Capturing competitors’ installed base opportunities - In the Context of New Service Development and Business Model Innovation in After Sales Services

Abstract

In today’s extremely competitive business environment, one could argue that manufacturing companies should start providing services that accompany their products, therefore providing more value to their customers. Searching for these alternative sources of income becomes particularly significant in periods when the company’s capital business is underperforming. During these times, companies often face the need to innovate business models, creating new ones or refining already existing ones. However, whether the company is just starting to service its own installed base, or already does at a high capacity, the provided services may not be limited to only a company’s own installed base. Consequently, companies have the opportunity to expand their own installed bases through servicing those of other original equipment manufacturers. The main purpose and objective of this thesis is to determine how a company could use their competitive advantages to systematically identify and win after-sales service opportunities in the installed bases of competitors and other original equipment manufacturers. In addition, the thesis examines how a business model could support the systematization of this process, what resources it requires from the company, how the performance of the model should be monitored, as well as how the continuous development of the model can be ensured. The research is conducted through a literature review and an empirical study. The literature review is divided into 2 sections, observing business models and business model innovation in services, in addition to diving into value creation in the after-sales and new service development. The empirical section of this study included an interview and a survey, which was conducted on multiple employees working on different hierarchical levels of the case company. Based on the literature review, a tentative framework for new service development is created through commonly agreed upon steps found in the literature. In essence, this framework portrays the tentative framework for identifying and winning service opportunities. Combining these findings from literature with the findings from empirical study, the tentative framework is revised to make it applicable for use in the context of competitors’ and other original equipment manufacturers’ equipment. Even though the literature on providing services for the equipment of the competitors is extremely scarce, both literature and empirical evidence highlight the importance of customer-insight-driven development, more efficient cross-functional collaboration, as well as strategic alignment as the cornerstone for identifying and capturing new service potential. Also, the literature combined with the empirical results clearly show that a business model clarifies the value proposition of the service offering while it helps in revealing gaps in competitors’ offerings, aligns the resources and capabilities of the company, and evaluates the financial feasibility of targeting competitors’ installed base.