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Product-Service Systems Design

  • Paper:
    Design Science (under review). (PDF)
Designing Profitable Joint Product-Service Channels

Consumer choices of services and the product platform that delivers them, such as apps and mobile devices or eBooks and eReaders, are becoming inextricably interrelated. Market viability demands product-service combinations be compatible across multiple producers and service channels, and producers profitability must include both service and product design. Some services may be delivered contractually or physically through a wider range of products than others, and so optimizing producers’ contingent product, service, and channel decisions becomes a combined decision problem. This article examines three common product-service design scenarios: exclusive, non-exclusive asymmetric, and non-exclusive symmetric. An enterprise-wide decision framework is proposed to optimize integrated services and products for each scenario. Optimization results can provide guidelines for strategies that are mutually profitable for partnercompetitor firms. An e-book service and tablet example, using market-level information from four firms (Amazon, Apple, B&N, GooglePlay) and conjoint-based product-service choice data, illustrates the approach using a scalable sequential optimization algorithm. The example results suggest that firms in a market equilibrium can differ markedly on the services they should seek to provide via other firms’ products, and demonstrate the interrelationship among marketing, services, and product design.