Value Based Service

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MSQ 16,3


Values-based service brands: narratives from IKEA
Bo Edvardsson and Bo Enquist
Service Research Center, Karlstad University, Karlstad, Sweden, and


Michael Hay
IKEA North America
Purpose – The purpose of this paper is to present a model for values-based service brands grounded in values-based service management. In undertaking this task, the paper addresses two research questions: “What is the role of values in creating customer value and corporate identity?” and “How can values and corporate identity be communicated to customers and thus contribute to customer-perceived service value?”. Design/methodology/approach – Based on five narratives from a value-driven company, IKEA, the paper proposes a model of values-based service brands in action. The model is based on interpretations of how IKEA manages and communicates values in practising values-based service management. Findings – The study distinguishes four types of “values” in the example of IKEA: economic, social, environmental, and communication-based. These are incorporated into the model. Originality/value – This is the first study of the role of values-based service brands in creating value in use for customers. Keywords Value added, Brands, Customer service management, Corporate identity Paper type Research paper

Managing Service Quality Vol. 16 No. 3, 2006 pp. 230-246 q Emerald Group Publishing Limited 0960-4529 DOI 10.1108/09604520610663471

1. Introduction Brands are among the most fundamental and enduring assets of a firm (Martin et al., 2005). However, in services-management research, little attention has been devoted to the question of how a perception of value-in-use can be communicated to customers through values-based service brands. The importance of communicating values in business is illustrated in the contemporary utilisation of such approaches as “corporate social responsibility” (CSR) (Zadek, 2004; Kotler and Lee, 2005) and “triple bottom-line thinking” (Elkington, 1997, 2001) to create stakeholder value (Post et al., 2002). In accordance with these approaches, companies try to avoid aligning themselves with negative values – for example, environmental pollution or exploitation of cheap labour (especially child labour) –which can result in negative publicity and value being destroyed. Rather, companies strive to be associated with attractive values – for example, high ethical standards in dealing with employees and customers, contributing to society, and applying recycling principles whenever possible. Vargo and Lusch (2004a, b) stressed value-in-use for the customer. In accordance with a service-centred view, Vargo and Lusch (2004a) argued that value is defined by and co-created with the customers, rather than being embedded in output, in defined products or service attributes. According to this view, value is perceived by the

customer on the basis of value-in-use, and value creation through service is described in terms of linked activities and interactions provided as solutions to customer problems (Edvardsson et al., 2005a, b). The present paper argues that corporate values also bring value-in-use to customers. Excellent companies are distinguished from average companies by values, and not merely by logical, value-for-money outcomes and cognitive assessments (Johnston and Clark, 2001). The aim of the paper is thus to present a framework for values-based service brands grounded in values-based services management. The focus is on how values are communicated and bring value-in-use to customers. The new model is based on a literature review and an interpretation of how one particular values-based firm, IKEA, nurtures and communicates values in its customer relationships. IKEA is the largest furniture retailer in the world (Kotler, 1999), and has a growing global business. IKEA...
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