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Local Motors

Local Motors Marketing in a Digital World by Prof. Aric Rindfleisch Rally Fighter, image retrieved from
Marketing in a Digital World by Prof. Aric Rindfleisch
Marketing in a Digital World by
Prof. Aric Rindfleisch

Rally Fighter, image retrieved from https://localmotors.com/local motors/rally-fighter/, authorized by Local Motors.

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?

Case Study

Case Study Image retrieved from https://localmotors.com/blog/vehicles/, authorized by Local Motors. Typical Student

Image retrieved from https://localmotors.com/blog/vehicles/, authorized by Local Motors.

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

Pizza and the US Department of Defense. Finally, Local

requiring its customers to actually engage in the car

Motors is exploring new digital manufacturing

building process, Local Motors also appears to be

techniques and recently printed the world’s first 3D

engaging in a form of Submitting, although in this case,

printed car during a Chicago manufacturing expo.

the submissions come in the form of physical labor.

Lesson Learned:

Recent Developments:

1. Traditional innovation practices are less than

As of early January 2014, Local Motors has sold less

ideal because they greatly restrict the flow of

than 100 Rally Fighters. Thus, from a pure sales

ideas from those outside the firm.

perspective, this product has not been a success.

2. Anything can be co-created. If you can co-create

However, the Rally Fighter was quite successful in

a car, you can co-create just about anything.

terms of generating substantial attention for Jay Rogers

3. Your contributors may not be your customers.

and Local Motors, including several magazine articles

The design for the Rally Fighter was submitted

and television interviews. In recent years, Local Motors

by a unemployed college student.

has expanded its product line as is developing co-

4. Non-customers can also be valuable assets to a

created bicycles and motorcycles. More broadly, Local

firm. In marketing, we typically value

Motors has realized that their distinctive advantage is

customers based on either their past purchasing

their worldwide community of designers. Thus, it is

behavior or future purchase promise. This case

now positioning itself as a co-creation design platform

shows that individuals can provide valuable

and has drawn attention from a number of large firms

contributions to a firm by offer ideas instead of

and government agencies including Reebok, Domino’s

money.

 

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Case study

 

Resources:

“How the Internet Built a $100,000 Race Car” (http://www.cnn.com/2013/03/12/tech/web/crowdsourced-car- sxsw/)

Local Motors Rally Fighter – Jay Leon’s Garage” (https://www.youtube.com/watch?v=OetiD8rL1KU)

www.localmotors.com/rallyfighter/