This paper discusses alternative ways in which the potential for diminishing returns has been built into the examination of service improvement programmes by way of stated preference techniques. During the past two or three years there has been a dramatic increase in the use that has been made of stated preference techniques to assist Marketing Managers in assessing the relative values of a variety of potential product improvements. Such Marketing Audits, as they have become known, have tended to accommodate a wide range of variables comparing improvements in primary characteristics (such as journey time, punctuality and reliability) with infrastructure changes (e.g.new/ refurbished rolling stock, station modernisation, etc) and new service products (such as luggage conveyance facilities, limousine services to the terminals, creche facilities at stations/on trains, etc). In the process of conducting a number of such studies the authors rapidly became aware of the need to explicitly build in the possibility that consumer reaction programme of service improvements might well be subject to diminishing returns. As a result, alternative ways were developed of exploring whether consumer spending limits existed and, if so, at what levels. This paper describes some of the approaches adopted, providing some practical examples of studies undertaken on behalf of a number of European railway and bus operators. The paper demonstrates the flexibility and power of the technique in providing usable management information for a wide variety of tasks e.g. feasibility studies, new product development, minor investment decisions and marketing strategy development.
Abstract