Given the increasingly competitive environment characterizing many industries, firms are finding it difficult to compete profitably on the basis of their core product offerings. Against this backdrop, customer service has evolved as a key source of differentiation and profits. Firms are looking to cross-sell goods and services during customer service provision with the objective to generate revenue.

However, given that customers are typically not in a favorable state of mind when seeking customer service, cross-selling during customer service provision is a challenging task. In this paper, we address the following questions: (1) What factors influence the likelihood that a customer will accept the cross-sell offer? and, (2) Given that the cross-sell offer has been accepted, what factors influence the cross-sell expenditure?

We develop a contingent model of the direct and joint effects of customer, base product, customer service agent, and cross-sell product characteristics on the customer’s likelihood to accept the cross-sell offer and cross-sell expenditure. We test this two-part model using data on 6782 customers of a computer systems firm who were pitched a cross-sell, of whom 498 accepted the offer.

The findings indicate that customers who own high functionality products and customer service agents with increasing resolution ability decrease cross-sell outcomes whereas customers with increasing risk aversion and those who purchase cross-sell goods (versus services) increase cross-sell outcomes.

Increasingly, firms are offering hybrid bundles, products that combine both good(s) and service(s), in both business-to-consumer (B2C) and business-to-business (B2B) industries. Some B2C hybrid bundles, such as TiVo that combines a digital video recorder (good) and recording management (service) are more visible, while B2B hybrid bundles, such as General Electric’s Powerplant System that includes a nuclear power plant (good) and repair/project management (service) are more obscure.

The pricing strategy of a hybrid bundle is critical to its success. While pricing strategies for a goods bundle have been well-studied, those for a services bundle have been underexplored. Hybrid bundles, which are fundamentally different from bundles of goods or bundles of services, primarily with regard to quality variability and scalability, have received even less attention. This dissertation explores important facets of hybrid bundle pricing from analytical, experimental, and empirical perspectives.

I study demand evolution of Internet retail service over space and time. In essay 1, I study time-varying social influence effects reflected in geographic proximity and demographic similarity. I find that the proximity effect is strong early on, whereas the similarity effect becomes more important with time.

In essay 2, I study space- and time-varying social influence effects emanating from buyers acquired by online search and offline word-of-mouth (WOM). I find that WOM acquisitions are, on average, of “better quality”. Not every market favors WOM acquisitions however—the superiority of one acquisition channel over the other varies over space.

In essay 3, I show why online demand is greater in local markets where target customers are in the minority. Moreover, preference minority markets are less price-sensitive and the “preference minority effect” is stronger for niche brands than for popular brands. Finally, I derive implications for the Long Tail sales distribution.

This research examines how brand positioning can be extended to personal interactions between employees and consumers to increase customer-based brand equity. Branded customer service offers a way to achieve this, and refers to the strategic alignment of consumers’ service experiences with brand promises.

While this concept has received anecdotal attention in the popular press, empirical evidence is needed to explain its effects on consumers’ brand evaluations. In an experiment, we demonstrate that aligning employee behavior with the brand image positively influences brand equity and we identify consumers’ perceptions of the brand’s authenticity as the underlying mechanism driving these effects. We also uncover situations in which employees can be most impactful in supporting a firm’s brand positioning strategy.

Results indicate that employees’ brand-aligned behavior is most influential in shaping unfamiliar brands’ equity when these brands perform successfully, and conversely, most influential in shaping familiar brands’ equity when these brands fail consumers.

In product categories characterized by search behavior consumers are subject to two different forces. On the one hand, incomplete information on consumer’s side necessitates search behavior which could lead to consumers switching from the current provider to a different provider. On the other hand, brand loyalty, risk aversion, and other psychological factors result in switching costs introducing frictions in the market.

Both search and switching have been separately studied in the empirical literature. In this paper we introduce a model where both factors exist and we empirically attempt to distinguish between them. The advantages of this approach are that we not only learn about the absolute levels of search and switching costs, but also about their relative magnitudes and importance. We implement our model for the U.S. auto insurance industry. In the data, we observe respondents’ search and switching behavior as well as the premiums for all quotes for one insurance policy purchase. This information enables us to identify both search and switching costs.