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
1. What type of co-creation is Local Motors
was founded in 2007 by Jay Rogers, who came up with
using?
the idea while he was an MBA student at Harvard
2. What do you think of the Rally Fighter? Will
Business School. The company is located in Chandler,
this new car be successful? Why or why not?
Arizona and is currently selling a variety of motorized
3. What is Local Motors’ value proposition?
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.
Case Study

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
Image retrieved from https://localmotors.com/blog/vehicles/,
well as its various accessories. In addition, by freely authorized by Local Motors.
sharing all of its designs, components, and plans on its
Pizza and the US Department of Defense. Finally, Local
website, it also encourages Tinkering. Finally, by
Motors is exploring new digital manufacturing
requiring its customers to actually engage in the car
techniques and recently printed the world’s first 3D
building process, Local Motors also appears to be
printed car during a Chicago manufacturing expo.
engaging in a form of Submitting, although in this case,
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
than 100 Rally Fighters. Thus, from a pure sales
perspective, this product has not been a success.
However, the Rally Fighter was quite successful in
terms of generating substantial attention for Jay Rogers
and Local Motors, including several magazine articles
and television interviews. In recent years, Local Motors
has expanded its product line as is developing co-
created bicycles and motorcycles. More broadly, Local
Motors has realized that their distinctive advantage is
their worldwide community of designers. Thus, it is
now positioning itself as a co-creation design platform
and has drawn attention from a number of large firms
and government agencies including Reebok, Domino’s
ideal because they greatly restrict the flow of
ideas from those outside the firm.
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.
The design for the Rally Fighter was submitted
by a unemployed college student.
4. Non-customers can also be valuable assets to a
firm. In marketing, we typically value
customers based on either their past purchasing
behavior or future purchase promise. This case
shows that individuals can provide valuable
contributions to a firm by offer ideas instead of
money.
2
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/