Customer co-creation for the new products development in the Home Appliances industry

20 minutes with Sarah Cirillo and Caterina Salvidio

Rome, 14th June 2011

Co-designing a new washing machine

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Innovation is our business

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Customer co-creation is the process by which new products are developed jointly by companies and their stakeholders and their consumers.

Since 2008 Indesit engages people as active co-creators of value to reach win more-win more transactions.Indesit is the only one in its industry to use the Customer co-creation.

The effects of customer co-creation

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- Differentiation

- Efficiences and speed

- Risks, time and capital reduction

- Competitive advantage

- Growth and New opportunities

Are customers enough qualified to design new products?

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The customers’ competence is the final result of some changes, such as:

• The Internet which has reduced a particular market failure, known as Information Asymmetry (Akerlof, Spence, Stiglitz)

• The social networking and the speed of communication

• The transformation from firms considered as a portfolio of business units, to an opened and networked firm, which is related with the context

• The increase of customers’ awareness

Market research Vs costumer co-creationM

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Traditional marketing inquiries do not involve customers.

Playing an active role in the products’ design, customers can deliver a strategic amount of information and insights for firms.

Why are customers able to create value for the firms?

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The Customer satisfaction reached by innovation is Indesit’s strategic goal. We are “obsessed” by the customers’ needs.

To innovate is the capability to give a concrete answer to a precise problem of a target market segment. Sometimes to innovate means creating new problems and giving new solutions.

Customers are perfect “problem creators”!

Customer co-creation weakens Porters’ five forces

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SWOT ANALYSIS

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STRENGTHS WEAKNESSES

Client and user at the center

Customer satisfaction

Emotional choices

Products without market

SWOT ANALYSIS

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OPPORTUNITIES THREATS

Increase in market share

Improved relationship with clients and users

Information flow

No patents

Difficulty in engineering process

Potential gains from consumer co-creation

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Thanks to consumer co-creation we expect our business to record significant gains in terms of:

• Ebitda

• Ebit

• ROI

Customer co-creation impact - 2012 FY preview

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[€M, Change Vs. 2011]

2009

Net Sales 2,879.2 2,613.0 +10.2%

EBITDA 309.8 259.5 +19.4%10.8% 9.9%

EBIT 183.8 118.6 +55.0%6.4% 4.5%

ROI 149.4 66.85.2% 2.6%

Change20122010

+123.5%

% on sales

% on sales

% on sales

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Our competitors

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Potential market share gains in EU

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Market Share Units (%)

2,6%

2,7%

2,7%

3,4%

3,9%

7,0%

8,9%

12,3%

13,1%

17,9%

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On the costs side:

Design and planning costs will grow following customer co-creation indications.

At the same time, the total effect on costs will decrease, thanks to a reduction in expenses connected to basic marketing researches and advertising.

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CONCLUSIONS

• Higher brand awareness

• Higher consumer satisfaction, regarding both customers and users

• Higher loyalty from our customers

• Weakening of Porter’s Five Forces

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Any questions?