Identifying Value Co-creating Customer Segments and Their Loyalty Patterns in the Automotive Market: A Cluster Analysis Approach

Abstract

Value co-creation behaviour is a powerful tool adopted by firms to mitigate loyalty risk. However, there is considerable heterogeneity amongst customers in terms of their brand engagement and loyalty. The current study examines segmentation possibilities amongst automobile owners based on participation in the value co-creation process. An online survey resulted in a sample of 352 customers based on their value co-creation behaviour. Furthermore, segmentation analyses helped identify three discrete segments. Chi-square analysis and one-way analysis of variance (ANOVA) were conducted to profile the segments and assess their brand engagement and firm perceptions. Lastly, an outcome-based loyalty analysis for the segments was done using one-way ANOVA. The pioneering use of value co-creation behaviour as the segmentation tool identified three clusters, namely Engaged Co-creators, Cautious Co-creators and Other-Oriented Co-creators. The Engaged Co-creators exhibited higher brand engagement, perceived their brand to be innovative and were tolerant of service failures. The Engaged Co-creators were the brand’s strongest advocates and loyalists compared to the other two groups. The study adopts a novel approach of segmenting customers based on value co-creation behaviour. Considering the diversity in brand engagement and firm perceptions of the segments and differential loyalty demonstrated by the three clusters offer significant actionable and segment-specific insights for firms.