Although advanced services, or so called integrated solutions, have increasingly received attention in the literature, no coherent body of literature exists, and the relational dimensions and consequences of integrated solutions are not explored in detail. Based on the emerging literature, we develop a framework identifying four different categories of integrated solutions: rental, maintenance, operational and performance offerings. We also compare and contrast the service- and the goods-centered logics with the logic of integrated solutions, and thereby show how the reciprocal interdependencies increase between customers and suppliers. We explore these interdependencies further in three case studies of firms experimenting with integrated solutions, and identify dependencies related to process knowledge, process optimization, and process operations. The paper shows that rather than moving along a linear continuum from goods to services, firms developing integrated solutions need to balance elements of both goods- and service-logics, as well as manage the increased customer–supplier interdependencies that integrated solutions entail.
A number of marketing scholars argue for a new dominant logic of marketing, where service provision, rather than goods, is fundamental to economic exchange, and the logic of which is applicable to any type of organization, industry and sector (e.g. Edvardsson et al., 2000, Edvardsson et al., 2005, Gronroos, 1994, Gummesson, 1994, Normann, 2000 and Vargo & Lusch, 2004). As a consequence, manufacturing firms have been urged to reposition themselves as service organizations and focus on a new set of issues, including the development of customized offerings, increased customer involvement, and even co-production (Gummesson, 1994, Normann, 2000 and Vargo & Lusch, 2004). Instead of short-term transactions, long-term relationships with customers are in focus in these ‘new’ interactions (Gronroos, 1994).
Despite increased emphasis on services in both literature and practice, questions remain about the applicability of findings when it comes to manufacturing firms in the capital goods industry (Grove et al., 2003 and Stauss, 2005). The literature on service development focuses on the services sector and tends to underexpose the goods-manufacturing industry; in addition, most services marketing research focuses on consumer markets rather than industrial markets (Jackson et al., 1995 and Lovelock & Gummesson, 2004). As a result, scholars emphasize the differences between managing firms producing tangible goods and intangible services (Bowen & Ford, 2002, de Brentani, 1989 and Vargo & Lusch, 2004), and often overlook a more integrated perspective which may better apply to the capital goods industry. Therefore, insight into how products and services could and should be integrated in the capital goods industry, the challenges connected to this integration, the extent of the service offering, and the factors to consider when deciding on the product–service mix in the capital goods industry is scarce (Grove et al., 2003 and Oliva & Kallenberg, 2003). How the manufacturing firms in the capital goods industry operate in the so called service-dominant logic remains an open question.
In this paper, we explore the concept of integrated solutions and its relational consequences, specifically focusing on the capital goods industry. With integrated solutions, a combination of physical products or services, or both, plus knowledge are used to provide a specific outcome fulfilling the customers' needs. In a fully-fledged integrated solution, the supplier retains ownership of the equipment and increases the value for the customer (fulfils the customer's need) by reducing the customer's costs and/or enabling the customer to create new and more competitive offerings (Windahl, 2007). The buyer pays according to the level of usage or in relation to obtained cost savings, and thus the integrated solution becomes a running expense for the buyer rather than an investment (Soderstrom, 2003).
Drawing upon the relatively sparse literature on integrated solutions in the capital goods industry, the first objective of the paper is to create an understanding of different types of integrated solutions. The second objective of the paper is to develop a framework that deals with relational dimensions and consequences of developing integrated solutions in the capital goods industry. More specifically, we address two research questions: (a) how can the concept of integrated solutions be operationalized, and (b) how do integrated solutions change the interdependencies between suppliers and customers?
