The Self-Service Strategy: Linking Operations and Marketing

The growth of the so-called "self-service economy " emphasizes the increasing popularity of self-service in the design of service delivery systems. By using the co-productive nature of services production, self-service seems to o¤er the solution for providing cost-e¤ective, high-quality service to consumers at a large scale. However, there has also arisen widespread doubt about the strate-gic impact of increasing self-service levels on a service providers product positioning, customer segmentation, and customer retention and acquisition strategies. This paper proposes a general framework for modeling service coproduction and analyzing the "self-service strategy " wherein self-service is used to substitute for employee-delivered service. The central issue of the strategy is to decide on the optimal price and self-service level based on \u85rm and customer characteristics (e.g., rm capacity and operating e ¢ ciency, customer e ¢ ciency, the value of time opportunity cost for the consumer, and individual preferences). The proposed model is then used to analyze the im-pact of the self-service strategy on product positioning and customer segmentation, retention and acquisition. 2