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Do customized service packages impede value capture in industrial markets?

  • Original Empirical Research
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Abstract

Capturing the value of industrial services is an issue of growing concern as services increasingly define manufacturing companies’ competitive market positions. In business markets, suppliers often create customized service packages (CSPs) to avoid difficult pricing decisions or tedious negotiations. However, using a unique dataset of responses from more than 450 managers collected through telephone-assisted online questionnaires, this study shows that the managerial practice is suboptimal. Customers’ willingness to pay for CSPs is almost 5% lower than it would be with separate assessments of the same service elements, which represents substantially lower value capture potential. Buying firms with strong purchasing power demand greater price discounts for CSPs, though the presentation format has less influence among large and experienced buyers, as long as services support customer processes. Switching from CSPs to separate service offerings can enhance supplier profitability, but it requires advanced marketing capabilities to understand, document, and communicate customer value in business markets.

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Notes

  1. Absolute values (e.g., 2,000€) were computed according to the price of the machine a respondent planned to buy. This machine and its respective price were gathered in a previous questionnaire stage; the information about the machine was available to the respondent throughout the online survey, at the top of the screen.

  2. We gratefully acknowledge an anonymous reviewer for this suggestion.

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Acknowledgments

The authors thank Lisa K. Scheer for her valuable insights on a previous version of this paper. Her constructive comments greatly helped us to improve the positioning of the paper.

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Authors and Affiliations

  1. University of Muenster, Am Stadtgraben 13-15, 48143, Muenster, Germany

    Michael Steiner & Klaus Backhaus

  2. University of Paderborn, Warburger Strasse 100, 33098, Paderborn, Germany

    Andreas Eggert

  3. Newcastle University Business School, 5 Barrack Road, Newcastle upon Tyne, NE1 4SE, UK

    Andreas Eggert

  4. IMD Lausanne, Chemin de Bellerive 23, 1001, Lausanne, Switzerland

    Wolfgang Ulaga

Authors
  1. Michael Steiner
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  2. Andreas Eggert
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  3. Wolfgang Ulaga
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  4. Klaus Backhaus
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Corresponding author

Correspondence to Andreas Eggert.

Appendices

Appendix A

Table 4 Item formulations
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Table 5 Attributes and levels (12 SSPs; 7 SSCs)
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Appendix B

Table 6 Sample composition by industry
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Table 7 Sample composition by turnover
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Table 8 Sample composition by firm size (number of employees)
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Table 9 Sample composition by key informant
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Steiner, M., Eggert, A., Ulaga, W. et al. Do customized service packages impede value capture in industrial markets?. J. of the Acad. Mark. Sci. 44, 151–165 (2016). https://doi.org/10.1007/s11747-014-0410-9

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  • DOI: https://doi.org/10.1007/s11747-014-0410-9

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