KOREASCHOLAR

Purpose Two patterns of consumer value creation are commonly observed in literature: standardisation and customisation of products. An important value-creating feature of standard products is reduction of consumer costs, both direct (prices of standard products are lower) and indirect (costs of recognising, selecting and learning-to-use). Personalised production, on the contrary, is costly, but the decrease in value due to a complexity of choice and use is compensated by an additional value from the perfect fitting to THE consumer needs. Service industry, especially B2B services, provides a good example of personalisation. This paper focuses on marketing to study drivers and determinants of the successful value creation in an individualised service production. Incentives to provide bespoke services arise when it is impossible to sell a second copy (a replica) of previously provided services: the service should be personally tailored and tuned to the needs of a particular customer. Bespoke services cannot be properly produced without detailed information about THE customers’ needs; a common knowledge about a representative consumer is not sufficient in this case. Customised KIBS have two producers: first, the service provider, who inputs its intellectual human resources; second, the customer, whose input is information, i.e. knowledge about itself. This phenomenon is known as co-production. The value of a customised service is therefore added by consumer as well. Co-production adds value to the supplied item by transforming it from replica into a unique object. The purpose of the current paper is to analyse the mechanism of co-production in marketing services in order to identify the sources of the above mentioned inefficiencies. Methodology The study of marketing services is part of the broader study of knowledge-intensive business services (KIBS) in Russia. Our methodology includes the study of observable patterns in KIBS sector performance with an objective to arrive at a better conceptual understanding of contemporary practices. We employ empirical data from 2007-13 obtained from specialised surveys of Russian executives who were asked to answer questions both on their own company and on market developments. The survey covers 600-800 producers of KIBS annually, and one tenth of them are suppliers of marketing services. Furthermore, in 2007, 2011 and in 2013 the survey involved over 700 business consumers of KIBS, of whom at least one third are users of marketing services. Marketing services involve a visible share of customised production (up to 70 per cent before the recent economic downturn), which makes them a convenient field for a research on individualised services. Original metrics of their knowledge intensity, level of customisation, customer involvement and customers’ absorptive capacity are the most important empirical outcomes of our surveys. Maim findings First, we argue that marketing services in Russia are highly knowledge intensive. The literature on KIBS usually proposes three main characteristic of knowledge intensity: 1) educational attainments of the workforce that are associated with the level of professional skills; 2) share of the value-added, and 3) share of customised services. With our original methodic we obtain quantitative metrics of all the three characteristics and prove high knowledge intensity of marketing services. Second, we present thorough investigation of provider-customer relations within service production. We provide original metrics of the intensity of customer co-production and show that the users of marketing services are deeply involved into co-production. We also demonstrate how the level of co-production fluctuates along the service production cycle to prove our hypothesis about positive relation between the intensity of customers’ involvement and their ability to add value to customised services. Third, we prove that value adding via co-production of marketing services is rarely absolutely efficient. The losses in efficiency results in value losses because proper customisation is impossible without perfect co-production, and insufficient co-production thus generates standard service instead of bespoke one. We reveal the sources of imperfect co-production and provide empirical evidence of their relative importance. Fourth, we demonstrate that value added through co-production can be lost due to incomplete absorption of the service. We provide evidence about imperfect absorptive capacity of Russian users of marketing services and expose its sources. We also discuss the relation between absorptive capacity and the general economic cycle in Russia. Research implications The study of co-production of marketing services may help their providers to optimise their customer strategy, to upgrade their value chains and to avoid value losses in their interaction with customers. More generally, the study improves our understanding of the bespoke production which takes the growing importance with the progress of post-industrial mode of production and life.

• Marina Doroshenko(National research University Higher School of Economics)