Offering Development in the Restaurant Sector. A Comparison Between Customer Perceptions and Management Beliefs

The present study concentrates on a small – but important – area of marketing: offering development within the service sector, more exactly the restaurant sector. The empirical part of the study has been carried out in the Helsinki metropolitan area using six successful restaurants. First, a conceptual offering development model is developed based on how the management perceives the offering development processes. Second, customer perceptions of offerings and management beliefs about how the customers perceive the offerings are analysed. Finally, an extended offering development model is created based on the management perceptions (the first model) as well as on observed gaps between customer perceptions of offerings and management beliefs about the customer perceptions. The study reveals that customer perceptions and management beliefs are rather similar but also that some differences exist. These differences are taken into account in the extended offering development model (the second model). The empirical data was collected through interviews and surveys. All together 393 customers and 14 managers participated in the study. The study suggests that successful offering development has to be closely connected with the general strategy of the company. A shared vision within the company in combination with a systematic strategic offering development process create a sound basis for the practical development work. The main contribution of the study is the extended offering development model forming a framework for further studies within the area.

Adaptation in triadic business relationship settings: A study in corporate travel management

ANNE HOLMA ADAPTATION IN TRIADIC BUSINESS RELATIONSHIP SETTINGS – A STUDY IN CORPORATE TRAVEL MANAGEMENT Business-to-business relationships form complicated networks that function in an increasingly dynamic business environment. This study addresses the complexity of business relationships, both when it comes to the core phenomenon under investigation, adaptation, and the structural context of the research, a triadic relationship setting. In business research, adaptation is generally regarded as a dyadic phenomenon, even though it is well recognised that dyads do not exist isolated from the wider network. The triadic approach to business relationships is especially relevant in cases where an intermediary is involved, and where all three actors are directly connected with each other. However, only a few business studies apply the triadic approach. In this study, the three dyadic relationships in triadic relationship settings are investigated in the context of the other two dyads to which each is connected. The focus is on the triads as such, and on the connections between its actors. Theoretically, the study takes its stand in relationship marketing. The study integrates theories and concepts from two approaches, the industrial network approach by the Industrial marketing and purchasing group, and the Service marketing and management approach by the Nordic School. Sociological theories are used to understand the triadic relationship setting. The empirical context of the study is corporate travel management. The study is a retrospective case study, where the data is collected by in-depth interviews with key informants from an industrial enterprise and its travel agency and service supplier partners. The main theoretical contribution of the study concerns opening a new research area in relationship marketing by investigating adaptation in business relationships with a new perspective, and in a new context. This study provides a comprehensive framework to analyse adaptation in triadic business relationship settings. The analysis framework was created with the help of a systematic combining approach, which is based on abductive logic and continuous iteration between the theory and the case study results. The framework describes how adaptations initiate, and how they progress. The framework also takes into account how adaptations spread in triadic relationship settings, i.e. how adaptations attain all three actors of the triad. Furthermore, the framework helps to investigate the outcomes of the adaptations for individual firms, for dyadic relationships, and for the triads. The study also provides concepts and classification that can be used when evaluating adaptation and relationship development in both dyadic and triadic relationships.

Perceived Value of Mobile Service Use and its Consequences

The thesis is positioned in the services marketing field. Previous mobile service research has identified perceived value or relative advantage as a stable predictor of use of services. However, a more detailed view of what customers value in mobile services is needed for marketing diverse types of mobile content and attracting committed customers. The direct relationships between multidimensional value and loyalty constructs have received limited attention in the previous literature, although a multidimensional view is needed for differentiating services. This thesis studies how perceived value of mobile service use affects customer commitment, repurchase intentions, word-of-mouth and willingness to pay. The doctoral thesis consists of three journal articles and one working paper. The four papers have different sub-aims and comprise individual empirical studies. Mixed methods including both personal interviews and survey data collected from end-users of different types of mobile content services are used. The conceptual mobile perceived value model that results from the first explorative empirical study supports a six- dimensional value view. The six dimensions are further categorized into two higher order constructs: content-related perceived value (emotional, social, convenience and monetary value) and context-related (epistemic and conditional value) perceived value. Structural equation modeling is used in the other three studies to validate this framework by analyzing the relationships between context- and content-related value, and how the individual perceived value dimensions affect commitment and behavioral outcomes. Analyzing the direct relationships revealed differences in the effect of perceived value dimensions between information and entertainment mobile service user groups, between effects on commitment, repurchase intentions and word-of-mouth intentions, as well as between effects on commitment to the provider and to the mobile channel as such. This thesis contributes to earlier perceived value literature by structuring the value dimensions into two groups. Most importantly, the thesis contributes to the value and loyalty literature by increasing understanding of how the different dimensions of perceived value directly affect commitment and post-purchase intentions. The results have implications for further theory development in the electronic services field using multidimensional latent constructs, and practical implications for enhancing commitment to content provider and for differentiated marketing strategies in the mobile field. The general conclusion of this thesis is that differentiated value-based marketing of mobile services is essential for attracting committed customers who will use the same providers’ content also in the future. Minna Pihlström is associated with the Centre for Relationship Marketing and Service Management (CERS) at Hanken.

Sensemaking in the Third Space - Essays on French-Finnish Bicultural Experiences in Organizations and Their Narratives (summary section only)

Research on cross-cultural and intercultural aspects in organizations has been traditionally conducted from an objectivist, functionalist perspective, with culture treated as an independent variable, and often the key explanatory factor. In order to do justice to the ontological relativity of the phenomena studied, more subjectivist research on intercultural interactions, and especially on their relationships with the dynamics of cultural identity construction, is needed. The present research seeks to address this gap by focusing on bicultural interactions in organizations, as they are experienced by the involved individuals. It is argued that such bicultural situations see the emergence of a space of hybridity, which is here called a ‘third space’, and which can be understood as providing ‘occasions for sensemaking’: it is this individual sensemaking that is of particular interest in the empirical narrative study. A first overall aim of the study is to reach an understanding of the dynamics of bicultural interactions in organizations; an understanding not only of the potential for learning and emancipatory sensemaking, but also of the possibility of conflict and alienatory ordering (this is mainly addressed in the theoretical essays 1 and 2). Further, a second overall aim of the study is to analyze the reflexive identity construction of four young French expatriates involved in such bicultural interactions in organizations in Finland, in order to examine the extent to which their expatriation experiences have allowed for an emancipatory opportunity in their cases (in essays 3 and 4). The primary theoretical contribution in this study lies in its new articulation of the dynamics of bicultural interactions in organizations. The ways in which the empirical material is analyzed bring about methodological contributions: since the expatriates’ accounts are bound to be some kind of construction, the analysis is made from angles that point to how the self-narratives construct reality. There are two such angles here: a ‘performative’ one and a ‘spatial’ one. The most important empirical contributions lie in the analysis of, on the one hand, the alternative uses that the young expatriates made of the notion of ‘national culture’ in their self-narratives, and, on the other hand, their ‘narrative practices of the third space’: their politics of escape or stabilization, their exploration of space or search for place, their emancipation from their origin or return to home as only horizon.

Key Account Management and Quality in Business-to-Business Relationships

What are the main elements of successful Key Account Management (KAM)? What is the nature of quality for the company and for the individual in business-to-business relationships? What kind of managerial practices are required at the company and individual level in Key Account Management? This paper focuses on these central aspects of KAM. It describes the main elements of KAM, which is a systematic marketing management approach in the business-to-business context with the objective to build profitable and long-lasting relationships with major accounts. Although paying customers in the business-to-business market are organizations, they are always represented by individuals. Thus, successful KAM requires appropriate handling of both the organizational and the individual levels. This paper describes the nature of quality for the company and for the individual in business-to-business relationships. As a synthesis, this paper suggests a framework for KAM practices deploying the main elements of KAM and the company and individual levels of business-to-business relationships. The weakness of the traditional quality management approach is that it pays little, if any, attention to customer importance. By providing similar quality to each customer, more important customers are penalized and less important customers are rewarded. This paper broadens the traditional quality management approach by introducing the concept of targeted quality based on customer importance.

Service Productivity: Toward a Conceptualisation of the Transformation of inputs

The productivity of a process is related to how effectively input resources are transformed into value for customers. For the needs of manufacturers of physical products there are widely used productivity concepts and measurements instruments. However, in service processes the underlying assumptions of these concepts and models do not hold. For example, manufacturing-based productivity models assume that an altered configuration of input resources in the production process does not lead to quality changes in outputs (the constant-quality assumption). However, in a service context changes in the production resources and productions systems do affect the perceived quality of services. Therefore, using manufacturing-oriented productivity models in service contexts are likely to give managers wrong directions for action. Research into the productivity of services is still scarce, because of the lack of viable models. The purpose of the present article is to analyse the requirements for the development of a productivity concept for service operations. Based on the analysis, a service productivity model is developed. According to this model, service productivity is a function of 1) how effectively input resources into the service (production) process are transformed to outputs in the form of services (internal or cost efficiency), 2) how well the quality of the service process and its outcome is perceived (external or revenue efficiency), and 3) how effectively the capacity of the service process is utilised (capacity efficiency). In addition, directions for developing measurement models for service productivity are discussed.

Rethinking Service Companies’ Business Logic: Do We Need a Customer-Dominant Logic as a Guideline?

Purpose –This paper explores and expands the roles of customers and companies in creating value by introducing a new a customer-based approach to service. The customer’s logic is examined as being the foundation of a customer-based marketing and business logic. Design/methodology/approach – The authors argue that both goods-dominant logics and service-dominant logics are provider-dominant. Contrasting the customer-dominant logic with provider-dominant logics, the paper examines the creation of service value from the perspectives of value-in-use, the customer’s own context, and the customer’s experience of service. Findings –Moving from a provider-dominant logic to a customer-dominant logic uncovered five major challenges to service marketers: Company involvement, company control in co-creation, visibility of value creation, locus of customer experience, and character of customer experience. Research limitations/implications – The paper is exploratory. It presents and discusses a conceptual model and suggests implications for research and practice. Practical implications –Awareness of the mechanisms of customer logic will provide businesses with new perspectives on the role of the company in their customer’s lives. We propose that understanding the customer’s logic should represent the starting-point for the marketer’s business logic. Originality/value – The paper increases the understanding of how the customer’s logic underpins the customer-dominant business logic. By exploring consequences of applying a customer-dominant logic, we suggest further directions for theoretical and empirical research.

Marketing and the Logic of Service: Value Facilitation, Value Creation and Co-creation, and Their Marketing Implications

The discussion of a service-dominant logic has made the findings of decades of service marketing research a topic of interest for marketing at large. Some fundamental aspects of the logic such as value creation and its marketing implications are more complex than they have been treated as so far and need to be further developed to serve marketing theory and practice well. Following the analysis in the present article it is argued that although customers are co-producers in service processes, according to the value-in-use notion adopted in the contemporary marketing and management literature they are fundamentally the creators of value for themselves. Furthermore, it is concluded that although by providing goods and services as input resources into customers’ consumption and value-generating processes firms are fundamentally value facilitators, interactions with customers that exist or can be created enable firms to engage themselves with their customers’ processes and thereby they become co-creators of value with their customers. As marketing implications it is observed that 1) the goal of marketing is to support customers’ value creation, 2) following a service logic and due to the existence of interactions where the firm’s and the customer’s processes merge into an integrated joint value creation process, the firm is not restricted to making value propositions only, but can directly and actively influence the customer’s value fulfilment as well and extend its marketing process to include activities during customer-firm interactions, and 3) although all goods and services are consumed as service, customers’ purchasing decisions can be expected to be dependant of whether they have the skills and interest to use a resource, such as a good, as service or want to buy extended market offerings including process-related elements. Finally, the analysis concludes with five service logic theses.

Inventory Routing - A Strategic Management Accounting Perspective

This dissertation develops a strategic management accounting perspective of inventory routing. The thesis studies the drivers of cost efficiency gains by identifying the role of the underlying cost structure, demand, information sharing, forecasting accuracy, service levels, vehicle fleet, planning horizon and other strategic factors as well as the interaction effects among these factors with respect to performance outcomes. The task is to enhance the knowledge of the strategic situations that favor the implementation of inventory routing systems, understanding cause-and-effect relationships, linkages and gaining a holistic view of the value proposition of inventory routing. The thesis applies an exploratory case study design, which is based on normative quantitative empirical research using optimization, simulation and factor analysis. Data and results are drawn from a real world application to cash supply chains. The first research paper shows that performance gains require a common cost component and cannot be explained by simple linear or affine cost structures. Inventory management and distribution decisions become separable in the absence of a set-dependent cost structure, and neither economies of scope nor coordination problems are present in this case. The second research paper analyzes whether information sharing improves the overall forecasting accuracy. Analysis suggests that the potential for information sharing is limited to coordination of replenishments and that central information do not yield more accurate forecasts based on joint forecasting. The third research paper develops a novel formulation of the stochastic inventory routing model that accounts for minimal service levels and forecasting accuracy. The developed model allows studying the interaction of minimal service levels and forecasting accuracy with the underlying cost structure in inventory routing. Interestingly, results show that the factors minimal service level and forecasting accuracy are not statistically significant, and subsequently not relevant for the strategic decision problem to introduce inventory routing, or in other words, to effectively internalize inventory management and distribution decisions at the supplier. Consequently the main contribution of this thesis is the result that cost benefits of inventory routing are derived from the joint decision model that accounts for the underlying set-dependent cost structure rather than the level of information sharing. This result suggests that the value of information sharing of demand and inventory data is likely to be overstated in prior literature. In other words, cost benefits of inventory routing are primarily determined by the cost structure (i.e. level of fixed costs and transportation costs) rather than the level of information sharing, joint forecasting, forecasting accuracy or service levels.

Profitable Customer Management: A Study in Retail Banking

The increasing focus of relationship marketing and customer relationship management (CRM) studies on issues of customer profitability has led to the emergence of an area of research on profitable customer management. Nevertheless, there is a notable lack of empirical research examining the current practices of firms specifically with regard to the profitable management of customer relationships according to the approaches suggested in theory. This thesis fills this research gap by exploring profitable customer management in the retail banking sector. Several topics are covered, including marketing metrics and accountability; challenges in the implementation of profitable customer management approaches in practice; analytic versus heuristic (‘rule of thumb’) decision making; and the modification of costly customer behavior in order to increase customer profitability, customer lifetime value (CLV), and customer equity, i.e. the financial value of the customer base. The thesis critically reviews the concept of customer equity and proposes a Customer Equity Scorecard, providing a starting point for a constructive dialog between marketing and finance concerning the development of appropriate metrics to measure marketing outcomes. Since customer management and measurement issues go hand in hand, profitable customer management is contingent on both marketing management skills and financial measurement skills. A clear gap between marketing theory and practice regarding profitable customer management is also identified. The findings show that key customer management aspects that have been proposed within the literature on profitable customer management for many years, are not being actively applied by the banks included in the research. Instead, several areas of customer management decision making are found to be influenced by heuristics. This dilemma for marketing accountability is addressed by emphasizing that CLV and customer equity, which are aggregate metrics, only provide certain indications regarding the relative value of customers and the approximate value of the customer base (or groups of customers), respectively. The value created by marketing manifests itself in the effect of marketing actions on customer perceptions, behavior, and ultimately the components of CLV, namely revenues, costs, risk, and retention, as well as additional components of customer equity, such as customer acquisition. The thesis also points out that although costs are a crucial component of CLV, they have largely been neglected in prior CRM research. Cost-cutting has often been viewed negatively in customer-focused marketing literature on service quality and customer profitability, but the case studies in this thesis demonstrate that reduced costs do not necessarily have to lead to lower service quality, customer retention, and customer-related revenues. Consequently, this thesis provides an expanded foundation upon which marketers can stake their claim for accountability. By focusing on the range of drivers and all of the components of CLV and customer equity, marketing has the potential to provide specific evidence concerning how various activities have affected the drivers and components of CLV within different groups of customers, and the implications for customer equity on a customer base level.