Duncan Pham

Duncan Pham is an MSc Supply Chain Management Graduate of the Rotterdam School of Management. He also participated in a Consultancy Project between Erasmus University Rotterdam, Port of Rotterdam, and Foodbank of the Netherlands.

The Rotterdam School of Management is known for its focus on improvement in business practice and management. Its mission, a force for positive change, resonates with the current environmental and social problems. As a Master's student of RSM, Duncan geared his paper toward sustainability within the field of Operation Management. He is interested in Product-Service Systems, a circular business model that has recently gained traction. Using Choice-Based Conjoint Analysis (CBC), Duncan could delve into customers' preferences for characteristics designed into the business model.

Our thesis project aims to provide empirical evidence on the influence of different product and business designs on customer purchasing behaviors in washing machine product-service systems. We explore the effect of pricing structures, efficiency, and durability in different consumer segments. More specifically, the research focuses on environmental consciousness and service quality perception, delving into their impact on the customers' valuation of the product characteristics. We utilize discrete choice experiments to elaborate on the utility of different levels within one attribute and the attribute importance. We can summarize the main results in several points. First, in terms of pricing structure, there seems to be a preference for the combination of monthly fees and usage-based fees. Moreover, ownership is only considered when there is a "good" combination of other attribute levels. Second, consumers value energy efficiency most, followed by product durability. We also discovered an interaction effect between these two attributes. The results suggest avoiding incorporating the worst options (Label E and Basic Class) into the product offerings. Lastly, consumer characteristics play a role in determining their purchasing behaviors in the PSS market. We identify that consumers with high environmental consciousness value efficiency more than those who are less. However, they do not value durability as much. Furthermore, segmenting consumers based on their perception of the service quality yielded no difference in utilities or importance. Besides these main findings, we also have many implications for researchers and practitioners.

There are various managerial implications regarding our findings. Businesses should employ all possible strategies to capitalize on different consumer segments and create flexibility. We must note that there is no pure pay-per-use option currently on the market for washing machine PSS. This can be attributed to the many risks associated with ownership from the providers. Thus, companies should only consider offering a combination of monthly and usage-based fees in addition to the monthly payment scheme. Moreover, our study shows that ownership is only considered when a combination of efficiency and durability provides substantial utility. Furthermore, we suggest companies shift their focus towards energy efficiency when the expected energy consumption of the product is high, such as washing machines. However, when it comes to products that require consistent availability, such as laptops, we recommend focusing on product durability. We must note that although the focus should be shifted, the other product attribute should not be disregarded entirely. Lastly, from the findings regarding environmental consciousness, we advise PSS businesses to focus on energy efficiency when targeting highly environmentally conscious consumers. Since energy efficiency directly relates to reducing the negative ecological impact, the targeted segment will most likely prefer this attribute over durability. Moreover, we suggest offering more durable profiles to consumers with a lower environmental consciousness since they emphasize the product's availability.

Aside from the practical implications, the thesis project aims to contribute to the academic field. We provide empirical evidence on consumer purchasing behaviors in PSSs. These findings are then integrated with other theoretical discussions to develop a more relevant and comprehensive perspective on the business model. Moreover, the research is more consumer-centric to capture the demand side of the equation. This enriches the findings of the provider-centric case studies and provides more in-depth knowledge for researchers. Furthermore, we incorporate different segmentations to explore the customer characteristics and their effects on the PSS valuation. Lastly, although similar to many papers that employ the DCE and HB/Logit analysis, our research thoroughly discusses the steps necessary to conduct such a study.

However, there are many limitations and suggestions that should be considered for future research. First, there are various drawbacks to the survey and questionnaire design. The contract terms, service offerings, and attribute levels are explained based on assumptions and narrow definitions. Therefore, any inaccuracies in the reception of this information can lead to unreliable results. We suggest employing interviews with experts to create more up-to-date and market-accurate business model descriptions and attribute-level designs. Moreover, given the use of Likert scales as the instruments for customer characteristics collection, our survey may be inadequate to ensure reliable and valid data. We suggest using more items to provide enough choice sensitivity and incorporating more dimensions to encompass service quality perception. Second, we must discuss the disadvantage of the sampling procedure. As mentioned, using convenience sampling via social media creates a biased sample. More specifically, our respondents are overrepresented in the following groups: Male, aged 20 to 31, and Bachelor's or Master's degrees. Therefore, our findings are bound to washing machine PSS and these specific characteristics. Consequently, we suggest future research utilize a more robust data collection method to control the sample statistics. Third, although the research provides more empirical evidence for attribute importance and utility, there is still potential for further analysis. This can be in the form of willingness to pay, preference shares via market simulation, or choice probabilities. We recommend future research to conduct similar data collection via DCE and HB/Logit analysis, then employ one of the aforementioned methods to achieve a more detailed perspective of the PSS business model. Lastly, from our findings, we recommend future research to look into the influence of reliability on purchasing intention for PSS that require consistent product usage. We propose including other product attributes that indirectly reduce resource consumption for the environmental consciousness segmentation. This allows for analyzing consumer perception of direct versus indirect reduction in ecological impact.