Configuring Service Operations in Accordance With Customer Needs and Preferences

Abstract

This study presents an approach for effective service operations management by integrating market-based objectives and operating decisions of managers. This approach is based on constructs from operations management, econometrics, and marketing and can be used by managers to make better decisions about product/service design and positioning services according to market needs. Empirical data for this study were collected from the pizza delivery industry in a large metropolitan area in the western United States. Pizza delivery profiles were experimentally designed based on seven attributes: promised delivery time, actual delivery time, pizza variety, pizza temperature, money-back guarantee, price, and discount. An econometric procedure known as probabilistic discrete choice analysis was used to identify the customer pizza choice patterns and managers’ perceptions of customer choice patterns. The results show how customers trade off among different attributes when choosing a pizza delivery company. Managers can use this information to position their operations according to customer needs.