Chapter 14: Consumer goods: from mass consumption to servitization
Restricted access

This chapter draws on price discrimination and historical production models to build price and operations strategy typologies in manufacturing. Historically, manufacturing firms have been unable to find production models that achieve optimal price and operations strategies. For instance, craft production could possibly achieve optimal price discrimination (first-degree discrimination) but lower operational performance. In contrast, mass production dramatically improved operational performance simply by offering volume discounts to attract demand (second-degree discrimination) or segmentation (mass customization), which could only achieve third-degree price discrimination. However, this research presents a relatively new production model that can offer price and operational optimality jointly, i.e., the servitization of manufacturing. In servitization, manufacturing firms add services to foster closer and richer relationships with customers (front-end), and digital technologies to improve logistics and inventory management (back-end). Here it is argued that, by doing so, servitization enables first-degree price discrimination to be established via product customization, and production efficiency via built-in digital production facility and product capabilities.

You are not authenticated to view the full text of this chapter or article.

Access options

Get access to the full article by using one of the access options below.

Other access options

Redeem Token

Institutional Login

Log in with Open Athens, Shibboleth, or your institutional credentials

Login via Institutional Access

Personal login

Log in with your Elgar Online account

Login with your Elgar account