DEVELOPMENT OF INTERNET-BASED VALUE ADDED SERVICES IN HOUSING ESTATE BUSINESS IN RUSSIA
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Introduction 8
Background 8
Research problem 9
Organisation of the study 10
Chapter 1. Theoretical Background 12
1.1. The concept of Business Model 12
1.1.1. Defining Business Model 12
1.1.2. Internet Business Model 13
1.1.3. Online earnings logics 16
1.2. The concept of Value Added Services 19
1.2.1. Defining Value Added Service 19
1.2.2. Strategies of providing Value Added Services 21
1.2.3. Value Added Services categorisation 24
1.2.4. Value Added Services in different industries 27
1.3. State Information System description 30
Chapter 2. Methodology 33
2.1. Methodology justification 33
2.2. Interview 34
2.3. Survey 37
Chapter 3. Findings 40
3.1. Interview 40
3.2. Survey 48
Chapter 4. Discussion 56
4.1 Theoretical contribution 56
4.2 Managerial implications 57
4.3 Limitations and future research 59
List of References 60
Appendix
Background 8
Research problem 9
Organisation of the study 10
Chapter 1. Theoretical Background 12
1.1. The concept of Business Model 12
1.1.1. Defining Business Model 12
1.1.2. Internet Business Model 13
1.1.3. Online earnings logics 16
1.2. The concept of Value Added Services 19
1.2.1. Defining Value Added Service 19
1.2.2. Strategies of providing Value Added Services 21
1.2.3. Value Added Services categorisation 24
1.2.4. Value Added Services in different industries 27
1.3. State Information System description 30
Chapter 2. Methodology 33
2.1. Methodology justification 33
2.2. Interview 34
2.3. Survey 37
Chapter 3. Findings 40
3.1. Interview 40
3.2. Survey 48
Chapter 4. Discussion 56
4.1 Theoretical contribution 56
4.2 Managerial implications 57
4.3 Limitations and future research 59
List of References 60
Appendix
Nowadays customer-oriented industries have significantly changed. Currently, customers expect from the purchase more than just a product or service. They tend to become loyal if their expectation are met; to reach it companies usually offer their clients some additional things. These additional elements are called value added services. Such services have positive impact on the perceived value of the core product [van Riel et al., 2001, Gwinner et al., 2000]. Therefore as consumers tend to expect high quality of the core product and take this high quality largely for granted [Gwinner et al., 2000], value added services play a significant role in modern business. Another reason for value services introduction is the fact that physical products don’t provide companies with competitive advantage, financial performance or market opportunities anymore [Oliva, Kallenberg, 2003; Gebauer, Fleisch, Friedli, 2005]. Also value added services help companies to deal with low or decreasing revenues from the core product [Ahn et al., 2011; Goyal, 2004]. So the better value added services the company offers the higher is the value of its core product from the customer perspective. Thus value added services is becoming one of the key competitive advantages for companies on different markets.
These changes started in 90-s when value added services were first introduced in telecommunication industry. Since then many different studies were conducted on the topic of value added services: Dowling (1991), Stoetzer (1992), Wittenbach (1995), Goyal (2004), Ulaga and Reinartz (2011) and many others.
All business fields and issues, including value added services, changed significantly with emergence of the Internet, for example, new e-business models appeared [Casadesus- Masanell, Ricart, 2009]. Also Internet-based value added services differ a lot from basic ones, which is very common for the majority of e-services based on traditional ones [Riedl, Leimeister, Krcmar, 2011].
All the mentioned changes have global character and affect almost all industries in all countries. Previous studies were conducted to identify peculiarities of different regions [Dowling, Witte, 1991; Stoetzer, 1991], nevertheless, Russian market have not been examined yet. The need in development of value added services is increasing in different business fields: foodservice [Wittenbach, 1995], internet telephony [Wang, 1999], next-generation networks [Whalley, 2008], health micro insurance [Pott, Holtz, 2014] and many others. Housing estate is not an exception as the changes affect this industry, too.
Key definitions:
Business model - a simplified description of a complex business, which allows to explore its structure, different elements’ relationships and its response to the real world [Applegate, 2001].
Value Added Service - additional service, not a part of primary business activity, which creates additional value for the clients.
E-service is considered to be a service that is provided to the customers over electronic networks [Rust, Kannan, 2003].
Commoditisation - a process by which products tend to lose their uniqueness and respectively value for customers [Davenport, 2005].
Business-to-consumer (B2C, sometimes also called Business-to-Customer) describes activities of businesses serving end consumers with products and/or services [Nemat, 2011].
Consumer-to-consumer (C2C) (or citizen-to-citizen) electronic commerce involves the electronically facilitated transactions between consumers through some third party [Nemat, 2011].
These changes started in 90-s when value added services were first introduced in telecommunication industry. Since then many different studies were conducted on the topic of value added services: Dowling (1991), Stoetzer (1992), Wittenbach (1995), Goyal (2004), Ulaga and Reinartz (2011) and many others.
All business fields and issues, including value added services, changed significantly with emergence of the Internet, for example, new e-business models appeared [Casadesus- Masanell, Ricart, 2009]. Also Internet-based value added services differ a lot from basic ones, which is very common for the majority of e-services based on traditional ones [Riedl, Leimeister, Krcmar, 2011].
All the mentioned changes have global character and affect almost all industries in all countries. Previous studies were conducted to identify peculiarities of different regions [Dowling, Witte, 1991; Stoetzer, 1991], nevertheless, Russian market have not been examined yet. The need in development of value added services is increasing in different business fields: foodservice [Wittenbach, 1995], internet telephony [Wang, 1999], next-generation networks [Whalley, 2008], health micro insurance [Pott, Holtz, 2014] and many others. Housing estate is not an exception as the changes affect this industry, too.
Key definitions:
Business model - a simplified description of a complex business, which allows to explore its structure, different elements’ relationships and its response to the real world [Applegate, 2001].
Value Added Service - additional service, not a part of primary business activity, which creates additional value for the clients.
E-service is considered to be a service that is provided to the customers over electronic networks [Rust, Kannan, 2003].
Commoditisation - a process by which products tend to lose their uniqueness and respectively value for customers [Davenport, 2005].
Business-to-consumer (B2C, sometimes also called Business-to-Customer) describes activities of businesses serving end consumers with products and/or services [Nemat, 2011].
Consumer-to-consumer (C2C) (or citizen-to-citizen) electronic commerce involves the electronically facilitated transactions between consumers through some third party [Nemat, 2011].
Firstly, in this study sample for customer survey was created by cluster sampling technique, and included only inhabitants of YIT housing estates. Such sample was used in the survey because these people were familiar with online platforms as such system was already implemented in their housing estates. In terms of this research, respondents’ knowledge of the platform was significant for reaching the research goals of creating value added services for housing estate industry, as these people are aware of online portal, have better understanding of its potential and can provide more information. However, used sample is not representative regarding the issue of new users’ adoption of online platform.
Secondly, all the respondents of the customer survey are citizens of Saint-Petersburg, so the results are relevant only for big cities. Therefore consumers’ interest in utilisation of online portal might be different in smaller cities of Russia. Additionally, differences in the life-style of people from big and small cities can lead to lower interest in some value added services provided through online platform in the latter.
Future studies can observe the issue of new users’ adoption by enlarging the customer survey sample and including respondents from different housing estates who might be absolutely unfamiliar with online platforms. Customers from smaller (compared to Saint- Petersburg) cities of Russia can be surveyed in order to identify their interests in value added services and to compare the outcomes with the results of this research. This will help to generalize conclusions for the whole Russian market of housing estate.
Also, only 7 experts from 2 construction companies were interviewed and qualitative analysis of the results of these interviews was conducted. Future researches can conduct surveys among construction companies and use quantitative analysis in order to understand general attitude to value added services issue on the housing estate market.
This research was focused on value added services and does not take into account any companies’ features. Therefore, further researches can concentrate on this issue and define if any characteristics of the construction company influence value added services issue.
Finally, the list of value added services developed for online platforms in housing estate industry can be used as a base for further researches regarding new value added services development for other industries. Additionally, as value added services are getting obsolete after a big number of companies implement them, the results of this research can be used as a background for further development of new services in housing estate business.
Secondly, all the respondents of the customer survey are citizens of Saint-Petersburg, so the results are relevant only for big cities. Therefore consumers’ interest in utilisation of online portal might be different in smaller cities of Russia. Additionally, differences in the life-style of people from big and small cities can lead to lower interest in some value added services provided through online platform in the latter.
Future studies can observe the issue of new users’ adoption by enlarging the customer survey sample and including respondents from different housing estates who might be absolutely unfamiliar with online platforms. Customers from smaller (compared to Saint- Petersburg) cities of Russia can be surveyed in order to identify their interests in value added services and to compare the outcomes with the results of this research. This will help to generalize conclusions for the whole Russian market of housing estate.
Also, only 7 experts from 2 construction companies were interviewed and qualitative analysis of the results of these interviews was conducted. Future researches can conduct surveys among construction companies and use quantitative analysis in order to understand general attitude to value added services issue on the housing estate market.
This research was focused on value added services and does not take into account any companies’ features. Therefore, further researches can concentrate on this issue and define if any characteristics of the construction company influence value added services issue.
Finally, the list of value added services developed for online platforms in housing estate industry can be used as a base for further researches regarding new value added services development for other industries. Additionally, as value added services are getting obsolete after a big number of companies implement them, the results of this research can be used as a background for further development of new services in housing estate business.