for zero customer empowerment strategy, €27,33 for middle customer
empowerment strategy, and €24,72 for full customer empowerment strategy. Furthermore, those
means are statistically significant as One-way Repeated Measures ANOVA test showed p = 0,001
(see Figure 5). These findings are in line with the previous results received from between-subjects
design.
However, the analysis of purchase intention showed different results between within-subjects and
between-subjects designs. Those 90 respondents who were exposed to the within-subjects design
32
survey were found to have higher purchase intention on average compared with the between-
subjects design survey ( = 3,84 when it is zero customer empowerment strategy, = 3,79 –
middle customer empowerment strategy, and = 3,51 – full customer empowerment strategy).
Moreover, distinct from the previous findings, One-way Repeated Measures ANOVA test showed
that those means significantly vary within the levels (see Figure 6).
Due to the fact that I randomly allocated people to within-subjects design survey or between-
subjects design survey, the difference in purchase intention might have come from the method of
research. This just once again reminds that it is important to know the benefits and limitations of
different research approaches and to test the robustness of the results of the different experimental
design methods. As this example shows, the failure to do so may lead to incorrectly rejected or
failed to reject hypotheses.
Zero Empowerment Middle Empowerment Full Empowerment0tan28aa566028
0tan29aa566029
0tan1aa56601
0tan2aa56602
0tan3aa56603
0tan4aa56604
36tan2aa56602 36tan2aa5660224tan2aa56602
36tan1aa56601 0tan1aa56601 36tan1aa56601
Within-Subjects Design Between-Subjects Design
Figure 6. Comparison of purchase intention across different customer empowerment strategies and between-subjects design and within-subjects design
Note: no significant difference between levels of customer empowerment in PI in between-subjects design (p = 0,906); significant difference between levels of customer empowerment in PI in within-subjects design (p = 0,002)
The literature suggests that by using a within-subjects design, researchers can minimise the effects
caused by individual differences (Tucker-Drob, 2011). Moreover, this research design has more
statistical power (Rao and Monroe, 1989). On the other hand, studies show that in terms of “given
equal number of tests, the between-subjects design is more powerful due to the slight gain in the
degrees of freedom” (Viswesvaran and Ones, 1999).
However, the main point that determined the choice of between-subjects design in this research was
the criticism on within-subjects design as being too articaftual: respondents faced with the different
33
treatments sequentially may guess what response is expected from them and respond accordingly
(Sawyer, 1975).
34
6. General DiscussionIn this section of the paper I will give conclusions regarding the research question formulated in the
first chapter. The question will be answered based on provided literature review and the results of
conducted survey. The chapter also covers managerial and academic implications, possible
limitations and opportunities for future research.
6.1ConclusionCustomer empowerment is one of the most discussed topics in marketing field. Researchers argue
about its contribution in increasing customer experience: there are those who say that customer
empowerment better reflects individual needs, increases customer satisfaction and psychological
ownership that leads to greater intention to purchase (Hunter and Garnefeld, 2008; O’cas and Ngo,
2011;Koriat, et al., 1980; Muthukrishnan and Kardes, 2001; Wathieu et al., 2002; Prandelli et al.,
2005; Fuchs et al., 2010) and then, there are those who believe that this marketing strategy might
reinforce the overall dissatisfaction with the company, decrease customer satisfaction, make loose
“perceived fit”, and cause too much trouble for customer to make a decision (Goodman et al., 1995;
Wathieu et al., 2002; Kahneman, 1994; Iyengar and Lepper, 2000; Fuchs et al., 2010).
Due to that, the objective of this paper was to define the power level that company should give to
the customer to improve rather than damage its experience. Based on the literature review, I
distinguished three levels of customer empowerment: zero, middle, and full. I assumed that these
levels of customer empowerment can influence the willingness to pay and intention to purchase in
laptop case market. Moreover, that this relationship can be shaped by customers’ need for
autonomy.
The results of the study show, that levels of customer empowerment indeed have an influence on
willingness to pay. However, the effect was opposite of what was expected: middle level of
customer empowerment affected willingness to pay negatively, when zero customer empowerment
strategy had a positive effect. There was no statistically significant evidence that level of full
customer empowerment has any influence on willingness to pay.
These findings can be explained with the help of the theory. Specifically, Fuchs et al. (2010) states
that customers who are empowered create higher demand towards underlying products compared
with non-empowered customers. That might be the case in this study. All of the respondents were
treated as non-empowered customers and that might diminished the positive effect of customer
empowerment all together.
35
On the other hand, no statistically significant results were found to support my assumption that
different customer empowerment strategies can influence intention to buy. There are two
explanations for that. First, it is because of the chosen method of research. The robustness check
showed that purchase intention varied significantly in within-subjects design. Second, this might
have happened because of very specific offered product – laptop case. 26,5% of all respondents
have never even bought the case for their gadget.
Apart from direct relationship between levels of customer empowerment and willingness to pay and
intention to buy, I also tested the moderating effect of customers’ need for autonomy. I assumed
that those customers who have low need for autonomy will have more favourable attitude towards
zero customer empowerment strategy and those that have high need for autonomy will prefer full
customer empowerment strategy in terms of willingness to pay and intention to purchase.
The results of the research confirmed that the characteristics of the customers like need for
autonomy can influence their willingness to pay. More specifically, respondents who reported low
need for autonomy were found to be more willing to purchase laptop case that was produced using
zero customer empowerment strategy. However, the higher customers’ need for autonomy the less
willing he/she was to pay for a laptop case from a company that is engaged in full customer
empowerment strategy.
Furthermore, as in between-subjects research design there were no statistically significant evidence
that levels of customer empowerment have an impact on intention to purchase, there was no
moderating influence of customers’ need for autonomy found as well. Thus, the assumptions could
not be tested.
The test of the hypotheses is summarised in the table below (see Table 10).
Table 10. Hypotheses table
36
6.2ImplicationsThe results of this thesis provide an important contribution to the literature on customer
empowerment as well as to the managers responsible for implementing marketing strategies.
First of all, it reinforces the theory of customer empowerment by introducing customer
characteristics as moderating the outcome from this marketing strategy. Secondly, it enriches the
literature on customer involvement in new product development from the perspective of non-
empowered customer as most of the studies conducted in this field are from the view point of
customers that are empowered by the company (Fuller et al., 2009; Hunter and Garnefeld, 2008;
O’Cass and Ngo, 2011).
The latter is very important for the managers as well as non-empowered customers account for the
larger share of the target market. Mainly, the findings of this study suggest that customer
empowerment is not beneficial for the company. It costs a lot to implement and maintain the
platform for customer involvement, but non-empowered customers do not show any exclusive
interest in buying or paying more for customer co-created product.
Moreover, this paper has not only conceptual but due to the fact, that I used two different methods
for my experimental research, it also provides a research-orientated contribution. The findings fall
in alongside the previous researches emphasising the importance of choosing the right research
approach in order to support or reject the hypotheses correctly.
6.3Limitations and future researchThis study has several limitations that can be seen as new opportunities for future research. First,
when using the between-subjects design, I did not manage to catch any relationship between levels
of customer empowerment and intention to purchase. As robustness check showed, this might have
happened because of the chosen research method. For a future research, the influence of levels of
customer empowerment on purchase intention could be tested using different approach.
Secondly, the literature suggests many methods to test the willingness to pay. The payment scale is
considered to have high response rate and to be more valid compared with other approaches
(Donaldson et al., 1997). However, it is vulnerable to range bias, thus it would be interesting for a
future research to include different approach to measure willingness to pay.
Thirdly, in this study I used only one durable product to test the hypotheses. Various studies suggest
that there might be different effects for different types of goods. Future researchers could not only
include different product in this type of study, but also could use several products in order to test if
37
there is any effects of the levels of customer empowerment on a specific type of product, for
example, luxury goods vs. economy goods, FMCG vs. durable goods.
Finally, three quarters of the study population were young people from 20 to 29. It is common to
think that they are more open and risk taking, thus accept innovations more rapidly. Though, the
results of this study showed the opposite, I would suggest researchers to include respondents from a
wider age range, in the future in order to reflect the attitudes of a broader market.
38
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43
Appendix A. Between-Subjects Design Questionnaire in EnglishZero-Empowerment Strategy
Dear respondent,
I am a Master student at Erasmus School of Economics. I am doing a research on customer empowerment impact on willingness to pay and intention to purchase. I would appreciate if you would answer the questions below. The results will be used for my Master thesis in order to give conclusion and recommendations.
Filling the questionnaire will not take more than 5 minutes of your precious time!
Background information
Imagine, that you are looking for a new case for your laptop. What you know about the policy of a new product development in the Company A is that it hires professionals to come up with new possible ideas for the cases for laptops and after that, the Company’s A board of directors decides which of the concepts is worth to be produced for the market.
Down you can see the outcome - a rubber case:
1. What is the MAXIMUM price you would be willing to pay to have the item?
Please indicate your choice (and price willing to pay) below:
€5€10€15€20€25€30€35
€40€45€50€55€60€65€70
€75€80€85€90€95€100
2. Recall that the design of this laptop case is one of several proposed by professional designers of the Company A and the choice of this particular case was made by the company's A board of directors with the advice of the head of design of the company. In this situation, please indicate below how would you characterise the idea:
44
Useless Usable○ ○ ○ ○ ○ ○ ○Unfeasible Feasible○ ○ ○ ○ ○ ○ ○Mindful Ridiculous○ ○ ○ ○ ○ ○ ○Conventional Original○ ○ ○ ○ ○ ○ ○Vivid Dull○ ○ ○ ○ ○ ○ ○Pleasant Irritating○ ○ ○ ○ ○ ○ ○Ordinary Unique○ ○ ○ ○ ○ ○ ○Senseless Makes sense○ ○ ○ ○ ○ ○ ○Inappropriate Appropriate○ ○ ○ ○ ○ ○ ○Provokes imagery Does not provoke imagery○ ○ ○ ○ ○ ○ ○Worthless Valuable○ ○ ○ ○ ○ ○ ○Illogical Logical○ ○ ○ ○ ○ ○ ○Irrelevant Relevant○ ○ ○ ○ ○ ○ ○Common Fresh○ ○ ○ ○ ○ ○ ○Familiar Bizarre○ ○ ○ ○ ○ ○ ○
3. How innovative do you think this idea is?
Not innovative at all Very innovative○ ○ ○ ○ ○ ○ ○
4. If you were, at the moment, looking for a laptop case and saw this laptop case priced at the value you indicated above as your maximum willingness to pay, would you buy it?
45
Definitely not Probably not I am not sure Probably yes Definitely yes○ ○ ○ ○ ○
5. Please, answer true or false to the following statements:True False
I find that I can think better when I have the advice of others ○ ○Family obligations make me feel important ○ ○I would feel lost and lonely roaming about the world alone ○ ○I could live alone and enjoy it ○ ○I would not mind living in a very lonely place ○ ○I would like to be alone and be my own boss ○ ○I like to do whatever is proper ○ ○I would like to have a job in which I didn’t have to answer to anyone ○ ○I usually try to share my problems with someone who can help me ○ ○I am quite independent of the opinions of others ○ ○I don’t want to be away from my family too much ○ ○
6. How often do you visit stores for laptop gadgets?
o Nevero Less than once a montho At least once a montho At least once a weeko More than once a week
7. How often do you usually buy cases for laptop?
o Nevero One case for one laptopo More than one case for one laptop
8. How many cases for laptop do you own?
o Noneo One case for one laptopo More than one case for one laptop
9. Gender
o Maleo Female
10. Age
46
o Less than 20o 20-29o 30-39o 40-49o 50 and more
11. Education
o Lower than Bacheloro Bachelor’s degreeo Master’s degreeo Doctorate degree
Middle-Empowerment Strategy
Dear respondent,
I am a Master student at Erasmus School of Economics. I am doing a research on customer empowerment impact on willingness to pay and intention to purchase. I would appreciate if you would answer the questions below. The results will be used for my Master thesis in order to give conclusion and recommendations.
Filling the questionnaire will not take more than 5 minutes of your precious time!
Background information
Imagine, that you are looking for a new case for your laptop. What you know about the policy of a new product development in the Company B is that it gives an opportunity for its customers to suggest new possible ideas for the cases for laptops and after that, the Company’s B board of directors decides which of the concepts is worth to be produced for the market.
Down you can see the outcome - a rubber case:
1. What is the MAXIMUM price you would be willing to pay to have the item?
Please indicate your choice (and price willing to pay) below:
€5€10€15
€20€25€30
€35€40€45
47
€50€55€60€65
€70€75€80€85
€90€95€100
2. Recall that the design of this laptop case is one of several proposed by the customers of the Company B and the choice of this particular case was made by the Company's B board of directors with the advice of the head of design of the company. In this situation, please indicate below how would you characterise the idea:
Useless Usable○ ○ ○ ○ ○ ○ ○Unfeasible Feasible○ ○ ○ ○ ○ ○ ○Mindful Ridiculous○ ○ ○ ○ ○ ○ ○Conventional Original○ ○ ○ ○ ○ ○ ○Vivid Dull○ ○ ○ ○ ○ ○ ○Pleasant Irritating○ ○ ○ ○ ○ ○ ○Ordinary Unique○ ○ ○ ○ ○ ○ ○Senseless Makes sense○ ○ ○ ○ ○ ○ ○Inappropriate Appropriate○ ○ ○ ○ ○ ○ ○Provokes imagery Does not provoke imagery○ ○ ○ ○ ○ ○ ○Worthless Valuable○ ○ ○ ○ ○ ○ ○Illogical Logical○ ○ ○ ○ ○ ○ ○Irrelevant Relevant○ ○ ○ ○ ○ ○ ○Common Fresh○ ○ ○ ○ ○ ○ ○Familiar Bizarre○ ○ ○ ○ ○ ○ ○
3. How innovative do you think this idea is?
Not innovative at all Very innovative
48
○ ○ ○ ○ ○ ○ ○
4. If you were, at the moment, looking for a laptop case and saw this laptop case priced at the value you indicated above as your maximum willingness to pay, would you buy it?
Definitely not Probably not I am not sure Probably yes Definitely yes○ ○ ○ ○ ○
5. Please, answer true or false to the following statements:True False
I find that I can think better when I have the advice of others ○ ○Family obligations make me feel important ○ ○I would feel lost and lonely roaming about the world alone ○ ○I could live alone and enjoy it ○ ○I would not mind living in a very lonely place ○ ○I would like to be alone and be my own boss ○ ○I like to do whatever is proper ○ ○I would like to have a job in which I didn’t have to answer to anyone ○ ○I usually try to share my problems with someone who can help me ○ ○I am quite independent of the opinions of others ○ ○I don’t want to be away from my family too much ○ ○
6. How often do you visit stores for laptop gadgets?
o Nevero Less than once a montho At least once a montho At least once a weeko More than once a week
7. How often do you usually buy cases for laptop?
o Nevero One case for one laptopo More than one case for one laptop
8. How many cases for laptop do you own?
o None
49
o One case for one laptopo More than one case for one laptop
9. Gender
o Maleo Female
10. Age
o Less than 20o 20-29o 30-39o 40-49o 50 and more
11. Education
o Lower than Bacheloro Bachelor’s degreeo Master’s degreeo Doctorate degree
Full-Empowerment Strategy
Dear respondent,
I am a Master student at Erasmus School of Economics. I am doing a research on customer empowerment impact on willingness to pay and intention to purchase. I would appreciate if you would answer the questions below. The results will be used for my Master thesis in order to give conclusion and recommendations.
Filling the questionnaire will not take more than 5 minutes of your precious time!
Background information
Imagine, that you are looking for a new case for your laptop. What you know about the policy of a new product development in the Company C is that it gives an opportunity for its customers to suggest new possible ideas for the cases for laptops. Customers are also empowered to decide which of the concepts is worth to be produced for the market.
Down you can see the outcome - a rubber case:
50
1. What is the MAXIMUM price you would be willing to pay to have the item?
Please indicate your choice (and price willing to pay) below:
€5€10€15€20€25€30€35
€40€45€50€55€60€65€70
€75€80€85€90€95€100
2. Recall that the design of this laptop case is one of several proposed by the customers of the Company C and the choice of this particular case was also made by the Company's C customers. In this situation, please indicate below how would you characterise the idea:
Useless Usable○ ○ ○ ○ ○ ○ ○Unfeasible Feasible○ ○ ○ ○ ○ ○ ○Mindful Ridiculous○ ○ ○ ○ ○ ○ ○Conventional Original○ ○ ○ ○ ○ ○ ○Vivid Dull○ ○ ○ ○ ○ ○ ○Pleasant Irritating○ ○ ○ ○ ○ ○ ○Ordinary Unique○ ○ ○ ○ ○ ○ ○Senseless Makes sense○ ○ ○ ○ ○ ○ ○Inappropriate Appropriate○ ○ ○ ○ ○ ○ ○Provokes imagery Does not provoke imagery○ ○ ○ ○ ○ ○ ○
51
Worthless Valuable○ ○ ○ ○ ○ ○ ○Illogical Logical○ ○ ○ ○ ○ ○ ○Irrelevant Relevant○ ○ ○ ○ ○ ○ ○Common Fresh○ ○ ○ ○ ○ ○ ○Familiar Bizarre○ ○ ○ ○ ○ ○ ○
3. How innovative do you think this idea is?
Not innovative at all Very innovative○ ○ ○ ○ ○ ○ ○
4. If you were, at the moment, looking for a laptop case and saw this laptop case priced at the value you indicated above as your maximum willingness to pay, would you buy it?
Definitely not Probably not I am not sure Probably yes Definitely yes○ ○ ○ ○ ○
5. Please, answer true or false to the following statements:True False
I find that I can think better when I have the advice of others ○ ○Family obligations make me feel important ○ ○I would feel lost and lonely roaming about the world alone ○ ○I could live alone and enjoy it ○ ○I would not mind living in a very lonely place ○ ○I would like to be alone and be my own boss ○ ○I like to do whatever is proper ○ ○I would like to have a job in which I didn’t have to answer to anyone ○ ○I usually try to share my problems with someone who can help me ○ ○I am quite independent of the opinions of others ○ ○I don’t want to be away from my family too much ○ ○
6. How often do you visit stores for laptop gadgets?
o Nevero Less than once a month
52
o At least once a montho At least once a weeko More than once a week
7. How often do you usually buy cases for laptop?
o Nevero One case for one laptopo More than one case for one laptop
53
8. How many cases for laptop do you own?
o Noneo One case for one laptopo More than one case for one laptop
9. Gender
o Maleo Female
10. Age
o Less than 20o 20-29o 30-39o 40-49o 50 and more
11. Education
o Lower than Bacheloro Bachelor’s degreeo Master’s degreeo Doctorate degree