Digital ServicesHow are they different?

Joni Salminen Turku School of Economics Aug 6th, 2014

Why study services? Important part of post-industrial

economy at a global scale, e.g.• 71.2% of GDP in Finland (2012)• 69.2% in Taiwan (2009)

Two trends:• As developing countries develop,

their economic structure gears towards services

• Industrial firms want to expand their offering through servitization/service infusion

Digital servicesDominate communication, online

shopping, payments, etc.More and more services are offered

digitally to cut cost and increase efficiency of distribution

…but is there anything special about digital services compared to traditional services?

The studyVery simple purpose: try to

compare digital and traditional services with the IHIP model

See what• Is the same• Is new• …and perhaps understand digital

service better.

IHIP model (e.g., Parasuraman, Zeithaml,

Berry, 1985)

Characteristics of (human touch) services: Intangible; cannot be touched Heterogeneous; cannot be of standard quality Inseparable; production cannot be separated

from consumption Perishable; cannot be stored.

Has received a lot of criticism from services-focused scholars, but the most important for this study is that the model was made prior to digitalization and therefore does not necessarily capture critical aspects of digital services.

The resultsCharacteristic

Applicable

Explanation

Intangible Yes Even more than physical services that often include a strong servicescape component

Heterogeneous

No Due to digital delivery, they are standardized; quality can be kept

Inseparable No Digital services are on-demand; moreover, the service quality can be verified before delivery

Perishable No No; resources are on-demand and scalable, the service is always stored in local memory or cloud.

Conclusions Because IHIP is a poor fit, a better model for

digital services is proposed. The IHIS model:

• intangibility; intangible and consume a minimal number of physical resources

• high technology; require little or no human intervention (thus similar to self-service)

• invariance; identical & consistent by measurable quality

• scalability; much more scalable due to digital distribution (no need to consider time, place, or labor).

Why does it matter? (aka implications)

(Digital) labor is being more and more replaced by digital automatization

There are known and unknown issues: self-service; combining humans and automatization, etc.

Services marketing research focus more attention to this area with high growth potential for businesses!

Thanks for listeningRelating to digital marketing research collaboration, contact me at:

• joni.salminen@tse.fi• (Joni Salminen)