Value Creation by Toolkits for User Innovation and Design: The Case of the Watch Market

Abstract

This study analyzes the value created by so-called ''toolkits for user innovation and design,'' a new method of integrating customers into new product development and design. Toolkits allow customers to create their own product, which in turn is produced by the manufacturer. In the present study, questions asked were (1) if customers actually make use of the solution space offered by toolkits, and, if so, (2) how much value the self-design actually creates. In this study, a relatively simple, design-focused toolkit was used for a set of four experiments with a total of 717 participants, 267 of whom actually created their own watches. The heterogeneity of the resulting design solutions was calculated using the entropy concept, and willingness to pay (WTP) was measured by the contingent valuation method and Vickrey auctions. Entropy coefficients showed that self-designed watches vary quite widely. On the other hand, significant patterns still are visible despite this high level of entropy, meaning that customer preferences are highly heterogeneous and diverse in style but not completely random. It also was found that consumers are willing to pay a considerable price premium. Their WTP for a self-designed watch exceeds the WTP for standard watches by far, even for the best-selling standard watches of the same technical quality. On average, a 100% value increment was found for watches designed by users with the help of the toolkit. Taken together, these findings suggest that the toolkit's ability to allow customers to customize products to suit their individual preferences creates value for them in a business-to-consumer (B2C) setting even when only a simple toolkit is employed. Alternative explanations, implications, and necessary future research are discussed.

Avatar-based innovation: Consequences of the virtual co-creation experience

“…In our case, they may intend to live more sustainable. Literature on masscustomization, for example, states that consumers will show high interest in and willingness to pay for their self-designed products if they enjoy the design process due to a "flow" experience [24]. We state:…”

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“…The authors conduct two studies in which they find that products customized on the basis of expressed preferences bring about significantly higher benefits for customers in terms of willingness to pay, purchase intention, and attitude toward the product than standard products. The benefit gain is higher if customers have (1, hedonic (enjoyment from the creative activity) (Franke & Piller, 2004) and self-esteem ("I designed it myself" effect) consumer benefits ( (Franke, Schreier & Kaiser, 2009). Additionally it has been found that custom designs created by users are also attractive to non-designers (Franke & Piller, 2004;Schreier et al, 2012).…”

“…The benefit gain is higher if customers have (1, hedonic (enjoyment from the creative activity) (Franke & Piller, 2004) and self-esteem ("I designed it myself" effect) consumer benefits ( (Franke, Schreier & Kaiser, 2009). Additionally it has been found that custom designs created by users are also attractive to non-designers (Franke & Piller, 2004;Schreier et al, 2012). Toolkits may also "serve as a crèche for interested but inexperienced users who could evolve into leading-edge users over time" (Prügl & Schreier, 2006).…”

Human Factors in Production Systems

“…Although the crucial potential of usable products that are appropriate for a diverse user group, recognition of the importance of diversity is only slowly influencing mainstream technology development practise. New approaches integrate users as a valuable source for new ideas and innovations (end-user driven innovation cycle) and integrate their knowledge as an integral component into the technical development (Franke and Piller 2004). User communities are a significant source for innovation and provide market insight before launching an innovative product (Fredberg and Piller 2011).…”