Introduction
Reconceptualizing
customer perceived
value: the value of time
and place
Kristina Heinonen
The author
Kristina Heinonen is a Doctoral candidate at CERS Center for
Relationship Marketing and Service Management associated
with the Department of Marketing and Corporate Geography at
Hanken Swedish School of Economics and Business
Administration, Helsinki, Finland.
Keywords
Customers, Value analysis, Perception, Service systems,
Service quality assurance
Abstract
Considering the empowered customer interacting with
technology-based self-services, temporal and spatial access can
be argued to influence service delivery. However, service
management models have not considered the value of the
service delivery at various locations and time frames not
controlled by the service provider. Consequently, by arguing that
time and location are explicit value dimensions, this paper
investigates the importance of time and location and contrasts
them to traditional value dimensions. A conceptual model of
customer perceived value is proposed and empirically
investigated. By linking value and quality models, customer
perceived value is conceptualized as a function of benefit and
sacrifice of technical, functional, temporal and spatial value
dimensions. The empirical findings indicate that time and
location are perceived as important value dimensions and that
they are even more important dimensions than outcome and
process elements. Theoretical and practical implications of the
findings are discussed.
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Managing Service Quality
Volume 14 · Number 2/3 · 2004 · pp. 205-215
q Emerald Group Publishing Limited · ISSN 0960-4529
DOI 10.1108/09604520410528626
205
Value creation has been a popular area in
consumer and industrial marketing research and
the interest is equally extensive in academia and
industry. Academic research has built on defining
the value construct as well as on linking it to other
constructs such as loyalty, satisfaction and
repurchase behavior. Customer perceived value
has been given many definitions in the marketing
literature (e.g. Woodruff, 1997; Holbrook, 1994;
Zeithaml, 1988) and following one of the more
traditional perspectives (Monroe, 1990),
perceived value has been defined as “the
consumer’s overall assessment of the utility of a
product based on perceptions on what is received
and what is given” (Zeithaml, 1988, p. 14). In
other words, value has been seen as the trade-off
between benefit and sacrifice in an offering.
Quality, a related construct (e.g. Rust and
Oliver, 1994), has been suggested to form a part of
value (Liljander and Strandvik, 1995).
Dimensions that affect service quality thus
indirectly affect perceived value and quality
dimensions may thus be used to define perceived
value. According to quality definitions found in the
service management literature, perceived quality is
the result of an evaluation process of the expected
and experienced service (e.g. Grönroos, 1982;
Parasuraman et al., 1985). Although not explicitly
involving sacrifice, this definition of quality
involves technical and a functional dimensions as
sources of quality (Grönroos, 1982).
Technology has been suggested to influence
value creation processes (Parasuraman and
Grewal, 2000), resulting in a need to broaden the
value construct. Internet services, mobile services,
and other self-service technologies have created
empowered customers who may independently
perform the service process. These technology-
based services are “services delivered via
technological interfaces that enable customers to
produce a service independent of direct service
employee involvement” (Meuter et al., 2000,
p. 50). Similarly, in the marketing literature there
has occurred a shift in focus towards value co-
created by the customer (Ramı́rez and Wallin,
2000). However, extant service management
models have not considered the role of the
empowered customer who may perform the
service at various locations and time frames not
controlled by the service provider. Although time
and location have been implicitly noted as factors
influencing customer perceptions, there are no
theoretical conceptualizations that include time
and location as explicit value dimensions.
The aim with this paper is to reconceptualize
customer perceived value including a temporal and
Reconceptualizing customer perceived value: the value of time and place
Kristina Heinonen
spatial perspective by proposing and measuring
four value dimensions. The aim is thus theory
development. The empirical study points to the
importance of time and location as value
dimensions, and it indicates that current value
models need to be broadened.
The paper has the following structure. First, it
begins with a presentation of quality and value
literature to describe dimensions that influence
value perceptions. Aspects relating to the service
environment and e-service quality are presented to
show the challenges that time and location pose on
value perceptions. Second, the theoretical review
results in a conceptualization of customer
perceived value as a function of technical,
functional, temporal and spatial dimensions. Then
third, the discussion continues with an outline of
the research design and the empirical study.
Drawing from structured interviews about online
bill payments, it is shown that time and location
are considered to be value adding dimensions of
services. This is attributable to the relative utility of
the temporal and spatial dimensions in
comparison to the technical and functional
dimensions. The paper is concluded with
theoretical and practical implications to service
management and marketing.
Customer perceived value
It has been suggested that customer perceived
value is formed of the trade-off between benefit
and sacrifice (Monroe, 1990). Many of the
conceptualizations involve quality as the benefit
and price as the sacrifice. The perspective of value
taken is either a multiplicative or additive function
of benefit and sacrifice (Cronin et al., 1997). In the
former case, value has been seen as the ratio of
benefit (numerator) to sacrifice (denominator).
The additive model recognizes the integrative
nature of benefit and sacrifice and denotes the
compensatory trade-off between benefit and
sacrifice.
Although the benefit and sacrifice model of
value is relevant, it is not used in this study. In
many respects, the benefit and sacrifice
components do not denote the sources of value
similar to the technical and functional quality
dimensions. In contrast, acknowledging the
interdependence of service value and quality
(Liljander and Strandvik, 1995), it is argued in this
paper that quality dimensions can be used to
conceptualize perceived service value. Much of the
research on service quality has focused on
identifying dimensions that influence the perceived
quality of a service. Quality has been
conceptualized as having process and outcome
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Volume 14 · Number 2/3 · 2004 · 205-215
dimensions (e.g. Grönroos, 1982; Lehtinen, 1982;
Parasuraman et al., 1985). Perceived service
quality has been defined as a function of what
customers get out of the service, i.e. a technical
dimension, and how the service is delivered to
them, i.e. a functional dimension (Grönroos,
1982).
Service environment
It has also been suggested that the service
environment influences service evaluations
(Lehtinen, 1982; Lehtinen and Lehtinen, 1991;
Rust and Oliver, 1994; Brady and Cronin, 2001).
Lehtinen (1982) argued that the physical resources
of the service delivery system influence the service
production process. He separated between
physical support, i.e. physical setting and
equipment, and the physical product. More
recently, service quality has been described as a
hierarchical service quality model based on
interaction quality, environmental quality and
outcome quality (Brady and Cronin, 2001). In the
model, each of the fundamental dimensions
included three subdimensions that specified the
quality perceptions. The quality of the physical
environment involved three subdimensions:
ambient conditions, design and social factors.
Although it could be argued that the functional
dimension incorporates aspects in relation to the
service environment, it has traditionally been
defined with issues relating to the customer-service
employee interaction, and thus the service
environment has not been explicitly included.
Other service management models have
included the service environment as a function of
time and/or location, such as servicescape, service
delivery, accessibility and convenience. However,
the value of time and location has not been
acknowledged. One of the first conceptualizations
of the service environment was Bitner’s (1992)
servicescape model that involved three
environmental dimensions, ambient conditions,
space/function and signs, symbols and artifacts.
This thinking has been used extensively. The
servicescape can be seen to facilitate accessibility
in terms of ease of initiation (Donabedian, 1980),
ease of access (Parasuraman et al., 1985; Yale and
Venkatesh, 1986) and ease of orientation
(Dabholkar et al., 1996).
The service environment is often included in
service delivery, such as the distance between the
service provider and the customer (Lovelock,
1983), accessibility (Grönroos, 1982) and the
availability of service outlets (Lovelock, 1983).
However, although time and location are
acknowledged, the value of them are excluded.
Dabholkar (1994) classified technology-based
service delivery based on by whom, where and how
Reconceptualizing customer perceived value: the value of time and place
Kristina Heinonen
the service is delivered. Temporal access is
frequently related to time allocations (e.g. Hendrix
et al., 1979), time availability (e.g. Darian and
Cohen, 1995; Kaufman Felker and Lane, 1996),
and time orientations (e.g. Settle et al., 1978;
Bergadaa, 1990), opening hours (e.g. Kaufman
Felker and Lane, 1996), punctuality (e.g. Taylor,
1994; Brady and Cronin, 2001), and speed of
delivery (Dabholkar, 1994; Zeithaml et al., 2000;
Anselmsson, 2001; Jun and Cai, 2001).
Convenience is a related construct that refers to
temporal and spatial aspects of the service delivery
(e.g. Yale and Venkatesh, 1986; Brown, 1990; Zhu
et al., 2002; Peterson and Balasubramanian,
2002). Access convenience has been suggested to
be especially critical for services that require
customer participation because customers must be
present at the right time and place (Berry et al.,
2002).
Time and location have not been acknowledged
in e-quality models. It seems that many e-service
quality models (e.g. Zeithaml et al., 2000;
Kaynama and Black, 2000; Wolfinbarger and
Gilly, 2003) have been conceptualized based on
the SERVQUAL dimensions (Parasuraman et al.,
1985). For example, Zeithaml et al. (2000)
conceptualized e-service quality with 11
dimensions, i.e. reliability, responsiveness,
assurance/trust and security/privacy, access,
flexibility, ease of navigation, efficiency, and price
knowledge. However, it may involve similar
criticism as the original SERVQUAL dimensions
concerning their relevance and generalizability.
Likewise, the conceptualization may include
problems because of their level of detail. For
example, Dabholkar (1994, 1996, 2000) studied
technology-based self-services and suggested a
number of different attributes that customers
expect from technology-based self-service options,
including speed of delivery, little human
interaction, time savings, perceived control and
privacy. However, acknowledging the hierarchical
nature of service quality (Brady and Cronin,
2001), a lower level of detail can be used to group
many of these dimensions.
Proposed conceptualization of customer
perceived value
Based on the discussion in the literature review
above, three conclusions can be made that impact
on the development of the theoretical
conceptualization. First, value as defined as a
trade-off between benefit and sacrifice is relevant
but does not show the sources of value such as the
quality dimensions. Second, because quality and
value are linked, then dimensions that influence
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Volume 14 · Number 2/3 · 2004 · 205-215
quality perceptions can also be used to describe
value perceptions. Third, because the service
environment affects service delivery, time and
location may be seen to influence value
perceptions. However, they have not been
conceptualized as value dimensions. Hence, it is
proposed that value is based on four dimensions:
technical, functional, temporal and spatial
dimensions[1].
The technical dimension includes technical
elements of the service and is traditionally depicted
by the core service. It refers to what the outcome of
the service interaction is. The ability to choose
between alternatives has been shown to be relevant
for e-services. For example, Zeithaml et al. (2000)
identified flexibility as an e-service quality
dimension that denoted the customer’s choice to
conduct the service, as well as the knowledge of
such options. Similarly, Liljander et al. (2002)
elaborated this dimension and raised the issue of
service options referring to the option to choose
from a fixed number of service alternatives.
The functional dimension relates to an
evaluation of functional aspects of the service
delivery process. It denotes how the service
interaction process occurs. Looking at service
production as a continuum, services may be
produced by firms, jointly by firms and customers
and customers only (Bitner, 1992). Similarly,
Meuter and Bitner (1998) distinguished between
self-service, joint production and full service.
Three different types of service delivery have been
identified: automatic, self-service and human
service (Lehtinen and Lehtinen, 1991). Zeithaml
et al. (2000) suggested efficiency as a dimension of
e-service quality to denote the level of customer
input needed in providing necessary information.
These two traditional quality dimensions form
the fundamental part of services and relate to
customers’ perception of the core service, as
depicted in Figure 1. The service would be of little
value without them. In contrast, these dimensions
are influenced by the context in which they are
perceived. Hence, two other dimensions that
surround the fundamental dimensions affect
perceptions, namely temporal and spatial
Figure 1 Four value dimensions
Reconceptualizing customer perceived value: the value of time and place
Kristina Heinonen
dimensions, and involve customers’ flexibility in
relation to the service delivery.
The temporal dimension is based on temporal
aspects affecting value perceptions. It represents
how the customer perceives the temporal flexibility
relating to when the service interaction occurs.
Temporal latitude, i.e. a result of flexibility in
activities, has been conceptualized as a continuum
ranging from complete latitude, through some
latitude to no latitude (Hendrix et al., 1979).
Considering that technology-based self-services
are available almost independently of temporal
boundaries, this issue is particularly relevant.
The spatial dimension is spatially driven and
related to the usage location. It denotes how the
customer perceives the spatial flexibility relating to
where the service interaction occurs. Dabholkar
(1994) concluded that the service delivery for
technology-based self-service options could occur
at the service site, on a neutral site or at the
customer’s site. This conceptualization is based on
and similar to Lovelock’s (1983) conclusions. The
customer’s site involves home or work when
considering that technology-based services are
based on technology that is fixed to a location,
such as computers. The customer’s site can further
be conceptualized as being spatially flexible, i.e.
occur wherever, such as on the move, particularly
when taking into account portable devices, such as
mobile phones.
The value in when and where thus denotes the
value of service delivery at the right time and
location. The value added in these two dimensions
is dependent on the possibilities and limitations
enabled by technology and they form surrounding
but integral elements of the service. In the
empirical study, the importance of temporal and
spatial value dimensions is explored and they are
compared to the traditional technical and
functional dimensions. By empirically exploring
the proposed value conceptualization in a context
of online bill payment services, this study focuses
on measuring the relative importance of time and
location in value perceptions.
The empirical study
Taking a pragmatist approach that matches
methods to specific research questions (Patton,
2002), the empirical study was based on a parallel
mixed method model. This multiple application
design is a combination of qualitative and
quantitative data collection, data analysis and
inference in parallel form (Tashakkori and Teddlie,
1998). It follows the logic of abductive reasoning
that shifts between deduction and induction
(Patton, 2002). The study was designed and
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conducted to explore the relative importance of the
value dimensions and to investigate the content of
the value dimensions in a technology-based self-
service setting. It was based on interviews and
conjoint analysis lasting approximately one hour
per respondent. In this paper, only the quantitative
results are reported, but additional insight is taken
from the qualitative part.
Conjoint analysis
Conjoint analysis, i.e. a decompositional method
for estimating the structure of respondents’
preferences in relation to the overall evaluations of
a set of predetermined alternatives (Green and
Srinivasan, 1978), has been used to study
consumer evaluations of services (e.g. DeSarbo
et al., 1994; Ostrom and Iacobucci, 1995;
Carman, 2000). Considering that the aim is to
measure the relative importance of the value
dimensions, the choice of research technique was
perceived motivated. However, in this study the
focus was on depth rather than width, signifying
that the objective was not generalization in its
traditional meaning where large amounts of
empirical data are used to verify hypothesis. Rather
the aim was to use analytical tools, theoretical
models and empirical findings to deepen the
knowledge about a specific phenomenon. In this
respect, the abductive approach to move between
theoretical and empirical reasoning was aimed at
creating a comprehensive understanding about the
nature of customer perceived value.
A first study was conducted in spring 2002
among a convenience sample of 40 respondents
aged between 19 and 76 years. Senior marketing
students instructed to interview a specific number
of respondents collected the data among relatives
and friends. The second and main study
conducted by the author in winter 2002 was based
on a critical case sample (Patton, 2002) of 37
Finnish online bank customers. It consisted of 20
female and 17 male respondents in ages between
21 and 33 years.
Online bill payment services were chosen as the
unit of analysis since customers extensively
perform the service process themselves. In Finland
Internet banking services are largely used to pay
bills and the number of users is expected to
increase. For example, Nordea, one of Finland’s
leading banks, has estimated that almost half of all
bill payments are performed via the Internet, and
only 3 percent are performed at branch offices
(Hankkila, 2003). In general, about 34 percent of
all bill payments in Finland are executed via the
Internet (Fogelholm, 2002). This indicates that
the self-service delivery alternatives involve
Reconceptualizing customer perceived value: the value of time and place
Kristina Heinonen
something that customers value, something that is
not provided at bank branch offices and in this
respect the Finnish online retail banking is
appropriate for the study.
Two issues were relevant to the development
process of the empirical design. First, the technical
and functional service quality model (Grönroos,
1982) was chosen as starting point for the
theoretical conceptualization. Additionally, time
and location were included as value dimensions.
Second, by searching existing literature the
definitions of the technical and functional
dimensions were specified so that they would
better fit the current focus. Definitions on the
added dimensions were also based on previous
research. The theoretical support was beneficial
because the four proposed value dimensions were
operationalised by only one attribute each.
The value dimensions represented the attributes
and they were operationalised based on knowledge
on technology-based self-services as well as on a
pre-understanding of banking services. The
attributes, as they were presented to the
respondents, were:
.
possibility to choose different services (what,
technical dimension);
.
customers’ input in the service (how,
functional dimension);
.
possibility to choose the time of service
delivery (when, temporal dimension); and
.
possibility to choose the place of service
delivery (where, spatial dimension).
What related to the possibility to choose service
alternatives and it denoted how extensive the
service is. In the first study it was operationalised
as “flexibility in service options”. However, the
qualitative findings implied that this
operationalization was ambiguous, as the
respondents seemed to incorporate temporal and
spatial elements in this variable, rather than only
focusing on the service-specific elements. A stricter
definition was needed and hence it was
operationalised in the main study as the “ability to
choose different service options”.
How referred to the level of customer
involvement in the service delivery. As such, the
focus of the functional dimension in this study is
shifted away from the customer-service provider
interaction towards the customer’s activities in
relation to the service process. It was
operationalised in both studies as the “customer’s
effort in the service process”. When was described
as the time of service delivery and it related to how
much the customer is temporally bounded. In both
studies, it was operationalised as “the ability to
choose the time to conduct the service”. Where
denoted the place of service delivery and it
involved how much the customer is spatially
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Volume 14 · Number 2/3 · 2004 · 205-215
limited in the service delivery. It was
operationalised as “the possibility to choose the
place to perform the service” in both studies.
The attribute levels in the first study were
operationalised through reasoning based on
existing knowledge of banking services. The
technical dimension was operationalised as
flexibility on two levels: “all parts of the payment
are flexible” and “no parts of the payment are
flexible”. The functional dimension related to the
input in the payment and consisted of three levels:
no customer input, equal input from customer and
bank, and self-service. The temporal dimension,
the time of service delivery, had two levels:
“anytime” and “office hours”. The spatial
dimension, the location of service delivery,
consisted of three levels: at a specific place in
connection with the bank, at homeground and
anywhere.
The findings from the first study indicated that
some modifications in the attribute levels were
necessary for the main study. Although the
individual attribute levels were clear, the profiles
with variations in levels became somewhat
complex and difficult for the respondents to
evaluate. This was much due to the fact that all the
levels for each attribute were different. Also, the
profiles were sometimes comparable to an existing
service, but sometimes they were highly
hypothetical.
Consequently, for the main study it was decided
to operationalize the attribute levels on a more
abstract level in relation to the experience of the
current service and not with objective levels. A
benefit of using a reference service is that it is
behaviorally and contextually anchored in the
respondent’s consumption pattern (Liljander and
Strandvik, 1993). The reference service used in the
current study was the online bill payment service
that the respondent was currently using.
Three levels were used for all the dimensions
and operationalised as “more than”, “the same
as”, and “less than” compared to the current
service that the respondent was using. Examples of
profiles used in the conjoint task are:
.
“I have neither larger nor smaller possibility to
choose different services.”
.
“My own input in the service is larger.”
.
“I have smaller possibility to choose time of
service delivery.”
.
“I have neither larger nor smaller possibility to
choose place of service delivery.”
In the main study the functional dimension was
operationalised as customers’ level of input in the
service delivery without specifying the level of
input from the service provider, i.e. it included
only different variations of customer input. Also,
the focus of the spatial dimension is more on the
Reconceptualizing customer perceived value: the value of time and place Managing Service Quality
Kristina Heinonen Volume 14 · Number 2/3 · 2004 · 205-215

amount of flexibility in choosing the location of asked why they had sorted the profiles in such an
service delivery, rather than limiting the levels to order.
specific locations.
It was possible that the respondents would
perceive the services differently and this would
result in diverging reference points. Another Empirical findings on the value
alternative would have been to anchor the conjoint dimensions
task in some fixed reference point that was
consistent across respondents, for example a The purpose was to explore the importance of time
and location as value dimensions, and their relative
hypothetical scenario. This would, however, have
importance in comparison with technical and
meant that some respondents would probably not
functional dimensions. The perceived importance
be familiar with the reference point. It was
of the value dimensions is described by presenting
assumed that this alternative would involve a more
the aggregated attribute-specific results.
complex reference point and it may not necessarily
The findings from the first study indicated that
represent actual utility of the profiles. Hence, by
the most important attribute was the place of
anchoring the evaluations in an experienced
service delivery with 32.99 percent of the averaged
service, the respondents had a concrete and
importances (Figure 2). The second most
consistent, although not necessarily comparable,
important attribute was the temporal dimension,
frame of reference and the results would
i.e. the time of service delivery, which received an
presumably be more valid. averaged importance of 28.65 percent. The
Because the levels were designed this way, it was functional dimension had an averaged importance
assumed that the perceived utility of the of 23.10 percent. The least important attribute
dimensions would be linear. At the outset, it was was the technical dimension with an importance of
assumed that more flexibility in choice of service 15.25 percent.
options, time and location of service delivery (level Table I illustrates the relative importance of
3) for the technical, temporal and spatial each value dimension in the main study. On an
dimensions receives higher utility than less aggregate level, the findings show that time is the
flexibility in service options, time and location most important attribute with an average
(level 1), which includes higher sacrifice. For the importance of 40.07 percent. Interestingly, its
functional dimension, the situation was the importance was more than the combined
opposite, because more input (level 3) was importance of the technical and functional
assumed to involve higher sacrifice than less input dimensions. The spatial dimension follows as the
(level 1). However, for simplicity, in the analysis second most important attribute with an average
the results for the functional dimension were importance of 27.87 percent. The technical and
reversed. functional dimensions received almost similar
Using a full profile method where each stimulus importance weights with 16.07 percent and 15.99
is described separately consisting of all attributes percent respectively of the average importance.
and their levels (Hair et al., 1998), the conjoint task Both studies indicated that the new dimensions
with four attributes and three levels would include were the most important. However, the difference
81 possible combinations (3*3*3*3)[2]. By in the findings on the importance of time and
choosing the additive composition rule, these location may be attributable to the
combinations were reduced to nine stimuli using a operationalization of the levels. An attribute that is
fractional factorial design. It means that potential
independent interaction effects between attributes Figure 2 Importance of the value dimensions (first study)
cannot be accounted for. However, following the
conclusion of Carman (2000) that technical and
functional dimensions are segregate, it was
assumed that there were no interaction effects
between the attributes. Three holdout profiles
were included to measure the validity.
The conjoint task was conducted as an
interview situation where the respondents were
asked to first arrange the full profile descriptions in
two piles divided into the most preferred and least
preferred profiles and then to sort the piles
separately. They were to describe aloud the
thoughts that arose from the sorting procedure.
After sorting the profiles, the respondents were
210
 Reconceptualizing customer perceived value: the value of time and place
Kristina Heinonen
Table I Importance and utility of the value dimensions (second study)
Averaged importance (%)
Technical dimension 16.07
More services
Same services
Fewer services
Functional dimension 15.99
More input
Same input
Less input
Temporal dimension 40.07
More time freedom
Same time freedom
Less time freedom
Spatial dimension 27.87
More place freedom
Same place freedom
Less place freedom
operationalised with more levels usually receives
higher utility. This may explain why the spatial
dimension, operationalised with three levels,
received higher utility than the temporal
dimension, operationalised with two levels, in the
first study. In the second study, all dimensions had
three levels, and then the temporal dimension
received higher utility.
The level utilities provide a more detailed
description of how the value dimensions are
perceived. Figure 3 representing the second study
findings shows the part worths of the levels ranging
from level 1 (“less than”) through level 2 (“same as”)
to level 3 (“more than”). The most important aspect
in Figure 3 is the form of the level part worths.
Interestingly, none of the attribute level part
worths are linear. In fact, the form of the level part
worths resembles the curves of hygiene factors.
Characteristic of hygiene factors is that higher
levels do not provide more utility or value
(Herzberg, 1968). It may indicate that the
respondents are satisfied with the current level,
and an improved level does not offer much
additional value, whereas a lower level is perceived
Figure 3 Attribute level part worth
Managing Service Quality
Volume 14 · Number 2/3 · 2004 · 205-215
as very negative. This is particularly true for the
Utility temporal (when) and spatial (where) dimensions.
If the attribute part worths were linear they
would be perceived as critical. It seems that the
0.6036
functional dimension (how) is the closest to being
0.2613
2 0.8649
linear. Also the technical dimension (what) seems
to be somewhat near linearity, at least compared to
2 0.5225 the temporal and spatial dimensions. However,
0.2072 considering that the difference between the level
0.3153 utilities is small, their importance is not critical. In
other words, moving between levels 1-3 does not
1.1532 influence significantly the part worths.
0.6757 The validity measures of Pearson’s R (0.0000
2 2.3604 and 0.0000) and Kendall’s tau (significance
0.0002 and 0.0001) indicate that the results are
1.1532 statistically significant (Table II). The Kendall’s
0.4054 tau for the holdout cards was 0.3008, which is
2 1.5586 considered sufficient in a conjoint task (Hair et al.,
1998). Although the validity of the holdout stimuli
is usually lower, it may indicate that there are some
interaction effects between the attributes.
Discussion and contribution
Traditionally, technical elements of the service
outcome and functional elements of the service
process have been acknowledged as important
dimensions in value perceptions. However,
considering the empowered customer interacting
with technology-based self-services, also time and
location are important dimensions influencing
value perceptions. The aim with this study was to
investigate the importance of time and location as
value dimensions and how they are perceived in
comparison to the traditional dimensions. The
findings from two empirical studies revealed that
the time and location of service delivery in fact
influence customer perceived value and that they
are perceived as important value dimensions. In
this study, time and location were even more
important dimensions in customer perceived value
than outcome and process elements.
One theoretical contribution is the proposed
conceptualization that extended the scope on
customer perceived value and included two new
dimensions in addition to the traditional two
dimensions. It incorporated four value dimensions
to describe from a customer perspective the reality
in which value is created through different services,
service processes and service delivery times and
locations.
An implication of this is that time and location
need to be considered as explicit value dimensions
in addition to the technical and functional
dimensions. Accordingly, value is not limited to
the service itself, but incorporates a broader
perspective of factors internal and external to the
211
Reconceptualizing customer perceived value: the value of time and place
Kristina Heinonen
Table II Validity of the conjoint analysis
Study 1
Pearson’s R 0.998
Kendall’s tau 0.944
Kendall’s tau for holdouts
service. Hence, value is related to some specific
offering (technical value dimension), created in a
wanted way (functional value dimension) and that
is perceived as relevant in a specific time (temporal
value dimension) and location (spatial value
dimension).
The study also pointed to the curvilinearity of
the value dimensions. More specifically, the
temporal and spatial dimensions were perceived as
hygiene factors. It indicates that lower levels of
temporal and spatial flexibility than the current
situation are perceived as highly negative, while
higher levels do not provide much additional value.
Hygiene dimensions are factors that customers do
not notice until they do not reach the required
minimum level. The criticality of these dimensions
is made explicit when they do not perform
according to expectations. Then they become
crucial elements that very negatively affect the
perceived value. In other words, the sacrifice
would be larger with reduced levels in the temporal
and spatial dimensions, compared to reduced
levels in the technical and functional dimensions.
A practical implication of this is that the levels of
temporal and spatial dimensions have to be
perceived as acceptable because even minor
decreases in the performance may result in a large
reduction of the perceived value. These findings
support Strandvik’s (1994) conclusion about the
asymmetric shape of the quality function. Also the
findings of Zeithaml et al. (2002) pointed to the
curvilinearity of the quality function.
Limitations of the study and suggestions
for future research
In this study the benefit and sacrifice were viewed
as one entity within the value dimension. However,
considering the results from the qualitative part of
the study, there is an indication that each value
dimension includes different benefit and sacrifice
attributes. Further research is needed in order to
identify the content of each value dimension.
Future research should also measure whether
different aspects of the value dimensions are in fact
more value adding than others.
Even though this study has focused on
technology-based self-services, the
conceptualization is argued to be equally relevant
for other service contexts. Customers perceive and
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Significance Study 2 Significance
0.0000 1.000 0.0000
0.0002 1.000 0.0001
– 2 0.333 0.3008
value time and location independence in
technology-based services and it can be even more
important for some customers compared to the
service process and outcome. While further
investigation is needed, it can be assumed that if
customers get accustomed to this temporal and
spatial flexibility, in the future they would require it
for other service contexts as well. This would
indicate that the time and location of service
delivery are important, if not even necessary for
the perceived value of other services not directly
linked to technology. It would be particularly
interesting to explore the perceived value of time
and location in retailing services and professional
business settings.
Further investigation is also needed to measure
how the dimension importances will evolve.
Considering the findings from the qualitative part
of the study, it seems as if the perceived
importance of the value dimensions are dynamic
and relative. For example, it appears that they
differ among customers and among service
settings.
Looking critically at the study, then the number
of respondents may seem low. Usually the number
of respondents in a quantitative study is higher; the
studies were based on the perceptions of 40 and 37
respondents respectively. However, considering
the aim of this study, the number of respondents
was deemed sufficient. The objective was not to
statistically confirm the importance of each value
dimension; rather the conjoint task was used to
indicate whether the proposed dimensions are in
fact perceived as important. This is justified in a
grounded theory development type of study where
the aim is to find new aspects in a phenomenon.
Also, considering that conjoint analysis provides
data on both individual and aggregate levels, it is
not necessary to have large sample sizes.
Accordingly, the empirical study was deemed as
having sufficient theoretical and empirical
foundation.
Managerial implications
One practical implication of the importance of
time and location is that service design decisions
should explicitly include the time and location of
service delivery. This means that it is no longer
sufficient to only focus on process and outcome
Reconceptualizing customer perceived value: the value of time and place
Kristina Heinonen
aspects of service delivery, but that service
management must put considerable attention on
temporal and spatial elements in services.
However, this poses a challenge for service
managers. Whereas outcome and process elements
of the service have been relatively easy to
manipulate, variation in time and location are
more difficult to control due to the increased
customer input and activity in the service delivery.
The service delivery occurs in many cases at the
customer’s choice of time and location, instead of
the service provider’s site. This results in a focus on
creating an enabling arena for value creation where
customers can initiate and perform the service act
at their own convenience, rather than only
providing a value adding offering based on the
service outcome and service process.
A challenge for marketers is to increase the
breadth of the value dimensions. The findings
indicated that online banking services are
perceived as convenient in terms of temporal and
spatial flexibility. Considering the characteristics of
the dimensions, effort should be devoted to
creating adequate levels of temporal and spatial
flexibility. The temporal and spatial dimensions
were perceived as hygiene factors, i.e. lower levels
of temporal and spatial flexibility than the current
situation is perceived as highly negative, while
higher levels do not provide much additional value.
In other words, the sacrifice would be larger with
reduced levels in the temporal and spatial
dimensions, compared to reduced levels in the
technical and functional dimensions.
Additionally, while time and location are
important dimensions, they are fairly easily copied.
This means that the temporal and spatial value
dimensions may become hygiene factors for all
customer segments. In other words, it is necessary
to find new ways to develop the content of the
dimensions. For example, in addition to temporal
flexibility, service providers may need to improve
consumers’ time allocation. Similarly, spatial
flexibility may be complemented, for example,
with efficient production facilities, e.g. functioning
Internet sites. Also the technical and functional
dimensions should be monitored to identify
possibilities to develop them. Future research
needs to address this potential breadth of each of
the value dimensions.
In line with Swait and Sweeney (2000) who
proposed a segmenting model based on customers’
value orientations, the relative importance of each
value dimension provides a basis for contrasting
customers. This in turn may give more insight into
differences in behavior than traditional segmenting
based on demographic variables. Tentative cluster
analysis of the current study points to three
clusters. In the same way as there are customers
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that value the technical dimensions over the
functional dimension, i.e. prefer the outcome over
the process, there are some customers that value
time and/or location of service delivery over the
technical and functional dimensions. By having
customers compare them between competing
offerings, value profiles for different services can be
created. These profiles are based on different
ratings of the dimensions in reference to either
competing offerings, or future offerings. They can
be used in this respect to map current and future
demand.
An important practical implication of this is that
the value dimensions can be used to target
customers in a new way. In practice, this means
that depending on whether customers value the
temporal and spatial dimensions they may be
offered time and location flexibility. In contrast, for
customers that value service attributes, such as a
number of different service alternatives, then the
technical dimension may be accentuated in the
service design.
Notes
1 It is assumed that the value dimensions include price and
other forms of sacrifice that is implicitly considered. The
value dimensions are seen to include an integrated
function of benefit and sacrifice. Consequently, the benefit
and sacrifice of each dimension were not separated in this
study.
2 A full profile alternative of the pilot conjoint task with four
attributes and two-three levels would include 36 possible
combinations (2*3*2*2). However, using a fractional
factorial design it was possible to reduce the number of
profiles to nine. No holdout profiles were included.
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