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Local Motors

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:

Core Issue:

The purpose of this case study is to illustrate and apply

Local Motors has used co-creation to design the Rally

the concept of customer co-creation to an actual business

Fighter. Now it needs to successfully market it and find

case.

a sustainable value proposition.

Background:

Questions:

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 offroad 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.

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?

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Case Study

Typical Student Reaction:

When I teach this case, the student reaction is quite
mixed. Most dont like the Rally Fighter at all and
dont 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 codesigning 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:

Image retrieved from https://localmotors.com/blog/vehicles/,

authorized by Local Motors.
Pizza and the US Department of Defense. Finally, Local
Motors is exploring new digital manufacturing
techniques and recently printed the worlds first 3D
printed car during a Chicago manufacturing expo.
Lesson Learned:
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.

However, the Rally Fighter was quite successful in
terms of generating substantial attention for Jay Rogers

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.

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, Dominos

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-carsxsw/)

TWIST Rally Fighter (https://www.youtube.com/watch?v=h1nEnSTrybI)

www.localmotors.com/rallyfighter/