Servitisation Levels for Service Providers in Industrial Services

Abstract

Servitisation is the process of product companies getting into services activities and offering products and services as bundles to users. Creation of a bundle of services with products has been always a challenge for companies. So was the pricing of these bundles. This research paper studies the factors customers’ consider while paying a premium for such bundles. Further it also explores the preferred levels of servitization for these companies. A qualitative research was carried out among three industries, namely, power & related industries, heavy engineering and defence manufacturing, through depth interviews. Brand equity was found to be a prominent factor in willingness to pay premiums. It also lists out the services consumed by three industries. Such services are categorised by customers as critical services and non-critical services. Customers are ready to pay premium for approximately 30% services among the critical services and 10% among non-critical services. This willingness to pay premium is enhanced by the brand equity of the service provider. This research enables the service providers to bundle the products and services by picking the right services which fetch premiums for them.