Reconceptualising customer perceived value

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Reconceptualizing customer perceived value - the value of time and place

Kristina Heinonen CERS Center for Relationship Marketing and Service Management Hanken Swedish School of Economics and Business Administration e-mail [email protected]

Heinonen, K. (2004): Reconceptualizing customer perceived value - the value of time and place, Managing Service Quality, 14 (2/3), 205-215

_____________________________________________________________________________ Heinonen, K. (2004): Reconceptualizing customer perceived value - the value of time and place, Managing Service Quality, 14 (2/3), 205-215

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Reconceptualizing customer perceived value - the value of time and place Abstract Considering the empowered customer interacting with technology-based self-services, temporal and spatial access can be argued to influence service delivery. However, service management models have not considered the value of the service delivery at various locations and time frames not controlled by the service provider. Consequently, by arguing that time and location are explicit value dimensions, this paper investigates the importance of time and location and contrasts them to traditional value dimensions. A conceptual model of customer perceived value is proposed and empirically investigated. By linking value and quality models, customer perceived value is conceptualized as a function of benefit and sacrifice of technical, functional, temporal and spatial value dimensions. The empirical findings indicate that time and location are perceived as important value dimensions and that they are even more important dimensions than outcome and process elements. Theoretical and practical implications of the findings are discussed. Keywords Customer perceived value, conceptual model, time, location

Introduction

Value creation has been a popular area in consumer and industrial marketing research and the interest is equally extensive in the academia and the industry. Academic research has built on defining the value construct as well as on linking it to other constructs such as loyalty, satisfaction and repurchase behavior. Customer perceived value has been given many definitions in the marketing literature (e.g. Woodruff, 1997; Holbrook, 1994; Zeithaml, 1988) and following one of the more traditional perspectives (Monroe 1990), perceived value has been defined as “the consumer’s overall assessment of the utility of a product based on perceptions on what is received and what is given” (Zeithaml, 1988:14). In other words, value has been seen as the trade-off between benefit and sacrifice in an offering.


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Quality, a related construct (e.g. Rust & Oliver, 1994), has been suggested to form a part of value (Liljander & Strandvik, 1995). Dimensions that affect service quality thus indirectly affect perceived value and quality dimensions may thus be used to define perceived value. According to quality definitions found in the service management literature, perceived quality is the result of an evaluation process of the expected and experienced service (e.g. Grönroos, 1982; Parasuraman, Zeithaml & Berry, 1985). Although not explicitly involving sacrifice, this definition of quality involves technical and a functional dimensions as sources of quality (Grönroos, 1982).

Technology has been suggested to influence value creation processes (Parasuraman & Grewal, 2000) resulting in a need to broaden the value construct. Internet services, mobile services, and other self-service technologies have created empowered customers who may independently perform the service process. These technology-based services are “services delivered via technological interfaces that enable customers to produce a service independent of direct service employee involvement” (Meuter et al, 2000:50). Similarly, in the marketing literature there has occurred a shift in focus towards value co-created by the customer (Ramírez & Wallin, 2000). However, extant service management models have not considered the role of the empowered customer who may perform the service at various locations and time frames not controlled by the service provider. Although time and location have been implicitly noted as factors influencing customer perceptions, there are no theoretical conceptualizations that include time and location as explicit value dimensions.


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The aim with this paper is to reconceptualize customer perceived value including a temporal and spatial perspective by proposing and measuring four value dimensions. The aim is thus theory development. The empirical study points to the importance of time and location as value dimensions, and it indicates that current value models need to be broadened.

The paper has the following structure. First, it begins with a presentation of quality and value literature to describe dimensions that influence value perceptions. Aspects relating to the service environment and e-service quality are presented to show the challenges that time and location pose on value perceptions. Secondly, the theoretical review results in a conceptualization of customer perceived value as a function of technical, functional, temporal and spatial dimensions. Then thirdly, the discussion continues with an outline of the research design and the empirical study. Drawing from structured interviews about online bill payments, it is showed that time and location are considered to be value adding dimensions of services. This is attributable to the relative utility of the temporal and spatial dimensions in comparison to the technical and functional dimensions. The paper is concluded with theoretical and practical implications to service management and marketing.

Customer perceived value

It has been suggested that customer perceived value is formed of the trade-off between benefit and sacrifice (Monroe 1990). Many of the conceptualizations involve quality as the benefit and price as the sacrifice. The perspective of value taken is either a multiplicative or additive function of benefit and sacrifice (Cronin Jr et al, 1997). In the former case, value has been seen as the ratio _____________________________________________________________________________ Heinonen, K. (2004): Reconceptualizing customer perceived value - the value of time and place, Managing Service Quality, 14 (2/3), 205-215

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of benefit (numerator) and sacrifice (denominator). The additive model recognizes the integrative nature of benefit and sacrifice and denotes the compensatory trade-off between benefit and sacrifice.

Although the benefit and sacrifice model of value is relevant, it is not used in this study. In many respects, the benefit and sacrifice components do not denote the sources of value similar to the technical and functional quality dimensions. In contrast, acknowledging the interdependence of service value and quality (Liljander & Strandvik, 1995), it is argued in this paper that quality dimensions can be used to conceptualize perceived service value. Much of the research on service quality has focused on identifying dimensions that influence the perceived quality of a service. Quality has been conceptualized as having process and outcome dimensions (e.g. Grönroos, 1982; Lehtinen, 1982; Parasuraman, Zeithaml and Berry, 1985). Perceived service quality has been defined as a function of what customers get out of the service, i.e. a technical dimension, and how the service is delivered to them, i.e. a functional dimension (Grönroos, 1982).

Service environment It has also been suggested that the service environment influences service evaluations (Lehtinen, 1982; Lehtinen & Lehtinen, 1991; Rust & Oliver, 1994; Brady & Cronin Jr, 2001). Lehtinen (1982) argued that the physical resources of the service delivery system influence the service production process. He separated between physical support, i.e. physical setting and equipment, and the physical product. More recently, service quality has been described as a hierarchical service quality model based on interaction quality, environmental quality and outcome quality (Brady & Cronin Jr, 2001). In the model, each of the fundamental dimensions included three _____________________________________________________________________________ Heinonen, K. (2004): Reconceptualizing customer perceived value - the value of time and place, Managing Service Quality, 14 (2/3), 205-215

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subdimensions that specified the quality perceptions. The quality of the physical environment involved three subdimensions: ambient conditions, design and social factors. Although it could be argued that the functional dimension incorporates aspects in relation to the service environment, it has traditionally been defined with issues relating to the customer-service employee interaction, and thus the service environment has not been explicitly included.

Other service management models have included the service environment as a function of time and/or location, such as servicescape, service delivery, accessibility and convenience. However, the value of time and location has not been acknowledged. One of the first conceptualizations of the service environment was Bitner’s (1992) servicescape model that involved three environmental dimensions, ambient conditions, space/function and signs, symbols and artifacts. This thinking has been used extensively. The servicescape can be seen to facilitate accessibility in terms of ease of initiation (Donabedian, 1980), ease of access (Parasuraman, Zeithaml & Berry, 1985; Yale and Venkatesh, 1986) and ease of orientation (Dabholkar, Thorpe & Rentz, 1996).

The service environment is often included in service delivery, such as the distance between the service provider and the customer (Lovelock, 1983), accessibility (Grönroos, 1982) and the availability of service outlets (Lovelock, 1983). However, although time and location are acknowledged, the value of them are excluded. Dabholkar (1994) classified technology-based service delivery based on by whom, where and how the service is delivered. Temporal access is frequently related to time allocations (e.g. Hendrix, Kinnear & Taylor, 1979), time availability (e.g. Darian & Cohen, 1995; Kaufman & Lane 1996), and time orientations (e.g. Settle, Alreck & Glasheen, 1978; Bergadaa, 1991), opening hours (e.g. Kaufman & Lane 1996), punctuality (e.g. _____________________________________________________________________________ Heinonen, K. (2004): Reconceptualizing customer perceived value - the value of time and place, Managing Service Quality, 14 (2/3), 205-215

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Taylor 1994; Brady & Cronin Jr, 2001), and speed of delivery (Dabholkar, 1994; Zeithaml, Parasuraman and Malhotra, 2000; Anselmsson, 2001; Jun & Cai, 2001). Convenience is a related construct that refers to temporal and spatial aspects of the service delivery (e.g. Yale and Venkatesh, 1986; Brown, 1990; Zhu, Wymer & Chen, 2002; Peterson & Balasubramanian, 2002). Access convenience has been suggested to be especially critical for services that require customer participation because customers must be present at the right time and place (Berry, Seiders & Grewal, 2002).

Time and location have not been acknowledged in e-quality models. It seems that many e-service quality models (e.g. Zeithaml, Parasuraman & Malhotra, 2000; Kayanama & Black, 2000; Wolfinbarger & Gilly, 2003) have been conceptualized based on the SERVQUAL dimensions (Parasuraman, Zeithaml & Berry, 1985). For example, Zeithaml, Parasuraman & Malhotra (2000) conceptualized e-service quality with 11 dimensions, i.e. reliability, responsiveness, assurance/trust and security/privacy, access, flexibility, ease of navigation, efficiency, and price knowledge. However, it may involve similar criticism as the original SERVQUAL dimensions concerning their relevance and generalizability. Likewise, the conceptualization may include problems because of their level of detail. For example, Dabholkar (1994; 1996; 2000) studied technology-based self-services and suggested a number of different attributes that customers expect from technology-based self-service options, including speed of delivery, little human interaction, time savings, perceived control and privacy. However, acknowledging the hierarchical nature of service quality (Brady & Cronin Jr, 2001), a lower level of detail can be used to group many of these dimensions.


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Proposed conceptualization of customer perceived value

Based on the discussion in the literature review above, three conclusions can be made that impact the development of the theoretical conceptualization. First, value as defined as a trade-off between benefit and sacrifice is relevant but do not show the sources of value such as the quality dimensions. Second, because quality and value are linked, then dimensions that influence quality perceptions can also be used to describe value perceptions. Thirdly, because the service environment affects service delivery, time and location may be seen to influence value perceptions. However, they have not been conceptualized as value dimensions. Hence, it is proposed that value is based on four dimensions: technical, functional, temporal and spatial dimensions. i

The technical dimension includes technical elements of the service and is traditionally depicted by the core service. It refers to what the outcome of the service interaction is. The ability to choose between alternatives has been shown to be relevant for e-services. For example, Zeithaml, Parasuraman and Malhotra (2000) identified flexibility as an e-service quality dimension that denoted the customer’s choice to conduct the service as well as the knowledge of such options. Similarly, Liljander, van Riel and Pura (2002) elaborated this dimension and raised the issue of service options referring to the option to choose from a fixed number of service alternatives.

The functional dimension relates to an evaluation of functional aspects of the service delivery process. It denotes how the service interaction process occurs. Looking at service production as a continuum, services may be produced by firms, jointly by firms and customers and customers _____________________________________________________________________________ Heinonen, K. (2004): Reconceptualizing customer perceived value - the value of time and place, Managing Service Quality, 14 (2/3), 205-215

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only (Bitner, 1992). Similarly, Meuter and Bitner (1998) distinguished between self-service, joint production and full service. Three different types of service delivery have been identified; automatic, self-service and human service (Lehtinen & Lehtinen, 1991). Zeithaml, Parasuraman and Malhotra (2000) suggested efficiency as a dimension of e-service quality to denote the level of customer input needed in providing necessary information.

These two traditional quality dimensions form the fundamental part of services and relate to customers’ perception of the core service, as depicted in figure 1. The service would be of little value without them. In contrast, these dimensions are influenced by the context in which they are perceived. Hence, two other dimensions that surround the fundamental dimensions affect perceptions, namely temporal and spatial dimensions and involve customers’ flexibility in relation to the service delivery.

Take in figure 1

The temporal dimension is based on temporal aspects affecting value perceptions. It represents how the customer perceives the temporal flexibility relating to when the service interaction occurs. Temporal latitude, i.e. a result of flexibility in activities, has been conceptualized as a continuum ranging from complete latitude, through some latitude to no latitude (Hendrix, Kinnear and Taylor, 1979). Considering that technology-based self-services are available almost independently of temporal boundaries, this issue is particularly relevant.


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The spatial dimension is spatially driven and related to the usage location. It denotes how the customer perceives the spatial flexibility relating to where the service interaction occurs. Dabholkar (1994) concluded that the service delivery for technology-based self-service options could occur at the service site, on a neutral site or at customer’s site. This conceptualization is based on and similar to Lovelock’s (1983) conclusions. The customer’s site involves home or work when considering that technology-based services are based on technology that is fixed to a location, such as computers. The customer’s site can further be conceptualized as being spatially flexible, i.e. occur wherever, such as on the move, particularly when taking into account portable devices, such as mobile phones.

The value in when and where thus denotes the value of service delivery at right time and location. The value added in these two dimensions is dependent on the possibilities and limitations enabled by technology and they form surrounding but integral elements of the service. In the empirical study, the importance of temporal and spatial value dimensions is explored and they are compared to the traditional technical and functional dimensions. By empirically exploring the proposed value conceptualization in a context of online bill payment services, this study focuses on measuring the relative importance of time and location in value perceptions.

The empirical study

Taking a pragmatist approach that matches methods to specific research questions (Patton, 2002), the empirical study was based on a parallel mixed method model. This multiple application design is a combination of qualitative and quantitative data collection, data analysis and inference _____________________________________________________________________________ Heinonen, K. (2004): Reconceptualizing customer perceived value - the value of time and place, Managing Service Quality, 14 (2/3), 205-215

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in parallel form (Tashakkori & Teddlie, 1998). It follows the logic of abductive reasoning that shifts between deduction and induction (Patton, 2002). The study was designed and conducted to explore the relative importance of the value dimensions and to investigate the content of the value dimensions in a technology-based self-service setting. It was based on interviews and conjoint analysis lasting approximately one hour per respondent. In this paper, only the quantitative results are reported but additional insight is taken from the qualitative part.

Conjoint analysis Conjoint analysis, i.e. a decompositional method for estimating the structure of respondents’ preferences in relation to the overall evaluations of a set of predetermined alternatives (Green & Srinivasan 1978), has been used to study consumer evaluations of services (e.g. DeSarbo et al, 1994; Ostrom & Iacobucci, 1995; Carman, 2000). Considering that the aim to measure the relative importance of the value dimensions, the choice of research technique was perceived motivated. However, in this study the focus was on depth rather than width, signifying that the objective was not generalization in its traditional meaning where large amounts of empirical data is used to verify hypothesis. Rather the aim was to use analytical tools, theoretical models and empirical findings to deepen the knowledge about a specific phenomenon. In this respect, the abductive approach to move between theoretical and empirical reasoning was aimed at creating a comprehensive understanding about the nature of customer perceived value.

A first study was conducted in the spring 2002 among a convenience sample of 40 respondents aged between 19 and 76 years. Senior marketing students instructed to interview a specific number of respondents collected the data among relatives and friends. The second and main study _____________________________________________________________________________ Heinonen, K. (2004): Reconceptualizing customer perceived value - the value of time and place, Managing Service Quality, 14 (2/3), 205-215

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conducted by the author in the winter 2002 was based on a critical case sample (Patton 2002) of 37 Finnish online bank customers. It consisted of 20 female and 17 male respondents in ages between 21 and 33 years.

Online bill payment services were chosen as unit of analysis since customers extensively perform the service process themselves. In Finland Internet banking services are largely used to pay bills and the number of users is expected to increase. For example, Nordea, one of Finland’s leading banks has estimated that almost half of all bill payments are performed via Internet, and only 3 % are performed at branch offices (Hankkila, 2003). In general, about 34% of all bill payments in Finland are executed via Internet (Finnish Banker’s Association, 2003). This indicates that the self-service delivery alternatives involve something that customers value, something that is not provided at bank branch offices and in this respect the Finnish online retail banking is appropriate for the study.

Two issues were relevant to the development process of the empirical design. First, the technical and functional service quality model (Grönroos, 1982) was chosen as starting point for the theoretical conceptualization. Additionally, time and location were included as value dimensions. Secondly, by searching existing literature the definitions of the technical and functional dimensions were specified so that they would better fit the current focus. Definitions on the added dimensions were also based on previous research. The theoretical support was beneficial because the four proposed value dimensions were operationalised by only one attribute each.


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The value dimensions represented the attributes and they were operationalised based on knowledge on technology-based self-services as well as on a pre-understanding of banking services. The attributes, as they were presented to the respondents, were 1) possibility to choose different services (what, technical dimension), 2) customers’ input in the service (how, functional dimension), 3) possibility to choose the time of service delivery (when, temporal dimension) and 4) possibility to choose the place of service delivery (where, spatial dimension).

What related to the possibility to choose service alternatives and it denoted how extensive the service is. In the first study it was operationalised as “flexibility in service options”. However, the qualitative findings implied that this operationalization was ambiguous, as the respondents seemed to incorporate temporal and spatial elements in this variable, rather than only focusing on the service-specific elements. A stricter definition was needed and hence it was operationalised in the main study as the “ability to choose different service options”.

How referred to the level of customer involvement in the service delivery. As such, the focus of the functional dimension in this study is shifted away from the customer-service provider interaction towards the customer’s activities in relation to the service process. It was operationalised in both studies as the “customer’s effort in the service process”. When was described as the time of service delivery and it related to how much the customer is temporally bounded. In both studies, it was operationalised as “the ability to choose the time to conduct the service”. Where denoted the place of service delivery and it involved how much the customer is spatially limited in the service delivery. It was operationalised as “the possibility to choose the place to perform the service” in both studies. _____________________________________________________________________________ Heinonen, K. (2004): Reconceptualizing customer perceived value - the value of time and place, Managing Service Quality, 14 (2/3), 205-215

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The attribute levels in the first study were operationalised through reasoning based on existing knowledge of banking services. The technical dimension was operationalised as flexibility on two levels; “all parts of the payment are flexible” and “no parts of the payment are flexible”. The functional dimension related to the input in the payment and consisted of three levels; no customer input, equal input from customer and bank, and self-service. The temporal dimension, the time of service delivery, had two levels; “anytime” and “office hours”. The spatial dimension, the location of service delivery, consisted of three levels; at specific place in connection with the bank, at homeground and anywhere.

The findings from the first study indicated that some modifications in the attribute levels were necessary for the main study. Although the individual attribute levels were clear, the profiles with variations in levels became somewhat complex and difficult for the respondents to evaluate. This was much due to the fact that all the levels for each attribute were different. Also, the profiles were sometimes comparable to an existing service, but sometimes they were highly hypothetical.

Consequently, for the main study it was decided to operationalize the attribute levels on a more abstract level in relation to the experience of the current service and not with objective levels. A benefit of using a reference service is that it is behaviorally and contextually anchored in the respondent’s consumption pattern (Liljander & Strandvik, 1993). The reference service used in the current study was the online bill payment service that the respondent was currently using.


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Three levels were used for all the dimensions and operationalised as “more than”, “the same as”, and “less than” compared to the current service that the respondent was using (figure 2). In the main study the functional dimension was operationalised as customers’ level of input in the service delivery without specifying the level of input from the service provider, i.e. it included only different variations of customer input. Also, the focus of the spatial dimension is more on the amount of flexibility in choosing the location of service delivery, rather than limiting the levels to specific locations.

Take in figure 2

It was possible that the respondents would perceive the services differently and this would result in diverging reference points. Another alternative would have been to anchor the conjoint task in some fixed reference point that was consistent across respondents, for example a hypothetical scenario. This would however have meant that some respondents would probably not be familiar with the reference point. It was assumed that this alternative would involve a more complex reference point and it may not necessarily represent actual utility of the profiles. Hence, by anchoring the evaluations in an experienced service, the respondents had a concrete and consistent, although not necessarily comparable, frame of reference and the results would presumably be more valid.

Because the levels were designed this way, it was assumed that the perceived utility of the dimensions would be linear. At the outset, it was assumed that more flexibility in choice of service options, time and location of service delivery (level 3) for the technical, temporal and _____________________________________________________________________________ Heinonen, K. (2004): Reconceptualizing customer perceived value - the value of time and place, Managing Service Quality, 14 (2/3), 205-215

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spatial dimensions receives higher utility than less flexibility in service options, time and location (level 1), which includes higher sacrifice. For the functional dimension, the situation was the opposite, because more input (level 3) was assumed to involve higher sacrifice than less input (level 1). However, for simplicity, in the analysis the results for the functional dimension were reversed.

Using a full profile method where each stimulus is described separately consisting of all attributes and their levels (Hair et al, 1998), the conjoint task with four attributes and three levels would include 81 possible combinations (3*3*3*3).ii By choosing the additive composition rule, these combinations were reduced to 9 stimuli using a fractional factorial design. It means that potential independent interaction effects between attributes cannot be accounted for. However, following the conclusion of Carman (2000) that technical and functional dimensions are segregate, it was assumed that there were no interaction effects between the attributes. Three holdout profiles were included to measure the validity.

The conjoint task was conducted as an interview situation where the respondents were asked to first arrange the full profile descriptions in two piles divided into the most preferred and least preferred profiles and then to sort the piles separately. They were to describe aloud the thoughts that arose from the sorting procedure. After sorting the profiles, the respondents were asked why they had sorted the profiles in such an order.

Empirical findings on the value dimensions


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The purpose was to explore the importance of time and location as value dimensions, and their relative importance in comparison with technical and functional dimensions. The perceived importance of the value dimensions is described by presenting the aggregated attribute-specific results.

The findings from the first study indicated that the most important attribute was the place of service delivery with 32,99 % of the averaged importances (figure 3). The second most important attribute was the temporal dimension, i.e. the time of service delivery, which received an averaged importance of 28,65 %. The functional dimension had an averaged importance of 23,10 %. The least important attribute was the technical dimension with an importance of 15,25 %.

Take in figure 3

Table 1 illustrates the relative importance of each value dimension in the main study. On an aggregate level, the findings show that time is the most important attribute with an average importance of 40,07% of 100%. Interestingly its importance was more than the combined importance of the technical and functional dimensions. The spatial dimension follows as the second most important attribute with an average importance of 27,87%. The technical and functional dimensions received almost similar importance weights with 16,07% and 15,99% respectively of the average importance.

Take in table 1


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Both studies indicated that the new dimensions were the most important. However, the difference in the findings on the importance of time and location may be attributable to the operationalization of the levels. An attribute that is operationalised with more levels usually receives higher utility. This may explain why the spatial dimension, operationalised with three levels, received higher utility than the temporal dimension, operationalised with two levels, in the first study. In the second study, all dimensions had three levels, and then the temporal dimension received higher utility.

The level utilities provide a more detailed description of how the value dimensions are perceived. Figure 4 representing the second study findings shows the part worths of the levels ranging from level 1 (“less than”) through level 2 (“same as”) to level 3 (more than”). The most important aspect in the figure is the form of the level part worths.

Take in figure 4

Interestingly, none of the attribute level part worths are linear. In fact, the form of the level part worths resembles the curves of hygiene factors. Characteristic of hygiene factors is that higher levels do not provide more utility or value (Herzberg, 1968). It may indicate that the respondents are satisfied with the current level, and an improved level does not offer much additional value, whereas a lower level is perceived as very negative. This is particularly true for the temporal (when) and spatial (where) dimensions.


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If the attribute part worths were linear they would be perceived as critical. It seems that the functional dimension (how) is the closest to being linear. Also the technical dimension (what) seems to be somewhat near linearity, at least compared to the temporal and spatial dimensions. However, considering that the difference between the level utilities is small, their importance is not critical. In other words, moving between levels 1-3 does not influence significantly the part worths.

The validity measures of Pearson’s R (0,0000 and 0,0000) and Kendall’s Tau (significance 0,0002 and 0,0001) indicate that the results are statistically significant (table 2). The Kendall’s Tau for the holdout cards was 0,3008, which is considered sufficient in a conjoint task (Hair et al, 1998). Although the validity of the holdout stimuli is usually lower, it may indicate that there are some interaction effects between the attributes.

Take in table 2

Discussion and contribution

Traditionally, technical elements of the service outcome and functional elements of the service process have been acknowledged as important dimensions in value perceptions. However, considering the empowered customer interacting with technology-based self-services, also time and location are important dimensions influencing value perceptions. The aim with this study was to investigate the importance of time and location as value dimensions and how they are perceived in comparison to the traditional dimensions. The findings from two empirical studies revealed that the time and location of service delivery in fact influence customer perceived value _____________________________________________________________________________ Heinonen, K. (2004): Reconceptualizing customer perceived value - the value of time and place, Managing Service Quality, 14 (2/3), 205-215

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and that they are perceived as important value dimensions. In this study, time and location were even more important dimensions in customer perceived value than outcome and process elements.

One theoretical contribution is the proposed conceptualization that extended the scope on customer perceived value and included two new dimensions in addition to the traditional two dimensions. It incorporated four value dimensions to describe from a customer perspective the reality in which value is created through different services, service processes and service delivery times and locations.

An implication of this is that time and location need to be considered as explicit value dimensions in addition to the technical and functional dimensions. Accordingly, value is not limited to the service itself, but incorporates a broader perspective of factors internal and external to the service. Hence, value is related to some specific offering (technical value dimension), created in a wanted way (functional value dimension) and that is perceived as relevant in a specific time (temporal value dimension) and location (spatial value dimension).

The study also pointed to the curvilinearity of the value dimensions. More specifically, the temporal and spatial dimensions were perceived as hygiene factors. It indicates that lower levels of temporal and spatial flexibility than the current situation are perceived as highly negative, while higher levels do not provide much additional value. Hygiene dimensions are factors, that customers do not notice until they do not reach the required minimum level. The criticality of these dimensions is made explicit when they do not perform according to expectations. Then they _____________________________________________________________________________ Heinonen, K. (2004): Reconceptualizing customer perceived value - the value of time and place, Managing Service Quality, 14 (2/3), 205-215

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become crucial elements that very negatively affect the perceived value. In other words, the sacrifice would be larger with reduced levels in the temporal and spatial dimensions, compared to reduced levels in the technical and functional dimensions. A practical implication of this is that the levels of temporal and spatial dimensions have to be perceived as acceptable because even minor decreases in the performance may result in a large reduction of the perceived value. These findings support Strandvik’s (1994) conclusion about the asymmetric shape of the quality function. Also the findings of Zeithaml et al (2002) pointed to the curvilinearity of the quality function.

Limitations of the study and suggestions for future research

In this study the benefit and sacrifice were viewed as one entity within the value dimension. However, considering the results from the qualitative part of the study, there is an indication that each value dimension includes different benefit and sacrifice attributes. Further research is needed in order to identify the content of each value dimension. Future research should also measure whether different aspects of the value dimensions are in fact more value adding than others.

Even though this study has focused on technology-based self-services, the conceptualization is argued to be equally relevant for other service contexts. Customers perceive and value time and location independence in technology-based services and it can be even more important for some customers compared to the service process and outcome. While further investigation is needed, it can be assumed that if customers get accustomed to this temporal and spatial flexibility, in the _____________________________________________________________________________ Heinonen, K. (2004): Reconceptualizing customer perceived value - the value of time and place, Managing Service Quality, 14 (2/3), 205-215

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future they would require it for other service contexts as well. This would indicate that the time and location of service delivery are important, if not even necessary for the perceived value of other services not directly linked to technology. It would be particularly interesting to explore the perceived value of time and location in retailing services and professional business settings.

Further investigation is also needed to measure how the dimension importances will evolve. Considering the findings from the qualitative part of the study, it seems as if the perceived importances of the value dimensions are dynamic and relative. For example, it appears that they differ among customers and among service settings.

Looking critically at the study, then the number of respondents may seem low. Usually the number of respondents in a quantitative study is higher; the studies were based on the perceptions of 40 respectively 37 respondents. However, considering the aim with this study the number of respondents was deemed sufficient. The objective was not to statistically confirm the importance of each value dimension; rather the conjoint task was used to indicate whether the proposed dimensions are in fact perceived as important. This is justified in a grounded theory development type of study where the aim is to find new aspects in a phenomenon. Also, considering that conjoint analysis provides data on both individual and aggregate levels, it is not necessary to have large sample sizes. Accordingly, the empirical study was deemed as having sufficient theoretical and empirical foundation.


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Managerial implications

One practical implication of the importance of time and location is that service design decisions should explicitly include the time and location of service delivery. This means that it is no longer sufficient to only focus on process and outcome aspects of service delivery, but that service management must put considerable attention on temporal and spatial elements in services. However, this poses a challenge for service managers. Whereas outcome and process elements of the service have been relatively easy to manipulate, variation in time and location are more difficult to control due to the increased customer input and activity in the service delivery. The service delivery occurs in many cases at the customer’s choice of time and location, instead of the service provider’s site. This results in a focus on creating an enabling arena for value creation where customers can initiate and perform the service act at their own convenience, rather than only providing a value adding offering based on the service outcome and service process.

A challenge for marketers is to increase the breadth of the value dimensions. The findings indicated that online banking services are perceived as convenient in terms of temporal and spatial flexibility. Considering the characteristics of the dimensions, effort should be devoted to creating adequate levels of temporal and spatial flexibility. The temporal and spatial dimensions were perceived as hygiene factors, i.e. lower levels of temporal and spatial flexibility than the current situation is perceived as highly negative, while higher levels do not provide much additional value. In other words, the sacrifice would be larger with reduced levels in the temporal and spatial dimensions, compared to reduced levels in the technical and functional dimensions.


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Additionally, while time and location are important dimensions, they are fairly easily copied. This means that the temporal and spatial value dimensions may become hygiene factors for all customer segments. In other words, it is necessary to find new ways to develop the content of the dimensions. For example, in addition to temporal flexibility, service providers may need to improve consumers’ time allocation. Similarly, spatial flexibility may be complemented for example with efficient production facilities, e.g. functioning Internet sites. Also the technical and functional dimensions should be monitored to identify possibilities to develop them. Future research needs to address this potential breadth of each of the value dimensions.

In line with Swait and Sweeney (2000) who proposed a segmenting model based on customers’ value orientations, the relative importance of each value dimension provides a basis for contrasting customers. This in turn may give more insight into differences in behavior than traditional segmenting based on demographic variables. Tentative cluster analysis of the current study points to three clusters. In the same way as there are customers that value the technical dimensions over the functional dimension, i.e. prefer the outcome over the process, there are some customers that value time and/or location of service delivery over the technical and functional dimensions. By having customers compare them between competing offerings, value profiles for different services can be created. These profiles are based on different ratings of the dimensions in reference to either competing offerings, or future offerings. They can be used in this respect to map current and future demand.

An important practical implication of this is that the value dimensions can be used to target customers in a new way. In practice, this means that depending on whether customers value the _____________________________________________________________________________ Heinonen, K. (2004): Reconceptualizing customer perceived value - the value of time and place, Managing Service Quality, 14 (2/3), 205-215

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temporal and spatial dimensions they may be offered time and location flexibility. In contrast, for customers that value service attributes, such as a number of different service alternatives, then the technical dimension may be accentuated in the service design.

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Figure 1: Four value dimensions

When

Where What How

I have neither larger nor smaller possibility to choose different services My own input in the service is larger I have smaller possibility to choose time of service delivery I have neither larger nor smaller possibility to choose place of service delivery Figure 2: Example of profiles used in the conjoint task

45 40 35 30

What

25

How

20

When

15

Where

10 5 0

Figure 3: Importance of the value dimensions (first study)


30

Part worth

Table 1: Importance and utility of the value dimensions (second study) Averaged Utility importance 16,07% Technical dimension More services ,6036 Same services ,2613 Fewer services -,8649 15,99% Functional dimension More input -,5225 Same input ,2072 Less input ,3153 40,07% Temporal dimension More time freedom 1,1532 Same time freedom ,6757 Less time freedom -2,3604 27,87% Spatial dimension More place freedom 1,1532 Same place freedom ,4054 Less place freedom -1,5586

2 1,5 1 0,5 0 -0,5 0 -1 -1,5 -2 -2,5 -3

1

2

3

4

What How When Where

Attribute levels

Figure 4: Attribute level part worth

Table 2: Validity of the conjoint analysis Study 1 Significance Pearson’s R 0,998 0,0000 Kendall’s tau 0,944 0,0002 Kendall’s tau for holdouts -

Study 2 1,000 1,000 -,333

Significance ,0000 ,0001 ,3008


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i

It is assumed that the value dimensions include price and other forms of sacrifice that is implicitly considered. The value dimensions are seen to include an integrated function of benefit and sacrifice. Consequently, the benefit and sacrifice of each dimension were not separated in this study. ii A full profile alternative of the pilot conjoint task with four attributes and two-three levels would include 36 possible combinations (2*3*2*2). However, using a fractional factorial design it was possible to reduce the number of profiles to nine. No holdout profiles were included.
