Brown Bag (Lunch) Seminar: Service Design for Usage Based Business Models

In order to be relevant and attain sustainable growth, a firm’s product design decisions should continuously internalize the broader societal priorities and trends. In this work we study the implications of the emerging sharing economy on existing durable goods manufacturers and the need to design usage based business models around existing products. Using a market segmentation model we analyze the optimal product design decisions of the firm. Across different business models we find that the optimal service level increases in the usage frequency of customers. The optimal service level also increases in the inconvenience cost to the customers and increases in the willingness to pay for product quality