Today we identify service articles published in Marketing, Management, Operations, Productions, Information Systems & Practioner-oriented Journals in the last month.
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Song, Y., Y. Liu, M. Wang, K. Lanaj, R. E. Johnson and J. Shi (2018): A Social Mindfulness Approach to Understanding Experienced Customer Mistreatment: A Within-person Field Experiment, Academy of Management Journal, 61(3), pp.994-1020
We apply a social mindfulness lens to understand the phenomenon of perceived customer mistreatment. Recognizing that both recall of prosocial acts and perspective taking invoke the motivation to be mindful in social interactions, we investigated whether these two types of interventions affect customer service employees’ experience of customer mistreatment. Additionally, we investigated whether these two interventions might also buffer the relation of employees’ daily experience of customer mistreatment and their negative mood at the end of the workday. Finally, we examined whether the interventions, via their effects on daily experience of customer mistreatment and afternoon negative mood, could reduce dysfunctional coping responses in the evening (i.e., employee rumination and maladaptive shopping). We conducted a within-person field experiment utilizing a daily experience sampling approach with 94 customer service employees whom we surveyed for 15 consecutive workdays. Consistent with our expectations, both interventions significantly reduced the daily experience of customer mistreatment compared to a control condition. Recall of prosocial action also significantly buffered the positive relation of daily experience of customer mistreatment with afternoon negative mood. Moreover, both interventions had significant indirect effects on dysfunctional coping responses in the evening. We discuss theoretical and practical implications of these findings.
Link: http://dx.doi.org/10.5465/amj.2016.0448 [Google]
Harviainen, J. T., J. Ojasalo and S. N. Kumar (2018): Customer preferences in mobile game pricing: a service design based case study, Electronic Markets, 28(2), pp.191-203
This article examines the service design of freemium game pricing. Freemium games are a type of game that is partially free to play, but its players are able to access various options by playing real money. The article increases knowledge of the usability of service design processes in the pricing of mobile games, as well as the understanding of central aspects of freemium pricing models from the perspective of user experience and customer value. Existing research shows that one major reason for failing freemium pricing models is the orientation for technology development, alongside poor content and too aggressive monetization, rather than customer experience. The article presents a process in which an alternative pricing model was developed for freemium games, through the use of service design workshops.
Link: http://dx.doi.org/10.1007/s12525-018-0285-6 [Google]
Ambroise, L., I. Prim-Allaz and C. Teyssier (2018): Financial performance of servitized manufacturing firms: A configuration issue between servitization strategies and customer-oriented organizational design, Industrial Marketing Management, 71(), pp.54-68
The literature posits a positive relationship between servitization and financial performance. However, empirical evidence is inconclusive and notes the enabling role of organization. To contribute to this topic, this work first advocates for a new approach to define the servitization strategy of manufacturing firms based on the nature of their offerings and their impact on the provider-customer relationships. Three categories of strategy are suggested: added services-AS, activities reconfiguration-AR, and business model reconfiguration-BMR. Then, a general framework posits that financial performance stems from the adoption of specific COOD configurations depending on the servitization strategy adopted. Three dimensions of COOD are considered: service culture-SC, customer interface-CI and service delivery system-SDS. Based on a study involving 184 manufacturing firms, the research model provides quantitative support for driver configurations that increase financial performance. The results from both structural equation models and qualitative comparative analysis (fsQCA) confirm that all servitization strategies can lead to increased performance, but only with specific COOD configurations. The findings provide stimulating managerial implications: a company implementing an AS strategy has no incentive to invest in a complex COOD; firms adopting an AR strategy should focus largely on their SDS; and firms choosing a BMR strategy must develop a robust SC.
Link: http://dx.doi.org/10.1016/j.indmarman.2017.11.007 [Google]
Bolander, P., A. Werr and W. van der Valk (2018): Purchasing pension advisory services in Sweden – An interpretive investigation into service conceptions and supplier selection, Industrial Marketing Management, 71(), pp.108-122
Research on service purchasing commonly acknowledges that different types of services require different purchasing approaches. This has generated a plethora of service classifications that focus on different characteristics inherent to the service. Recently, the use to which a service is put in an organization and the organizational context have been argued to influence the way in which the service is purchased, thereby shifting attention away from inherent service characteristics. The current paper extends this line of research by focusing on the buyer’s understanding of the service and its impact on the supplier selection process. Based on an interpretive, phenomenographic analysis of 32 interviews with buyers of pension and insurance advice services (PIAS) in Sweden, the current study identifies four fundamentally different ways of understanding these services and shows how different conceptions of a service give rise to different approaches to selecting suppliers and different criteria for evaluating them.
Link: http://dx.doi.org/10.1016/j.indmarman.2017.12.015 [Google]
Nezami, M., S. Worm and R. W. Palmatier (2018): Disentangling the effect of services on B2B firm value: Trade-offs of sales, profits, and earnings volatility, International Journal of Research in Marketing, 35(2), pp.205-223
In the face of declining business and growing pressures from low-cost competitors, many business-to-business (B2B) manufacturers have moved from their previously successful product-centric strategies to more service-oriented business models. Yet despite their substantial investments in services, firms fail to understand the performance ramifications of these offerings. With a longitudinal data set (2001–2016) of 227 B2B manufacturers listed in the S&P 1500 index, this study disentangles the simultaneous effects of financial-based mechanisms that link the service ratio (i.e., share of a firm’s revenue generated from selling services) to firm value. The findings reveal significant trade-offs across these mechanisms. Although the service ratio monotonously boosts sales growth, it has U-shaped curvilinear relationships with profitability and earnings volatility. These effects also depend on industry- and firm-level factors. Industry maturity positively moderates the effects of the service ratio on sales growth and profitability. However, business scope has an adverse effect on the service ratio–profitability relationship. Finally, industry turbulence negatively moderates the effect of services on earnings volatility.
Link: http://dx.doi.org/10.1016/j.ijresmar.2017.12.002 [Google]
Reimer, T. and M. Benkenstein (2018): Not just for the recommender: How eWOM incentives influence the recommendation audience, Journal of Business Research, 86(), pp.11-21
Due to the high persuasiveness and broad accessibility of online reviews, companies have become interested in proactively managing this form of customer-to-customer communication. To date, marketers have commonly used monetary incentives to increase recommendation likelihood, thereby providing extrinsic motivation. However, in terms of the perspective of the review reader who is aware of the monetary reward, this incentive form also includes potential negative consequences, such as credibility loss of online recommendations and impairment of the company perception through consumer skepticism. This study analyzes two alternative incentive programs for increasing recommendation likelihood, addressing an altruistic form of motivation to overcome the drawbacks regarding perceptions of recommendations and of the company. A scenario-based experiment was designed to compare the effects of the eWOM incentives from a review-readers’ perspective. We used attribution theory as conceptual framework to explain consumers’ reaction regarding incentive-based reviews. Finally, the results are discussed and practical implications are deduced.
Link: http://dx.doi.org/10.1016/j.jbusres.2018.01.041 [Google]
Duan, T., R. Ding, W. Hou and J. Z. Zhang (2018): The burden of attention: CEO publicity and tax avoidance, Journal of Business Research, 87(), pp.90-101
We use search volume index (SVI) for a CEO’s name and stock ticker from Google Trends to measure CEO publicity, and examine the competing hypotheses on its relation to tax avoidance. On the one hand, CEOs who receive more attention from retail investors may engage in tax evasion activities to meet investors’ performance expectations; on the other hand, they are more concerned with public image and avoiding being labeled as tax avoiders. Based on the CEOs of S&P 500 firms between 2004 and 2011, our finding supports the former and shows that CEOs with higher publicity manage to have a lower effective tax rate and cash effective tax rate. Such effect is moderated by board independence. Finally, firms with higher CEO publicity pay auditors higher tax fees, suggesting that these CEOs tend to use more tax planning services from auditors.
Link: http://dx.doi.org/10.1016/j.jbusres.2018.02.010 [Google]
Lehrer, C., A. Wieneke, J. A. N. Vom Brocke, R. Jung and S. Seidel (2018): How Big Data Analytics Enables Service Innovation: Materiality, Affordance, and the Individualization of Service, Journal of Management Information Systems, 35(2), pp.424-460
The article reports on an exploratory, multisite case study of four organizations from the insurance, banking, telecommunications, and e-commerce industries that implemented big data analytics (BDA) technologies to provide individualized service to their customers. Grounded in our analysis of these four cases, a theoretical model is developed that explains how the flexible and reprogrammable nature of BDA technologies provides features of sourcing, storage, event recognition and prediction, behavior recognition and prediction, rule-based actions, and visualization that afford (1) service automation and (2) BDA-enabled humanmaterial service practices. The model highlights how material agency (in the case of service automation) and the interplay of human and material agencies (in the case of human-material service practices) enable service individualization, as organizations draw on a service-dominant logic. The article contributes to the literature on digitally enabled service innovation by highlighting how BDA technologies are generative digital technologies that provide a key organizational resource for service innovation. We discuss implications for research and practice.
Link: http://dx.doi.org/10.1080/07421222.2018.1451953 [Google]
Wu, Y. U. E., K. Zhang and V. Padmanabhan (2018): Matchmaker Competition and Technology Provision, Journal of Marketing Research (JMR), 55(3), pp.396-413
Matchmaking is a complex process that requires considerable expertise. Matchmakers in various industries often advertise proprietary technologies that presumably help users find an ideal match in a short time. However, matchmakers may have incentives to provide suboptimal matchmaking services so that users remain clients longer and pay more fees. This article considers a matchmaking market with network effects and strategic consumers and analyzes under what conditions matchmakers would offer more effective versus less effective matchmaking services. The authors find that stronger pricing power paradoxically leads to lower technology provision when consumers have high valuation for the matchmaking service. Moreover, network effects typically encourage matchmakers to retain the users in the market to create positive externalities, which can result in less precise matchmaking. In addition, consumer patience prompts competing matchmakers to implement ineffective technology. In two extensions, the authors explore asymmetric two-sided markets and discuss the impacts of alternative pricing schemes on technology provision.
Link: http://dx.doi.org/10.1509/jmr.16.0423 [Google]
Harviainen, J. T., M. Ekström and J. Ojasalo (2018): Tactical Service Failure: A Case Study on Public Funding as a Marketing Issue, Journal of Nonprofit & Public Sector Marketing, (), pp.1-19
ABSTRACTThis article analyzes the ways in which public-sector service providers may use service-delivery failure as a way of securing resources. In tactical service failure, an organization tactically delivers nonadequate service, so as to project a media image of being harmed by its funding cuts. Analyzing this process enables new insight into both public funding and provider-to-funder (P2F) marketing and selling. This research uses a single case study method to confirm the existence of the phenomenon first detected through long-term media analysis. To explore the single case, the authors interviewed a former city official who participated in tactical-service-failure processes and their marketing. The article shows how and why service providers may opt for this tactic and the potential gains and pitfalls of utilizing it. New insight is offered into how media connections are used to influence public-funding decisions.
Link: http://dx.doi.org/10.1080/10495142.2018.1452826 [Google]
Steffensen, K. D., M. Vinter, D. Crüger, K. Dankl, A. Coulter, B. Stuart and L. L. Berry (2018): Lessons in Integrating Shared Decision-Making Into Cancer Care, Journal of Oncology Practice, 14(4), pp.229-235
The benefits of shared decision-making (SDM) in health care delivery are well documented, but implementing SDM at the institutional level is challenging, particularly when patients have complex illnesses and care needs, as in cancer. Denmark?s Lillebaelt Hospital, in creating The Patient?s Cancer Hospital in Vejle, has learned key lessons in implementing SDM so that the organization?s culture is actually being transformed. In short, SDM is becoming part of the fabric of care, not a mere add-on to it. Specifically, the hospital chose and structured its leadership to ensure that SDM is constantly championed. It organized multiple demonstration projects focused on use of decision aids, patient-reported outcome measures, and better communication tools and practices. It designed programs to train clinicians in the art of doctor-patient communication. It used research evidence to inform development of the decision aids that its clinicians use with their patients. And it rigorously measured SDM performance in an ongoing fashion so that progress could be tracked and refined to ensure continuous improvement. Initial data on the institution?s SDM initiatives from the Danish national annual survey of patients? experiences show substantial progress, thereby motivating Lillebaelt to reassert its commitment to the effort, to share what it has learned, and to invite dialogue among all cancer care organizations as they seek to fully integrate SDM in daily clinical practice.
Link: http://dx.doi.org/10.1200/JOP.18.00019 [Google]
Ta, H., T. L. Esper and A. R. Hofer (2018): Designing crowdsourced delivery systems: The effect of driver disclosure and ethnic similarity, Journal of Operations Management, 60(), pp.19-33
Crowdsourced delivery is a service operations model that has proliferated in recent years, bringing unique opportunities and challenges to online retail operations. In particular, new technology enabled features, such as the disclosure of delivery drivers’ identities, introduce a social dimension prior to delivery service encounters that might influence customers’ service quality expectations and ultimately impact their attitudes towards the retailers. Building on premises of social identity theory, this research investigates effects of various crowdsourced delivery system designs related to driver disclosure and ethnicity on customers’ attitudes towards the drivers and retailers. Using data from a scenario-based experiment with 761 participants across two studies, we find that crowdsourced delivery designs that disclose drivers’ identity increase customers’ trust, satisfaction, and repurchase intentions only when customers perceive the drivers to be similar to them, particularly with regard to ethnicity. The designs that offer driver choice options are also found to be highly regarded by customers. In addition, the similarity effects of crowdsourced delivery designs differ depending on certain customer characteristics. Overall, our research shows crowdsourced delivery – as a technology-driven phenomenon – may portend unexpected and challenging social dilemmas for operations managers. Our findings contribute to emerging research on the intersection of service design, technology management, and the sharing economy.
Link: http://dx.doi.org/10.1016/j.jom.2018.06.001 [Google]
Dahm, M., D. Wentzel, W. Herzog and A. Wiecek (2018): Breathing Down Your Neck!: The Impact of Queues on Customers Using a Retail Service, Journal of Retailing, 94(2), pp.217-230
While a rich body of research has examined the psychological costs and benefits of queuing, this research focuses on the customer currently using a retail service and examines how this customer is affected by lines forming at his or her back. Drawing on Social Impact Theory, we postulate that customers feel pressured by people waiting behind them and that this feeling of social pressure leads to more negative affective experiences, poorer participation in co-creation settings, and lower perceptions of service quality. Five field and controlled experimental studies tested these predictions and also explored how retailers can reduce the adverse impact of queues. Studies 1A and 1B show that the customer’s experience deteriorates as queue length increases and that perceptions of social pressure mediate this effect. Studies 2A and 2B show that this effect is moderated by customers’ own waiting time such that customers are more affected by queues forming at their backs when their own waiting time decreases. Finally, study 3 identifies two strategies to attenuate the negative effects of waiting lines, namely explicitly reassuring the focal customer that she need not feel pressured to be efficient and removing the waiting customers from the line of vision of the focal customer.
Link: http://dx.doi.org/10.1016/j.jretai.2018.04.002 [Google]
Hao, Z., K. Guangwen and S. Rajagopalan (2018): Contract Design by Service Providers with Private Effort, Management Science, 64(6), pp.2672-2689
We investigate the performance of two commonly used pricing schemes–hourly-rate contract and two-part tariff–in service environments where the buyer’s valuation is invisible to the service provider and the provider’s effort may not be visible to the buyer. In the private effort environment, we further distinguish between situations where the contract may be based on the outcome or on the effort reported by the provider. We show that under the two-part tariff, when effort is private, the provider can achieve the same profit as under public effort by contracting on reported effort and will beworse off by contracting on outcome. Under the hourly-rate contract, compared with the public effort case, the provider may be better or worse off in keeping effort private and contracting on the reported effort, and the trade-off is affected by the degree of outcome uncertainty in a nontrivial way. We find that a provider’s profits under an hourly-rate contract are as good as under a two-part tariff over a sizable parameter regime when contracting on reported effort.
Link: http://dx.doi.org/10.1287/mnsc.2017.2743 [Google]
Ming, H., L. Yang and W. Jianfu (2018): Efficient Ignorance: Information Heterogeneity in a Queue, Management Science, 64(6), pp.2650-2671
How would the growing prevalence of real-time delay information affect a service system? We consider a single-server queueing system where customers arrive according to a Poisson process and the service time follows an exponential distribution. There are two streams of customers, one informed about real-time delay and the other uninformed. The customers’ uninformed behavior may be due to information ignorance or rational behavior in the presence of an information fee. We characterize the equilibrium behavior of customers with information heterogeneity and investigate how the presence of a larger fraction of informed customers affects the system performance measures, i.e., throughput and social welfare. We show that the effects of growing information prevalence on system performance measures are determined by the equilibrium joining behavior of uninformed customers. Perhaps surprisingly, we find that throughput and social welfare can be unimodal in the fraction of informed customers. In other words, some amount of information heterogeneity in the population can lead to more efficient outcomes, in terms of the system throughput or social welfare, than information homogeneity. For example, under a very mild condition, throughput in a system with an offered load of 1 will always suffer if there are more than 58% of informed customers in the population. Moreover, it is shown that for an overloaded system with offered load sufficiently higher than 1, social welfare always reaches its maximum when some fraction of customers is uninformed of the congestion level in real time.
Link: http://dx.doi.org/10.1287/mnsc.2017.2747 [Google]
Rhouma, T. B. and G. Zaccour (2018): Optimal Marketing Strategies for the Acquisition and Retention of Service Subscribers, Management Science, 64(6), pp.2609-2627
In this paper, we propose a diffusion model for a subscription service. The evolution over time of the number of subscribers is governed by a differential equation combining two processes–namely, a customer acquisition process and a customer attrition process. Assuming profit-maximization behavior of the firm, we use dynamic programming to optimize the customer equity and determine optimal customer relationship marketing expenditures. We implement an augmented Kalman filter with continuous state and discrete observations to estimate the model’s parameters using market data of two well-known companies in the telecommunications sector. To the best of our knowledge, this is the first paper to model acquisition and retention efforts in the context of a diffusion model. By doing so, we extend the literature on product diffusion to services–that is, beyond its traditional area of durable (and occasionally nondurable) products. By the same token, we contribute to the literature on customer relationship marketing (CRM), where social interactions have been overlooked. Our analytical and numerical results provide a better understanding of the relationships among the optimal customer equity, the customer lifetime value, the prospect lifetime value, and the optimal acquisition and retention spending. Our model and estimation approach give the tools for assessing empirically the role of CRM spending, social interactions, and other factors in the service subscription dynamics. Our main empirical results are as follows: (i) CRM spending and external incentives have indeed a significant effect on acquisition and retention processes; (ii) the impact of CRM is market specific; (iii) compared with optimal levels, both firms underinvest in retention; and (iv) whereas we observe increasing spending in acquisition over time, the derived optimal policy recommends a decreasing level of spending over time.
Link: http://dx.doi.org/10.1287/mnsc.2017.2752 [Google]
Maglaras, C., Y. John and A. Zeevi (2018): Optimal Price and Delay Differentiation in Large-Scale Queueing Systems, Management Science, 64(5), pp.2427-2444
We study a multiserver queueing model of a revenue-maximizing firm providing a service to a market of heterogeneous price- and delay-sensitive customers with private individual preferences. The firm may offer a selection of service classes that are differentiated in prices and delays. Using a deterministic relaxation, which simplifies the problem by preserving the economic aspects of price-and-delay differentiation while ignoring queueing delays, we construct a solution to the fully stochastic problem that is incentive compatible and near optimal in systems with large capacity and market potential. Our approach provides several new insights for large-scale systems: (i) the deterministic analysis captures all pricing, differentiation, and delay characteristics of the stochastic solution that are nonnegligible at large scale; (ii) service differentiation is optimal when the less delay-sensitive market segment is sufficiently elastic; (iii) the use of “strategic delay” depends on system capacity and market heterogeneity–and it contributes significant delay when the system capacity is underutilized or when the firm offers three or more service classes; and (iv) connecting economic optimization to queueing theory, the revenue-optimized system has the premium class operating in a “quality-driven” regime and the lower-tier service classes operating with noticeable delays that arise either endogenously (“efficiency-driven” regime) or with the addition of strategic delay by the service provider.
Link: http://dx.doi.org/10.1287/mnsc.2016.2713 [Google]
Lee, C., E. Ofek and T. J. Steenburgh (2018): Personal and Social Usage: The Origins of Active Customers and Ways to Keep Them Engaged, Management Science, 64(6), pp.2473-2495
We study how digital service firms can develop an active customer base, focusing on two questions. First, how does the way that customers use the service postadoption to meet their own needs (personal usage) and to interact with one another (social usage) vary across customer acquisition methods? Second, how do firm-to-customer and customer-to-customer communications promote different types of usage? We study these questions using two data sets and by developing a multivariate hierarchical Poisson hidden Markov model (HMM), which fits the data significantly better than univariate and latent class approaches. We indeed find that postadoption behavior varies depending on customer acquisition method and dynamic states. At the total usage level, in one context (an annotation and note-taking service), customers who heard about the service through search and mass-invite exhibited significantly higher usage compared to those who joined through word of mouth (WOM), whereas in another context (a cloud-based file storage service), customers who joined through WOM referrals tended to exhibit higher usage. Yet, examining how routes of adoption relate to specific types of behavior, personal versus social usages, reveals a more nuanced picture. Furthermore, in both contexts, communications postadoption influenced engagement, albeit in different ways. Firm-to-customer communications, through company posts to Twitter and blog entries, had varying effects on customer behavior and in some cases led to lower personal and/or social usage; however, customer-to-customer communications tended to increase personal-use engagement across latent states and in both data sets. The findings suggest that firms offering digital services should pay attention to how the mode of customer acquisition is related to subsequent usage intensity, accounting for both personal and social activity, and encourage customers to interact with each other postadoption.
Link: http://dx.doi.org/10.1287/mnsc.2017.2754 [Google]
Marinesi, S., K. Girotra and S. Netessine (2018): The Operational Advantages of Threshold Discounting Offers, Management Science, 64(6), pp.2690-2708
We study threshold discounting, or the practice of offering a discounted-price service if at least a prespecified number of customers signal interest in it, as pioneered by Groupon. We model a capacity-constrained firm, a random-sized population of strategic customers, a desirable hot period, and a less desirable slow period. Compared to a more traditional approach (slow period discounting or closure), threshold discounting has two operational advantages. First, the contingent discount temporally balances demand when the market for the service is large, and reduces supply of the service (preserving higher margins) when the market is small, allowing the firm to respond to the service’s unobserved market potential. Second, activation of the threshold discount signals the market state and the consequent service availability to strategic customers, inducing them into self-selecting the consumption period to one that improves the firm’s capacity utilization. Yet, threshold discounting can be harmful in situations with chronically low demand. In contrast with past work on strategic customers, their presence is advantageous to firms in our context. A calibrated numerical study shows that threshold discounting improves firm profits over a traditional approach by as much as 33% (7% on average).
Link: http://dx.doi.org/10.1287/mnsc.2017.2740 [Google]
Jeunghyun, K., R. S. Randhawa and A. R. Ward (2018): Dynamic Scheduling in a Many-Server, Multiclass System: The Role of Customer Impatience in Large Systems, Manufacturing & Service Operations Management, 20(2), pp.285-301
Problem definition: We study optimal scheduling of customers in service systems, such as call centers. In such systems, customers typically hang up and abandon the system if their wait for service is too long. Such abandonments are detrimental for the system, and so managers typically use scheduling as a tool to mitigate it. In this paper, we study the interplay between customer impatience and scheduling decisions when managing heterogeneous customer classes. Academic/practical relevance: Call centers constitute a large industry that has a global spending of around $300 billion and employs more than 15 million people worldwide. Our work focuses on improving call center operations, which can reduce costs and improve customer satisfaction. Mathematically, customer patience is typically modeled as exponentially distributed for tractability. Our work makes inroads into relaxing this restrictive assumption to allow modeling more realistic call center situations. Methodology: We use heavy traffic-motivated asymptotic queueing machinery that provides us the traction to successfully capture and incorporate the customer impatience distribution into the scheduling problem. In our approach, the scheduling problem reduces to a diffusion control problem, which we solve to propose near-optimal scheduling policies. Results: We propose near-optimal scheduling policies that can be implemented by call centers to improve their quality-of-service metrics. One of our main results is that, for a class of parameters, we establish sufficient conditions for both the optimality and nonoptimality of threshold policies. Managerial implications: Threshold policies are widely used for scheduling. Our work provides additional insight into whether these may be suboptimal. Our work provides an easy-to-implement alternative that can reduce customer abandonments considerably; for instance, our numerical results indicate that for a system with two customer types, the abandonment rate of one class can be lowered by 30% by using our policy relative to the best threshold policy.
Link: http://dx.doi.org/10.1287/msom.2017.0642 [Google]
Mengshi, L., C. Zhihao and S. Siqian (2018): Optimizing the Profitability and Quality of Service in Carshare Systems Under Demand Uncertainty, Manufacturing & Service Operations Management, 20(2), pp.162-180
Carsharing has been considered as an effective means to increase mobility and reduce personal vehicle usage and related carbon emissions. In this paper, we consider problems of allocating a carshare fleet to service zones under uncertain one-way and round-trip rental demand.We employ a two-stage stochastic integer programming model, in the first stage of which we allocate shared vehicle fleet and purchase parking lots or permits in reservation-based or free-floating systems. In the second stage, we generate a finite set of samples to represent demand uncertainty and construct a spatial-temporal network for each sample to model vehicle movement and the corresponding rental revenue, operating cost, and penalties from unserved demand. We minimize the expected total costs minus profit and develop branch-and-cut algorithms with mixed-integer, roundingenhanced Benders cuts, which can significantly improve computation efficiency when implemented in parallel computing. We apply our model to a data set of Zipcar in the Boston-Cambridge, Massachusetts, area to demonstrate the efficacy of our approaches and draw insights on carshare management. Our results show that exogenously given one-way demand can increase carshare profitability under given one-way and round-trip price differences and vehicle relocation cost whereas endogenously generated one-way demand as a result of pricing and strategic customer behavior may decrease carshare profitability. Our model can also be applied in a rolling-horizon framework to deliver optimized vehicle relocation decisions and achieve significant improvement over an intuitive fleet-rebalancing policy.
Link: http://dx.doi.org/10.1287/msom.2017.0644 [Google]
Janakiraman, G., M. Nagarajan and S. Veeraraghavan (2018): Simple Policies for Managing Flexible Capacity, Manufacturing & Service Operations Management, 20(2), pp.333-346
In many scenarios, a fixed capacity is shared flexibly between multiple products. To manage such multiproduct systems, firms need to make two sets of decisions. The first one requires setting an inventory target for each product, and the second requires dynamically allocating the scarce capacity among the products. It is not known how to make these decisions optimally. In this paper, we propose easily implementable policies that have both theoretical and practical appeal. We first suggest simple and intuitive allocation rules that determine how such scarce capacity is shared. Given such rules, we calculate the optimal inventory target for each product. We demonstrate analytically that our policies are optimal under two asymptotic regimes represented by high service levels (i.e., high shortage costs) and heavy traffic (i.e., tight capacity). We also demonstrate that our policies outperform current known policies over a wide range of problem parameters. In particular, the cost savings from our policies become more significant as the capacity gets more restrictive.
Link: http://dx.doi.org/10.1287/msom.2017.0648 [Google]
Berry, L. L., K. A. Deming and T. S. Danaher (2018): Improving Nonclinical and Clinical-Support Services: Lessons From Oncology, Mayo Clinic Proceedings: Innovations, Quality & Outcomes, (), pp.
Nonclinical and clinical-support personnel serve patients on the front lines of care. Their service interactions have a powerful influence on how patients perceive their entire care experience, including the all-important interactions with clinical staff. Ignoring this reality means squandering opportunities to start patients out on the right foot at each care visit. Medical practices can improve the overall care they provide by focusing on nonclinical and clinical-support services in 5 crucial ways: (1) creating strong first impressions at every care visit by prioritizing superb front-desk service; (2) thoroughly vetting prospective hires to ensure that their values and demeanor align with the organization’s; (3) preparing hired staff to deliver excellent service with a commitment to ongoing training and education at all staff levels; (4) minimizing needless delays in service delivery that can overburden patients and their families in profound ways; and (5) prioritizing the services that patients consider to be most important. We show how cancer care illustrates these principles, which are relevant across medical contexts. Without nonclinical and clinical-support staff who set the right tone for care at every service touchpoint, even the best clinical services cannot be truly optimal.
Link: http://dx.doi.org/10.1016/j.mayocpiqo.2018.05.002 [Google]
Gunarathne, P., H. Rui and A. Seidmann (2018): WHEN SOCIAL MEDIA DELIVERS CUSTOMER SERVICE: DIFFERENTIAL CUSTOMER TREATMENT IN THE AIRLINE INDUSTRY, MIS Quarterly, 42(2), pp.489-A410
The article presents a study on customer service provided through social media by several major U.S. airlines. Topics include the tendency for airlines to respond more to complaints from customers with more social media followers, the tendency for airlines to respond quicker to complaints from customers with more followers confirming the existence of a social media influence effect, and the tendency for airlines to respond less to complaints with multiple parties mentioned confirming the existence of a bystander effect.
Link: http://dx.doi.org/10.25300/MISQ/2018/14290 [Google]
Ren, H., T. Huang and K. Arifoglu (2018): Managing Service Systems with Unknown Quality and Customer Anecdotal Reasoning, Production & Operations Management, 27(6), pp.1038-1051
We consider service systems where customers do not know the distribution of uncertain service quality and cannot estimate it fully rationally. Instead, they form their beliefs by taking the average of several anecdotes, the size of which measures their level of bounded rationality. We characterize the customers’ joining behavior and the service provider’s pricing, quality control, and information disclosure decisions. Bounded rationality induces customers to form different estimates of the service quality and leads the service provider to use pricing as a market segmentation tool, which is radically different from the full rationality setting. As customers gather more anecdotes, the service provider may first decrease and then increase price, and the revenue is U‐shaped. Interestingly, a larger sample size may harm consumer surplus, although it always benefits social welfare. When the service provider also has control over quality, we find that it may reduce both quality and price as customers gather more anecdotes. In addition, a high‐quality service provider may not disclose quality information if the sample size is small, while a low‐quality service provider may disclose if the sample size is large. Furthermore, as the expected waiting cost increases, information non‐disclosure is more attractive, thereby highlighting the importance of incorporating customer‐bounded rationality in congested settings.
Link: http://dx.doi.org/10.1111/poms.12850 [Google]
Li, B. and S. Kumar (2018): Should You Kill or Embrace Your Competitor: Cloud Service and Competition Strategy, Production & Operations Management, 27(5), pp.822-838
Cloud services have grown rapidly in recent years as a new form of service, but there exists scant research on the competition and service offering strategies of cloud service providers. We study these strategic choices by considering a setting where an incumbent cloud service provider may offer two service classes (premium and standard) and an entrant provider may offer the standard service. We analyze two competitive strategies the incumbent provider: (a) deterring competitor entry, and (b) not deterring competitor entry. We also evaluate two service offering strategies of the incumbent provider: (a) offering both the premium and the standard service, and (b) offering the premium service only. Based on the results of our model, we present several useful managerial insights. First of all, we find that, under monopoly setting, it may sometimes be beneficial for the service provider to encourage higher usage despite the extra cost. Further, in the duopoly setting, higher customer usage impacts the Deter/Allow strategy choice and is neither always beneficial nor always detrimental to the incumbent provider, and such impact depends on profit margin and customer usage distribution. We also find that a larger market encourages the incumbent provider to add the standard service and switch between Allow and Deter strategies, since a larger market size may reduce the profit of an incumbent provider sticking to the Deter strategy. On the capacity side, we discover that the incumbent provider should strive to deter entry threats when it is at a cost advantage in a small market.
Link: http://dx.doi.org/10.1111/poms.12843 [Google]
Oh, J. and X. Su (2018): Reservation Policies in Queues: Advance Deposits, Spot Prices, and Capacity Allocation, Production & Operations Management, 27(4), pp.680-695
At firms such as restaurants, customers either make reservations in advance or join queues on the spot. Reservation holders may not show up, and walk‐ins have to wait. Using a game‐theoretic model between the firm and customers, this paper studies the following: (i) reservation deposits and service prices, and (ii) capacity allocation between reservations and walk‐ins. We have three main results: (i) When reservation no‐shows lead to wasted capacity that cannot be reallocated, the firm should front‐load all charges into the reservation deposit; (ii) The firm should charge a lower service price to reservation‐holders than to walk‐in customers when it decides to serve both; (iii) Less capacity should be allocated for reservations as the potential market size grows; with sufficiently large potential demand, the firm should stop taking reservations. Our results follow from key operational tradeoffs between reservations and queues: reservations permit 100% utilization, but queues operate at less than 100%; however, reservations have constant returns to scale, while queues enjoy increasing returns.
Link: http://dx.doi.org/10.1111/poms.12821 [Google]
Kim, H. S., J. Y. Lee, S. La and B. Choi (2018): Conceptualization and model development of customer‐to‐customer encounter quality (CCEQ) in service settings, Psychology & Marketing, 35(6), pp.463-476
Abstract: Despite interests from many researchers, the conceptualization and measurement of customer‐to‐customer encounter quality (CCEQ) have mostly remained untapped. The present study aims to develop a conceptual framework to manage the impact of other customers on the focal customers’ service experience based on the perceived service quality framework. In Study 1, the authors employed critical incident technique to establish a multilayered factor structure of CCEQ consisted of three primary categories: customer‐to‐customer hedonic quality, customer‐to‐customer utilitarian quality, and customer‐to‐customer normative quality. In Study 2, the authors examined reliability and validity of the CCEQ model by using comprehensive confirmatory factor analyses and structural equation modeling. The results support the conceptualization of CCEQ proposed in Study 1. As an initial work as to the conceptualization and measurement of CCEQ model, this study provides theoretical and managerial insights into other customers’ influence on focal customers’ overall evaluation of service experiences.
Link: http://dx.doi.org/10.1002/mar.21099 [Google]
Ndubisi, N. O. and R. Nataraajan (2018): Customer satisfaction, Confucian dynamism, and long‐term oriented marketing relationship: A threefold empirical analysis, Psychology & Marketing, 35(6), pp.477-487
Abstract: Firms and their customers enter into a relationship for mutual satisfaction. However, there is much more to learn about long‐term oriented marketing relationship dynamics in Asia that lead to customer satisfaction. The goal of this study is to examine the direct and indirect effects of relational dynamics on customer satisfaction in the Asian context. Specifically, the study proposes that long‐term oriented relationship variables such as fairness, empathy, and trust have significant direct impact on customer satisfaction, and indirectly through overall relationship quality. Three studies were conducted in three service sectors viz. banking, healthcare, and hospitality with data collected from two regions of Malaysia, the Peninsular region and the Borneo region. A total of 1945 usable responses were received across the three sectors and analyzed: banking (653), healthcare (666), and hospitality (626). The model was compared among the three sectors. The results show that long‐term oriented marketing relationship variables predict a significant amount of variance in customer satisfaction across the three service sectors. However, the predictive powers differ from industry to industry, wherein 72% unique variance was predicted in the banking sector, 66% in healthcare, and 68% in hospitality. Relationship quality fully mediates some of the relationships in some sectors and partially mediates in others. Since Malaysia is dubbed a potpourri of Asian cultures, there is a potential for generalizability of the research findings across other Asian contexts. Theoretical, contextual, and managerial implications of the findings are discussed.
Link: http://dx.doi.org/10.1002/mar.21100 [Google]
Cowart, K. O. and K. D. Lehnert (2018): Empirical evidence of the effect of colorism on customer evaluations, Psychology & Marketing, 35(5), pp.357-367
Abstract: Skin tone is a known influencer of earnings and social status. Its role in marketing has been primarily studied within the context of advertising while focusing on differences between Whites and Blacks. Three experiments were conducted to determine the effect of skin tone on customer evaluations of Black, Hispanic, and White males and females across two industries. In Studies 1 and 2, the Hispanic male was deemed less competent, professional, and worthy of repatronage compared to other service providers. In Study 3, the Hispanic male received higher evaluations when portrayed with a darker skin tone than lighter skin tone. Skin tone identity, ethnic identity, and colorism are found to influence the observed relationship. The research demonstrates that ethnicity matters, gender matters, and skin tone matters when evaluating service providers.
Link: http://dx.doi.org/10.1002/mar.21091 [Google]
Gong, T. and Y. Yi (2018): The effect of service quality on customer satisfaction, loyalty, and happiness in five Asian countries, Psychology & Marketing, 35(6), pp.427-442
Abstract: This research investigates and validates the cross‐national applicability of a service quality model in five Asian countries: China, Hong Kong, Japan, South Korea, and Singapore. The objectives of this research are to establish whether or not a service quality model can be conceptualized in the same way across Asian countries and to explore whether or not scores on the items can be meaningfully compared among the Asian countries. The findings show that overall service quality has a positive influence on customer satisfaction, which in turn leads to customer loyalty and customer happiness and that the general pattern of structural paths is valid in the five countries. Furthermore, the comparisons of paths show that most of them are not significantly different across the five countries. The results of this study reveal four key findings. First, customer well‐being or happiness was driven by service quality. Second, customer loyalty was driven by service quality across the five Asian countries, demonstrating that the economic values of service quality could be applied to Asian countries just as they are in North American and European countries. Third, customer satisfaction was driven by service quality. Fourth, customer income increased the effect of service quality on customer happiness via customer satisfaction in China, Hong Kong, and South Korea.
Link: http://dx.doi.org/10.1002/mar.21096 [Google]
