SERVITIZATION AND

MANUFACTURING
COMPANIES
GROUP 7
KEY THEMES
• What role do services play within manufacturing firms
and their goods?
• Service businesses within manufacturing companies.
• Defining and exploring servitization.
• Challenges of servitization and the service relationship in
.
manufacturing
• Alternative strategies
• Research traditions and challenges within management,
marketing and operations
 MAINTAINING GOOD SERVICE RELATIONSHIPS
WITH CUS TOMERS IS ONE OF THE FACTORS THAT
HAS LED MANUFAC TURERS TO FOCUS MORE ON
THE CONTRIBUTION SERVICES MAKE TO THE
PRODUCTION AND SALE OF MANUFACTURED
GOODS. MANUFACTURING COMPANIES
PURCHASE SER VICES TO IMPROVE PRODUCTION
AND SALES PROCESSES; HOWEVER, THEY ALSO
SELL SERVICES DIRECTLY TO CUSTOMERS.
•In this chapter, we consider the ways in which services
have been incorporated into the operational processes
that support manufacturing and product/good-related
services. This includes the provision of consultancy
services, design and development services, retail and
distribution ser vices, financial services, logistics
services, instal lation and setup services, management
and operating services, maintenance and support ser
vices and disposal and conversion services
(Mastrogiacomo et al. 2019).
 1 2 . 1 S E RV I T I Z I N G I N
M A N U FA C T U R I N G C O M PA N I E S

•MANUFACTURING COMPANIES HAVE

BEEN REFOCUS ING THEIR ATTENTION ON
THE DOWNSTREAM ELEMENTS OF VALUE
CHAINS TO TRY TO EXTRACT VALUE FROM
OPERA TIONS, TASKS AND ACTIVITIES
THAT WERE FORMERLY THE CUSTOMER’S
RESPONSIBILITY. IN DOING SO, SOME
ARGUE THAT THEY OFFER ‘CAPABILITIES’
RELATED TO THE USE OF A GOOD, SUCH
AS THE CAPABILITY OF PRINTING OR
TRANSPORTING (BAINES AND LIGHTFOOT
2013).
 12.2 DEFINING
S E RV I T I Z AT I O N
IT IS IMPORTANT TO CLEARLY DEFINE THE SERVITIZATION
PROCESS. TO BAINES ET AL. (2009A) SERVITIZATION IS
‘THE INNOVATION OF A MANUFACTURER’S CAPABILITIES
AND PROCESSES TO MOVE FROM SELLING GOODS, TO
SELLING INTEGRATED PRODUCT-SERVICE OFFERINGS
THAT DELIVER VALUE IN USE’ (P. 512). THIS DEFINITION
CAN BE DEVELOPED BY EXPLORING KOHTAMÄKI ET AL.
(2018) WHO SUGGEST THAT SERVITIZATION REPRESENTS A
CHANGE IN BUSINESS MODEL TOWARDS A PRODUCT-
SERVICE- SYSTEM (PSS
 12 . 3
Challenges of Servitization
WITH DEVELOPMENTS IN NEW
TECHNOLOGIES, AND NEW MARKET
STRUCTURES, MANUFACTURERS NEED TO
DELIVER NEW SERVICE SOLUTIONS.
NEVERTHELESS, IT IS CHALLENGING FOR A
COMPANY TO REAP THE BENEFITS THAT
COME FROM SERVITIZATION. THIS HAS
BEEN TERMED THE ‘SERVICE PARADOX’
(GEBAUER ET AL. 2005)
Figure
12 . 1 The changing focus of manufacturers from
simple to advanced product-service systems.
(Source: Authors’ own)
12.4 OTHER DEVELOPMENTS AND THE
SERVICE- MANUFACTURING RELATIONSHIP
Other phenomena identified and
explored by researchers include
service reduction (deserviti zation),
standardization of services and
producti zation.
•For some companies,
servitization might be a preferred
strategy in an attempt to retain
cus tomers whilst there might be
no economic bene f its for other
firms.
12.5 PERSPECTIVES ON SERVITIZATION
RELEVANT FOR MANAGEMENT
The change in business perspective towards an increasing
emphasis on services, or service rela tionships and service
business models, has, in the service marketing literature,
been treated more broadly as a change in business logic
that is rele vant to all societal sectors. Thus, a discussion
has revolved around ‘service logic’ and ‘service dominant
logic’ and how such logics can be adopted and
appropriated by service businesses and manufacturing
companies.
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