1 Customer Analysis - III Alaska Airlines

P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan2 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 Commodity Good ServiceExperience Price of Coffee Offerings (Pine & Gilmore, 1999)

P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan3 Retail Banking: Transaction Costs

P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan4 Co-production Customer as co-producer (hence stakeholder) –pre-purchase –production and consumption –post-purchase

P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan5 Go back to Flowcharting Where can we create value? Existing Actions New Actions Existing Actors New Actors

P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan6 Co-Production: An Illustration advanced development customer interface supplier Traditional Approach advanced development Customers-as-Innovators-Approach supplier interface test (feedback) Build (prototypes) test (feedback) Build (prototypes) design customer design

P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan7 A Closer Look at the Impact of Co-production The Fundamental Issue in Alaska Airline –Use of Technology to alter Consumer Interactions with the Firm A Benchmarking Comparison –The Diffusion of Online Banking What are the consequences? –Service Consumption Activities –Segmentation –Customer Revenue –Firm’s Costs –Overall Profitability

P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan8 Estimated Transaction Cost by Channel ChannelEstimated Cost Per Transaction Branch* 1 Call Center (Live Agent) 0.94 ATM 0.31 Voice Response Unit (VRU) 0.18 Online 0.09 *Cost of branch transaction normalized to 1

P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan9 Distribution of Transactions by Channel May 2001

P4 Sept/Oct -2003Services Marketing – Professor V. Padmanabhan10 Performance Measures by Online Status