Purpose: The purpose of this case study is to illustrate and apply the concept of customer co-creation to an actual business case. Background: Local Motors is a new start-up vehicle manufacturer. It was founded in 2007 by Jay Rogers, who came up with the idea while he was an MBA student at Harvard Business School. The company is located in Chandler, Arizona and is currently selling a variety of motorized vehicles, including an automobile called the “Rally Fighter.” This vehicle has both normal driving and off- road capabilities and sells for about $100,000. It was created using the principle of customer co-creation and buyers play an active role in building their own car. At this point in time, Local Motors is manufacturing the Rally Fighter and is eagerly seeking more customers. Core Issue: Local Motors has used co-creation to design the Rally Fighter. Now it needs to successfully market it and find a sustainable value proposition. Questions: 1. What type of co-creation is Local Motors using? 2. What do you think of the Rally Fighter? Will this new car be successful? Why or why not? 3. What is Local Motors’ value proposition? Local Motors Rally Fighter, image retrieved from https://localmotors.com/local motors/rally-fighter/, authorized by Local Motors. Marketing in a Digital World by Prof. Aric Rindfleisch
Transcript
1
Purpose:
The purpose of this case study is to illustrate and apply
the concept of customer co-creation to an actual business
case.
Background:
Local Motors is a new start-up vehicle manufacturer. It
was founded in 2007 by Jay Rogers, who came up with
the idea while he was an MBA student at Harvard
Business School. The company is located in Chandler,
Arizona and is currently selling a variety of motorized
vehicles, including an automobile called the “Rally
Fighter.” This vehicle has both normal driving and off-
road capabilities and sells for about $100,000. It was
created using the principle of customer co-creation and
buyers play an active role in building their own car. At
this point in time, Local Motors is manufacturing the
Rally Fighter and is eagerly seeking more customers.
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Core Issue:
Local Motors has used co-creation to design the Rally
Fighter. Now it needs to successfully market it and find
a sustainable value proposition.
Questions:
1. What type of co-creation is Local Motors
using?
2. What do you think of the Rally Fighter? Will
this new car be successful? Why or why not?
3. What is Local Motors’ value proposition?
Local Motors
Rally Fighter, image retrieved from https://localmotors.com/localmotors/rally-fighter/, authorized by Local Motors.
Marketing in a Digital World
by Prof. Aric Rindfleisch
Case Study
2
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Typical Student Reaction:
When I teach this case, the student reaction is quite
mixed. Most don’t like the Rally Fighter at all and
don’t see its appeal, while a few students really love it
and think it is amazing.
Concept Application:
This is an excellent example of the concept of customer
co-creation. Local Motors appears to employs multiple
co-creation techniques. For example, it used co-
designing to obtain the basic Rally Fighter design as
well as its various accessories. In addition, by freely
sharing all of its designs, components, and plans on its
website, it also encourages Tinkering. Finally, by
requiring its customers to actually engage in the car
building process, Local Motors also appears to be
engaging in a form of Submitting, although in this case,
the submissions come in the form of physical labor.
Recent Developments:
As of early January 2014, Local Motors has sold less
than 100 Rally Fighters. Thus, from a pure sales
perspective, this product has not been a success.
However, the Rally Fighter was quite successful in
terms of generating substantial attention for Jay Rogers
and Local Motors, including several magazine articles
and television interviews. In recent years, Local Motors
has expanded its product line as is developing co-
created bicycles and motorcycles. More broadly, Local
Motors has realized that their distinctive advantage is
their worldwide community of designers. Thus, it is
now positioning itself as a co-creation design platform
and has drawn attention from a number of large firms
and government agencies including Reebok, Domino’s
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Pizza and the US Department of Defense. Finally, Local
Motors is exploring new digital manufacturing
techniques and recently printed the world’s first 3D
printed car during a Chicago manufacturing expo.
Lesson Learned:
1. Traditional innovation practices are less than
ideal because they greatly restrict the flow of
ideas from those outside the firm.
2. Anything can be co-created. If you can co-create
a car, you can co-create just about anything.
3. Your contributors may not be your customers.
The design for the Rally Fighter was submitted
by a unemployed college student.
4. Non-customers can also be valuable assets to a
firm. In marketing, we typically value
customers based on either their past purchasing
behavior or future purchase promise. This case
shows that individuals can provide valuable
contributions to a firm by offer ideas instead of
money.
Image retrieved from https://localmotors.com/blog/vehicles/, authorized by Local Motors.
Case study
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Resources:
• “How the Internet Built a $100,000 Race Car” (http://www.cnn.com/2013/03/12/tech/web/crowdsourced-car-
