The service elimination process : an empirical investigation into the British financial services sector

Abstract

The present study represents an in-depth empirical investigation into the service elimination process in the British financial services sector. It aims to make a contribution towards the concise development of the literature on service elimination and to provide empirically based recommendations, which can improve the way financial service elimination is practised. The theoretical part of the study focused first on a review of the characteristics of services in general and of financial services in particular and of the service range management activities of financial institutions. Second, the literature on product and service elimination was reviewed. The bulk of this material refers to conceptual propositions and empirical evidence on elimination from manufacturing settings, while conceptual and empirical material from service and financial service settings is alarmingly sparse. The presents tudy conceptualisedth e service elimination process as consisting of three broad stages, a) the pre-elimination stage, b) the actual service elimination decision-making process and c) the post-elimination stage. The study adopted a research approach based on the broad hypothesis that service elimination decisions are not made in a vacuum (as the limited literature on service and financial service elimination assumes explicitly or implicitly) but that they are influenced by contextual organisational and environmental characteristics of companies. Based on the above conceptualisations, the research objectives were to a) identify the content of the service elimination process (i. e., the decision variables involved in the various steps of the process) b) measure the relative importance/frequency of use of the above content and c) measure the influence of a set of contextual independent variables on the relative importance/frequency of use of the content of the service elimination process. To meet the above research objectives, a pluralistic research method was adopted. For the identification component of the research objectives qualitative research (in-depth interviews) was conducted, while for the measurement component quantitative research was conducted(mail survey). The findings indicated that service elimination decisions were the outcome of a multi-step process, which with very few exceptions (i. e., the way in which British financial institutions identified financial services as candidates for elimination) was found to be largely informal and unsophisticated. Moreover service elimination was rated as the least important service range management activity and was allocated the least amount of resources (temporal, monetary and human). The findings also suggested that the content of the service elimination process was both similar and different to elimination practice in manufacturing settings. Among the most obvious similarities was the paramount importance of sales and profitability considerations in making products and financial services candidates for elimination. Among the most striking differences was that while a product is fully eliminated, partial elimination was the predominant outcome of the service elimination process in the studied setting. With regards to the contextual influence, it was found that the relative importance/frequency of the decision variables involved in the service elimination process varied in relation to the type and the size of individual financial institutions, the pursued overall business strategy, and degree of market orientation, the degree of formalisation of the service elimination process, the number of services in the range (service diversity), the type of financial service which is considered for elimination, the method of its delivery process, the intensity of competition and of the legislative environment and the volatility of the technological environment. As such, the findings confirmed the hypothesised dynamism of the service elimination decisions and suggested that any attempt to describe the service elimination process in a golden rule way that fits all companies, all financial services and all environmental circumstances would be misleading.