Competing in business-to-business sectors through pay-per-use services

Abstract

Purpose

Despite the opportunities provided by pay-per-use (PPU) services, product companies in business-to-business sectors often fail to compete systematically by using them. The purpose of this paper is to explain how companies can avoid failures when it comes to PPU services. The paper describes the “seizing” capabilities needed to achieve the strategic objectives of PPU services.

Design/methodology/approach

The research process is divided into a pilot and an in-depth study. Altogether, 17 companies participated in the study.

Findings

The findings reveal that the seizing capabilities depend on the strategic objectives of PPU services. To expand the market share with PPU services, companies need to broaden the customer portfolio for PPU services, to align individual services within the entire service portfolio and to balance profits made by PPU services and other business lines. For strategic objectives such as rapid sales growth early in the market development and new market creation other seizing capabilities are required.

Research limitations/implications

The findings are not generalizable, due to the use of a qualitative study. The study is restricted to product companies in the business-to-business sector.

Practical implications

Managers often believe that extending and modularizing the service portfolio is beneficial. When achieving sales growth during the market development phase, these capabilities are in fact sometimes counterproductive. Practitioners have to look into the costs and benefits of setting-up their own financing company and working with banks.

Social implications

PPU services contribute to a more sustainable consumption and make product design more resource-efficient.

Originality/value

The study is original by virtue of systematically studying PPU services, providing a microfoundation for seizing capabilities and developing testable propositions for future research.

Citation

Gebauer, H., Haldimann, M. and Saul, C.J. (2017), "Competing in business-to-business sectors through pay-per-use services", Journal of Service Management, Vol. 28 No. 5, pp. 914-935. https://doi.org/10.1108/JOSM-07-2016-0202