Role of Cues in Buyers' Evaluations of Service Innovations

This dissertation integrates knowledge from consumer behavior, diffusion research, strategy and MIS to investigate the effects of information cues such as price, brand equity, and technology on buyers' service evaluations and behavioral intentions. Specifically, the effects of these information cues on buyers' perceptions of service quality, value and purchase intentions are examined. In addition, this study examines the role of two intervening variables, namely, sacrifice (monetary costs) and ease of use (non-monetary costs) in buyers' service evaluations. Two interactive services, a home banking service (Citibank & Ameritech) and a home shopping service (Time Warner) were described in a concept test format to subjects in a 4 x 2 x 2 between-subjects factorial design experiment. The sample for the home banking service (281) was composed of undergraduate students drawn from the university while the sample for the home shopping service (409), was composed of individuals living in the South Florida area. The experimental treatments, manipulation checks, dependent and intervening variables were measured using multiple-item seven point Likert-type scales. The data was analyzed using econometric modeling techniques. In both experiments, service quality perceptions were found to be significantly influenced by technology and brand equity perceptions. Brand equity was the main determinant of service quality in both experiments. Service value perceptions were driven by direct effects from service quality, sacrifice and ease of use and indirectly driven by technology and price perceptions. The role of brand equity in value perceptions is ambiguous. Sacrifice was related positively to price perceptions in both studies. Purchase intentions were explained only by value perceptions in both studies. The results suggest that service quality and service value are very different. The value function is more complex than service quality. Service organizations that attempt to create customer value by maximizing service quality ratings at the lowest price need to emphasize other value based determinants such as technology and ease of use. The model suggests a crossfunctional approach should be employed for service design and development in order to maximize service quality and customer value. In addition, this study recommends a substantive pre-launch service concept development and delivery effort by service organizations before introducing new services.