PSS Design in Practice - How a Choice Experiment Can Help Configuring a New Subscription Offer. The Case of Care by Volvo’s Used Car Subscription Offer

Abstract

Background and Purpose The automotive industry is facing huge challenges as the perception and utilization of cars is changing. As a result, many automotive companies are increasingly moving away from solely selling cars and starting to offer bundles of products and services (PSS) instead. Care by Volvo is one such example as it offers cars via a subscription offer. This thesis aims to support the management of Care by Volvo during the design and configuration of a used car subscription offer. More specifically, it aims to obtain reliable information about customers’ preferences and willingness to pay regarding the included services by using an established method in this new PSS design context. The services evaluated where repair & maintenance, tyres, a car pickup and delivery service, insurance, a replacement car and the car condition.

Methodology The research was based on an extensive literature review in the fields of PSS, PSS design and methods for measuring customer preferences and WTP. In order to obtain the necessary customer data a survey-based discrete choice analysis was conducted. It was distributed on social media and targeted towards a predefined target group that consists of male inhabitants of Germany who are between 25-45 years old and have a gross-income above 37 500 €. However, the obtained sample could only partly represent this population.

Findings and Conclusions The researchers found that it is most important to include Repair & Maintenance and Tyres services into a used car subscription offer. “Winter and summer tyres with mounting and storage included” was thereby strongly preferred over “All-weather tyres and mounting included”. The monthly price resulted to be among the three most important decision factors for a subscription offer. Interestingly, women from the obtained sample have shown to be more price-sensitive than men while no correlation could be detected with the respondents’ income. Overall, the specific target group was found to have the highest WTP. On an academic level, the DCA seems applicable to the researchers for PSS-Design and specifically for the configuration and evaluation of a PSS. Furthermore, the research contributes to the sparse literature about car subscriptions. The most important limitations of this research concern the data collection, since the use of a convenience sample and a selection bias lead to overall low generalizability. Other significant limitations are the non-inclusion of a no-buy option and further factors that could influence on a respondents’ choice for a subscription offer.