Operations as marketing: A competitive service strategy

Abstract This paper presents a competitive service strategy paradigm which explicitly considers the strategic role of operations as a competitive weapon. This service strategy paradigm draws upon the prevailing manufacturing strategy literature in its definition of strategic operations choices and critical success factors. We show that to make a service delivery system a potential marketing tool, critical success factor criteria must be based upon the explicit service task or mission which coincides with a service operations strategy. We illustrate how critical success factors are the linchpin between operations and marketing in service organizations. Assessing critical success factors is the first step of a process which determines the strategic role that operations can play in a service firm. Using a sample of 117 retail banks, our paper explores industry critical success factors along two dimensions, one is market‐oriented and the other is competitor‐oriented. We derive a framework, which we label the Customer/Account Base (CAB) matrix, to serve as a decision‐aiding tool to evaluate the relative competitive positioning of a service firm. Our analyses show that quadrants on the CAB matrix coincide with four stages of capability development, similar to those found in manufacturing by Hayes and Wheelwright (1984), reflecting the strategic role a service delivery system design plays in meeting the competition. We go on to empirically link the competitive priorities of retail banks with operations strategy contents of structure, infrastructure and integration choices. Using our service strategy paradigm, we empirically show that the pattern of operations choices varies by competitive priority. As anticipated, the pattern of operations choices linked to relationship banking, one of the most difficult capabilities to achieve and one that requires a high degree of customer contact, is characterized by the most holistic and integrative operations strategy. In conclusion, our exploratory findings illustrate how the prevailing manufacturing strategy framework can be adopted in service strategy delivery system design and the moderating role that customer contact exerts in service strategy formation.