Reports

Brand-Tier Advantage in Service Coproduction

Beibei Dong and K. Sivakumar, 2018, 18-104-02

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Understanding customer roles in service production and delivery, known as “customer coproduction” is a burgeoning issue in business practice and scholarly inquiry. Companies are increasingly outsourcing labor to customers (e.g., grocery store self-checkouts, furniture assembly, airline check-in). Indeed, how to best use customer resources will determine the core competency of organizations in the twenty-first century.

 

Goods and services are often classified into high-tier and low-tier brands (e.g., Ritz-Carlton hotels vs. DoubleTree). Marketing researchers have identified several advantages accruing to high-tier brands from their superior quality positioning (e.g., enhanced price promotion effectiveness). This research bridges these two research streams—customer coproduction and brand quality tiers. Research findings on coproduction are inconclusive, necessitating additional investigations to examine underlying mechanisms and boundary conditions; furthermore, coproduction literature has not considered the role of brand tiers in shaping consumer responses, despite the importance of brand tiers in the marketplace.

Drawing on attribution theory, Beibei Dong and K. Sivakumar theorize customer’s inferred firm motive (inferred motive hereinafter) as an important link between coproduction and customer satisfaction. Then, they examine how brand tier influences the motive inference process and moderates the impact of coproduction on inferred motive. For the first time, their analysis demonstrates a “brand-tier advantage” in coproduction; that is, customers infer a more negative firm motive for low-tier than high-tier brands in coproduction.  

Dong and Sivakumar also examine two boundary conditions of the brand-tier advantage in coproduction. First, when customers expect that high-tier brands should provide more customer service to be commensurate with their brand positioning and this expectation is salient, the brand-tier advantage for high-tier brands becomes a disadvantage (i.e., high-tier brands suffer more than low-tier brands, due to inferred motive from coproduction). Second, customer autonomy can change the motive inference dynamics and thus mitigate the impacts of brand tier and customer expectation, overcoming the negative impact of coproduction for both brand tiers.

This research contributes in three ways. First, the authors advance coproduction research by identifying inferred motive as the underlying consumer psychological mechanism and brand tier as a boundary condition of coproduction, helping explain the mixed consumer responses in coproduction. Second, they expand the brand-tier literature by exploring the brand-tier advantage in the hitherto unexplored coproduction domain and identifying its associated boundary conditions. Third, they enhance the attribution literature by extending the limited work of inferred motive to consumer research and coproduction in particular.

This research also offers valuable managerial insights to brands in different tiers when managing coproduction: high-tier brands should leverage their brand-tier advantage to capitalize on customer labor; however, they must also recognize that such an advantage could become a disadvantage when customers expect high customer service (thus, limited self-service) from them. In addition to managing customer expectations, offering customer autonomy in the choice of coproduction may change the dynamics of the motive inference and offer a solution for both tiers: high-tier brands could reduce the negative impact from high service expectations, and low-tier brands could avoid the disadvantage of their inferior brand positioning.

Beibei Dong is Associate Professor of Marketing and K. Sivakumar (“Siva”) is the Arthur Tauck Chair and Professor of Marketing, both at Lehigh University.

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