Impact of Value Co-Creation Behavior on Customer Loyalty in

FMCGs Sector

Thesis Proposal submitted by:

Salman Sarwar
01-229172-006

Submitted to:

Dr. Haider Ali Shah

Program: M. PHIL (MS) II-Evening

Department of Management Sciences

Bahria University, Islamabad Campus
 Impact of Value Co-Creation Behavior on Customer
Loyalty in FMCGs Sector

Background of the Study:

In Marketing, co creation activities particularly in consumer engagement has been one of the
primary concern of research (Grissemann & Stokburger-Sauer, 2012). In addition of co creation,
study of customer values also have been continuous in marketing field since more than two
decades(Vega-Vazquez, Ángeles Revilla-Camacho, & J. Cossío-Silva, 2013).

A new concept, a service dominant logic(Vargo & Lusch, 2004) evolved one and a half decades
ago by Vargo, also explains that, a value co creating by customers is always an ongoing process(C.
F. Chen & Wang, 2016).

Previous literature regarding customer behavior have more focal points of discussion with
customer decision making rather than purchases, but we do not have to see customers only as
respondents but also creators of value. (Yi & Gong, 2013). Marketplace dynamics are changing
fundamentally by the customers, and making that marketplace a platform through which customers
are performing key roles in not only producing value but also competing for it(C.-J. Chen, Chen,
& Wu, 2014).

Among the best intangible assets of organizations, customer loyalty is the one having high
weightage. Even Both of the loyalty dimensions, attitudinal & behavioral, enable organizations to
create sources of differentiation and competitive advantage(Cossío-Silva, Revilla-Camacho,
Vega-Vázquez, & Palacios-Florencio, 2016).

The main purpose of customer is to perform various activities to attain the purpose. Customer co-
creation includes two types of customer behavior which are the participation and citizenship
behavior(Yi & Gong, 2013)

First dimension describes behavior of customer during activities which is important in value co-
creation process. Second dimension is a behavior which is highly important for organizations and
play effective role in co creation but it is not essential for co-creation of value(Yi & Gong, 2013).
If customer involvement in all activities increases then customer’s motivation, satisfaction and
loyalty also increases with co-creation(C. F. Chen & Wang, 2016). So it shows that co-creation of
value process is highly related with customer loyalty. Value co-creation process also involves
suppliers, companies and stakeholders along with the customer and supplier. So value co-creation
process is not to organizational boundaries rather it also goes beyond the organizational
boundaries.(Vargo, Maglio, & Akaka, 2008)

Introduction:

According to (Grissemann & Stokburger-Sauer, 2012), the ideas of the users show a greater degree
of promise and quality that are more focused and flexible to lower the development time. This
study is also focusing on the value co creation in FMCGs sector and investigating its Impact on
the loyalty of rural customers. In the industry of foods and drinks, the significance of co-creation
with consumers is still a major concept, where the main point of focus is the production cost
optimization. And it makes this conservative approach to change and increasingly difficult for
consumers to recognize some new value-added food products thus rewarded creative behavior
slowly.

Therefore, development of knowledge and business practices are the main interests for explaining
the factors effecting loyalty. For this purpose, some studies list the prior factors of loyalty which
are, perceived value, service quality, satisfaction etc. But this study following the framework of
relatively new antecedent of loyalty: customer value co-creation behavior among customers &
organizations. The major part of the study is not only highlighting the significant role of customer
participation and citizenship behavior in value creation in FMCGs sector but also analyzing the
consequences of co-creation behavior from customer’s standpoint.

This study will firstly define the customer co-creation and its dimensions, secondly customer
loyalty and its dimensions, and at the last, but not least, their relationship and impact of one on the
other.

Problem Statement:

Customer loyalty is an issue which always includes in primary concerns for the organizations even
they tend to focus more on customer retention and loyalty rather than attracting new customers.
And for this purpose, customer’s value help organizations to achieve their goal more effectively.
Pakistan’s rural sector is still a huge market to cover specially in FMCGs sector. And this study is
also investigating impact of customer value co-creation behavior on the customer loyalty of rural
in FMCGs sector.

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