Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

The impact of consumption goals on flat-rate choice

08.05.2013
Can 'hedonizing' a service increase customers' propensity to choose a flat rate?

Can you imagine a world where a subway ride becomes the highlight of your day? Where going to the laundromat isn't such a dreary duty? A recent study published in the Journal of Service Research found that our perception of certain services can drastically change with the right adjustments, and not everyone needs Mickey Mouse and daily parades to make their experience magical.

German professors Fabian Uhrich, Jan H. Schumann, and Florian van Wangenheim conducted studies on amusement parks, public transportation, museums, and spas to evaluate the payment behaviors of consumers. The goal: to shed light on consumer spending patterns in various service industries. Their research uncovered what they call a 'flat rate bias'; customers are more likely to pay flat rates, or fixed prices, for unlimited use of a service, instead of paying per use, regardless of whether the flat rate is the cheaper option.

"This flat rate bias contradicts standard economic theory," says Uhrich. "But it's very beneficial for service providers, because consumer spending is much more constant and predictable with flat rates." While more hedonic, or fun, services (i.e. Disney World) enjoy a natural flat rate bias, other providers of more utilitarian services (i.e. laundromats) must make adjustments so that customers perceive them as more pleasurable and satisfying.

In order to do this, the researchers say companies can initiate marketing campaigns with keywords such as fun, exciting, thrilling, delightful, or enjoyable. Their study found that "hedonizing," or making services more enjoyable, doesn't have a negative effect on a consumer's willingness to pay, thereby making this a must-do for service firms. However, "Managers must ensure that the experience actually is enjoyable," cautions Urich, "because not delivering as promised can lead to serious customer dissatisfaction."

So, how can companies bring the fun back into business? Start with a smile; the researchers say you'll never reach success without one. Staff must be trained to provide friendly service—which is hardly surprising—but this must work in tandem with an evolved and enticing physical environment.

"Museums and zoos should offer services such as movie theaters with exciting and funny movies, nice coffee shops, and themed playgrounds," Uhrich explains, "Even language schools can incorporate more fun into their programs, by cooking country-specific cuisine every so often."

Some service companies and attractions in the United States have already mastered this method.

"Boston's Museum of Science is great example of a service that offers this diversified experience," says Katherine Lemon, Boston College Accenture Professor of Marketing and Journal of Service Research editor. "Making what otherwise might be an unpleasant educational experience much more exciting for families, through its Omni theatre and interactive exhibits."

Co-authors Uhrich, Schumann, and van Wangenheim point out this approach can even be applied to uninviting yet necessary entities like public transportation. For example, managers might be able to encourage public transport riders to purchase season-long passes instead of single-day tickets if they advertise with promotions that are more festive and fun, train employees to be exceptionally friendly, and add entertainment to help offset what many consider to be a headache and hassle of their daily routine.

That said, consumers should be wary of paying flat rates if they are looking to be cost conscious because pay-per-use plans can sometimes be the more affordable option. For example, purchasing a monthly subway pass makes financial sense if someone is taking the metro everyday, but less frequent riders will save money by paying for each individual ride.

Will metro stations ever be as magical as "The Happiest Place On Earth?" Probably not, but there is certainly a future in fun when it comes to businesses - even the ones we would rather not interact with.

The Journal of Service Research is edited by Katherine Lemon, Accenture Professor of Marketing at Boston College's Carroll School of Management, and published by Sage in Thousand Oaks, California.

Contact: Fabian Uhrich
TUM School of Management
Technische Universitaet Muenchen, Germany.
Email: Fabian.Uhrich@marketing.wi.tum.de
Phone: +498928928402
Address: Lehrstuhl fuer Dienstleistungs- und Technologiemarketing, Arcisstrasse 21, Muenchen, 80333, Germany

Sean Hennessey | EurekAlert!
Further information:
http://www.bc.edu

More articles from Studies and Analyses:

nachricht Researchers simplify tiny structures' construction drip by drip
12.11.2018 | Princeton University, Engineering School

nachricht Mandibular movement monitoring may help improve oral sleep apnea devices
06.11.2018 | Elsevier

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: UNH scientists help provide first-ever views of elusive energy explosion

Researchers at the University of New Hampshire have captured a difficult-to-view singular event involving "magnetic reconnection"--the process by which sparse particles and energy around Earth collide producing a quick but mighty explosion--in the Earth's magnetotail, the magnetic environment that trails behind the planet.

Magnetic reconnection has remained a bit of a mystery to scientists. They know it exists and have documented the effects that the energy explosions can...

Im Focus: A Chip with Blood Vessels

Biochips have been developed at TU Wien (Vienna), on which tissue can be produced and examined. This allows supplying the tissue with different substances in a very controlled way.

Cultivating human cells in the Petri dish is not a big challenge today. Producing artificial tissue, however, permeated by fine blood vessels, is a much more...

Im Focus: A Leap Into Quantum Technology

Faster and secure data communication: This is the goal of a new joint project involving physicists from the University of Würzburg. The German Federal Ministry of Education and Research funds the project with 14.8 million euro.

In our digital world data security and secure communication are becoming more and more important. Quantum communication is a promising approach to achieve...

Im Focus: Research icebreaker Polarstern begins the Antarctic season

What does it look like below the ice shelf of the calved massive iceberg A68?

On Saturday, 10 November 2018, the research icebreaker Polarstern will leave its homeport of Bremerhaven, bound for Cape Town, South Africa.

Im Focus: Penn engineers develop ultrathin, ultralight 'nanocardboard'

When choosing materials to make something, trade-offs need to be made between a host of properties, such as thickness, stiffness and weight. Depending on the application in question, finding just the right balance is the difference between success and failure

Now, a team of Penn Engineers has demonstrated a new material they call "nanocardboard," an ultrathin equivalent of corrugated paper cardboard. A square...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

VideoLinks
Industry & Economy
Event News

“3rd Conference on Laser Polishing – LaP 2018” Attracts International Experts and Users

09.11.2018 | Event News

On the brain’s ability to find the right direction

06.11.2018 | Event News

European Space Talks: Weltraumschrott – eine Gefahr für die Gesellschaft?

23.10.2018 | Event News

 
Latest News

Purdue cancer identity technology makes it easier to find a tumor's 'address'

16.11.2018 | Health and Medicine

Good preparation is half the digestion

16.11.2018 | Life Sciences

Microscope measures muscle weakness

16.11.2018 | Life Sciences

VideoLinks
Science & Research
Overview of more VideoLinks >>>