Current arguments on the drivers of business performance in the service economy focus on investments in information technology, investments in human resources, and investments in developing customer-oriented business processes. This paper advances a new approach to understanding competitive performance in the service economy. Termed the strategic segmentation perspective, this new approach suggests it is not investments in organizational capabilities alone but the alignment of organizational capabilities with customer segmentation strategies that generates competitive advantage. By aligning organizational capabilities with distribution strategies that recognize the distinct product and service needs of different customer segments, service companies can maximize profits from each customer group they serve. The article draws on case studies of high-performing service companies to show how a strategic approach to distribution strategies can be used to achieve superior service performance.
This report is part of the RAND Corporation draft series. The unrestricted draft was a product of the RAND Corporation from 1993 to 2003 that represented preliminary or prepublication versions of other more formal RAND products for distribution to appropriate external audiences. The draft could be considered similar to an academic discussion paper. Although unrestricted drafts had been approved for circulation, they were not usually formally edited or peer reviewed.
Permission is given to duplicate this electronic document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. For information on reprint and linking permissions, please visit the RAND Permissions page.
The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.