VCC as an emerging paradigm proposes a change from a firm-centric view to a demand-centric and interactive process that engages resource-integrating participants for a mutually beneficial collaboration (Frow & Payne, 2011). The VCC paradigm seeks reciprocal value propositions amongst its stakeholders (Ballantyne & Varey, 2006), where actors can create value in collaboration with or influenced by others (Jaakola, Helkkula & Aarika, 2015). The paradigm typifies shifting boundaries, where consumers perform the simultaneous roles of providing firms with value in the form of their co-creation activity and in the form of their purchase activity (O'Hern & Rindfleisch, 2010).

Customers are vital for every business, and the ability to consistently offer value to them can determine the profitability and survival of the business. VCC advocates that the responsibility of value creation is transferred from inside the organization to collaborative relationships outside the physical boundaries of the organization (Frow, Nenonen, Payne & Storbacka, 2015). According to Matthing, Sandén and Edvardsson (2004), continuous involvement and communication with customers will enable an organization to learn from customers and position its offering within the scope of customers’ PV.

The process of VCC involves a combination of knowledge enhancement and exchange, skill acquisition, and organizational learning which can ascribe a sense of ownership to customers as a result of their contribution to the value development process (Prahalad & Ramaswamy, 2000). Moreover, the unique experience that is determined by the quality of interaction can serve as a potential source of competitive advantage to the organization, because customers will be likely to build emotional attachments with product offerings when they were part of its product development process. VCC attributes to the consumer a more proactive role in product development while it offers the service provider a better understanding of the customers’ needs and definition of value. Thus, the co-creation experience becomes the basis of value (Prahalad & Ramaswamy, 2004b) and serves as a novel frontier of strategy innovation, where the interaction between the service provider and customer is a locus for value creation and extraction (Spena, Carida, Colurcio & Melia, 2012).

The service provider should initiate the process of VCC with an aim to engage customers in a purposeful dialogue and to reconfigure its resources and functions such that they are positioned within the customer's creation space (Ramaswamy & Gouillart, 2010). Payne et al. (2008) recognize the implications for service providers in their process-based co-creation framework. According to the authors, the‘supplier process should begin with a thorough understanding of customers’ VC procedure. The supplier process combines techniques such as opportunity review; planning, testing and prototyping ideas with customers; process re-alignment; implementing solutions; developing appropriate assessment metrics; and adequately managing customer encounters. Recognizing customer processes within the supplier process will provide suppliers with a better understanding of where their offering can fit within the space of the customers’ value-creation activities, as well as clarification on how to position its internal resources/capabilities for optimal utility within the VC process (Payne et al., 2008).

The proliferation of technological innovations has been a major driver for actualizing these interactive moments. Through technological platforms, customers can be engaged in the co-creation process to generate experiences with economic, functional, and cultural benefits (Cova & Dalli, 2009). Moreover, Schiavone, Metallo and Agrifoglio (2014) demonstrate that technology can be an essential and additional factor to the DART model, since technology also helps to enhance the levels of dialogue, access to information, trust, and transparency within the co-creation process.

Owing to the predominant service context of the hospitality industry, customers’ PV is formed mainly from intangible experiences and interactions. VC may thus be contingent on the ability to co-create these customer experiences, such that customers can be active participants in building their own experiences from personalized and interactive moments with the service provider (Prahalad & Ramaswamy, 2004a).

The utility of information and communication technology (ICT) in VCC for hospitality services has become apparent in tech-enabled platforms such as online social communities, online booking, virtual tourism experiences, advertising, specialized mobile apps, etc. The online community offers the benefits of social inclusion and information sharing through information dissemination, user-generated comment, interaction, and mutual assistance from hotel and fellow community members. Online communities also help to establish valuable relationships between old and new customers (Gebauer, Johnson & Enquist, 2010). Travelers’ comments and reviews on TripAdvisor typify the concept of VCC, where potential customers may even preconceive their PV based on feedback from other community members. Ayeh, Au and Law (2013) view user-generated comment as a powerful tool for influencing consumer buying behaviour because it is less partisan and has a positive effect on potential customers’ likelihood to use information from these comments for their travel planning and hotel reservations.

The growing access to smartphones has also driven the utility of mobile commerce in the hospitality services context. Hotels are designing device-enabled applications to interact with their customers and design services according to personalized needs and preferences. These hotel-designed apps enable customers to actively engage and determine the services received, such as room features, concierge services, taxi services, and check in Sarmah, Kamboj and Rahman, (2017).

Prahalad and Ramaswamy (2004a) developed the DART model to challenge the traditional company-centric approach to value creation, where organizations propose value offerings to consumers with little or no insight into what their customers actually perceive as value. The model is an attempt to challenge the notion that market insight can be sufficient and suggests that organizations should also seek market foresight and learn to anticipate customer expectations. The authors propose the model on the recognition that consumers have transitioned to a state of being connected, informed, and active. These features have put consumers in a position of advantage. Hence, organizations can no longer act autonomously when developing product and service offerings.

The DART model projects that the newly assumed status of customers can provide novel avenues for competitive advantage, and companies ought to take advantage of the opportunity to facilitate value-creating interactions that empower customers to co-shape their experiences. Prahalad and Ramaswamy (2004a) emphasize that VC depends on negotiation between a company and its customers. The lack of differentiation makes customers buy smart and cheap, thus contributing to the increased commoditization of products and services. Those companies that do not want to be a part of this value-destroying process need to adopt the DART framework to comprehend co-creation with their customers and influence their perception by cultivating deep customer engagement and experiences.

Prahalad and Ramaswamy (2004a) suggested that VCC depends on the interactions of four elements amongst a firm and its consumers. These interactions are defined in Table 1.

The VCC paradigm suggests that when customers assume a pro-active role in the VCC process, they assign value to the experience and are likely to have positive feelings about the product offering (Prahalad & Ramaswamy, 2004b). Thus, it becomes imperative to assess the validity of this notion and the extent to which co-creation affects customer PV. The study adopts the DART framework as a proxy for the VCC process and two characteristics of PV—perceived price and perceived quality—to test this relationship.

To date, to our knowledge, no attempts have been made to study the influence of the DART model on hotel guests’ perception of price and service quality. This trend is surprising, because Prahalad & Ramaswamy, 2004, 2004ba, C. K. 2004c) have directly pointed to this fundamental relationship, mainly highlighting on the impact of the DART model on the customer's perception of price and, consequently, quality. As pointed out by Arslanagic-Kalajdzic and Zabkar (2017) and Kotler and Keller (2012), customers perceive higher-priced products as more high-quality, which is an essential part of a premium pricing strategy. DART elements can be used to communicate information about the quality and price of hotel services, thus influencing customers’ perceptions of them.

The hypothesis that the dialogue element of the DART model has a direct influence on the price and quality of services stems directly from the definition of this element by Prahalad & Ramaswamy, 2004, 2004b), as well as the nature of today's information-intensive marketplace. However, companies can influence customers’ perception of the place of accommodation and its price by cultivating a productive dialogue with customers. Dialogue is a deep interactive engagement where the actors involved are willing to act and change (Prahalad & Ramaswamy, 2004c), while Ballantyne (2004, p. 117) states that dialogue is “an interactive process of learning together” . Accordingly, dialogue as a learning process means that the involved actors have the chance to gain knowledge and create new knowledge (Grönroos, 2004). Within the perspective of service-dominant logic (SDL), marketing is a structurer of relationships, encounters, and dialogue (Payne et al., 2008).

Consequently, a sincere and active dialogue has the power to affect customers’ perception of the price and quality of hotel services. Such a dialogue must occur for a hotel to have a variety of communication channels that cover both synchronous-asynchronous and digital-analogue communication. Although having many channels of communication does not necessarily mean that active dialogue will take place, nonetheless the more channels and the more opportunities to communicate, the greater the chance of initiating an active dialogue (Ballantyne, 2004).

We hypothesize that the consumer's perceived price and quality can be improved with a reciprocal dialogue between a firm and consumers.

Thus,

H1a: Dialogue will have a positive impact on a hotel's price.

H1b: Dialogue will have a positive impact on a hotel's quality.

The omnipresent access to information concerning competitors’ prices and the type of services they provide makes the provision of such online information an industry standard. Internet platforms such as TripAdvisor, Booking.com, and many others allow customers to assess their place of stay efficiently and without any time constraints. They also allow careful planning of the trip, making it less likely for a firm to be chosen by customers if it does not readily provide full information about the services it provides. Furthermore, the modern tourism industry has become a highly information-intensive industry, heavily dependant on information and communication technologies (Buhalis & O'Connor, 2005).

Like dialogue, access impacts the way customers perceive the quality and price of touristic services. Factors such as the ability to decide how services are offered, the ability to choose between options regarding how to involve a particular service, the ability to select the most convenient time to receive specific services, and the opportunity to share customers’ opinions on how specific services must be provided all cultivate customer engagement. Rather and Sharma (2017) noted that the provision of pertinent, attractive, or personal information to customers could increase the customers’ attention and improve their loyalty. In this way, it becomes possible to hypothesize that by providing pertinent and personal information about their hotel, and by proposing to offer customers the option of voicing their opinions on how to improve their hotel services, firms can impact customers’ perception of the quality and prices of their services.

Therefore:

H2a: Access will have a positive impact on a hotel's price.

H2b: Access will have a positive impact on a hotel's quality.

While access to all relevant information forms an essential part of customers’ perception of a particular hotel, risks form a separate informational category identified by Prahalad & Ramaswamy, 2004, 2004bc). Customers must know what the possible inconveniences of visiting a particular hotel are, in addition to its benefits. Therefore, any potential risks must be communicated very clearly, and the personnel of the hotel should advise its customers on how to use its services to avoid possible problems (Oskam & Boswijk, 2016).

To trust is to accept the inherent risk in a customer-firm relationship (Sheppard & Sherman, 1998); hence, trust can relieve perceived risk and customer uncertainty (Ponnapureddy, Priskin, Ohnmacht, Vinzenz & Wirth, 2017). However, should the hotel fail to communicate information about possible risks to its customers, the result may be compromised trust, thus forcing customers to switch to a different hotel provider or even to choose a different destination. Yang and Peterson (2004) showed that switching costs might be a restraining factor in this situation. However, hospitality services are characterized by few switching costs, which is why a loss of trust can easily deter customers and make them choose a different service provider that provides full information about possible downsides of its services.

Also, it is necessary to add that, as pointed out by Prahalad and Ramaswamy (2004c), today's global business environment is characterized by networking and increased customer communications. Therefore, customers may discuss fully any possible risks associated with a particular service provider in a dedicated community, such as TripAdvisor or Booking.com. The absence of official information about risks, in this case, is likely to present the company as dishonest and unscrupulous. A failure to communicate information about such risks can significantly compromise the trust of numerous customers, as well as customer value (Ponnapureddy et al., 2017).

Thus,

H3a: Risk will have a positive impact on a hotel's price.

H3b: Risk will have a positive impact on a hotel's quality.

Although Prahalad & Ramaswamy, 2004; 2004bc underlined the company's role in sharing transparent information with customers, the truth is that this idea is not new and is an integral part of the value-based strategy. Kotler and Keller (2012) noted that when suppliers provide transparent value to the customers, this means that customers can “easily understand how the supplier calculates the differential value between its offering and next best alternative” (p. 400). Transparency of information has an enormous impact on PP, since the provision of such information can increase price pressure for undifferentiated products and provide a correct image of the true value of highly differentiated services/products (Rothenberger, 2015).

Transparency plays a leading role in the decision to purchase a vacation package (Tanford, Erdem & Baloglu, 2011) and in the hotel booking process (Miao & Mattila, 2007). Since the hotel industry provides highly differentiated services, it is no wonder that transparent prices can improve the perception of a particular hotel's services. Rothenberger (2015) found that when customers have more information on the price, their price fairness perception increases. Transparency thus becomes a direct function of ready informational access and is consequently represented in product quality. Consequently, this allows customers not only to understand better how to use products, but also to propose suggestions about how the products and services can be improved. We hypothesize that this is useful in the hotel industry because it allows customers to fine-tune the services they receive until their perceptions of a particular hotel improve.

H4a: Transparency will have a positive impact on a hotel's price.

H4b: Transparency will have a positive impact on a hotel's quality.

Perceived price (PP) and perceived quality (PQ) are often used as interchangeable indicators, where a high price may serve as an indicator of high quality, and high quality can indicate a correspondingly high price. According to Johansson and Erickson (1985), two alternative views underlie the formation of a perceived price-quality linkage: learning theory and cognitive theory. Under learning theory (Monroe, 1973), quality and price are linked through customer experience. As the customer accumulates more experience, a gradual realization, termed ‘learning’, will become apparent to enable the customer to establish a connection between the constructs. In the context of hospitality services, the initial experience of the service quality often happens at specific touchpoints such as websites, customer care/reservation units, and virtual tour guides (Stickdorn & Zehrer, 2009). Customers assess the quality of the experience at these touchpoints, which helps to signal a PP level of the hotel's service offerings.

On the other hand, cognitive theory posits that information is the linking factor between quality and price (Olson, 1977). Customers will be able to infer price levels rationally from the available information about a product/service attribute. In a market with fewer imperfections and less information asymmetry, it is likely that customers will assume that the costs involved in creating high quality will be reflected in the price. Furthermore, both theories acknowledge the indicator roles of quality and price, and suggest two intermediary variables in the form of accumulated experience and availability of information as factors that link PQ to PP.

Since the current research is centred on the effect of DART building blocks on customers’ perception of price and quality, it is vital to take into account the notion of customer value. As noted by Dovaliene, Masiulyte and Piligrimiene (2015), customer value is the ratio of consumer value received to cost experienced when customers acquire a particular product/service. When referring to customer value directly, without taking into account the social and emotional values discussed in the previous sections, it is possible to adopt Naumann's (1995) creation of value triangle, formed by quality, service, and price. The author affirms that without these two factors (quality and pricing), it would be impossible to sustain a pricing marketing strategy base. We assume that superior quality should result in a higher price, and this is linked to a premium pricing strategy. Premium pricing is used to signal to customers that a particular hotel provides superior quality. Companies that offer more services often charge a premium price, which is why such a strategy would be a logical choice for companies that adopt a value co-creation strategy (Yang, Mueller & Croes, 2016). Yacouel and Fleischer (2012) concluded that guests take into consideration travel agents’ ratings of a hotel's service quality and pay a premium for highly-rated hotels, while the findings of Yang et al. (2016) suggest that hotel guests are willing to designate more funds for quality hotel features such as comfort, atmosphere, and additional services.

Coupled with transparent information about the high quality of services and full access to fine-tuning such services, along with their risks, signalling the superior quality of services will directly influence customers’ price perception, positively affecting their willingness to pay. In the hospitality context, higher service quality coincides with the highest room price—that is, higher quality incurs elevated costs in operation and administration, and consequently the hotels charge the highest prices (Chiu And & Chen, 2014). Therefore, we pose the following hypothesis:

H5: A hotel's quality will have a positive impact on a hotel's price.

These nine hypotheses are represented graphically in the proposed research model (Fig. 2).

Fig. 2.

The proposed model to be evaluated.

(0.09MB).

The sample comprised international tourists, and we proceeded to collect data only after acquiring the required permission from airport authorities to conduct the survey. The survey took place at Greek airports while holidaymakers were waiting for their return flights. Staying at a hotel the night before the flight and understanding English were prerequisites for clients to take part in the survey. A non-probability sampling technique was utilized to survey the readily available part of the population (Bhattacherjee, 2012) inside the waiting lounges. There, the questionnaires were physically distributed along with pens and gathered by two persons.

To avoid exposing some minor errors in the process of data collection, a pilot study (40 surveys) was conducted at the international airport of Thessaloniki. The pilot study did not present any trouble and the survey proceeded at the international airports of Athens and Corfu, collecting 158 and 326 questionnaires respectively.

Concerning statistical analysis of the data, SEM necessitates a considerable sample size, a common sample size being 200 cases (Crockett, 2012; Kline, 2011). Hence, the aggregate of 484 questionnaires from the surveys was adequate for performing SEM analysis with AMOS 22.0 software.

In Table 2, the principal features of the sample are presented. Specifically, the survey collected 484 questionnaires. The majority of the sample (53.31%) was female customers and the surveyed primarily belonged to the age group of 50 to 64 (25.10%), followed by the 25 to 34 age group (24.69%). Most of the sample (42%) held a postgraduate degree, and UK citizens comprised almost half of the sample (49.59%). The main motive for travel was holiday for 74 percent of the respondents, while most (44.51%) stayed at four-star hotels.

The findings of this study have some unique implications for hotel managers for managing co-creation activities with clients and enhancing their service offering. To begin with, the study has demonstrated that customers’ PP and PQ are related to some dimensions of the DART model for value co-creation, particularly risk and transparency. The significant relationship of these two components with PP and PQ indicates that a customer considers these factors important enough to influence their perception of value. Hence, we envisage that recognition of this relationship can be utilized to strengthen competitive positioning and increase revenue opportunities for hotels.

The significance of the risk dimension can be discerned from the safety and security concerns of tourists, who will likely be less familiar with the immediate environment of the given destination. On the premise that tourists have little knowledge of a destination, hotels can provide advice to tourists on how to avoid negative experiences while touring the city, such as avoiding neighborhoods with high rates of crime, pickpockets, muggings, and scams; avoiding certain groups of traders who target tourists specifically to rip them off with expensive souvenirs; and reliable transport routes and times for night travel, etc. Tourist safety concerns can also present unique avenues for revenue generation for hotels when the opportunity is taken to offer tourists special packages to visit attractions around the city. Such tour packages will be conducted and led by a tour guide who is conversant with the city and knowledgeable on how to avoid potential risks. The findings from this study suggest that such efforts will be significantly correlated to quality and price perceptions, and can help confer a unique position of safety and assurance in the minds of customers.

The DART framework proposes that customers can perceive transparency from the degree of openness with which a firm shares information about its service offerings and prices. Many producers are able to charge non-competitive prices because consumers are frequently poorly informed about the market (Steenkamp, 1988).

The information imbalance between firms and customers has conventionally been to the advantage of the firm (Prahalad & Ramaswamy, 2004a). The results of this study underscore the need for openness and transparency in information sharing, because such openness can be perceived as a unique gesture by customers; it can improve their perceptions of fairness and quality, and their confidence in the hotel's service offerings. This is in line with Prahalad and Ramaswamy (2004a), who suggest that the combination of the risk and transparency dimensions can build customer trust. Prahalad and Ramaswamy (2004a) explored the effect of external information sharing and confirmed that information sharing can improve customers’ responsiveness and purchase intentions toward product offerings. Given the positive impact of openness in information sharing on perceptions of trust, quality, and fairness, the onus is on the hotel's management to take advantage of customers’ responsiveness as a means to engage them with more offerings that ultimately increase revenue for the hotel.

The findings from this study also indicate that tourists’ PQ positively affects PP, along with three dimensions of the DART framework (access, risk and, transparency) being positively related to PQ. This intermediary role of PQ implies the existence of a quality-price inference, where customers can gauge the price of a service based on the quality perceptions of the three dimensions. Hotel managers must then recognize the importance of customers’ quality perception, not just for the indicator role it plays but also as a strategic tool for targeting and positioning. As VCC increases customers’ value and quality perception, they will anticipate a fitting price for the value received.

An overwhelming number of studies have limitations and our research is no exception. We therefore point out some constraints of our study and present avenues for future research.

The study's limitations are especially concentrated in the convenience sample and the approach of the research model. In terms of the study's sample, the hotel clients surveyed were guests located mostly in a holiday resort, such as the island of Corfu. Also, many of them were leisure tourists who had booked their trips through tour operators. This kind of client tends to be more conventional in their way of organizing and enjoying their vacations. Therefore, it would be beneficial to study a wider variety of tourist destinations which include greater diversity of hotels. Also, new research could investigate consumer segments according to how they organized their trip, whether autonomously contracting with the hotels or through a package organized by a travel agency or other intermediary agents. Perhaps tourists who organize their trip by themselves are postmodern tourists (López-Bonilla & López-Bonilla, 2009), and they may be more willing to contribute to VCC than tourists who buy a tour package. Likewise, in line with Ye, Li, Wang and Law (2014), it is possible to explore the moderating impact of the type of trip (leisure tourists vs business tourists) and the hotel category (number of stars) on VCC and marketing strategies based on quality and price.

A second limitation derives from the research model and the connection proposed between the two marketing approaches (VC and VCC), where PV is only tested on its two distinctive utilitarian factors, PQ and PP. It may be necessary to include other components of PV.

Prior literature in hospitality studies has explored PV in terms of hedonic and utilitarian values (Dedeoğlu et al., 2016; Hlee, Lee, Yang & Koo, 2019; Hyun & Park, 2016; Wu, Chen, Chen & Cheng, 2014), while this study has explored just the utilitarian context of PV. Hedonic value is the conscious feeling of value derived from the reputational, aesthetic, social, and emotional aspects of a product or service offering. Teng, Wu, Teng and Wu (2019) describe hedonic values as being associated with customers’ desire to experience fun, entertainment, novelty, and excitement. Given that these experiences are also embedded in a hotel's service offerings, it would be useful for further research to include in the VC model additional variables that measure values such as social, emotional, and reputational values.

Finally, it should be mentioned that marketing strategy studies regarding price and quality have focused mainly on monetary price. Hence, it could be interesting to extend the analysis to include the non-monetary aspects of price. Iglesias and Guillen (2002) described the non-monetary aspects of price as including temporal, physical, sensorial, and psychological costs. Temporal cost refers to the time dedicated to evaluating a product before purchase; physical cost refers to the physical activities required to obtain information about the product; sensorial cost captures the stimuli and sensations induced by a product before its purchase; while psychological cost connotes the mental exercise dedicated to assessing a product's features and comparing them with competing products. Non-monetary costs can convey the level of sacrifice which a customer makes before making a purchase decision. Thus, it would be interesting to investigate how the interplay of the value co-creation dimensions facilitates or hampers clients’ non-monetary sacrifices.