Linking Marketing and Operations: An Application at Blockbuster, Inc

In theory, it is a simple proposition: Make customers wait longer, and fewer of them will come back. But actual practice is complicated. Marketing develops a new product, service, affinity plan, and so on. This new marketing initiative causes changes in operational processes that increase customer s...

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Bibliographic Details
Published in:Journal of service research : JSR 2002-11, Vol.5 (2), p.91-100
Main Authors: Evangelist, Shane, Godwin, Badger, Johnson, Joey, Conzola, Vincent, Kizer, Robert, Young-Helou, Stephanie, Metters, Richard
Format: Article
Language:English
Subjects:
Brand loyalty
Case studies
Customer retention
Customer services
Employees
Gift cards & certificates
Initiatives
Loyalty
Marketing
Operations management
Rentals
Simulation
Video stores
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Summary:In theory, it is a simple proposition: Make customers wait longer, and fewer of them will come back. But actual practice is complicated. Marketing develops a new product, service, affinity plan, and so on. This new marketing initiative causes changes in operational processes that increase customer service times. When waiting lines form, a small increase in service times for each customer magnifies into a significant increase in waiting time for the customer at the end of the line. The increase in waiting times causes a reduction in customer loyalty, which leads to lower customer retention, and hence, repurchases. Consequently, the marketing initiative has costs as well as benefits. Blockbuster, Inc. has developed a model that combines operational process analysis, waiting line simulation, real versus perceived waiting times, a customer loyalty model, and a financial model to find the bottom-line impact from operational changes of new marketing programs.
ISSN:1094-6705
1552-7379
DOI:10.1177/109467002237489