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).

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Zero Empowerment Middle Empowerment Full Empowerment0tan28aa566028

0tan4aa56604

0tan9aa56609

0tan14aa566014

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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

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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