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Do customized service packages impede value capture in industrial markets?

Author

Listed:
  • Michael Steiner

    (University of Muenster)

  • Andreas Eggert

    (University of Paderborn
    Newcastle University Business School)

  • Wolfgang Ulaga

    (IMD Lausanne)

  • Klaus Backhaus

    (University of Muenster)

Abstract

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

Suggested Citation

  • Michael Steiner & Andreas Eggert & Wolfgang Ulaga & Klaus Backhaus, 2016. "Do customized service packages impede value capture in industrial markets?," Journal of the Academy of Marketing Science, Springer, vol. 44(2), pages 151-165, March.
    • Handle: RePEc:spr:joamsc:v:44:y:2016:i:2:d:10.1007_s11747-014-0410-9
    DOI: 10.1007/s11747-014-0410-9
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    Cited by:

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    2. Katharina Dowling & Daniel Guhl & Daniel Klapper & Martin Spann & Lucas Stich & Narine Yegoryan, 2020. "Behavioral biases in marketing," Journal of the Academy of Marketing Science, Springer, vol. 48(3), pages 449-477, May.
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    4. Leckie, Civilai & Dwivedi, Abhishek & Johnson, Lester W., 2023. "Credibility and price premium-based competitiveness for industrial brands," Journal of Retailing and Consumer Services, Elsevier, vol. 74(C).
    5. Raja, Jawwad Z. & Frandsen, Thomas & Kowalkowski, Christian & Jarmatz, Martin, 2020. "Learning to discover value: Value-based pricing and selling capabilities for services and solutions," Journal of Business Research, Elsevier, vol. 114(C), pages 142-159.
    6. Neil A. Morgan & Kimberly A. Whitler & Hui Feng & Simos Chari, 2019. "Research in marketing strategy," Journal of the Academy of Marketing Science, Springer, vol. 47(1), pages 4-29, January.
    7. Jonas Schmidt & Tammo H. A. Bijmolt, 2020. "Accurately measuring willingness to pay for consumer goods: a meta-analysis of the hypothetical bias," Journal of the Academy of Marketing Science, Springer, vol. 48(3), pages 499-518, May.
    8. Stefan Worm & Sundar G. Bharadwaj & Wolfgang Ulaga & Werner J. Reinartz, 2017. "When and why do customer solutions pay off in business markets?," Journal of the Academy of Marketing Science, Springer, vol. 45(4), pages 490-512, July.
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