Designing service operations: value (economic and environmental) implications
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The service sector has been identified as the main force of economic and potentially sustainable growth in most developed economies. Nevertheless, despite the role of services in today's economy, little is known about what drives service innovation and which tools and methods determine successful service design and development. This dissertation focuses on addressing the challenges associated with the design, development and operation of service offerings. In the first essay (Chapter II) we explore the design challenges of an organization that develops an experiential service. In experiential services, the customer value extends beyond the functional benefits of the service, and it encompasses the overall experience. We draw upon the perspective of the customer journey, which is widely used by design firms (e.g., IDEO), and we model the entire service experience as a process comprising individual service steps (also known as touchpoints). The value of the service is "co-produced" over several touchpoints between the customer and the service provider. We identify the non-monotonic effects of the co-production losses and service complexity on the provider's design decisions, (i.e., price), and the touchpoints she controls. Finally, we fully characterize the conditions under which the service provider may use these design decisions to effectively signal the experience potential of the service offering. In the second essay (Chapter III) we study the auto manufacturer's choice regarding whether to provide mobility service (e.g., car sharing) in conjunction with the traditional sales channel. A utility maximization model is used to characterize the consumer's choice between purchasing a vehicle, benefiting from the mobility service or relying on an outside option (e.g., public transportation). We characterize the benefit to the manufacturer of providing mobility service and the environmental implications of this strategy. In the third essay (Chapter IV) we study the implications of "reference point" effects on the optimal service design. We envision the service delivery as a two-stage process in which customer satisfaction is stochastic. The service provider needs to determine the optimal level of effort to exert at each stage, given that the customer experience at the first stage of the process can affect the expectations regarding the experience at the second stage of the process.