skip to primary navigationskip to content

Cambridge Service Alliance

At the forefront of service transformation in the digital era

Studying at Cambridge

 

Industry Conditions and Product Firms’ Choice to Offer Services

last modified Oct 22, 2015 12:32 PM
The October 2015 paper on 'How Do Industry Evolution and Industry Conditions Prompt Product Firms to Offer Services?' by Ivanka Visnjic, Sam Arts & Dimo Ringov.
Industry Conditions and Product Firms’ Choice to Offer Services

October 2015 Paper

[Download Paper]

Product companies are increasingly offering different types of services. Companies choose this strategy, often called servitization, when they face several challenges in their ‘native’ product industry. We study under which industry conditions product companies offer services and why. Moreover, we distinguishing between services that are performed on products (product-oriented services) and services that go beyond the products to provide more broadly based support for customer needs (customer-oriented services). Statistical tests performed on the sample of 410 public companies from 1990 to 2011 demonstrate that companies are more likely to offer product-oriented services in the early stage of the industry life cycle and/or when their industries are highly R&D intense and competitive. Conversely, product companies tend to offer customer-oriented services in the mature stage of the industry life cycle and/or in highly cyclical industries. We argue that companies are more likely to opt for product-oriented, as opposed to customer-oriented services in young, R&D intense and competitive industries because they focus on deepening the product knowledge through offering those services. For example, offering maintenance and monitoring helps learn about the product functioning and use, enabling companies to improve their product and become more competitive in an attractive product industry. On the other hand, we believe that product companies are more likely to offer customer-oriented services, as opposed to product-oriented services, in mature and turbulent industries because they intend to broaden their knowledge base beyond products and discover other market opportunities that are unrelated to their increasingly unattractive product industry. For example, offering consulting services helps understand better customers’ business model and other unsatisfied needs they may have.

RSS Feed Latest news

2020 Annual Review

Oct 23, 2020

Read about our latest research in our tenth anniversary Annual Review.

Managing customer experience through a systematic approach to data analytics

Jul 24, 2020

We all know what a positive – or negative – customer experience feels like: a rush of pleasure or teeth-grinding frustration. Firms are acutely aware of the importance of how we feel – and how that translates into long-term loyalty – but feelings are a difficult and complicated thing to measure at scale.

Blog | Has COVID-19 Invented the 10X Supply Chain?

Jul 06, 2020

Surendra Kancherla, Principal Architect - Digital Technologies, at CSA partner, HCL, says that COVID-19 is forcing firms to look afresh at their supply chain capabilities.

Insight | Business model innovation for digital twins in the construction sector

May 19, 2020

At the Cambridge Service Alliance's most recent Community of Interest, Dr Erika Pärn considered the development of digital twins in the construction sector: the challenges it faces and whether android operating systems could provide a useful roadmap for business model innovation.

Generate revenue from digital platforms

May 12, 2020

According to Shep Hyken: "Customers are smarter than ever because they're experiencing great service from certain brands, and those rock-star brands are setting the bar higher for everyone else." In this white paper we explore the 'customer experience paradox' and how firms can use digital platforms to overcome it.

View all news