Capturing customer value with product service systems. : A case study at Xylem Inc.

University essay from KTH/Skolan för industriell teknik och management (ITM)

Abstract: Competition among original equipment manufacturers are increasing and firms are looking for new ways to compete without dumping the prices. A growing approach is to move from selling traditional products into solutions with a combination of product and services by offering product service systems (PSS). This can provide business opportunities and strengthen the relationship with existing customers, but to reap the rewards there are both internal and external challenges that the firm needs to overcome, they also need to look at new ways of working to be able to handle the increased complexity of selling solutions. This master thesis has investigated how Xylem should approach servitization from a customer oriented perspective. It also discusses how the incentives and challenges for servitization for customers differ depending on segment and compared to literature. Through a combination of existing literature and qualitative interviews with Xylems customer it has been possible to identify the key components and drivers for when a customer is mature to approach servitization. It has resulted in an alternative list and ways of approaching servitization where the customer characteristics are taken into consideration. The findings from this thesis highlight a number of critical customer characteristics that need to be considered. It shows the importance of understanding a larger part of the customers business model when selling a product service system compared to when selling a product.

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