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Optimizing service failure and damage control

Journal

International Journal of Research in Marketing

Subject

Marketing

Publishing details

International Journal of Research in Marketing 2018 Vol 35:1 p 100-115

Authors / Editors

Halbheer D;Gartner D;Gerstner E;Koenigsberg O

Biographies

Oded Koenigsberg

Publication Year

2018

Abstract

Should a provider deliver a reliable service or should it allow for occasional service failures? This paper derives conditions under which randomizing service quality can benefit the provider and society. In addition to cost considerations, heterogeneity in customer damages from service failures allows the provider to generate profit from selling damage prevention services or offering compensation to high-damage customers. This strategy is viable even when reputation counts and markets are competitive.

Keywords

Service quality; Service reliability; Service failure; Damage control

Available on ECCH

No


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