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Linking Customer Needs to Corporate Strategic Intention An Extension of Service Design Planning Models in Online Financial Service Xin (David) Ding * Rohit.

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Presentation on theme: "Linking Customer Needs to Corporate Strategic Intention An Extension of Service Design Planning Models in Online Financial Service Xin (David) Ding * Rohit."— Presentation transcript:

1 Linking Customer Needs to Corporate Strategic Intention An Extension of Service Design Planning Models in Online Financial Service Xin (David) Ding * Rohit Verma Yang Huang * Assistant Professor Department of Information and Logistics Technology University of Houston Presented for the Art & Science of Service Conference June 19, 2009

2 Outline Motivation Research Objectives Literature Research Findings Future Research Directions

3 Motivation … organization has been burned by technology dumping: systems were designed and pushed out to the field with little thought for how they would be used… –Kruse et al., ICSS (2001) … companies run out and buy [technology] when they hear about a great deal without thinking about the products' strategic fit in the business… –Robert Kish, Business Week (2009) A mismatch between customer needs and system design leads to a shrinking customer base –Gupta et al., JMR (2004)

4 Theoretical Frameworks Service planning models (Chase and Acquilano, 1989; Goldstein et al. 2002) Dual-layer experience model (Ding et al. 2008) Performance Output Service Delivery System Input People Technology Process Equipment Service outcome Service experience Experience Clues Flow Experience Satisfaction System Product offerings Customer service … Interactivity Focused attention Control …

5 Research Objectives 1.Empirically test the applicability of an extended service planning model in an online financial service setting; 2. Examine the impact of market positioning on corresponding service outcomes and service performance.

6 Literature Review Technology readiness –People's propensity to use new technology –Its typology helps access final usage, usability needs and evaluations (Parasuraman & Colby 2001, Tsikriktsis 2004, Massey et al. 2007) Service delivery system (clues) –Consists of four major components including system, production, information, and accounts (Krishnan et al. 1999, Wixom and Todd 2005) –The aggregate perception of the service system from interacting with the clues lead customers into a cognitive flow experience state, which stimulate further behavioral intention (Carbone and Haeckel 1994, Ding et al. 2008).

7 Literature Review (Contd) Flow experience –Cognitive states during human-computer interaction (Krishnan et al. 1999, Wixom and Todd 2005) –Including the factors of focused attention, interactivity, sense of control, level of challenges, and skills (Ghani and Deshpande 1994, Huffman et al. 1996, Novak et al. 2000). –For the study context, it is best captured with focused attention and interactivity (Brush and Artz 1999, Lovelock 2001). Market entry and operations strategy –First-mover advantage (Lieberman and Montgomery 1988, Kerin et al. 1992).). –First-mover disadvantage (White 1983, Robinson et al. 1992). –Marketing – operations dilemma (Bozarth and Berry 1997). over-promise to lure customers and a push on operations to move beyond an internal focus on reducing costs without a clear vision of consumer needs

8 Research Model Technology Readiness Service Sys. (Clues) Customer- Firm relation Service Experience H1a H1c H2a H3 H2b Market Entry H1b H4a H4c H4b

9 Research Hypotheses H1:: T R segments differ in the evaluation of service delivery system, service experience, and customer-firm relationship; H2:: M ajor design elements within the service delivery system affect customer experience and customer-firm relationship; H3:: C ustomer experience affects customer-firm relationship; H4::M arket entry decision affects the evaluation of service delivery system, customer experience, and customer- firm relationship.

10 Research Methodology Sample –666 individual investors from 14 major online brokers (RR > 10%) –Unit of analysis: individual investor & broker Survey –Likert-scale type, mostly validated scales Statistical analysis –LCA, ANOVA, PLS

11 LCA Analysis - TR Segments

12 Market Entrants ExplorerPioneerSkepticsLaggardsCompany a Total Customers first entrant37%10%28%26%e*Trade (1992)90 explorers28%14%39%19% Ameriprise (1994), Ameritrade (1994) 128 followers22%9%45%24% Charles Schwab (1996), Scottrade (1996), ShareBuilder (1996), TD. WaterHouse (1996), Fidelity (1997) 406 late entrants29%0%50%21% Interactive (1998), Vanguard (1998), Merrill Lynch (1998), Wells Fargo (1998), Buy & hold (1999), Optionsxpress (2000) 42 Average25%10%42%23%

13 Analysis Results (Overview) Technology Readiness Service Sys. (Clues) Customer- Firm relation Service Experience H1a H1c H2a H3 H2b Market Entry H1b H4a H4c H4b

14 ANOVA Analysis Mean (standard deviation)F F 1. Explorers 2. Pioneers 3. Skeptics 4. Laggards 1. first entrant 2. explorers 3. followers 4. late entrants Product offerings *** Account *** Information *** System *** Focused attention *** Interactivity ** Behavioral intention *** ** H1H4

15 PLS Analysis 2009 H2H3

16 Research Findings Perceived service system performance, experience, and customer-firm relationship differ across TR segments; Market entry decision does not affect the performance of service delivery system and customer experience, yet it affects customer-firm relationship; Service delivery system affects customer experience and following customer-firm relationship; Customer experience mediates the relationship between service delivery system and customer-firm relationship. 2009

17 Research Contributions Four major contributions: –Examines the connection between customer tech needs and experience/evaluation from service design perspective; –Examines how the critical decision in service strategy (i.e., market positioning relative to competitors) affects the type of relationship the firm wishes to pursue with its customers; –Examines how the design of a service delivery system affect the firms relationship with its customer; –Empirically tests the dual-layer experience model.

18 Managerial Contribution Customer needs affect his/her experience and valuation of a service from service design perspective –target the right customer segment and prioritize customer needs to obtain the maximum value Market positioning affect the type of relationship the firm wishes to pursue with its customers –be the second to market (explorers) tend to draw more loyal customers The design of a service delivery system affect the firms relationship with its customer –System is most important, following by account, information, and then product offerings 2009

19 Future direction Applying –Explore the service design planning model and dual-layer experience model among other service settings Extending –Include additional factors measuring service input and service delivery system –Cross-cultural comparison Validating –Controlled experiments 2009

20 end 2009


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