Hassan Sherwani ROLE OF SALES AND MARKETING IN ... - Oulu

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The other side of dual nature of value creation explained by Naumann (1995) which
distinguishes the concept of as ‘the value the customer provides to the company’, in the
form of profit streams, intellectual capital, and other customer assets. This view
elaborates how customer could create value for the organizations in return of what value
organizations have created for the customer. This concept is referred as ‘co-creation of
value’ by the customers for the company. The value co-creation process involves the
supplier creating superior value propositions, with customers determining value when a
good or service is consumed (Payne et al, 2008).
Traditionally, it is seen that suppliers would produce products or services and customers
would buy that at a reasonable price. Companies can no longer act autonomously,
designing products, developing production processes, crafting marketing messages and
controlling sales channel with very little or sometimes no interference from the
customers (Prahalad and Ramaswamy, 2004b). This trend is changing as customers are
now playing their role in developing the product or service. Customers tend to
participate with supplier through each stage of production from design to delivery. This
type of interaction of customer and supplier is rather a new trend and has been as a very
positive learning process (Ballantyne, 2004). Through this collaborative process,
customer and supplier would have a great opportunity to a better product with
customized offerings and hence, it enhances value as a process in itself. This co-creation
value concept is equally beneficial for the firms because, this process may signify
customer’s need and point of view which can be improved in a more productive way. It
is worth mentioning that value is fundamentally derived and determined in use – the
integration and application of resources in a specific context – rather than in exchange –
embedded in firm output and captured by price (Vargo et al., 2008). With this new cocreation
view, companies and customers have distinct roles of production and
consumption. Products and services contain value and markets tend to exchange this
value from the producers to the customers. Though value creation occurs outside the
markets yet as one considers value co-creation approach, this distinction disappears.
Consequently, customers engage themselves in the processes of both defining and
creating value and hence, co-creation experience of the customer has become very basis
of value (Prahalad & Ramaswamy, 2004b) as shown in figure 7.