Value Co-Creation by Customer-to-Customer Communication: Social Media and Face-to-Face for Case of Airline Service Selection

Abstract

One of the foundational of service science and of study of value-creation in service systems is service-dominant logic (S-D logic). S-D logic especially emphasizes the role of customers; that is, each customer is recognized as an active co-creator of knowledge and service value. Most studies on the value co-creation process have concentrated on the in- teraction between customers and providers. In contrast, this research is investigating co-creation of value and the notion of “value in use” that is central to the service-dominant logic by focusing on value co-creation from the customer per- spective, especially in terms of how customers are engaging in experiences by clarifying what different influences are produced by their exchange of information about the providers. The basic framework of the present research is a proc- ess model of value co-creation of service system, i.e., co-experience and co-definition. The main purpose is to investi- gate how new value is co-created by mutual interaction among customers by using Airline service selection as a typical case to clarify influences on the value co-creation process produced by different ways of customer-to-customer com- munication: social media and face-to-face communication. By agent-based simulation we compare learning efficiency and learning performance of the two communication styles of the customers. Learning efficiency is measured by the distance between the average payoff of the customers and that of the provider, while learning performance is measured by the average payoff obtained from Nash Equilibrium by the game played with the provider. The simulation results found that communication style influences the learning efficiency by customers as well as the learning performance. Social media is a good way when few customers know the provider correctly or have limited knowledge of the commu- nity, while face-to-face is a good way when quite a many customers know the provider correctly or trust on reputation of the provider in the community. The research results indicate that it is crucial for the provider, to establish trust with the customers.