Means-end value assessment

Abstract

Services are intangible in their nature. When product oriented companies seeks to expand their industrial offerings with services they encounter many problems, one of which is the challenge of selling these intangible services. The sales team needs to be able to show the value of the service in order to successfully reach out to the customers. Embracing “service logic” has proven successful for this type of company. Its perspective on value creation is very different from the perspective traditionally employed by product companies i.e. through “product logic”. One must turn to customer day-to-day activities and look at their value creating processes in order to understand what value can be created from a service. This is because customers will not be interested in complex, intangible aspects of an offering. They want to know how a supplier can improve their business. The purpose of this study is to develop a framework for value communication through value assessment (and segmentation) of a product related service in a B2B business relation. A qualitative single case study was employed involving the multinational Swedish garden and forestry company Husqvarna (i.e. the supplier) and their soon-to-be-released IT-based fleet management service called Husqvarna Fleet Services (i.e. the service). Seven customer interviews were held in France, one in Sweden. The value hierarchy is used as an approach to value creation and the laddering technique is consequently employed in order to assess the potential customer value deriving from use of the service. On an attribute level, the elements are approximated to the categories of information represented in the user interface. Primary ladders are comprised of 4 end‐states and 22 consequences that should be seen as potential benefits from use of the service. Screening them for low frequencies, 11 consequences and 2 end‐states (‘Productivity & Efficiency’ and ‘Cost Reduction/Control’) remain. Preliminary cost savings are given (as examples) in four cases although these lack significant information to be considered as important findings. Attempting value based segmentation, a basic non‐statistical segmentation gives rise to seven variables by which the identified benefits are thought to vary. Employing the idea of communicating through a resonating focus, the findings suggest that depending on customer characteristics the 11 identified benefits, each of which will have varying degrees of importance. Due to the fact that no realized value is found, these benefits are still regarded intangible. Finally, the complexity, novelty and intangibility of the offering point toward an increasing need for a communication strategy that serve the purpose of providing solutions to customers’ major issues. The results from our study suggest that the supplier rigorously attempts more pilot studies on a few selected targets in order to realize substantial value and develop business cases