Pricing strategies of service offerings in manufacturing companies: a literature review and empirical investigation

Rapaccini, Mario

doi:10.1080/09537287.2015.1033495

Cited by 46 publications

(58 citation statements)

References 77 publications

(115 reference statements)

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“…However, many PSS providers fail to achieve these potential benefits (Neely 2008, Benedettini et al 2015 due to difficulties in implementing a servitisation strategy. Services require fundamentally different operations to traditional manufacturing (Alghisi and Saccani 2015, Peillon et al 2015, Rapaccini 2015. Operations in PSS provision are highly dependent on the individual service employee because they are the contact point with the customer (Bitran et al 2008) and facilitator of the customer relationship .…”

Section: Introductionmentioning

confidence: 99%

Employee motivation in product-service system providers

Kreye

2016

Production Planning & Control

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This research investigates how intrinsic and extrinsic motivation factors contribute to employee motivation in providers of Product-Service Systems (PSS). Employee motivation determines the quality of the delivered service and is thus an area of great importance for PSS providers. We present rich case-based data collected through semi-structured interviews, a survey and secondary sources. The analysis showed the particularly high importance of intrinsic and individual motivation factors such as the fulfilling nature of the work and skill development showing the ownership and pride service employees took in their work. Further, the organisation needs to set the context of high employee motivation by enabling flexibility and performance feedback. Our research contributes to the literature by providing a first empirical study of employee motivation in PSS providers and thus providing important insights on the implementation of a servitisation strategy.

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Section: Introductionmentioning

confidence: 99%

Employee motivation in product-service system providers

Kreye

2016

Production Planning & Control

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“…Similarly, the literature frequently reports the financial difficulties servitized manufacturers have (Neely 2008) with increased numbers of bankruptcies (Benedettini et al 2015). In line with these observations, Rapaccini (2015) reports that PSS providers frequently under-price their offerings and overpromise regarding their performance because of the operational novelty and complexity of PSS for their business. Thus, many servitized manufacturers fail to make suitable pricing decisions for their PSS offerings.…”

Section: Introductionmentioning

confidence: 86%

“…This section will outline the expectations of our experimental study regarding the impact of competition on pricing decision making. Rapaccini (2015) found that in practice many servitized manufacturers use a cost-based approach for pricing their PSS offerings. The reason for their observation may be found in the product-focused tradition of their businesses (Neely 2008, Baines et al 2013, Benedettini et al 2015.…”

Section: Expectations and Hypothesis Developmentmentioning

confidence: 99%

“…On the one hand, decision makers may be encouraged to set a high price value because of the high operational uncertainty of PSS to ensure future profitability (Benedettini et al 2015). On the other hand, the existence of competition can motivate decision makers to reduce the price bid (Feng et al 2015, Rapaccini 2015 leading to an under-pricing of the PSS offering. In addition, services are heterogeneous which means different providers offer different quality levels (Fisk et al 1993).…”

Section: Introductionmentioning

confidence: 99%

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Uncertainty perception in bidding for Product-Service Systems under competition

Kreye

Goh

Newnes

2018

Journal of Purchasing and Supply Management

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This research investigates what impact of uncertainty perception arising from the existence of competition has on the pricing decision for Product-Service Systems (PSS) under uncertainty. PSS provision is an increasingly important area for many businesses and competition increases cognitive pressures on providers even further. We present an experimental study with industrial costing and bidding experts from the defence and aerospace sector. The study consisted of an experimental set-up via two questionnaires which differed in the existence of competition in the bidding scenario. The findings showed that bidding decision makers changed their evaluation of the cost estimate due to the introduction of competition but kept their evaluations of the profit margin and price bids constant. Furthermore, the participants listed the relevant sources of uncertainty that influenced their decision-making process. This research contributes to the literature in two ways. First, our findings showed that predictions from current theory regarding decision-making of cost estimation and pricing are not confirmed when competitively bidding for PSS. Second, we show uncertainty sources that influenced the decision makers and identified p the importance of internal processes of the PSS provider and environmental uncertainty.

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“…BA1. Price and contracts definition, requiring to handle and fulfil the interests of each involved stakeholder in a long-term relationship [34].…”

Section: Literature Review a Pss And Barriers For Its Adoptionmentioning

confidence: 99%

Asset Management Framework and Tools for Facing Challenges in the Adoption of Product-Service Systems

Erguido

Márquez

Castellano

et al. 2022

IEEE Trans. Eng. Manage.

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Servitisation is recognized as a key business strategy for Original Equipment Manufacturers willing to move up the value chain. However, several barriers have to be overcome in order to successfully integrate products and services. Many of these barriers are caused by the technical challenges associated with the design and management of the product-service systems, such as life cycle service level and cost estimation, risk management, or the system design and pricing.Asset management presents itself as a key research area in order to overcome these barriers as well as to integrate product-service systems within the manufacturers' operations management. It is the scope of this paper to provide theoretical and practical insights with regards to the alignment of asset management and product-service system research areas. To support the alignment between both areas, a management framework which gathers specific technologies, including reliability analysis, simulation modelling and multi-objective optimisation algorithms, is presented. The purpose of the framework is to provide manufacturers with a decision-support tool that facilitates the main managerial challenges faced when implementing a servitisation strategy.The paper contributions are successfully applied to case studies in the railway and wind energy sectors based on real field data, thereby demonstrating their suitability for both facilitating manufacturer's decisionmaking process and better satisfying stakeholders' interests. MANAGERIAL RELEVANCE STATEMENTShifting from product-oriented to service-oriented business models could become critical for those manufacturers aiming at moving up the value chain for a better future market position. However, such business models imply to assume the ownership of the products that they used to sell, and in rather unknown scenarios. Thus, products become manufacturers' assets, which need to be managed for them to provide value to their businesses over their entire life cycle.The lack of asset management capabilities at manufacturers' side may develop a serious risk that is further translated into barriers hindering service-oriented business models adoption. Such barriers are related to difficulties, for instance, to properly define the product-service system contracts or to fulfil stakeholders' requirements during the system life cycle in highly uncertain scenarios.In this context, the present paper proposes a management framework to provide manufacturers some of the capabilities needed to overcome above mentioned barriers, helping them to design and manage successful 2 product-service systems.The framework designed consists of analytical and empirical models providing advanced capabilities for product-service systems management. Likewise, the paper helps manufacturers understand the managerial insights that such capabilities may provide them along their different decision processes, which are further illustrated through wind energy and railway case studies. AbstractServitisation is recognized as a key business strategy f...

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Pricing strategies of service offerings in manufacturing companies: a literature review and empirical investigation

Cited by 46 publications

References 77 publications

Employee motivation in product-service system providers

Employee motivation in product-service system providers

Uncertainty perception in bidding for Product-Service Systems under competition

Asset Management Framework and Tools for Facing Challenges in the Adoption of Product-Service Systems

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