Ming-Hui Huang

The Service Revolution and the Transformation of Marketing Science

The nature of marketing science is changing in a systematic, predictable, and irrevocable way. As information technology enables ubiquitous customer communication and big customer data, the fundamental nature of the firms connection to the customer changes: better, more personalized service can be offered, from which service relationships are deepened, and consequently, more profitable customers grow the influence of service within the goods sector and expand the service sector in the economy. Marketing is becoming more personalized, and marketing science techniques that exploit customer heterogeneity are becoming more important. Information technology improvements also guarantee the increasing importance and usage of computationally intensive data processing and “big data.” Most importantly, these trends have already lasted for more than a century, and they will become even more pronounced in the coming years as a result of the monotonic nature of technology improvement. These changes imply a transformation of marketing science in both the topics to be emphasized and the methods to be employed. Increasingly, and inevitably, all of marketing will come to resemble to a greater degree the formerly specialized area of service marketing, only with an increased emphasis on marketing analytics.

Value fusion: The blending of consumer and firm value in the distinct context of mobile technologies and social media

Purpose: In this article, we introduce the concept of Value Fusion to describe how value can emerge from the use of mobile, networked technology by consumers, firms, and entities such as non-consumers, a firm’s competitors, and others simultaneously.Design/methodology/approach: We discuss the combination of characteristics of mobile devices that enable Value Fusion. We discuss specific value and benefits to consumers and firms of being mobile and networked. We introduce and define Value Fusion and set it apart from related, other conceptualizations of value. We provide examples of Value Fusion and discuss the necessary conditions for Value Fusion to occur. We discuss under which conditions the use of mobile, networked technology by consumers and firms may lead to Value Confusion instead of Value Fusion. We end with several research questions, proposed to further enhance the understanding and management of Value Fusion.Findings: The combination of portable, personal, networked, textual/visual and converged characteristics of mobile devices enables firms and consumers to interact and communicate, produce and consume benefits, and create value in new ways that have not been captured by popular conceptualizations of value. These traditional conceptualizations include customer value, experiential value, customer lifetime value, and customer engagement value. Value Fusion is defined as value that can be achieved for the entire network of consumers and firms simultaneously, just by being on the mobile network. Value Fusion results from producers and consumers (i) individually or collectively, (ii) actively and passively, (iii) concurrently, (iv) interactively or in aggregation contributing to a mobile network (v) in real time and (vi) just-in-time.Implications: Mobile devices have revolutionized the way we live, and there is widespread expectation that they will have “game- changing” implications for marketing in the near future (MSI, 2012). Therefore, research is needed to help us understand how mobile technologies are likely to change conventional wisdom about how customers and firms connect, interact and do business, and finally culminate in mutual, synergetic value; a phenomenon which we label Value Fusion.Originality: This paper synthesizes insights from the extant value literature that by and large has focused on either the customer’s or the firm’s perspective, but rarely blended the two. The contribution of this paper is that the Value Fusion concept achieves such a blending in the distinct context of mobile technologies and social media. Value should be considered more holistically, and value to the consumer and firm should be jointly optimized (i.e., Value Fusion) rather than managed in isolation. In addition, both active and passive participation should be valued. This paper calls for a more holistic approach to conceptualize value and identifies unanswered questions about value in the distinct context of mobile technology and social media.

Optimizing Service Productivity

To increase service productivity, many companies utilize automation extensively to reduce the use of labor. However, greater use of automation does not always result in higher service quality, and the effectiveness of automation in providing service hinges on how advanced the technology level is. Departing from the standard perspective in which productivity is simply treated as an output measure of firm performance, the authors propose service productivity as a strategic decision variable; that is, the firm manages the service productivity level to maximize profits. They develop a theory of optimal service productivity that explains when the optimal productivity level will be higher or lower and distinguishes between short-term effects of service productivity due to labor–automation trade-offs and long-term effects due to the advance of technology. The theory, together with the existing literature, inspires the development of three testable empirical hypotheses, which are confirmed using data from more than 700 service companies in two time periods. The research shows that service productivity should be lower when factors (e.g., higher profit margin, higher price) motivate the provision of better service quality and that service productivity should be higher when factors (e.g., higher market concentration, higher wages) discourage the provision of better service quality. The empirical results also provide preliminary evidence that large service companies may tend to be too productive relative to the optimal level and, if so, should place less emphasis (in the short run) on cost reduction through automation and more emphasis on service quality.

IT-Related Service A Multidisciplinary Perspective

Information technology (IT)-related service is the strategic management of the creation and delivery of service in which information and communication technology (referred to as IT here) plays a substantial role. IT can serve as a facilitator (e.g., facilitates access to customer information and customer communication) or enabler (e.g., enables value cocreation), serves as the context (e.g., mobile phone market or e-commerce), or is itself service (e.g., social networking sites or information goods). There are three essential characteristics of IT-related service—it is information-intensive, customer-centric, and multidisciplinary. IT-related service is information-intensive. The ability to communicate (firm-to-customer, firm-to-firm, and customer-to-customer) anytime, anywhere, and to anyone, is significantly facilitated by the recent technology trends of big data, cloud computing, and mobile and networking platforms. IT-related service is customer-centric. The use of IT, both by firms and by customers, alleviates the common observation that there is a trade-off between customer satisfaction and productivity improvement for service. Customers are able to talk back to firms with their new communication power and firms are better able to cost-efficiently satisfy their customers. The study of IT-related service is thus inherently multidisciplinary involving such fields as marketing, strategic management, computer science/information systems, and operations management/organizational research. The results of the IT-service transformation are that IT blurs the distinction between goods and service; service is becoming more goods-like and goods are acquiring the characteristics of service. The Journal of Service Research special issue on IT-related service brings together all of these elements, and provides rich strategic implications for managers.

The Future of Frontline Research: Invited Commentaries

This article contains a set of six invited commentaries written by leading scholars, expressing varied perspectives on the future of frontline research and on the frontline domain itself. The article accompanies the Journal of Service Research special issue on organizational frontlines. In their commentaries, the authors share insightful views on areas of personal interest ranging from employee emotion and customer relationship building to the effect of technology and its implementation at the organizational frontline. Included within each commentary are managerial insights and suggestions for needed research in the highlighted area.

Getting Smart: Learning From Technology-Empowered Frontline Interactions

Smart technologies are rapidly transforming frontline employee-customer interactions. However, little academic research has tackled urgent, relevant questions regarding such technology-empowered frontline interactions. The current study conceptualizes (1) smart technology use in frontline employee-customer interactions, (2) smart technology–mediated learning mechanisms that elevate service effectiveness and efficiency performance to empower frontline interactions, and (3) stakeholder interaction goals as antecedents of smart technology–mediated learning. We propose that emerging smart technologies, which can substitute for or complement frontline employees’ (FLEs) efforts to deliver customized service over time, may help resolve the long-standing tension between service efficiency and effectiveness because they can learn or enable learning from and across customers, FLEs, and interactions. Drawing from pragmatic and deliberate learning theories, the authors conceptualize stakeholder learning mechanisms that mediate the effects of frontline interaction goals on FLEs’ and customers’ effectiveness and efficiency outcomes. This study concludes with implications for research and practice.

Marketing Is from Mars, IT Is from Venus: Aligning the Worldviews for Firm Performance

A typical firm is operated by multiple functional managers who may collaborate as well as compete to achieve firm performance. In the digital age, firm performance is essentially customer-dependent and technology-dependent, with both marketing and information technology (IT) playing key roles. Unfortunately the two functions often have very different worldviews. We show how these differences can damage firm performance, and suggest ways to mitigate this damage. We build a worldview difference model, synthesized from multiple disciplines. The model is tested using both matched and nonmatched observations from marketing and IT managers, and is analyzed with hierarchical linear models using both perceptual and objective firm performance data over a 4-year period. We find that differences between the beliefs and perceptions of marketing managers and IT managers generate a negative impact on firm performance, and suggest appropriate technology-culture associations to effectively align their worldviews for firm performance. To improve firm performance, a cross-functional appreciation for market and technology drivers can be achieved by making marketing managers more learning-oriented and by providing IT managers a culture that is congruent with technology.

Artificial Intelligence in Service

Artificial intelligence (AI) is increasingly reshaping service by performing various tasks, constituting a major source of innovation, yet threatening human jobs. We develop a theory of AI job replacement to address this double-edged impact. The theory specifies four intelligences required for service tasks—mechanical, analytical, intuitive, and empathetic—and lays out the way firms should decide between humans and machines for accomplishing those tasks. AI is developing in a predictable order, with mechanical mostly preceding analytical, analytical mostly preceding intuitive, and intuitive mostly preceding empathetic intelligence. The theory asserts that AI job replacement occurs fundamentally at the task level, rather than the job level, and for “lower” (easier for AI) intelligence tasks first. AI first replaces some of a service job’s tasks, a transition stage seen as augmentation, and then progresses to replace human labor entirely when it has the ability to take over all of a job’s tasks. The progression of AI task replacement from lower to higher intelligences results in predictable shifts over time in the relative importance of the intelligences for service employees. An important implication from our theory is that analytical skills will become less important, as AI takes over more analytical tasks, giving the “softer” intuitive and empathetic skills even more importance for service employees. Eventually, AI will be capable of performing even the intuitive and empathetic tasks, which enables innovative ways of human–machine integration for providing service but also results in a fundamental threat for human employment.

Price Mechanism for Knowledge Transfer: An Integrative Theory

Knowledge transferred in the open market via a price mechanism enjoys the benefits of avoiding internal competition, learning from external competitors, and accmulating diversified knowledge. In the market, users can access a repository of knowledge for a single price (repository pricing) or knowledge items in the repository can be sold individually (knowledge pricing). However, users have been found to prefer repository pricing but not the knowledge in the repository. This irrationality can cause market failure because users derive a suboptimal level of utility from the knowledge repository, and vendors have contradictory pricing and knowledge strategies. We empirically examine a joint explanation from two competing theoretical perspectives that accounts for this inconsistency nicely: The mental accounting perspective endorses repository pricing because it entices users with the benefits of the whole repository, whereas the transaction decoupling perspective finds expression in individually priced knowledge because it prevents the discrete benefit of knowledge from becoming obscure. By integrating the two theoretical perspectives and considering price, knowledge, and user characteristics simultaneously, the results offer important implications for the market transfer of knowledge. Repository pricing attracts users and is essential to initiate the transfer process, whereas knowledge pricing generates knowledge preference and is thus an effective approach for learning.

The Future of Frontline Research

This article contains a set of six invited commentaries written by leading scholars, expressing varied perspectives on the future of frontline research and on the frontline domain itself. The article accompanies the Journal of Service Research special issue on organizational frontlines. In their commentaries, the authors share insightful views on areas of personal interest ranging from employee emotion and customer relationship building to the effect of technology and its implementation at the organizational frontline. Included within each commentary are managerial insights and suggestions for needed research in the highlighted area.