This article examines key success factors for designing and delivering combinations of goods and services (i.e., hybrid offerings) in business markets. Goods manufacturers, unlike pure service providers, find themselves in a unique position to grow revenues through hybrid offerings but must learn how to leverage unique resources and build distinctive capabilities. Using case studies and depth interviews with senior executives in manufacturing companies, the authors develop a resource–capability framework as a basis for research and practice. Executives identify four critical resources: (1) product usage and process data derived from the firm's installed base of physical goods, (2) product development and manufacturing assets, (3) an experienced product sales force and distribution network, and (4) a field service organization. In leveraging these specific resources, successful firms build five critical capabilities: (1) service-related data processing and interpretation capability, (2) execution risk assessment and mitigation capability, (3) design-to-service capability, (4) hybrid offering sales capability, and (5) hybrid offering deployment capability. These capabilities influence manufacturers’ positional advantage in two directions: differentiation and cost leadership. The authors propose a new typology of industrial services and discuss how resources and capabilities affect success across categories of hybrid offers.
AllmendingerGlen, and LombregliaRalph (2005), “Four Strategies for the Age of Smart Services,”Harvard Business Review, (October), 131–45.
2.
AmitRaphael, and SchoemakerPaul J.H. (1993), “Strategic Assets and Organizational Rent,”Strategic Management Journal, 14(January), 33–46.
3.
AntiocoMichael, MoenaertRudy K., LindgreenAdam, and WetzelsMartin (2008), “Organizational Antecedents and Consequences of Service Business Orientations in Manufacturing Companies,”Journal of the Academy of Marketing Science, 36(3), 337–58.
4.
BarneyJ.B. (1991), “Firm Resources and Sustained Competitive Advantage,”Journal of Management, 17(1), 99–120.
5.
BavejaSarabjit Singh, GilbertJim, and LedinghamDianne (2004), “From Products to Services: Why It's Not So Simple,”Harvard Management Update, 9(4), 3–5.
6.
BharadwajSundar G., VaradarajanPR., and FahyJ. (1993), “Sustainable Competitive Advantage in Service Industries: A Conceptual Model and Research Propositions,”Journal of Marketing, 57(October), 83–99.
7.
BoltonRuth N., GrewalDhruv, and LevyMichael (2007), “Six Strategies for Competing Through Services: An Agenda for Future Research,”Journal of Retailing, 83(1), 1–4.
8.
BoytTom, and HarveyMichael (1997), “Classification of Industrial Services: A Model with Strategic Implications,”Industrial Marketing Management, 26(4), 291–300.
9.
ChallagallaGoutam, VenkateshR., and KohliAjay K. (2009), “Proactive Postsales Service: When and Why Does It Pay Off?”Journal of Marketing, 73(March), 70–87.
10.
CohenMorris A., AgrawalNarendra, and AgravalVipul (2006), “Winning in the Aftermarket,”Harvard Business Review, (May), 129–38.
11.
DayGeorge, and WensleyRobin (1988), “Assessing Advantage: A Framework for Diagnosing Competitive Superiority,”Journal of Marketing, 52(April), 1–20.
12.
DeshpandéRohit (1983), “Paradigms Lost: On Theory and Method in Research in Marketing,”Journal of Marketing, 47(Fall), 101–110.
13.
DubinskyAlan J., and RudeliusWilliam (1980), “Selling Techniques for Industrial Products and Services: Are They Different?”Journal of Personal Selling & Sales Management, 1(1), 65–76.
14.
EppenG. (1979), “Effects of Centralization of Expected Costs in a Multi-Location Newsboy Problem,”Management Science, 25(5), 498–501.
15.
FangEric, PalmatierRobert W., and SteenkampJan-Benedict (2008), “Effect of Service Transition Strategies on Firm Value,”Journal of Marketing, 72(September), 1–14.
16.
FornellClaes, RustRoland, and DekimpeMarnik (2010), “The Effect of Customer Satisfaction on Consumer Spending Growth,”Journal of Marketing Research, 41(February), 28–35.
17.
FrambachRuud T., Wels-LipsInge, and GuendlachArjan (1997), “Proactive Product Service Strategies: An Application in the European Health Market,”Industrial Marketing Management, 26(4), 341–52.
18.
FrankeGeorge R., and ParkJeong-Eun (2006), “Salesperson Adaptive Selling Behavior and Customer Orientation: A Meta-Analysis,”Journal of Marketing Research, 43(November), 693–702.
19.
GlaserBarney G. (1998), Doing Grounded Theory: Issues and Discussions.San Francisco: The Sociology Press, University of California.
20.
GlaserBarney G., and StraussAnselm L. (1999), The Discovery of Grounded Theory: Strategies for Qualitative Research.New York: Hawthorn.
21.
HelfatC.E., and LiebermanM. (2002), “The Birth of Capabilities: Market Entry and the Importance of Prehistory,”Industrial and Corporate Change, 11(4), 725–60.
22.
KohliAjay K., ShervaniTasadduq A., and ChallagallaGoutam N. (1998), “Learning and Performance Orientation of Salespeople: The Role of Supervisors,”Journal of Marketing Research, 35(May), 263–74.
23.
LevittTheodor (1976), “Production-Line Approach to Service,”Harvard Business Review, (September/October), 63–74.
24.
LovelockChristopher H. (1983), “Classifying Services to Gain Strategic Marketing Insights,”Journal of Marketing, 47(Summer), 9–20.
25.
MarkidesConstantinos, and WilliamsonPeter J. (1996), “Corporate Diversification and Organizational Structure: A Resource-Based View,”Academy of Management Journal, 39(2), 340–69.
26.
MarkowitzHarry (1987), Mean-Variance Analysis in Portfolio Choice and Capital Markets.New York: Blackwell.
27.
McCrackenGrant (1988), The Long Interview (Qualitative Research Methods Series 13).Newbury Park, CA: Sage Publications.
28.
MenonAnil, BharadwajSundar, AdidamPhani Tej, and EdisonSteven (1999), “Antecedents and Consequences of Marketing Strategy Making: A Model and a Test,”Journal of Marketing, 63(April), 18–40.
29.
MeyerMarc H., and DeToreArthur (1999), “Product Development for Services,”Academy of Management Executive, 13(3), 64–76.
30.
NeuWayne, and BrownStephen W. (2008), “Manufacturers Forming Successful Complex Business Services,”International Journal of Service Industry Management, 19(2), 232–51.
31.
NijssenEdwin J., HillebrandBas, VermeulenPatrick A.M., and KempRon G.M. (2006), “Exploring Product and Service Innovation Similarities and Differences,”International Journal of Research in Marketing, 23(3), 241–51.
32.
Olson EricM., SlaterStanley F., and TomasG., HultM. (2005), “The Performance Implications of Fit Among Business Strategy, Marketing Organization Structure and Strategic Behavior,”Journal of Marketing, 69(July), 49–65.
33.
ParasuramanA., ZeithamlValarie A., and BerryLeonard L. (1988), “SERVQUAL: A Multiple-Item Scale for Measuring Consumer Perceptions of Service Quality,”Journal of Retailing, 64(1), 12–40.
34.
PerreaultWilliam D.Jr., and LeighLaurence (1989). “Reliability of Nominal Data Based on Qualitative Judgments,”Journal of Marketing Research, 26 (May), 135–48.
35.
PeterafM.A. (1993), “The Cornerstones of Competitive Advantage: A Resource-Based View,”Strategic Management Journal, 14(3), 179–92.
36.
RaoRaghunath, ChandyRajesh, and PrabhuJaideep (2008), “The Fruits of Legitimacy: Why Some New Ventures Gain More from Innovation than Others,”Journal of Marketing, 72(October), 58–75.
37.
ReinartzWerner, and UlagaWolfgang (2008), “How to Sell Services Profitably,”Harvard Business Review, 86(5), 90–98.
38.
RijsdijkSerge A., HultinkErik Jan, and DiamantopoulosAdamantios (2007), “Product Intelligence: Its Conceptualization, Measurement and Impact on Consumer Satisfaction,”Journal of the Academy of Marketing Science, 35(3), 340–56.
39.
RustRoland T., and CooilBruce (1994), “Reliability Measures for Qualitative Data: Theory and Implications,”Journal of Marketing Research, 31(February), 1–14.
40.
RustRoland T., and HuangMing-Hui (2009), “Service Productivity Strategy,” MSI Working Paper Report 09-120, 77–99.
41.
RustRoland T., and OliverRichard (1994), “Service Quality: Insights and Managerial Implications From the Frontier,” in Service Quality: New Directions in Theory and Practice, RustR.T., and OliverR.L., eds. Thousand Oaks, CA: Sage Publications.
42.
SawhneyMohanbir, BalasubramanianSridhar, and KrishnanVish V. (2004), “Creating Growth with Services,”MIT Sloan Management Review, 45(2), 34–43.
43.
ShahNenish, RustRoland T., ParasuramanA., StaelinRichard, and DayGeorge S. (2006), “The Path to Customer Centricity,”Journal of Service Research, 9(2), 113–24.
44.
ShankarVenkatesh, BerryLeonard L., and DotzelThomas (2007), “Creating and Managing Hybrid Innovations,” presentation at AMA Winter Educators’ Conference, San Diego, CA (February 16–19).
45.
ShankarVenkatesh, BerryLeonard L., and DotzelThomas (2009), “A Practical Guide to Combining Products and Services,”Harvard Business Review, 87(11), 94–99.
46.
ShuganSteven M. (2004), “The Impact of Advancing Technology on Marketing and Academic Research,”Marketing Science, 23(4), 469–75.
47.
SitkinS.B., and PabloA.L. (1992), “Reconceptualizing the Determinants of Risk Behavior,”Academy of Management Review, 17(1), 9–38.
48.
SlywotzkyA.J. (1996), Value Migration: How to Think Several Moves Ahead of the Competition.Boston: Harvard Business School Press.
49.
StanleyJennifer, and WojcikPhilip (2005), “Better B2B Selling,”McKinsey Quarterly, 38(3), 15.
50.
StraussAnselm L., and CorbinJuliet (1998), Basics of Qualitative Research: Techniques and Procedures for Developing Grounded Theory, 2d ed. Newbury Park, CA: Sage Publications.
51.
TreacyMichael, and WiersemaFred (1993), “Customer Intimacy and Other Value Disciplines,”Harvard Business Review, (January/February), 84–93.
52.
TuliKapil, KohliAjay, and BharadwajSundar G. (2007), “Rethinking Customer Solutions: From Product Bundles to Relational Processes,”Journal of Marketing, 71(July), 1–17.
53.
UlagaWolfgang, and EggertAndreas (2006), “Value-Based Differentiation in Business Relationships: Gaining and Sustaining Key-Supplier Status,”Journal of Marketing, 70(January), 119–36.
54.
VargoStephen L., and LuschRobert F. (2004), “Evolving to a New Dominant Logic for Marketing,”Journal of Marketing, 68(January), 1–17.
55.
WatsonRichard, PittLeyland F., BerthonPierre, and ZinkhanGeorge (2002), “Ucommerce: Expanding the Universe of Marketing,”Journal of the Academy of Marketing Science, 30(4), 333–47.
56.
WiseRichard, and BaumgartnerPeter (1999), “Go Downstream: The New Profit Imperative in Manufacturing,”Harvard Business Review, 77(5), 133–41.
57.
YinRobert K. (1994), Case Study Research: Design and Methods, Vol. 5, Applied Social Research Methods Series, 2d ed. Thousand Oaks, CA: Sage Publications.
58.
ZeithamlValarie A., BitnerMary Jo, and GremlerDwayne D. (2006), Services Marketing: Integrating Customer Focus Across the Firm.New York: McGraw-Hill.
59.
ZeithamlValarie A., ParasuramanA., and BerryLeonard L. (1990), Delivering Quality Service: Balancing Customer Perceptions and Expectations.New York: The Free Press.
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
