Development of a taxonomy of services to gain strategic marketing insights

Abstract

A theme emerging in the services marketing literature indicates that services marketers should look beyond industry boundaries to gain marketing insight. A number of conceptual typologies for grouping services have been developed. However, none of these conceptualizations have been studied empirically. This study addresses this shortcoming. The study is divided into two phases. The first phase develops a taxonomy of consumer services, and the second phase tests its usefulness. The taxonomy is based on a cluster analysis of consumer perceptions of ten services across seven attributes. This study tested the usefulness of the taxonomy by comparing its ability to give insight into marketing strategy vis-a-vis the ability of two traditional grouping methods--strategic and industry groupings. This was accomplished by the creation of a regression model for each of the three different grouping methods (taxonomic, strategic, and industry) in which return on investment was used as the dependent variable, while variables related to different elements of the marketing mix served as the independent variables. Raw data for the regression analyses were derived from the Compustat data base. Before comparing the three grouping methods, Chow tests were performed to determine whether differences existed in the regression models formed by the groups within each grouping method. If no differences were found, there would be no reason for creating these groups. The Chow tests found that significant differences did exist between the regression models of the taxonomic groups and the industry groups. Strategic groups were formed in two industries, the restaurant industry and the hotel industry. The tests indicated that significant differences existed between the groups formed within the restaurant industry, while no significant differences existed between the groups within the hotel industry. The usefulness of each grouping method was then evaluated based on its ability to give insight into the determination of return on investment. The mean adjusted R2 for each grouping method was the criterion for this test. Taxonomic groups were found to explain the most variation, followed by strategic groups and industry groups.