Service Design and Operations Strategy Formulation in Multicultural Markets

Abstract

Businesses that service multicultural customer segments face unique challenges in developing the appropriate service strategy. While the strategic implications of expanding services from a domestic market to an international location have been well documented, multicultural customer segments at one location is a unique problem that has largely been neglected by researchers. This paper attempts to fill this gap by presenting a conceptual framework and method for determining the extent of service product and process attribute standardization versus customization in these settings. The paper presents an approach for modeling the preferences of different cultural segments, evaluating the differences between the segments and determining the appropriate service strategy for service providers. We evaluate the effects of competitors adopting their revenue maximizing strategy both independently of each other and simultaneously while assuming the size of the market is viewed as a zero sum game. In an actual application at an international airport terminal, one food-service vendor implemented the suggested operations strategy and the result was a significant revenue gain over the previous year’s sales during the same period. The method has valuable implications for managers when developing strategies for delivering a service to multicultural customer segments.