A re-examination of service standardization
versus customization from the
consumer’s perspective
Ying Ding
School of Business, Renmin University of China, Beijing, China, and
Hean Tat Keh
Monash Business School, Monash University, Caulfield East, Australia
Abstract
Purpose – The purpose of this paper is to investigate the pros and cons of service standardization (vs customization) from the consumer’s
perspective, the key factors influencing consumers’ preference for standardized (vs customized) services and the outcomes of service standardization
(vs customization).
Design/methodology/approach – The authors conducted a qualitative study and two behavioral experiments to test the hypotheses.
Findings – The authors find that the advantages of service customization include greater perceived control and higher consumer satisfaction. The
drawbacks of service customization include greater perceived risk. These findings also suggest that consumers’ preference for standardized (vs
customized) service depends on their consumption goal. Specifically, consumers with a hedonic goal tend to prefer customized services, while those
with a utilitarian goal tend to prefer standardized services. These effects are moderated by their need for uniqueness.
Research limitations/implications – The qualitative and experimental studies in this research reveal the antecedents (utilitarian vs hedonic goal)
on consumer preference for service standardization versus customization, as well as the consequences in terms of perceived risk, consumer
satisfaction and perceived control. The experimental studies were conducted with Chinese and American consumers, respectively, which lend
credence to the robustness of the findings.
Practical implications – Results of the present research provide new insights into service standardization versus customization and have significant
practical implications. In particular, service organizations should consider designing the appropriate service mode based on consumers’
characteristics, particularly their consumption goals and their need for uniqueness. If the customers focus on efficiency and functionality, the
organization should try to provide standardized services. In contrast, for customers who are seeking fun and a novel experience, the service firm
should try to tailor to their hedonic needs.
Originality/value – While previous research identifies “heterogeneity” as a key characteristic of services in general, the present findings qualify
this received wisdom. In particular, the authors show that consumers’ preference for service standardization versus customization is a function of
their consumption goal and need for uniqueness. Thus, the present findings refine the current understanding of service heterogeneity, which makes
a significant contribution to the services marketing literature.
Keywords Perceived risk, Perceived control, Consumption goal, Need for uniqueness, Service customization, Service standardization
Paper type Research paper
Introduction
along with the standardized food preparation methods (Ritzer,
2011). On the other hand is The Counter restaurant, a rapidly
expanding chain founded in 2003. Its customers can expect to
receive customized service through the construction of
personalized burgers that cater to their unique individual
tastes and wants (Perman, 2009). Technically, based on the
choice of ingredients available, The Counter claims it can offer
more than 312,120 different burger combinations. In
comparing between the two brands, we note that a
fundamental difference lies in McDonald’s raison d’être based
on service standardization and The Counter’s emphasis on
service customization.
The co-existence and sustainability of the contrasting
service options may be explained by market segmentation, a
concept that is central to modern marketing theory and
Should service organizations standardize or customize their
market offerings? Consider the following contrasting examples
of two restaurants that serve hamburgers. On the one hand,
McDonald’s represents a classic example of service
standardization. Beyond the widely recognized golden arches,
employee uniforms and restaurant design, a striking
consistency across its outlets around the globe is the similar
limited menu (with minor modifications to cater to
location-specific peculiarities, such as lamb burgers in India)
The current issue and full text archive of this journal is available on
Emerald Insight at: www.emeraldinsight.com/0887-6045.htm
Journal of Services Marketing
30/1 (2016) 16 –28
© Emerald Group Publishing Limited [ISSN 0887-6045]
[DOI 10.1108/JSM-02-2015-0088]
Received 17 February 2015
Revised 7 May 2015
Accepted 21 May 2015
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Service standardization versus customization
Journal of Services Marketing
Ying Ding and Hean Tat Keh
Volume 30 · Number 1 · 2016 · 16 –28
practice (Kotler and Keller, 2012). There could be varying
levels of segmentation, ranging from mass marketing, which
implies that the firm provides the same offering for the entire
market, as in the case of McDonald’s, to specific narrow
segments of individual customers, a practice known as mass
customization (Davis, 1987; Pine, 1993), as exemplified by
The Counter. Prominent marketing scholar Kotler (1989,
p. 47) once prophesied that:
laid out in order and all outcomes are uniform (Shostack,
1987). The objective of standardized services is to reach as
many customers as possible while satisfying a rather limited
number of customer needs (Simonson, 2005). The
development of technology has facilitated the delivery of
standardized and consistent service performance (Levitt,
1972, 1976). For example, the growth in self-service
technologies (Meuter et al., 2000) such as ATMs,
pay-at-the-pump, automated hotel checkout, vending
machines and Internet transactions has led to service delivery
becoming more standardized. In each of these cases, human
labor has been replaced or reduced by technology and
machine. As machines can create a more constant service
atmosphere, the customer will know precisely what to expect
from the encounter and have a similar experience each time
the service is used (Curran et al., 2003).
Over the years, the standardization of work procedures and
the implementation of technology have led to what sociologist
Ritzer (2011) terms the “McDonaldization” of service
industries such as restaurants, hotels, retailing and tourism.
One of the central tenets of McDonaldization is predictability,
which implies that regardless of location, consumers can
expect to receive the same consistent standard of service every
time when interacting with the organization. To illustrate:
[. . .] the “mass market” is dead – segmentation has now progressed to the
era of mass customization [. . .] Today’s computer technologies and
automation capabilities within factories now allow us to bring out
affordable, individualized versions of products – every consumer’s dream.
Nonetheless, the ubiquitous presence of McDonald’s suggests
that the pronouncement by Kotler (1989) on the death of
mass marketing may have been premature. Besides
McDonald’s, there are many other service organizations that
continue to apply mass marketing strategies, such as
Wal-Mart stores, Shell gas stations, Holiday Inn hotels and
AMC cinemas. Conversely, not all attempts at mass
customization have been successful. For example, Pine et al.
(1993, p. 114) attribute the failure of Westpac Bank’s
attempts in Australia to become a mass customizer to “The
challenges of automating inflexible processes, building on
ossified products, and trying to create a fluid network within a
hierarchical organization [. . .] ”. Interestingly, there was no
mention in their analysis on the role of consumers in
determining the fate of Westpac’s customization strategy. This
is despite consumers’ sensitivity to customization being one of
the four pillars determining the organization’s decision to
engage in mass customization (Carr, 2007).
The present research seeks to understand the goals
underlying consumer preference for one service mode over the
other, and consumers’ reactions to service standardization
versus customization. To this end, we develop a contingency
framework and empirically examine the role of consumers’
temporal consumption goal (i.e. utilitarian vs hedonic goal) in
driving their preference for standardized versus customized
service modes.
The rest of this article is organized as follows. The next
section reviews the extant literature on service standardization
and service customization. Following this, a qualitative study
(Study 1) is presented to better understand consumer
perceptions of standardized versus customized service modes.
Based on the literature and the qualitative study, we develop a
set of testable hypotheses. Next, findings from two empirical
experiments (Studies 2 and 3) are reported. The conclusion
includes a discussion of the theoretical contributions and
managerial implications, as well as suggestions for future
research.
In the past, one of the reasons that tour operators had to offer standardized
meals was that the food available at a given tourist site would likely prove too
unusual and unpredictable and therefore unpalatable for many tourists.
However, now tourists can generally be safely left on their own at most
locales since those who want standardized meals will almost undoubtedly
find them readily available at a local McDonald’s [. . .] Similar chains, or
indigenous spin-offs, in many other sectors (such as Benetton in clothing,
Body Shops in cosmetics) make most tourist sites quite familiar and
comfortable for the majority of tourists (Ritzer and Liska, 1997, p. 99).
The consistency and predictability associated with service
standardization can lead to positive consumer evaluation. The
wisdom-of-the-crowd effect (Surowiecki, 2004) suggests that
service organizations can generate higher sales from
consumers through standardized offerings. Along this line,
Kramer et al. (2007) find that consumers who exhibit
interdependent or collectivistic tendencies tend to favor
products based on the aggregated preferences of other
consumers (standardization) over products based on their own
preferences (customization).
Service customization
In contrast to service standardization, customization refers to
some level of adaptation or tailoring of the process to meet the
individual consumer’s needs (Shostack, 1987). Thus, service
customization may be viewed as a tailor-made solution for the
customer’s benefit (Lovelock, 1983). Customized services
may result from employees’ proactive contributions, such as
offering helpful information and suggestions (Keh et al.,
2013). Services may be customized by a predetermined
“envelope of variety” (Hart, 1995), namely a range within
which a service can be meaningfully customized.
Marketers can take advantage of new technologies to offer
individual consumers exactly what they want (Kotler, 1989).
Vargo and Lusch (2004, p. 329) contend that the normative
marketing goal should be customization, and:
Literature review on service standardization
and customization
A firm’s service offerings can range from one-size-fits-all to
totally personalized experiences for each customer (Pullman
et al., 2001). In this section, we review the relevant literature
on standardized versus customized service modes.
Service standardization
Standardization refers to a non-varying sequential process,
similar to the mass production of goods, in which each step is
Rather than trying to make service more goods-like through internal
standardization, service managers should capitalize on the flexibility of
service provision, and manufacturers should strive to make their goods more
17
Service standardization versus customization
Journal of Services Marketing
Ying Ding and Hean Tat Keh
Volume 30 · Number 1 · 2016 · 16 –28
cent had master’s degrees. In addition, the interviewees came
from a wide range of socioeconomic backgrounds.
The interviewers first introduced and defined the concepts
of service standardization and service customization. Based on
the literature, service standardization was defined as the
provision of standardized, consistent services to all customers,
and service customization as the potential for high
personalization in the delivery of services (Lovelock and
Gummesson, 2004; Zeithaml et al., 1985). Following that, the
respondents were asked to list four to six standardized services
and customized services each. They were then asked about the
pros and cons of the standardized and customized services.
Finally, the respondents were requested to elaborate on the
situations in which they would prefer standardized services
and customized services.
We conducted content analysis to understand consumer
perceptions of standardized and customized services. Based
on the interviewees’ responses, we found that consumers
considered many services to be standardized. The most
frequently cited standardized services included fast-food
restaurants (n ⫽ 25), taxi service (n ⫽ 9) and airlines (n ⫽ 10).
On the other hand, the most frequently mentioned customized
services included beauty salon (e.g. haircut, facial, spa
and massage) (n ⫽ 24), medical services (n ⫽ 18), fitness
clubs (n ⫽ 9) and consulting (n ⫽ 7).
Following the procedure for grounded theory (Strauss and
Corbin, 1990), our content analysis also compared the
advantages and disadvantages of both standardized and
customized services. Table I summarizes the major pros and
cons of these two service modes and the representative
statements from the respondents.
Furthermore, the content analysis also revealed several
factors that could influence consumer preferences for
standardized versus customized services. First, the customized
mode was more suitable for services associated with higher
consumer involvement and need for personalization (e.g.
beauty salon and fitness club) (n ⫽ 17). Second, consumers’
preference for customized services depended on their time
availability (n ⫽ 9). Third, consumers’ preference for
customized services was also a function of the cost and their
willingness to pay (n ⫽ 7).
Based on the prior literature as well as the findings of our
qualitative study, we chose consumption goal and need for
uniqueness as two core factors that may influence consumers’
preference for standardized versus customized services. We
elaborate on our arguments and develop our first set of
hypotheses in the following section.
service-like through the customized provision of output that meets the
heterogeneous standards of consumers.
A closer fit between preferences and service attributes may
bring about increased benefits for the consumer (Franke et al.,
2009; Simonson, 2005). Specifically, customized services that
cater to consumers’ individual aesthetic and functional
preferences would increase their willingness to pay (Franke
and Schreier, 2008; Roth et al., 2006), loyalty and the level of
retention (Coelho and Henseler, 2012). In addition, perceived
uniqueness induced by customization may also enhance the
consumer’s experience (Franke and Schreier, 2008; Tian
et al., 2001).
Nevertheless, some scholars observe that customization
may not always lead to positive outcomes (Franke et al., 2009;
Huffman and Kahn, 1998; Simonson, 2005). As consumers’
preference is constructed, the fundamental assumptions
underlying the new approaches for satisfying individual
consumer preferences often may not hold. In particular,
consumers’ preferences are often unstable and susceptible to
influence, and consumers usually have poor insight into their
own preferences. Thus, the value added by individually
customized offers, as opposed to standardized services, will
often be rather limited, and attempts to customize to
individual tastes may not guarantee consumer loyalty
(Simonson, 2005).
Prior research also indicates that service customization is
associated with lower efficiency, lower productivity and higher
costs (Hart, 1995). The benefits of customization may be
outweighed by the monetary and psychological costs that a
consumer encounters, including the increased price of
customized services, the delay in receipt of the custom-made
service and the need for consumers to invest time in specifying
their preferences before the service can be purchased and
consumed (Bardakci and Whitelock, 2004; Huffman and
Kahn, 1998). In addition, Dellaert and Stremersch (2005)
show that the mass customization configuration may enhance
consumers’ perception of complexity, which in turn can exert
a negative impact on utility.
In summary, our review of the literature indicates that both
benefits and drawbacks accrue to service standardization and
customization. That is, the literature does not provide
unequivocal support for either service standardization or
customization; rather, the strengths and weaknesses of each
service mode may well explain their respective appeals to
different customer segments, as reflected by practice in the
marketplace.
Hypotheses development
Hedonic versus utilitarian consumption goal
There are two forms of consumption:
1 utilitarian consumption with tangible or objective
features; and
2 hedonic consumption with non-tangible or subjective
features that produce a pleasurable response from
consumers (Holbrook and Hirschman, 1982).
Study 1: a qualitative exploration of service
standardization versus customization
As the existing literature does not provide an unequivocal
answer on the superiority of service standardization versus
service customization, we first conducted in-depth interviews
to explore customer perceptions of, and reactions to,
standardized versus customized services. We conducted
interviews with 31 respondents (64.5 per cent male), who
were fully employed consumers attending a training program
at a large public university in China. Their ages ranged from
28 to 43 years, with the mean being 35.9 years. In terms of
education, 77.4 per cent had bachelor’s degrees and 22.6 per
To illustrate, a person could go to a restaurant to discuss
business over a meal with a client (utilitarian goal) or to
celebrate a birthday with friends (hedonic goal). Babin et al.
(1994) noted that consumers’ choices were often driven by
utilitarian and hedonic considerations. For instance, shopping
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Service standardization versus customization
Journal of Services Marketing
Ying Ding and Hean Tat Keh
Volume 30 · Number 1 · 2016 · 16 –28
Table I Advantages and disadvantages of standardized versus customized services (Study 1, n ⫽ 31)
Service
mode
Standardized
service
Advantages
vs
disadvantages
Advantages
Respondents‘
thoughts
Standardization
(n ⫽ 21, 67.7 %)
Low cost (n ⫽ 15,
48.4 %)
Perceived fairness
(n ⫽ 9, 29.0 %)
Disadvantages
Customized
service
Lack of personalization
(n ⫽ 22, 71.0 %)
Implications
Typical statements
The service process is
standardized and there are very
few surprises
Consumer can spend less money
and time to obtain the service
Since all consumers receive the
same service, the perceived
fairness is high
The service lacks personalization
“Because of standardization, it’s easy for me to
judge service quality.”
Inflexible
(n ⫽ 9, 29.0 %)
The service process is inflexible
Advantages
Customization
(n ⫽ 28, 90.3 %)
Satisfaction and loyalty
(n ⫽ 16, 51.6 %)
Disadvantages
Perceived risk (n ⫽ 20,
64.5 %)
The process of service can vary
from consumer to consumer
Customized service can increase
consumer satisfaction and
loyalty
No standard to judge the
service quality, which may
increase perceived risk
Consumers need to spend more
money and time to obtain the
service
Higher cost (n ⫽ 15,
48.4 %)
“Choosing standardized service can save money and
time.”
“Standardized service brings fairness to consumers.”
“Standardized mode cannot provide personalized
service according to each consumer’s special
needs.”
“The company cannot modify their standardized
services and be more flexible to meet my special
needs.”
“The service provider can deliver services according
to consumers’ specific needs.”
“Personalized service makes me feel more
satisfied.”
“It’s hard to judge service quality, which makes me
feel anxious during the service.”
“I need to pay more for the special service and
usually it requires more time too.”
consumers’ attention to fun and enjoyment during service
experiences, with less concern for time and price issues.
Participants in our qualitative study also expressed statements
consistent with hedonic goals. For instance, when they want to
have fun or relax, they will opt for customized services (n ⫽
17, 54.8 per cent of the sample). Accordingly, based on the
literature and insights from our qualitative study, we
hypothesize the following:
experiences can produce both utilitarian and hedonic value
(Fischer and Arnold, 1990). Sherry (1990, p. 180) described
shopping at a flea market as “The oscillation of consumers
between homo economicus and homo ludens” by drawing on the
analogy between work and play.
Prior research describes utilitarian consumer behavior as
task-related and rational (Batra and Ahtola, 1991). This
implies that when consumers have a utilitarian goal, they
prefer the service to be provided in an efficient and fastidious
manner (Babin et al., 1994). Along this line, participants in
our qualitative study mentioned that they would choose
standardized services when they have temporal or monetary
constraints (n ⫽ 16, 51.6 per cent of the sample). The
reasoning is that when consumers have a utilitarian goal, they
will focus on service efficacy and the fulfillment of functional
benefits, for which standardized services with consistent
delivery are more suited to offer.
In contrast, hedonic value tends to be more subjective and
personal; it is more influenced by fun and playfulness than by
task completion (Holbrook and Hirschman, 1982). For
example, hedonic shopping value reflects shopping’s potential
entertainment and emotional benefits (Babin et al., 1994).
This can be better achieved through customized, rather than
standardized, services. In addition, prior research suggests
that consumers are less price sensitive toward services with
hedonic characteristics compared with the more functional
services (Wakefield and Inman, 2003). Okada (2005) found
that people were willing to spend more time on hedonic items.
Thus, we propose that hedonic consumption goal will shift
H1.
Compared to consumers with a hedonic consumption
goal, the attribute of waiting time will be more
important for consumers with a utilitarian consumption
goal.
H2.
Compared to consumers with a hedonic consumption
goal, the attribute of price will be more important for
consumers with a utilitarian consumption goal.
H3.
Compared to consumers with a hedonic consumption
goal, a standardized (customized) service will be more
(less) important for the consumers with a utilitarian
consumption goal.
Need for uniqueness
Uniqueness theory (Snyder and Fromkin, 1980) deals with
people’s emotional and behavioral reactions to information
about their similarity to others. In particular, Fromkin (1970)
indicated that consumers might place more value on scarce
experiences when they felt too similar with others. Prior
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Service standardization versus customization
Journal of Services Marketing
Ying Ding and Hean Tat Keh
Volume 30 · Number 1 · 2016 · 16 –28
research suggests that consumers’ need for uniqueness plays
an important role in their judgment and choice behavior
(Simonson and Nowlis, 2000), and leads to consumption of
novel products and services (Franke and Schreier, 2008; Tian
et al., 2001).
According to Snyder and Fromkin (1977), individuals have
dispositional differences in their uniqueness motivation. That
is, some people have a high need for uniqueness while others
have a low need for uniqueness. By extension, it is reasonable
to expect that individual differences in the strength of
consumers’ need for uniqueness may moderate their
preference for standardized versus customized services. When
driven by utilitarian goals, consumers with a low need for
uniqueness will not have the urge to stand out, and will be
satisfied purchasing standardized services. However, when
they have hedonic goals, they are likely to prefer customized
services. In contrast, consumers with a high need for
uniqueness are likely to express themselves by acquiring scarce
or novel services, which the majority of other consumers may
not experience (Fromkin, 1970; Simonson and Nowlis, 2000;
Snyder, 1992). High need-for-uniqueness consumers often
desire a greater level of self-expression and distinctiveness,
regardless of their consumption goal. Accordingly, we propose
that the effect of consumption goal on consumers’ preference
for standardized versus customized services would be
attenuated for those with a high need for uniqueness.
Specifically:
vs hedonic) were activated (H1-H3). In addition, we wanted
to verify the moderating effect of consumers’ need for
uniqueness on the preference for service mode (H4).
H4.
Experimental design
Study 2 used a 2 (consumption goal: utilitarian vs hedonic) ⫻
2 (need for uniqueness: high vs low) ⫻ 2 (service mode:
standardization vs customization) ⫻ 2 (waiting time: long vs
short) ⫻ 2 (price: high vs low) mixed factorial design, whereby
the utilitarian versus hedonic consumption goal was
manipulated between subjects. Specifically, half of the
participants were randomly told that they needed to purchase
the service with a utilitarian consumption goal, while the other
half was informed that they needed to purchase the service
with a hedonic consumption goal. Consumers’ need for
uniqueness was measured within subjects, and we divided the
entire sample into two subgroups using the median split.
To understand how consumers make trade-offs between
waiting time (short vs long), price (low vs high) and service
mode (standardization vs customization), we conducted a
conjoint analysis following the procedure by Ostrom and
Iacobucci (1995). Participants were asked to consider and
indicate their preference by ranking among eight restaurant
options that were the result of varying the three attributes (i.e.
waiting time, price and service mode) in a full 2 ⫻ 2 ⫻ 2
factorial design. All eight possible combinations of the services
were presented to the participants: each service option had
either short or long waiting time, low or high price and was
either standardized or customized.
Consumers with a high need for uniqueness will prefer
the customized service for both hedonic and utilitarian
goals, while consumers with a low need for uniqueness
will prefer the customized service only when they have
a hedonic goal.
Sample
The experiment was conducted at a large public university in
China. Participants were recruited using an online
advertisement on the bulletin board system of the university,
which invited students to participate in a marketing
experiment with a compensation of RMB20 (⬇ USA$3.25).
In total, 75 participants took part in this study (34.7 per cent
males; 18.7 per cent below 20 years old, 80.0 per cent between
20 and 30 years old and 1.3 per cent above 30 years old).
Based on the qualitative study and hypotheses development,
we present our conceptual framework in Figure 1. Specifically,
consumption goal will influence consumer evaluation of
waiting time (H1), price (H2) and service mode (H3). In
addition, consumers’ need for uniqueness will moderate the
effect of consumption goal on preference for service mode
(H4). We conduct Study 2 to test H1-H4 and Study 3 to test
H5-H7 (to be developed later).
Procedure
The booklet consisted of experiment instructions, a service
scenario and measures for hypotheses testing. In the utilitarian
condition, the scenario was depicted as going to the restaurant
“to satiate your hunger”, while in the hedonic goal condition,
the scenario was depicted as going to the restaurant “to
celebrate your friend’s birthday” (see Appendix 1). We added
manipulation check questions to verify if “satiate your hunger”
was perceived to be a utilitarian goal and “celebrate your
friend’s birthday” was perceived to be a hedonic goal. After
Study 2: factors influencing consumers’
preference for service standardization versus
Customization
Study 2 was conducted to investigate consumers’ preferences
for waiting time, price and service mode (standardization vs
customization) when different consumption goals (utilitarian
Figure 1 Conceptual framework
Consumption
Goal
(Utilitarian vs.
Hedonic Goal)
H1
Waiting Time
H2
Price
H3
H4
H5
H6
Service Mode
Standardization
vs Customization
Consumer’s Need
for Uniqueness
20
Perceived Risk
Consumer Satisfaction
H7
Perceived Control
Service standardization versus customization
Journal of Services Marketing
Ying Ding and Hean Tat Keh
Volume 30 · Number 1 · 2016 · 16 –28
reading the service scenario, the participants were asked to
evaluate the eight service options and rank them according to
their own preference. Then they completed the
need-for-uniqueness scale to measure their chronic
uniqueness-seeking tendency. The questionnaire ended with
demographic questions.
with a utilitarian goal would prefer the standardized service,
supporting H3 (see Figure 2).
We also examined if need for uniqueness played a
moderating role. We conducted a two-way ANOVA, and the
results revealed a significant interaction between consumption
goal and need for uniqueness on consumers’ preference for the
customized service (F(1, 71) ⫽ 4.25, p ⬍ 0.05). For
consumers with a low need for uniqueness, they preferred the
customized service only when they had a hedonic goal
(Uutilitarian ⫽ 0.28 vs Uhedonic ⫽ 0.91, F(1, 33) ⫽ 14.99, p ⬍
0.001). In contrast, consumers with a high need for
uniqueness preferred the customized service, regardless of
their consumption goal (Uutilitarian ⫽ 0.64 vs Uhedonic ⫽ 0.82,
F(1, 38) ⫽ 1.64, p ⬎ 0.20). Thus, H4 was supported.
Measurement
We measured consumers’ need for uniqueness using the scale
developed by Tian et al. (2001). Based on the participants’
ratings, we used the median split to obtain two sub-samples:
consumers with a high need for uniqueness and those with a
low need for uniqueness.
Results and discussion
Manipulation check
Results of the one-way analysis of variance (ANOVA) revealed
that, compared with participants who were assigned to the
“celebrate your friend’s birthday” condition, those assigned to
the “satiate your hunger” condition indicated that the goal was
associated with higher utilitarian value (Mhunger ⫽ 5.73 vs
Mbirthday ⫽ 3.58; F(1, 73) ⫽ 92.31, p ⬍ 0.001), and with
lower hedonic value (Mhunger ⫽ 3.56 vs Mbirthday ⫽ 6.32;
F(1, 73) ⫽ 133.83, p ⬍ 0.001). This implied that our goal
priming was successful.
Study 3: consumer reactions to service
standardization versus customization
The results of Study 2 indicated that consumers’ preference
for service standardization versus customization depended on
their consumption goal. However, it still left several issues
unaddressed. First, we have not directly examined consumers’
reactions to service standardization and customization.
Findings from the qualitative study (Study 1) suggested that
the benefits of service customization included greater
customer satisfaction. At the same time, however, the
drawback of service customization included higher risk
perceptions. It is thus imperative to empirically investigate the
benefits and drawbacks of service standardization versus
customization. Second, as Study 2 examined only one service
context (i.e. restaurant), it was not clear if the findings could
be generalized to other service contexts.
Study 3 was conducted to address these issues. Specifically,
we sought to examine consumer reactions to standardized and
customized services. Based on the findings of the qualitative
study, we abstracted perceived risk as the downside to service
customization, and used perceived control and satisfaction to
reflect the benefits of service customization. Besides, to
increase the generalizability of the findings, we examined two
other services (i.e. hotel and fitness club) in Study 3. In
addition, as Study 2 was conducted in China, we sought to
conduct Study 3 in a Western country, which would enhance
the generalizability of the findings.
Hypotheses testing
Following the procedure by Ostrom and Iacobucci (1995), we
ran ordinary least squares regressions to perform conjoint
analyses on the data of each individual participant to obtain
the utilities (regression coefficients) for every participant on all
three service attributes. We ran a total of 75 regressions, one
for each participant. Each regression was based on eight data
points (the 2 ⫻ 2 ⫻ 2 design of the service attributes yielded
eight combinations). The participants’ ranking served as the
dependent variable, and three dummy-coded predictors
represented the three service attributes (waiting time, price
and service mode). Given these three predictors, each
regression yielded three coefficients or utilities (␤waiting time,
␤price and ␤service mode). A utility of zero would mean that the
level of specific attribute was not at all important on
consumers’ preference, while higher utilities reflected a greater
impact on their preference.
As predicted, the results showed that waiting time was
regarded as more important by consumers with a utilitarian
goal than by those with a hedonic goal (Uutilitarian ⫽ 1.51 vs
Uhedonic ⫽ 0.95, F(1, 73) ⫽ 25.43, p ⬍ 0.001), providing
support for H1. Similarly, the utility of price was significantly
higher for consumers with a utilitarian goal than for those with
a hedonic goal (Uutilitarian ⫽ 1.42 vs Uhedonic ⫽ 0.24, F(1, 73)
⫽ 21.04, p ⬍ 0.001), which supported H2.
In addition, the results indicated that the customized service
had significantly higher utility for consumers who had a
hedonic goal than for those with a utilitarian goal (Uutilitarian ⫽
0.41 vs Uhedonic ⫽ 0.85, F(1, 73) ⫽ 9.76, p ⬍ 0.01).
Conversely, utility of the standardized service was higher when
consumers had a utilitarian goal than when they had a hedonic
goal (Uutilitarian ⫽ ⫺0.41 vs Uhedonic ⫽ ⫺0.85, F(1, 73) ⫽
9.76, p ⬍ 0.01). This implied that consumers with a hedonic
goal would prefer the customized service, while consumers
Figure 2 Utilities of price, time and service mode under different
consumption goals (Study 2)
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Service standardization versus customization
Journal of Services Marketing
Ying Ding and Hean Tat Keh
Volume 30 · Number 1 · 2016 · 16 –28
Hypotheses development
Perceived risk
Perceived risk is a construct central to consumer evaluations,
choices and behaviors (Dowling, 1986; Keh and Pang, 2010;
Peter and Tarpey, 1975). It is a function of adverse
consequence and uncertainty; adverse consequence refers to
the amount of costs involved in attempting to achieve a set of
purchase goals in a buying situation, and uncertainty is
consumers’ probabilistic beliefs in the occurrence of the
adverse consequence (Dowling, 1986; Keh and Pang, 2010;
Peter and Tarpey, 1975). Consistent with prior research, we
define perceived risk as the subjective expectation of a loss
(Stone and Gronhaug, 1993). It integrates the future quality
of the service at the point of purchase.
Relative to tangible goods, there is potential for higher
variability in the performance of services (Murray and
Schlacter, 1990). The inconsistency in the service outcome
implies a higher degree of perceived risk (Johnson et al., 2008;
Keh and Sun, 2008). At the same time, the uncertainty
associated with service customization will also lead to greater
consumer anxiety. Thus, service customization can increase
perceived risk. In contrast, for the standardized service (e.g.
McDonald’s, where the workflow is highly standardized and
predictable, Ritzer, 2011), consumers can be more confident
of receiving consistent quality on every visit, and do not have
to worry about fluctuations in the service outcome. This can in
turn reduce risk perceptions. Accordingly, we hypothesize
that:
satisfaction. This is also supported by our qualitative study,
which indicated that customized services could lead to higher
consumer satisfaction. More formally, we hypothesize that:
H5.
H6.
Compared to the standardized service, the customized
service will lead to higher consumer satisfaction.
Perceived control
As one of the basic motivations of human activities, perceived
control refers to the need to demonstrate human competency,
superiority and mastery over the environment (White, 1959).
For standardized services, customers have little input and
cannot effect change in the production process and outcome.
However, customized services can meet the customer’s
specific needs. The higher level of customization or
personalization comes about with the consumer’s greater level
of co-production of the service (Chan et al., 2010; Etgar,
2008), which also implies greater consumer control (Bateson,
2000). Accordingly, we propose that:
H7.
Consumers’ perceived control will be higher for the
customized service than for the standardized service.
Experimental design
To increase the generalizability of the results, two service
contexts were selected following a pretest (i.e. hotel and
fitness club). We manipulated service mode (standardized vs
customized) across the two services, with a total of four
conditions.
Sample
We conducted Study 3 on Amazon’s Mechanical Turk and
received 133 responses from US participants. Four
participants who did not answer the attention check question
correctly (Please select “2” on this question so that we know
you are carefully completing this questionnaire) were excluded
from further analysis. Among the remaining 129 participants,
56.6 per cent were male. Their ages ranged from 19 to 74
years old (mean ⫽ 32 years); monthly income: 60.5 per cent
below $1,500, 23.3 per cent $1,501-$3,000, 9.3 per cent
$3,001-$4,500 and 7 per cent above $4,500).
Consumers’ perceived risk will be higher for the
customized service than for the standardized service.
Customization and satisfaction
Prior research on customization suggests that it enables
customers to better realize their specific needs and wants
(Dellaert and Stremersch, 2005; Franke et al., 2009; Gilmore
and Pine, 2000; Liechty et al., 2001). Simonson (2005) noted
that a closer fit between preferences and product attributes
could bring about increased benefits for the consumer.
Compared to standardized services, which by definition are
consistent and offered in the same way to all consumers, a key
benefit of service customization is that it caters to consumers’
specific needs (Vargo and Lusch, 2004). Consistent with this,
Gwinner et al. (1998) empirically showed that special
treatment benefits were particularly salient for “high-contact,
customized, personal services”, relative to “moderate-contact,
standardized services”.
Relative to standardization, customization can lead to
greater customer satisfaction and willingness to buy (Franke
et al., 2009). For instance, Huffman and Kahn (1998) found
that consumers who were allowed to specify their
within-attribute preferences in product selection expressed
greater satisfaction. Similarly, using analytical modeling, Xia
and Rajagopalan (2009) demonstrated that customized
products could increase consumer satisfaction by better
fulfillment of their needs. Furthermore, Valenzuela et al.
(2009) found that consumers who were allowed to
self-customize tended to experience greater satisfaction and
showed higher willingness to pay, especially when the
procedure was not difficult. Accordingly, we propose that
service customization has a positive effect on consumer
Procedure
The participants were randomly assigned to one of the four
conditions. After reading the scenario, they answered a series
of questions on the dependent variables, as well as some
demographic questions. Upon completion, the participants
were compensated, debriefed and thanked.
Measurement
Perceived risk was measured using three items on seven-point
Likert scales (1 ⫽ strongly disagree, 7 ⫽ strongly agree)
adapted from Stone and Gronhaug (1993). Perceived control
was measured using six items on seven-point Likert scales
adapted from the service locus of control scale (Bradley and
Sparks, 2002).
We assessed consumer satisfaction using four items on
seven-point Likert scales (Homburg et al., 2005). As the
satisfaction scale had excellent internal consistency for both
services (Cronbach’s ␣hotel ⫽ 0.89; Cronbach’s ␣fitness club ⫽
0.90), we averaged the four measurement items to obtain a
satisfaction index. All measurement items are shown in the
Appendix 2.
22
Service standardization versus customization
Journal of Services Marketing
Ying Ding and Hean Tat Keh
Volume 30 · Number 1 · 2016 · 16 –28
Results and discussion
Results for hotel
Results for the hotel context indicated that service
customization was associated with higher perceived risk than
service standardization was (Mstandardization ⫽ 3.56, SD ⫽
1.44 vs Mcustomization ⫽ 4.30, SD ⫽ 1.34, F(1, 64) ⫽ 4.65,
p ⬍ 0.05), in support of H5.
In addition, consumer satisfaction was higher for the
customized service than for the standardized service
(Mstandardization ⫽ 4.62, SD ⫽ 1.13 vs Mcustomization ⫽ 5.13,
SD ⫽ 0.89, F(1, 64) ⫽ 4.17, p ⬍ 0.05), in support of H6. The
results also revealed that consumers’ perceived control was
significantly higher for the customized service than for the
standardized service (Mstandardization ⫽ 3.53, SD ⫽ 1.55 vs
Mcustomization ⫽ 4.35, SD ⫽ 1.46, F(1, 64) ⫽ 4.91, p ⬍ 0.05),
and H7 was supported. These results are displayed in
Figure 3(a).
SD ⫽ 0.97, F(1, 61) ⫽ 5.81, p ⬍ 0.05), consistent with H6.
Furthermore, consumers’ perceived control was significantly
higher for the customized service than for the standardized
service (Mstandardization ⫽ 4.20, SD ⫽ 1.54 vs Mcustomization ⫽
5.02, SD ⫽ 1.21, F(1, 61) ⫽ 5.65, p ⬍ 0.05), which supported
H7 (see Figure 3(b)).
General discussion
The present research empirically examined service
standardization versus customization from the consumer’s
perspective. We first conducted Study 1 (a qualitative study)
to explore consumer perceptions of standardized versus
customized services. The results suggested that consumers
were able to distinguish between these two modes of services,
as well as understood their pros and cons. Based on the
qualitative findings and the literature review, we conducted
two experiments to investigate the psychological mechanisms
underlying consumers’ preference for service standardization
versus service customization.
Study 2 showed that consumers’ preference for service
standardization versus customization depended on their
consumption goal. When consumers had a hedonic goal, they
preferred the customized service, and had little concern about
the waiting time and price of the service. In contrast, when
consumers had a utilitarian goal, they were more likely to
choose the standardized service, and were more sensitive to
the waiting time and price of the service. Furthermore, the
effect of consumption goal on consumers’ preference for the
standardized (vs customized) service was contingent on an
individual difference factor (i.e. need for uniqueness).
Consumers with a high need for uniqueness preferred service
customization regardless of their consumption goal, while
those with a low need for uniqueness preferred service
customization only when they had a hedonic consumption
goal.
Study 3 examined consumer reactions to service
standardization versus customization. The results indicated
that, relative to standardized services, customized services
could positively increase consumers’ perceived control and
satisfaction. However, the drawback of service customization
was that it increased perceived risk.
Taken together, these findings make significant
contributions to the services marketing literature. Our
qualitative and experimental studies reveal the antecedents
(utilitarian vs hedonic goal) on consumer preference for
service standardization versus customization, as well as the
consequences in terms of perceived risk, consumer satisfaction
and perceived control (see the conceptual framework in
Figure 1). Our experimental studies were conducted with
Chinese and American consumers, respectively, which lend
credence to the robustness of our findings.
To this end, our findings also contribute to services
marketing theory on the “heterogeneity” characteristic of
services. In their landmark survey article, Zeithaml et al.
(1985, p. 34) wrote that, “Heterogeneity in service output is a
particular problem for labor intensive services” (emphasis
added). The implication is that, relative to highly identical
goods that come off the production line, labor-intensive
services suffer from a lack of consistency (Langeard et al.,
1981). Notwithstanding this observation, the present research
Results for fitness club
Similarly, for the fitness club service, we found that service
customization was associated with higher perceived risk
compared with service standardization (Mstandardization ⫽
3.46, SD ⫽ 1.32 vs Mcustomization ⫽ 4.30, SD ⫽ 1.33, F(1, 61)
⫽ 6.32, p ⬍ 0.05), which supported H5.
In addition, consumer satisfaction was higher for the
customized service than for the standardized service
(Mstandardization ⫽ 4.41, SD ⫽ 1.20 vs Mcustomization ⫽ 5.07,
Figure 3 Consumers’ reactions to service standardization versus
customization (Study 3)
23
Service standardization versus customization
Journal of Services Marketing
Ying Ding and Hean Tat Keh
Volume 30 · Number 1 · 2016 · 16 –28
reveals that service heterogeneity in itself may not always be
problematic; indeed, an offshoot of service heterogeneity is
service customization, which consumers with a hedonic goal
and high need for uniqueness prefer over service
standardization. At the same time, we also show that service
standardization appeals to consumers who have a utilitarian
goal, have low need for uniqueness and are more sensitive to
a short waiting time and low prices. Thus, it is not necessarily
obvious that the normative marketing goal of services is
customization over standardization (cf. Vargo and Lusch,
2004).
burnishing their corporate reputation and engendering
customer trust in the firm (Simonson, 2005). In addition,
loyalty or reward programs may also enhance consumer
satisfaction with the service provider (Keh and Lee, 2006).
Future research directions
There are several limitations in the present research that
provide opportunities for further research. First, we focus on
perceived risk, perceived control and consumer satisfaction as
the main consequences of service customization. It is
conceivable that service customization may lead to other
consumer-level outcomes as well. For example, the provision
of standardized services to all consumers may increase
perceived fairness (as indicated in the qualitative study). As
there are several dimensions to perceived fairness (i.e.
distributive, procedural, interpersonal and informational, see
Carr, 2007), the varying effects of service standardization
versus customization on the individual dimensions of
perceived fairness deserve research scrutiny.
It should also be noted that the services examined in the
present studies (i.e. restaurant, hotel and fitness club) may be
classified as experience services. The literature distinguishes
between experience service and credence service on the basis
of the ease or difficulty in collecting information to evaluate
the services (Darby and Karni, 1973; Keh and Pang, 2010;
Sun et al., 2012). Whereas consumers can evaluate experience
services (e.g. haircut and restaurant) confidently after
purchase or consumption, they have far greater difficulty
doing the same for credence services (e.g. education and
medical treatment) (Ostrom and Iacobucci, 1995; Zeithaml,
1981). Hence, it would be worthwhile to investigate consumer
reactions to service customization for credence services,
particularly when consumers are able to co-produce the
service (Chan et al., 2010; Etgar, 2008).
Finally, technology may also play an important role in
consumers’ choice between service standardization and
customization. This builds on recent research observing that
in many instances, the production and consumption of
services can be separated, usually aided by technology (Keh
and Pang, 2010; Schumann et al., 2012). On the one hand,
the development of technology and standardization of work
procedures imply that many services can be provided
consistently and efficiently (Levitt, 1972, 1976). On the other
hand, concepts such as customer relationship management
were intended to facilitate the delivery of personalized services
based on each customer’s characteristics and purchase history.
It would be beneficial to examine the mechanism underlying
the influence of technology using a contingency framework,
which will enable us to have a more granular understanding of
service standardization versus customization.
Managerial implications
Rather than being restricted to choosing between the
industrialization of services (Levitt, 1976) or the inexorable
march toward mass customization (Kotler, 1989), the present
findings suggest that the advent of technology allows service
organizations the flexibility of engaging in the mode of service
delivery that their customers want as a form of market
segmentation. The marketplace contains many examples of
service providers that opt for standardization (e.g.
McDonald’s, Benetton, Wal-Mart, Shell gas stations, Holiday
Inn and AMC cinemas) and others that thrive on
customization (e.g. The Counter, Princess Cruises and many
professional services). There is also a range of service
organizations that cater to the masses and personalize their
services at the same time, such as Yahoo! (cf. My Yahoo!),
retail banks (cf. personal banking), taxi transportation (cf.
limousines) and department stores (cf. personal shoppers).
Along this line, findings from Study 2 suggest that service
organizations should pay attention to consumers’
consumption goals in designing the service mode. Essentially,
when consumers have a utilitarian goal, standardized services
may be more suitable. However, when consumers have a
hedonic goal, they tend to prefer customized services. Thus,
before designing the service mode, service organizations
should fully consider the characteristics of the core service and
determine its major attraction to their key customer segments.
If the consumers focus on efficiency and functionality (e.g. fast
food, retail banking and taxi transportation), standardized
services would be preferred.
In contrast, for consumers who are seeking fun and a novel
experience (with a hedonic consumption goal), the service
firm should try to cater to their hedonic needs. These
consumers are seeking more than the mundane, and are less
restricted by time and monetary concerns. Consequently,
organizations catering to these consumers should position the
service based on hedonism and customization. This may
explain the success of The Counter. Beyond merely offering a
customized burger, the founder of the company, Jeff
Weinstein, claims that, “We are packaging an experience, a
mood”. He reflects that, “We’re not curing cancer. I have to
remember to step back and have fun” (Perman, 2009).
In addition, although service customization is associated
with benefits such as increasing consumers’ perceived control
and anticipated satisfaction, it can also enhance risk
perceptions simultaneously. This implies that consumers are
concerned whether the service will perform as intended.
Hence, managers should try to lower risk perceptions when
delivering customized services. Some possibilities include
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Service standardization versus customization
Journal of Services Marketing
Ying Ding and Hean Tat Keh
Volume 30 · Number 1 · 2016 · 16 –28
Appendix 1
Scenarios and Sample Questions Used in Study 2
Utilitarian goal condition
Please imagine that you are planning to go to a restaurant. You are hungry and your goal is
to satiate your hunger. Thecustomized service mode means that the restaurant will prepare the
food according to each customer’s individual and personalized needs while the standardized
service mode means that the restaurant will only serve the food on a fixed and limited menu.
1. In your opinion, what is the relative importance of the following three attributes when you are
choosing restaurants (1 = not important at all, 9 = very important).
Very
important
Not important
at all
Service mode (standardized vs. customized)
1
2
3
4
5
6
7
8
9
Price (RMB15 vs. RMB50 per person)
1
2
3
4
5
6
7
8
9
Waiting time (10 vs. 30 minutes)
1
2
3
4
5
6
7
8
9
2. Please review the descriptions of 8 restaurants that vary on three attributes: service mode,
price, and waiting time. Then rank them from 1 to 8, where “1” means it is your most preferred
choice while “8” is your least preferred choice.
Restaurant 1
Restaurant 2
Restaurant 3
Restaurant 4
Standardized service
Customized service
Standardized service
Customized service
RMB15 per person
RMB15 per person
RMB15 per person
RMB15 per person
Waiting time: 10mins.
Waiting time: 10mins.
Waiting time: 30mins.
Waiting time: 30mins.
Restaurant 5
Restaurant 6
Restaurant 7
Standardized service
Customized service
Customized service
Standardized service
RMB50 per person
RMB50 per person
RMB50 per person
RMB50 per person
Waiting time: 30mins.
Waiting time: 10mins.
Waiting time: 30mins.
Waiting time: 10mins.
Restaurant 8
Most likely
not to choose
Most likely
to choose
3. Please recall the goal when your choosing restaurants and rate on the following sentences
from 1 to 5 (1 = strongly disagree, 5 = strongly agree).
Strongly
Strongly
Disagree Neutral Agree
Agree
Disagree
I choose the restaurant to satiate my hunger.
I choose the restaurant for a functional goal.
I choose the restaurant to enjoy the dining experience.
I choose the restaurant for a hedonic goal.
1
1
1
1
2
2
2
2
3
3
3
3
4
4
4
4
5
5
5
5
Hedonic goal condition
Please imagine that you are planning to go to a restaurant. Your goal is to celebrate your
friend’s birthday there. The customized service mode means that the restaurant will prepare the
food according to each customer’s individual and personalized needs while the standardized
service mode means that the restaurant will only serve the food on a fixed and limited menu.
The questions are the same as those for the utilitarian goal condition.
27
Service standardization versus customization
Journal of Services Marketing
Ying Ding and Hean Tat Keh
Volume 30 · Number 1 · 2016 · 16 –28
Appendix 2
Table AI Construct measures used in Study 3
Cronbach’s ␣
Fitness
Hotel
club
Construct
Items
Perceived risk
(Stone and
Gronhaug, 1993)
1. If I choose this service mode, I will worry about whether the service will really perform as well as
it is supposed to
2. If I choose this service mode, I will become concerned that the service may not provide the level of
benefits that I would be expecting
3. The thought of choosing this service mode causes me to be concerned for how really dependable
and reliable that service will be
1. All in all, I would be satisfied with this service
2. The service provided by this company would meet my expectations
3. Compared to an ideal experience, the scenario seems good
4. Overall, how satisfied would you be with the service provided by this service?
1. Usually, the effort I put in will affect the service I receive
2. The standard of service I receive will be partly a reflection of my ability and personal characteristics
3. My own skills and abilities will make a big difference to the standard of service I receive
4. I know I will get better service if I really try hard
5. The quality of service I receive will be influenced by the amount of personal effort I put in
6. I expect that by working hard in a service encounter, I will influence the service I receive
Consumer
satisfaction
(Homburg et al.,
2005)
Perceived control
(Bradley and
Sparks, 2002)
About the authors
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0.863
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Monash University, Australia. He previously taught at the
University of Queensland, Peking University, and the
National University of Singapore. His research interests
include services marketing, consumer psychology, often
involving a cross-cultural dimension, and marketing
strategy. He has published in leading journals such
as Journal of Marketing, Journal of Marketing Research,
Journal of Consumer Research, Journal of Retailing,
International Journal of Research in Marketing, Marketing
Letters, Journal of Advertising, Journal of International
Marketing, Industrial Marketing Management, Psychology &
Marketing, Journal of Cross-Cultural Psychology, Journal of
Business Venturing and Entrepreneurship Theory and Practice.
Hean Tat Keh is the corresponding author and can be
contacted at: ht.keh@monash.edu
Ying Ding (PhD, Peking University) is an Assistant
Professor of Marketing at the School of Business, Renmin
University of China. Her research interests include
consumer psychology, decision-making and self-conceptrelated consumption. Her research has been published
in Journal of Consumer Research, and she presented
her research work at various international academic
conferences such as Association for Consumer Research North
American Annual Conference (2011, 2012, 2014), European
Marketing Academy Conference (2011) and Global Marketing
Conference (2010).
Hean Tat Keh (PhD, University of Washington) is a
Professor of Marketing at Monash Business School,
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