The concept of value creation is a key issue in tourism research as it is recognized as being vital in creating competitive advantage (Nasution & Mavondo, 2008; Sánchez et al., 2006) and should thus be considered in every marketing strategy. For tourism managers, this means that customer value plays an important role in developing market segmentation strategies, positioning policies or product differentiation strategies
(Gallarza and Saura, 2006). Investigating the perceived value of customers also helps managers to identify dimensions where they perform well or poor and helps to better understand customers’ decision making processes (Petrick, 2004).
For a long time, customer value was regarded as a one-dimensional construct mainly capturing value as value-for-money. Today, this view is rather outdated and customer value is considered being a multi-dimensional construct comprising several dimensions. Customers “assess products not just in functional terms of expected performance, value for money and versatility; but also in terms of the enjoyment or pleasure derived from the product and the social consequences of what the product communicates to others (Sweeney and Soutar, 2001, p. 216).”
In the context of hospitality research, Krasna (2008) found that solely
price-strategies seem to be out-of-date. By contrast it is the “soul of the hotel” (p. 14) and the emotional experience that makes hotel guests return to the hotel and recommend it to others. This is confirmed by Gallaraza and Saura (2006) who study university students’
travel behaviour and find that in the management of tourism experiences, there is a need to surpass pure utilitarian aspects and to focus on both the cognitive and affective
nature of perceived value. Thus, our understanding of perceived value goes beyond a price-performance ratio concept and incorporates functional, hedonic, and social aspects.
Functional value has its roots in economic utility theory and is often suggested as being the primary force of customer choice. Sheth and Uslay (2007) define functional value as the perceived utility derived from an alternative’s capacity for functional, utilitarian, or physical performance. Functional value is often evaluated by means of attributes such as price, reliability or durability. Woodruff (1997) identifies three key elements of functional value, that is, firstly, appropriate features, functions, attributes, secondly, appropriate performances, and thirdly, appropriate outcomes or
consequences.
The hedonic (experiential) value dimension brings emotions into play and views the customer as more than just a thinker but also as feeler and doer. Holbrook and Hirschman (1982) were among the first dealing with these experiential aspects.
Following their logic, value is not generated by the actual purchase but in the
consumption experience. Within this view, other variables such as fun, pleasure, or
emotions complement to the customer’s value perception (Addis & Holbrook, 2001).
Hedonic value is subjective and personal and often results from a fun experience rather than from purchasing or using a good or service. Hedonic value is filled with emotions, entertainment, freedom, and fantasy and can be influenced by atmosphere, employees’
behaviour, crowding or other peripheral services (Holbrook & Hirschman, 1982).
The social value dimension emanates from a mind-set which is shared by a society and is determined by the social impact the purchase of the service constitutes (Sánchez et al., 2006). Drawing on social identity theory (Tajfel & Turner, 1979), social
identification is a perception of oneness with a group of persons and leads to actions that are congruent with the group’s identity and support institutions that embody this identity (Ashforth & Mael, 1989). Depending on a person’s individual social value orientation he or she judges an entity for themselves and also for others. Thus, social value provides a basis for justification and acceptance when purchasing services. In tourism settings, purchase decisions often follow a social motivation which means that consumers want to belong or be accepted by a special group (Sánchez et al., 2006).
The conceptualization of consumer value is of particular importance for tourism products because they entail emotional value that goes beyond the functional utilities and provides more subjective, intangible benefits such as sensory pleasure, emotions, and excitement. Today, hospitality firms, for example, have to offer both impressive physical appearance and high-quality, personalized service offerings to their guests.
Additionally, the chances of achieving competitive advantage solely through the provision of tangibles, such as exclusive hotel furniture, are rather short-lived (Cai &
Hobson, 2004). Consequently, hotels achieve competitive advantage through creating symbolic, emotional, and intangible differences.
Beside the functional and hedonic benefits for the customer, which basically result from the purchase experience, the consumption of tourism services is also driven by customers’ need to extend their own personality, that is, to enhance their self-concept and to achieve group affiliation. When guests feel comfortable at a hotel because it matches their way of living and enhances their feelings of belonging to a certain group of people, positive reactions, such as positive word of mouth can be expected.
4.2 Customer Co-creation of Value
Various strategies have been implemented by firms to use the customer as an external resource. In most cases, though, the benefits of the firm—increasing output and
productivity—were at the very fore. However, this firm centred view is not in accordance with S-D logic. Nuttavuthisit (2010) takes a customer centric view and explores how and why individuals co-create and, additionally, derives four systematic categories of customer co-creation practices: participation-for-self, creation-for-self, participation-for-others, and creation-for-others. This categorization of practices
should allow conclusions on the motive and the extent to which customers engage in
co-creation.
Following Nuttavuthisit (2010) participation and creation are both elements of co-creation. Participation refers to the active involvement and cooperation of the customer, for instance, in the service development process. The extent to which customers are allowed to participate in this process is mainly predefined by the company. Creation, however, is controlled by the customer while he or she uses own or external resources to create individual value.
Participation-for-self aims at the fulfilment of specific needs demanded by the customer. The customer seeks to obtain a product or service which is tailored to his or her individual desires. The process to get to this stage is often cost intensive, as it needs to break free from standardization. Practices targeting at participation-for-self always actively involve the customer in business processes, whereas the advantages for the customer should compensate for possible risks s/he has to put up with
(Nuttavuthisit, 2010). Participation-for-self activities can particularly be found in the sports and leisure industry, where skiers (e.g., http://www.wagnerskis.com/),
sunglasses (http://www.customize-eyewear.com/), or bikes (e.g., http://www.
kraftstoff-bikes.com/), are tailored to fit customers’ unique needs with the help of mass customization tools.
Creation-for-self has been mainly influenced by the do-it-yourself concept.
Customers use their individual skills and knowledge to create value by and for them.
The firm supports customers by providing supportive surrounding conditions which allow them to apply and advance their skills. Both firm and customers are involved in the value creation process, whereas the customer plays an active role and the firm a rather passive but supportive role (Nuttavuthisit, 2010). Regarding the tourism industry, customers increasingly use online mix-and-match booking platforms to combine flights, hotels, and rental cars. These platforms have changed tourism substantially since they allow customers to easily compare different service providers and to find the most suitable offer for them.
Participation and creation-for-self obviously focus on benefits generated for the customer themselves and do not take any desires of other actors into account. Still, individuals feel the need for social affiliation, solidarity, and intercommunity, and therefore have to pay regard to benefits for other actors and society at large. The following two co-creation practices are aiming into this direction.
Participation-for-others refers to customers who make use of a company’s
resources and facilities in order to create value for others. A good example is sharing information with others for their benefit. This includes taking part in pre-tests of a product or writing reviews to share service experiences –whether positive or negative
—with other potential customers and the company itself. This co-creation practice helps other customers in their buying decision and allows companies to make adjustments concerning the product or service.
Prominent examples from the tourism industry are online recommendation websites, such as Tripadvisor or Holidaycheck, where customers rate accommodations and share their experiences with other customers to help them in making their travel arrangements.
Creation-for-others takes the adherence of others even one step further as
participation-for-others. Nowadays, information and communication technology allows fast, transnational, and low-cost interaction between customers. This technology
enables individuals to share information with a whole community, improve creativity, and advance problem-solving capacities. Online communities, for example, are often based on values, interests or a belief which are shared amongst the community
members. One example from the tourism industry is Wikitravel, a crowd-sourced travel guide, where users can contribute to existing articles or write new articles about travel destinations.
The four creation practices show different ways in which customers might co-create value with the firm or other actors. This classification is an attempt to clarify the various roles a customer can have when co-creating value. Nevertheless, it should also be clearly pointed out that all dimensions are strongly interrelated and cannot be dealt with independently. This framework, however, can help to develop strategies which foster co-creation (Nuttavuthisit, 2010).
Note that the extent to which a firm introduces co-creation practices mainly depends on the setting and on the discretionary policies a firm acts upon (Lengnick-Hall,
Claycomb, & Inks, 2000). Once the willingness and opportunity to enable co-creation practices is existent, there are three factors which represent the key to successful and effective co-creation: perceived clarity of the task, ability or technical competence, and motivation (Bettencourt, Ostrom, Brown, & Roundtree, 2002; Lengnick-Hall et al., 2000). Clarity of the task means that customers exactly know what is required from them and which role they play in the service development process. According to Mills, Chase, and Newton (1983) a high level of task clarity increases the chance of better service outcome as the customer exactly knows what to do. Increased communication within the organization as well as between customers can help to enhance task clarity (Lengnick-Hall et al., 2000). Customers’ ability to actually perform the task set by the firm is another key aspect of effective co-creation. They are required to act upon and deliver resources and make timely contributions to firm activities (Auh, Bell, McLeod,
& Shih, 2007). When acting on the assumption that the task is clear for the customer and he also has the ability or technical competence to carry out the task, there is still one essential element missing, namely that of motivation. The customer must be willing to co-create and engage in organizational activities. Especially if customers have the feeling that their contribution improves the outcome, they will be motivated to reinforce co-creation (Lovelock & Young, 1979; Lengnick-Hall et al., 2000).