The Life Event Cycle: A Special Management Tool for Mass Customization of Services

The Life Event Cycle: A Special Management Tool for Mass Customization of Services

Florian U. Siems (RWTH Aachen University, Germany) and Dominik Walcher (Salzburg University of Applied Sciences, Austria)
DOI: 10.4018/978-1-60566-260-2.ch001
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Abstract

In this chapter it is argued that service stores most often offer standardized services, which may not hit the customers’ demands. As a new possibility to customize service offerings the life event cycle is introduced, which builds on traditional lifecycle concepts but refines them by a stronger individual perspective. In the first part of the chapter, a short introduction in service management, kinds of services and the relevance of a long term customer relationship for service stores is given. Then the idea of life cycles is shown in general, before in the main part the life event cycle is explained. It is shown that all marketing instruments could be used to enhance individualization of services and to respect the implications of the life event cycle. The chapter ends with limitations and future trends.
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Introduction: Management Of Services

The management of services has become more and more important in practice and science within the last 20 years (Lovelock & Wirtz, 2004, pp. 4-8; Bruhn & Georgi, 2006, p. xvi; Zeithaml & Bitner & Gremler, 2006, p. 2). The definitions and classifications of service providers are as heterogeneous as the definitions of services themselves (Lovelock, 1983). In 1999 Tim Davis published his classification of service firms (Davis, 1999). Based on a well founded criticism on other definitions, Davis classified service providers regarding to the two dimensions

  • (1)

    Service task (routine / knowledge) and

  • (2)

    Service delivery (decoupled / integrated).

The distinction between routinized and knowledge based service tasks can also be found at several other classifications (Lovelock, 1983), the distinction between decoupled and integrated service delivery however can be seen as new. This factor deals with the horizontal dimension of work – the core process or how services are delivered. Basically the service delivery dimension refers to the distance between the majority of tasks within the service firm and the customers. Thus, the majority of tasks of a fast food restaurant or a car repair station is closer to the customer than the tasks of a hospital or a insurance company (Davis, 1999, p. 23). Combining these two dimensions four types of service firms emerge (shown in figure 1).

Figure 1.

Four types of service firms

(1) Service Factories have routine processes that are tightly integrated in delivery, such as fast food restaurants or car rental firms. (2) Service Shops carry out non-routine knowledge or craft work that is closely integrated in delivery, such as auto repair stations or small consulting offices. (3) Service Complexes engage in non-routine knowledge work that is decoupled in delivery, such as hospitals, large consulting firms or large advertising agencies. (4) Service Stores provide a variety of routine services that are decoupled or disintegrated in delivery, such as insurance companies or banks. At Service Stores it can be found that the level of service customization most often is very low. In order to stay cost efficient the standardization of services is pushed (“one type fits all”) at the price of not addressing the individual needs of the customer. In this paper it is argued that the possibilities of professional service customization can be exploited by Service Stores to a much higher extent by systematically applying a refined lifecycle concept - the life event cycle.

In the last decade marketing for services (Bruhn & Georgi, 2006) as well as customization of services (Ahlström & Westbrook 1999; Mills & Morris 1986; Piller 2003; Piller & Meier & Reichwald 2002; Piller & Stotko 2002; Tseng & Piller 2003; Winter 2001) has become more and more important. It was shown that especially in the service industry a long term relationship between provider and customer is responsible for a company’s success (Gummesson 1987; Reinartz & Kumar, 2000; Grönroos, 2000). Reichheld and Sasser (1990) for instance demonstrated in the 90ties, that increasing profits of a service provider can be traced back to long term relationships causing

  • (1)

    increasing purchases,

  • (2)

    cross- and up-selling-activities,

  • (3)

    reduced operating costs,

  • (4)

    customer as referrals and

  • (5)

    increasing acceptance of premium prices.

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