using automated teller machine (ATM) or self- checks in kiosks ... personal computers by their online choice of ... proposed service-centered logic for marketing.
coproduction (services) Lars Groeger and Francis Buttle
WHAT IS COPRODUCTION OF SERVICES? The defining characteristics of a service are its intangibility, heterogeneity, perishability, and inseparability. The inseparability of service production and consumption means that the customer participates in coproducing the service product. For example, customers having a haircut or booking a holiday are expected to cooperate with the hairdresser and travel agent, respectively. While customers involvement is often indispensable for the completion of service production and delivery processes, the degree of involvement varies between categories. In many instances, the customer’s involvement in coproduction involves little other than self-service, using automated teller machine (ATM) or selfchecks in kiosks at airports. In other cases, such as knowledge-intensive business service settings such as consulting and financial management, clients play a more diverse and lengthy role in the coproduction of the service. While a customer’s involvement is often unavoidable in the production of a service, the prevailing view is that a well-managed coproduction process has two primary benefits. First, involving the customer in coproduction can lower costs for organizations and thus reduce the price for the customer. These economic benefits are especially significant for services organizations with labor-intensive production processes and an inability to stockpile. In such contexts, coproduction can lead to significant
increases in productivity. Second, coproduction may offer enhanced choice to consumers through mass customization processes, such as the ability to create uniquely configured personal computers by their online choice of component parts. Thus, coproduction enables the firm to better customize its offerings to customers’ needs, lifting customer satisfaction levels. Customer participation in service production per se is not a new idea. However, recently, coproduction has become a central tenet of a proposed service-centered logic for marketing (Vargo and Lusch, 2004) and could be the “next frontier in competitive effectiveness” (see SERVICE-DOMINANT LOGIC). Companies who follow this shift in perspective view customers as active coproducers rather than as a passive audience; instead of asking “What can we do for you?” they ask “What can you do with us?” (Bendapudi and Leone, 2003). Bibliography Bendapudi, N. and Leone, R.P. (2003) Psychological implications of customer participation in coproduction. Journal of Marketing 67 (1), 14–28. Lovelock, C.H. and Wirtz, J. (2011) Services Marketing – People, Technology, Strategy, 7th edn, Prentice Hall, Upper Saddle River, NJ. Lovelock, C.H. and Young, R.F. (1979) Look to consumers to increase productivity. Harvard business review, 57 (3), 168–179. Vargo, S.L. and Lusch, R.F. (2004) Evolving to a new dominant logic for marketing. Journal of Marketing, 68 (1), 1–17.
Wiley Encyclopedia of Management, edited by Professor Sir Cary L Cooper. Copyright © 2014 John Wiley & Sons, Ltd.