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Theme: Theory & Practice<br />
CREATING CUSTOMER VALUE IN THE<br />
CONTEXT OF SERVICE BUNDLES<br />
Work In Progress<br />
Zins, Andreas H.<br />
Associate Professor at the Institute for Tourism and Leisure Studies,<br />
University of Economics and Business Administration, Vienna - Austria<br />
Address for all correspondence:<br />
Andreas H. Zins<br />
Institute for Tourism and Leisure Studies<br />
University of Economics and Business Administration<br />
Augasse 2-6, A-1090 Vienna, Austria<br />
Phone: +43-1-31336-4999<br />
Fax:: +43-1-3171205<br />
Email: andreas.zins@wu-wien.ac.at<br />
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CREATING CUSTOMER VALUE IN THE<br />
CONTEXT OF SERVICE BUNDLES<br />
ABSTRACT<br />
Work In Progress<br />
Following Holbrook’s axiological typology of customer value service quality is<br />
supposed to contribute to the formation of customer value. Yet, to better<br />
understand the antecedents of customer satisfaction and customer loyalty it is<br />
claimed to make major refinements of traditional and classical consumer<br />
behaviour models. A revised preference model for complex services is proposed<br />
and illustrated by the example of a holiday trip. Revisions and adaptations are<br />
suggested in order to integrate already known but so far disconnected issues. The<br />
marketing and research perspective has to turn its focus from attribute or benefit<br />
bundles to the consumption experience. This issue emphasises the means-end<br />
relationship inherent in any consumption activity. Buying and consumption<br />
processes are always accompanied by trade-off evaluations between benefits<br />
sought and disadvantages avoided. Neither service quality models nor perceived<br />
risk models capture this aspect adequately. Finally, it is argued that the product<br />
conceptualisation is to be extended by situational factors and the customer<br />
participation which both are constitutional elements in the process of service<br />
production/consumption.<br />
Keywords: service bundles, customer participation, service quality, customer<br />
value, tourism products.<br />
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INTRODUCTION<br />
Whether services are rendered in the presence or the absence of an object or<br />
subject, they offer a bundle of benefits to the customer like products do (Enis and<br />
Roering 1981; Lovelock 1981). The distinction between goods and services has<br />
been discussed for decades (Judd 1968; Blois 1974; Bateson 1977; Shostack<br />
1979), though the key criteria intangibility, inseparability, and variability (Kotler<br />
1980) have not entered the grand consumer behaviour models (e.g. Howard and<br />
Sheth 1969; Engel, Kollat and Miniard 1993) appropriately. Hence, it is claimed<br />
that consumer behaviour models focusing on the evaluation of alternatives and on<br />
post-choice evaluation have to be adapted whenever service components do not<br />
play but a negligible role. This will be illustrated by an example of the tourism<br />
industry where often bundles of tangible and intangible products are marketed and<br />
consumed simultaneously. Holiday or business trips similar to e.g. car<br />
maintenance services, financial services or dental services represent service<br />
bundles which vary in their degree of complexity. Various dimensions of product<br />
complexity can be differentiated (Güthoff 1995) and are influential in pre- and<br />
post-choice evaluation processes.<br />
The holiday preference (and satisfaction) model proposed in this paper tries to<br />
integrate three issues that have been considered separately in the literature so far.<br />
1. Products and services “potentially provide value-creating consumption<br />
experiences.” (Holbrook 1994, p. 21). Quality concepts based on expected and<br />
delivered attribute levels are only one dimension of the value realm. This<br />
perspective is supported by the means-end chain theory (Gutman 1982). 2. The<br />
buying and consumption decisions are always trade-offs between benefits and<br />
disadvantages (Gutman and Reynolds 1983, p. 40). This claim is based on the<br />
underlying exchange process between two agents who both, give up something of<br />
value for obtaining something else of value (Kotler 1991). 3. The social and<br />
physical context of this exchange process shall be incorporated in the<br />
conceptualisation of products and services (Berry 1981; Lovelock 1981; Grove<br />
and Fisk 1983). According to the experiential nature of services it is important to<br />
marketing managers how customer participation (Kellogg et al. 1997; Bitner et al.<br />
1997) and atmospherics (Kotler 1973; Bitner 1992) impact customer satisfaction.<br />
These issues will be discussed in more detail before illustrating the proposed<br />
model.<br />
COMPLEX SERVICES AND CUSTOMER ROLES<br />
Tourism products are predominantly complex product (and service) bundles.<br />
Customers are forced sometimes to choose among a limited number of entirely<br />
pre-packaged tourism products and are sometimes completely free to make<br />
individual arrangements. In some instances they will decide upon product details<br />
far in advance, in other situations they postpone the final decision making until<br />
the immediate consumption. In general, various aspects of the degree and<br />
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structure of complexity have been outlined (Güthoff 1995). The effects of<br />
complexity on service quality and customer satisfaction have been investigated<br />
only selectively: e.g. number of bundle elements (Danahar and Mattsson 1998)<br />
and duration of services (Czepiel et al. 1985, Danahar and Mattsson 1994, 1998;<br />
Geva und Goldman 1989) whereas criteria such as “multiple individuals<br />
involved”, “heterogeneity of bundle elements”, and “degree of individuality of the<br />
product” are still open for research.<br />
For marketing purposes it is essential to know what elements in a product and<br />
service bundle play a key role in the customer’s decision-making process.<br />
Bundling strategies in a competitive environment – first systematically outlined<br />
by Guiltinan (1987) – have their focus on product development and finding<br />
optimal prices. Similar problems in the tourism and hospitality context have been<br />
discussed by Kinberg and Sudit (1979), Green and Wind (1984), Sheldon and<br />
Mak (1987), and Bojanic and Calantone (1990). Nevertheless, their research<br />
approach is limited predominantly to the financial evaluation of quite a few<br />
product attributes and does not incorporate the instrumental role of those<br />
attributes in creating value and satisfaction to the customer.<br />
Therefore, it is essential to identify the various roles customers may play in the<br />
production process. Bitner et al. (1997) distinguish between three different roles:<br />
the customer as productive resource, the customer as contributor to quality,<br />
satisfaction and value, and the customer as competitor to the service organisation.<br />
According to these roles, different abstract levels of customer participation may<br />
occur: low level: only customer presence required (e.g. airline travel, fast-food<br />
restaurant), moderate level: customer inputs required (e.g. hair cut, advertising<br />
campaign), high level: customer co-creates service products (e.g. weightreduction<br />
programme, management seminar). Related issues have been raised<br />
addressing organisational socialisation by Bowen and Schneider (1985), Kelley et<br />
al. (1992), Lusch, Brown and Brunswick (1992) or the intrinsic attraction of selfservice<br />
by Bateson (1983, 1985) and Dabholkar (1996) or the relationship<br />
between satisfaction and failure attribution by Bitner (1990), Folkes (1988) and<br />
Hubbert (1995).<br />
If we take the experiential nature of services seriously (Lovelock 1979) we cannot<br />
separate the service’s personnel and environment from the consumer (Bateson<br />
1979). The situation in which the service consumption takes place involves<br />
several dimensions. Kotler (1973) addressed the physical setting by<br />
“atmospherics” including all perceptions of the five human senses. When Grove<br />
and Fisk (1983) discussed the dramaturgical perspective of service exchange<br />
processes both, the physical and social settings were integrated. Bagozzi (1975)<br />
emphasised the idea of symbolic exchange which is not limited to the core<br />
elements of products and services but extends to the physical environment as well<br />
as to the social interaction. Bitner (1992) proposed three dimensions of the socalled<br />
“servicescapes”: ambiente condition, spatial layout and functionality, and<br />
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signs and symbols which contribute to the achievement of organisational and<br />
marketing goals.<br />
The following Figure 1 shall illustrate and demonstrate that the specific situation<br />
and the consumer are constitutional elements of any service oriented industry.<br />
Figure 1: Extended product conceptualisation<br />
Supplier<br />
Retailer<br />
delivery, usage rights<br />
influence<br />
Product<br />
Service<br />
contribution - experience - evaluation<br />
Situation<br />
influence<br />
contribution - consumption<br />
experience - evaluation<br />
influence<br />
Consumer<br />
At the phase of evaluating product (travel) alternatives the potential traveller may<br />
consult previous experiences, recommendations and stories from others,<br />
catalogues, brochures, videos, media reports and other sources (Schmoll 1977,<br />
Mathieson and Wall 1982, Moutinho 1987, Goodall 1991). He/She has some –<br />
more or less- vague perceptions about the particular travel elements<br />
(transportation, accommodation, catering, guides, sporting and recreation<br />
facilities). Nevertheless, the customer, first, anticipates his/her contribution to the<br />
entire production process and the consumption situation and, later, influences the<br />
realisation. In contrast, the supplier/retailer sells implicitly not only the travel<br />
products and services but a situation as well: implicitly (e.g. climatic conditions)<br />
or explicitly (e.g. the atmosphere of a club resort). Consequently, evaluative<br />
processes – pre- or post-experience – on the part of the consumer are not restricted<br />
to the product and service attributes in a narrow sense.<br />
Adopting such an extended conceptualisation of products and services the<br />
question is raised to which degree traditional cognitivistic approaches (e.g. multiattribute<br />
attitude models) for modelling choice and post-choice evaluation seem to<br />
be appropriate and efficient. According to Güthoff (1995) the various service<br />
quality models (e.g. Grönroos 1984, Corsten 1986) proposed in the literature are<br />
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only apt to a limited degree to fully capture the complex service bundles.<br />
However, while these models strongly emphasise the characteristics of the<br />
services including process or interaction qualities, they neither consider explicitly<br />
the situational factors nor the customer contribution. Bitner (1992) shows in her<br />
servicescape framework theoretically that cognitive, emotional and physiological<br />
responses on the part of the customer and on the part of the employee are<br />
conceivable. These responses depend on environmental conditions (three<br />
dimensions of the servicescape) and are moderated by personal traits and<br />
situational factors. Though crowding phenomena are explicitly addressed within<br />
the spatial layout dimension, psycho-social influences deriving from foreign<br />
situations (e.g. different language, different habits and customs, multiple cultures<br />
represented by other consumers and/or employees) do not appear in her<br />
framework.<br />
QUALITY AND VALUE CONCEPTS RECONSIDERED<br />
Reviews of the abundant customer satisfaction literature (e.g. Yi 1991, Anderson<br />
and Fornell 1994) show some evidence that the central – and in numerous cases<br />
unique – source of customer satisfaction is quality. However, there is no product<br />
or service that is valuable by itself but through the value creation with a consumer<br />
(interactionist view). This valuation emerges on different dimensions<br />
(intrinsic/extrinsic, active/reactive, and self-oriented/other oriented) and was<br />
defined as an interactive relativistic preference experience (see Holbrook 1994).<br />
Quality or excellence appears in Holbrook’s value typology as an extrinsic,<br />
reactive and self-oriented value dimension. The quality concepts formulated by<br />
Zeithaml (1988) and Steenkamp (1989) fit into this terminology emphasising the<br />
instrumentality and achievement of usage goals. Yet, the operationalisation of the<br />
quality constructs has shifted either to the higher level abstraction of the service<br />
encounter (e.g. SERVQUAL) or to simple multi-attribute models on the product<br />
level. Both approaches are related but opposed to the attitude model developed by<br />
Ajzen and Fishbein (1977) or the expectancy-value model (Vroom 1964, Witt and<br />
Wright 1992) as they do not make explicit the relationships between product<br />
characteristics and more abstract consumer goals (Gutman 1982, Woodruff and<br />
Gardial 1996).<br />
According to the degree of customer participation and integration in the<br />
production process (Engelhardt et al. 1993) and the interaction with situational<br />
components the consumer perceives the utility or disutility of the entire service<br />
experience or elements thereof. Preference building, decision making as well as<br />
post-experience evaluation can always be expressed by approach and avoidance<br />
criteria. This is consistent with the trade-off perspective between benefits and<br />
disadvantages (Gutman and Reynolds 1983) and the exchange process paradigm<br />
of production and consumption activities (Kotler 1991).<br />
2889
Perceived risk models predominantly take care about the negative outcome or<br />
consequences of the buying decision or consumption process. In addition to<br />
functional and product risks other criteria such as political, weather, or crowding<br />
( situation) and physical, time, or financial risks ( person/customer) have<br />
been considered in various models (e.g. Kaplan et al. 1974; Mitchell and Boustani<br />
1994; Roehl and Fesenmaier 1992; Stone and Gronhaug 1993; Chaudhuri 1998).<br />
Addressing some of the constitutional domains of the service experience (cf.<br />
Figure 1: product, situation, consumer) the risk approach decides a priori to<br />
concentrate on the negative aspects of the exchange process. Without taking the<br />
benefit side into account different weights for the various instrumentalities of the<br />
service experience cannot be derived.<br />
Hence, two methodological differences exist between quality models of any shape<br />
and perceived risk models: 1. While the former emphasises on the positive aspects<br />
related to the consumption experience the latter focuses on the negative<br />
consequences. 2. The two approaches have different cognitive levels. While<br />
quality models operate either on the attribute level or on intermediate<br />
consumption goals (expected, perceived), risk models concentrate on the negative<br />
instrumentalities of attributes. The integration of both perspectives could give<br />
much more insight into the structure of preference building and satisfaction<br />
generation than separate approaches.<br />
This claim can be consistently embedded in the value framework outlined by<br />
Woodruff (1997, p. 142): “Customer value is a customer's perceived preference<br />
for and evaluation of those product attributes, attribute performances, and<br />
consequences arising from use that facilitate (or block) achieving the customer's<br />
goals and purposes in use situations. …it links together products with use<br />
situations and related consequences experienced by goal-oriented customers. This<br />
definition is anchored in a conceptual framework provided by a means-end type of<br />
model.”<br />
This value framework follows a hierarchical value concept (Rokeach 1973; Kahle<br />
1984; Grunert 1990; Patterson and Spreng 1997) and puts “give” and “get”<br />
components together. “Give” components are – in this extended product<br />
conceptualisation – not limited to the customer’s financial contributions but<br />
include any sacrifice (physical, psychological, time) necessary to achieve the<br />
intended consumption experience.<br />
SYNTHESIS AND IMPLICATIONS<br />
A re-designed framework for measuring and creating customer value for complex<br />
tourism bundles is outlined in Figure 2. It is labelled holiday preference model<br />
though it is not limited to this kind of product classes and could be generalised to<br />
a service preference model. It is based on the following principles discussed in the<br />
previous sections:<br />
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1. Extended product conceptualisation: the “delivered” products (and services),<br />
the consumption situation and the consumer, altogether, give gestalt to the<br />
travel experience.<br />
2. Consumers may express their desired level of the attributes or characteristics<br />
of all three domains associated with the relevant alternatives (Spreng,<br />
MacKenzie and Olshavsky 1996). The product domains may have positive or<br />
negative instrumentalities: benefits sought or inconveniences avoided.<br />
3. These evaluative criteria (benefits, disadvantages) are applicable to a<br />
particular product class (e.g. holiday trips) within which product alternatives<br />
can be evaluated.<br />
4. These criteria are dependent from more abstract cognitive levels such as<br />
personal values, motives and the static-dynamic orientation (Wicklund 1986;<br />
Gnoth et al. 1998).<br />
5. Give and get components, both, contribute to a perceived overall value that<br />
differentiates according to the source of contribution (product, situation,<br />
customer) and the product alternative (Woodruff 1997).<br />
6. Combined together, these three value components yield a preference for a<br />
particular alternative. In general, the product with the highest preference<br />
ranking will be chosen. Of course, unforeseen obstacles, personal (time<br />
restrictions, sickness) or supply side factors (unavailability) may bias the link<br />
between preference order and buying act.<br />
Figure 1: Holiday Preference Model<br />
Values<br />
Motives<br />
Static/<br />
dynamic<br />
orientation<br />
Inconveniences<br />
avoided<br />
Benefits<br />
sought<br />
Instrumentality<br />
Product<br />
attributes<br />
Situation<br />
attributes<br />
Consumer<br />
attributes<br />
strength of belief<br />
expectations<br />
Product<br />
value<br />
Situation<br />
value<br />
Consumer<br />
value<br />
Preferences<br />
2891
Several steps of the elaboration of this preference model are not yet finished:<br />
• The conditions of its applicability have to be discussed in detail. It is set out to<br />
be useful in tourism and applicable in other complex service contexts as well.<br />
• The operationalisation of the core evaluative elements (beliefs about<br />
attributes, links to benefits and inconveniences) is still under construction. A<br />
means-end approach (laddering technique) seems to be appropriate.<br />
• The empirical test and application shall deliver the practical evidence for the<br />
superiority of the model.<br />
Despite these present limitations the following advantages should be mentioned:<br />
• The model envisages high unifying power with integrating numerous existing<br />
theories and concepts.<br />
• The framework can be applied for a preference model in the pre-choice<br />
situation as well as for a satisfaction model in the post-choice situation<br />
without changing the basic concepts and conceptual links.<br />
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