Incorporating user costs in preference models for service alternatives

Services are often distinguished from goods by the involvement of the consumer in the production and delivery process. Since the net benefits derived by consumers depend upon their effectiveness and efficiency in fulfilling their required roles, preferences for and choice of alternative services should reflect their effort. We propose a model of preference which incorporatesuser costs, which reflect consumers' efforts, or a corresponding universal set ofuser service dimensions, which reflect attributes of the service that impinge on these user costs. We apply this model to a small-scale study of services for the transfer of written material. The findings demonstrate the ability to treat rigorously essential aspects of services, with implications for the management of services, and for further research.The authors acknowledge the considerable efforts of Rosemary Lyster, MBA student at New York University, and Lorraine Scudieri, Manager of Business Research at Bell Atlantic, in planning and executing a complex survey which provided the data used in this analysis. The authors were stimulated by discussions with Roger Betancourt, who deserves much of the credit and none of the blame for what follows. The authors are also grateful to Avijit Ghosh, Robert Shoemaker, and John Czepiel for their comments on an early version of this paper. Our application was motivated by a research project with Institut National des Telecommunications (France Telecom University) and, in particular with Pierre Vialle.