When co-creation pays: stimulating engagement to increase revenues

Yaojen Tu, Barbara Neuhofer, Giampaolo Viglia

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    Abstract

    Purpose – Customer willingness to pay (WTP) was initially set out to estimate the perceived value from a purchasing experience. However, purchasing decisions have changed as value co-creation has become increasingly applied in the hospitality industry. In adopting a service-dominant (S-D) logic lens, this paper aims to empirically test how co-creation impacts WTP through customer engagement (CE).

    Design/methodology/approach – The context for the empirical analysis is the Chinese market, one of the largest online purchasing markets that has been significantly transformed since the proliferation of co-creation. The study is a within-design online experiment with 488 Chinese participants. The analysis makes use of mediation models to evaluate the proposed mechanisms behind co-creation, CE and the moderated role of frequency of stay, and their impacts on WTP.

    Findings – The data confirm the hypothesised positive impact of value co-creation on customer WTP. This impact is fully mediated by CE, i.e. CE is the mechanism behind a higher WTP propensity for co-created hotel rooms. Notably, frequency of stay at a hotel, thus positively influencing WTP, does not have a moderated mediation effect on this relationship.

    Originality/value – Limited research to date has investigated the price effectiveness of value co-creation in the hospitality context. This study contributes to the S-D logic and value co-creation discourses by testing the effectiveness of these concepts in relation to customer pricing decisions. The study empirically confirms the hypothesised model and provides recommendations for hospitality research and practice.
    Original languageEnglish
    JournalInternational Journal of Contemporary Hospitality Management
    Early online date23 Feb 2018
    DOIs
    Publication statusEarly online - 23 Feb 2018

    Keywords

    • Co-Creation
    • Service-Dominant Logic
    • Customer Engagement
    • Willingness to Pay
    • Hospitality

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