A Customer Value Creation Framework for Businesses That Generate Revenue with Open Source Software

From a marketing theory perspective, customer value refers to customers’ perceptions of what they receive, in return for what they sacrifice (Zeithaml, 1988; tinyurl.com/7s2blkp). There are two aspects to customer value: desired value and perceived value (Woodruff, 1997; tinyurl.com/7lu6wxz). Desired value refers to what a customer desires in a product or service. Perceived value is the benefit a customer believes he or she received from a product after it was purchased. Customer value propositions are formulated by assessing the current market offerings, identifying what customers want, and then developing solutions that meet the market need for a product or service (Anderson et al., 2006; tinyurl.com/7ymgebb). Figure 1 illustrates the customer value creation strategy; it is the author’s representation of the extant literature.


Introduction
A business model establishes how value is created for customers and a firm's strategy to appropriate returns derived from that value.Typically, a business model identifies: i) the firm's value propositions for customers, partners, and other stakeholders; ii) the processes and resources required to deliver these value propositions; iii) and a profit formula.
In the February issue of the TIM Review, the author described customer value and how it is delivered to customers (Shanker, 2012;timreview.ca/article/525).In this article, the focus is on creating customer value, particularly in the context of businesses that generate revenue using open sources assets.
From a marketing theory perspective, customer value refers to customers' perceptions of what they receive, in return for what they sacrifice (Zeithaml, 1988;tinyurl.com/7s2blkp).There are two aspects to customer value: desired value and perceived value (Woodruff, 1997;tinyurl.com/7lu6wxz).Desired value refers to what a customer desires in a product or service.Perceived value is the benefit a customer believes he or she received from a product after it was purchased.Customer value propositions are formulated by assessing the current market offerings, identifying what customers want, and then developing solutions that meet the market need for a product or service (Anderson et al., 2006;tinyurl.com/7ymgebb).Figure 1 illustrates the customer value creation strategy; it is the author's representation of the extant literature.
When a firm uses a proprietary software business model, value is created by producing specific software that fulfils a customer's need to get a job done or solve a problem.Value may be appropriated using patents and licenses may be required to use the software.
When a firm uses open source software to satisfy customer's needs, value is captured in different ways because the supplier cannot charge for the software.This article reviews current customer value creation strategies and then proposes a value-creation framework for suppliers that rely on open source software to generate revenue.
Technology entrepreneurs must create value for customers in order to generate revenue.This article examines the dimensions of customer value creation and provides a framework to help entrepreneurs, managers, and leaders of open source projects create value, with an emphasis on businesses that generate revenue from open source assets.The proposed framework focuses on a firm's pre-emptive value offering (also known as a customer value proposition).This is a firm's offering of the value it seeks to create for a customer, in order to meet his or her requirements.(West, 2007;tinyurl.com/6pwjozm).Some components of the framework might not apply in this context.For example, experiential value is more of an individual assessment than a firm-level assessment.Similarly, symbolic value components such as self-identity, personal meaning, and self-expression, would only apply in cases where the end-customer was an individual user.
O'Cass and Ngo (2011; tinyurl.com/7zqcqpx)assert that a firm's pre-emptive value-creation strategy is comprised of: 1. Performance value: this component is associated with the product attributes and the attributes' performance.This relationship was also noted Woodruff (1997; tinyurl.com/7lu6wxz).

Pricing value:
this component can refer to the fair price or the value price.The fair price refers to customers believing they are paying a fair price for a product or service; the value price refers to a price that justifies the benefits of purchasing a product.

Relationship value:
this component refers to the firm's efforts to create and deliver a hassle-free purchase and consumption experience.

Co-creation value:
this component is added when customers find it beneficial to influence various parts of the business system to co-create or co-produce their own unique purchase and consumption experience.

Value Creation in Open Source
Value-creation frameworks and strategies rely on combining the resources and capabilities of a firm.These resources and capabilities are considered to be valuable, rare, inimitable, and non-substitutable because they provide a sustainable competitive advantage for a firm (Landroguez et al., 2011;tinyurl.com/7mpdtxz).
Firms  Woodruff's (1997;tinyurl.com/7lu6wxz)customer value hierarchy identifies that customers perceive value not only from the attributes of a product itself but also from the consequences of using a product and the goals achieved by it.

Cost/sacrifice value:
Customer value perception is often defined as a customer's evaluation of what they get in return for what they give (Zeithaml, 1988;tinyurl.com/7s2blkp).The cost/sacrifice value identifies the customer's perception of whether the value created is worth the cost paid.The cost paid can be in monetary terms, time, effort spend defining requirements, or any other way in which the customer invests in a firm's offering.The commoditization of open source software allows suppliers to provide undifferentiated software at a lower price point, thereby increasing the customer perception of value added (West, 2007;tinyurl.com/6pwjozm).

Relationship value:
this is refers to the overall customer experience during interactions with the supplier.
Value can be added to a relationship along dimensions such as product quality, service support, delivery per-  Bonaccorsi et. al., 2006;tinyurl.com/7vnupff)

Conclusion
The The level of formal appropriability or control that a firm has over its open source resources impacts the extent to which a firm can capture value from open source software.Therefore, value creation strategies would also be influenced by the degree to which a firm is involved in an open source software project.Future value creation frameworks could take that factor into account because it impacts the resources and capabilities that a firm has at its disposal.
The proposed value creation framework can be refined by conducting customer research to: i) validate the points of value creation identified; ii) determine new dimensions of value creation; and iii) assess the relative importance of each dimension of value from a customer's perspective.

Figure 1 .
Figure 1.A firm's value creation strategy

A
Customer Value Creation Framework for Open Source SoftwareAparna Shanker formance, supplier know-how, time-to-market, personal interaction, price, and process costs(Ulaga, 2003;  tinyurl.com/7pluqjz).Open source software can be combined with complementary assets such as support, customization, integration, or upgrades(West, 2007;  tinyurl.com/6pwjozm)  to create value for customers.Such value-added offerings encourage customers to develop and maintain a relationship with suppliers to obtain a hassle-free purchase and consumption experience(O'Cass and Ngo, 2011; tinyurl.com/7zqcqpx).Firms that use open source software could also create value for their customers by re-using code and by reducing time to market and production costs; these firms can then use this saved time and money towards enhancing business processes or employee development (Morgan and Finnegan, 2008; tinyurl.com/7jx8gt3).4.Co-creation value: this is the value perceived in either modifying available source code or defining re-quirements that allow a product to be customized to meet a customer's needs.It is the value customers perceive in having a say in a supplier's manufacturing process (O'Cass and Ngo, 2011; tinyurl.com/7zqcqpx).The nature of open source software allows users to co-create value by actively participating in the development process. 5. Open source brand value: this refers to the value that customers perceive in the open source brand itself.For example, value could be perceived by gaining legitimacy in the open source software community or by creating partnerships with other companies.Customer value creation strategies could change based on the extent to which open source resources are used in an offering ( value creation framework proposed here focuses on the creation of value from an open source business model perspective.The framework can be used in at least three ways.First, it can be used as a guideline for customer value research by manufacturers to assess what points of value matter to customers.Second, it can be used by managers and leaders of open source software projects to determine the points of value that their products and offerings should focus on.Third, managers and leaders can use the customer value di-mensions outlined in the framework to compete along dimensions other than cost.

" " A Customer Value Creation Framework for Open Source Software Aparna Shanker Value Creation Frameworks
1. Functional/instrumental value: the attributes of the product itself; the extent to which a product is useful and fulfills a customer's desired goals 2. Experiential/hedonic value: the extent to which a product creates appropriate experiences, feelings, and emotions for the customer 3. Symbolic/expressive value: the extent to which customers attach or associate psychological meaning to a product 4. Cost/sacrifice value: the cost or sacrifice that would be associated with the use of the product Smith and Colgate proposed their framework as a tool for marketing strategists to develop creative product concepts and recognize new product opportunities.The sources of value identified have to be appropriate and applicable to the context in which they are used.Smith and Colgate's value-creation framework must be adapted to the context of open source software because open source is most attractive to businesses and expert users, such as universities and hobbyist programmers that produce open source software and related services do not always rely solely on open source software.They usually combine proprietary and open source offerings and employ hybrid business models to deliver greater value to customers(West, 2003:  tinyurl.com/6s68jno;Bonaccorsietal., 2006: tinyurl.com/7vnupff).A network of developers (who may be internal and external to the firm), collaborates to produce open source software.Firms that use open source software as one of their resources to create value for customers can use the attributes of open source software to create a competitive advantage.For example,West (2007;  tinyurl.com/6pwjozm)recognizes that firms can create value for customers by providing software at lower prices through the use of open source software as one of their resource components.

Customer Value Creation Framework for Open Source Software
. For example, the value in a pure open source offering could be in the supplier's ability to customize without incurring high marginal costs.