Product Service Systems: An exploratory study of the barriers to adoption in B2C contexts

Jakob Vinther Talberg & Taiki Daniel Maeda Rasmussen

Student thesis: Master thesis

Abstract

This is an exploratory study of the barriers involved in providing Product Service Systems (PSS) in business-to-consumer (B2C) settings. The paper takes inspiration from the fields of the circular economy and the performance economy, where PSS are described as business models that can bring us closer to a sustainable economy. The motivation that drives the paper is that although quite prevalent in the business-to-business (B2B) sector, PSS are still quite rare in B2C environments. On top of the little attention towards the B2C sector in existing literature, most studies treat the large family of business models that fall under the term PSS as one. Therefore, in addition to our focus on the B2C sector, we found it necessary to limit the study to a specific subset of PSS to reap valuable findings. The selected strain of PSS were ‘leasing or performance-based’ models where customers purchase the performance of the product while the PSS provider retains ownership. The research topic was developed through an extensive literature review and through an iterative process of expert interviews. During this process it became apparent that an inductive approach was most appropriate as the investigated phenomenon is understudied in this context. As our research strategy we adopted multiple case studies based on qualitative interviews and secondary sources. The analysed case companies are Mud Jeans, Bundles, and Dutch aWEARness. The two former are within the B2C sector, offering leasing models of jeans and washing machines, respectively, and the third is a B2B PSS provider of work uniforms and clothing. The analysis is presented in three main sections, of which the latter two reflect the two research questions. The first section describes the case companies and their business models. The second section was conducted to map out the barriers experienced by the two B2C case companies in order to gain a deeper understanding and to compare the barriers identified in various articles with empirical observations. The barriers that both case companies face are: Financial barriers, issues with scaling, lack of customer knowledge, difficulties communicating the value proposition, and lack of PSS related competencies. Our findings generally concord with barriers that arose from our literature review but provide a more elaborate account than extant literature and deepen our understanding of the intricacies of providing PSS in these settings. The third section fuses this with insights from the B2B case company and theory regarding differences between the dynamics of marketing to organizational buyers and private consumers. The product of the analysis is a set of working hypotheses that aim to uncover the underlying differences between the B2B vs. B2C environment which explain the many observed barriers and potentially why implementing a PSS in B2C setting is more difficult than B2B. The hypotheses are: 1. The B2B sales process is better suited for i) understanding your customer ii) customizing the PSS iii) communicating the value proposition of PSS. 2. Rational decision making favours PSS more than emotional decision making. 3. There are in fact more potential benefits for organizational customers than private customers for adopting PSS solutions. Conducting the research revealed that there are several other conditions which affect the adoption of a PSS, underlying the importance of analysing on a case-by-case basis and also taking a holistic view. Our reflections on the analysis highlight that the characteristics of the product of a PSS and the stage of the company (startups vs. large established organizations) have implications that are strongly intertwined with the barriers that a PSS provider experiences. The paper concludes by providing suggestions for future research that we hope will inspire other researchers to contribute to the growing body of theory regarding PSS.

EducationsMA in International Business Communication (Intercultural Marketing), (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2016
Number of pages214