Driving Transformation: Increasing Customers’ Willingness to Pay in Transformative Travel Services

Abstract

Why does pricing fail to meet consumer expectations? According to Zeithaml et al. (2020), more attention is needed in service research to understand how customer value is associated with products and services, and how value is assessed. One area of interest is transformative services, where interactions between service providers and consumers influence the well-being of both (Anderson et al., 2013). Within this field, transformative value represents the social dimension of value creation that promotes well-being, as defined by Blocker and Barrios (2015). This study focuses on transformative services and value creation from two perspectives: the consumer’s willingness to pay and value creation mechanisms. Brandenburger and Stuart (1996) define total value created (TVC) as the difference between the consumer’s willingness to pay (WTP) and service input costs (C). Biloshapka and Osiyevskyy (2018) refine this by adding price (P) and dividing TVC into the consumer’s value capture (WTP - P) and business value capture (P - C). The consumer’s value capture is supported by value creation mechanisms—including value proposition, targeting, delivery, and appropriation (Biloshapka and Osiyevskyy, 2018). The study adopts a qualitative and exploratory approach, utilizing panel survey data (n = 1040) to identify potential implications for value creation mechanisms in transformative travel services. Survey participants were asked to assess their interest in and willingness to pay for 29 tourism services and products. The focus of the analysis was on identifying value creation mechanisms and exploring their adaptation options within each group. The findings indicate that value creation mechanisms in relation to willingness to pay are crucial in transformative services. The study concludes that: (1) transformative services benefit from new types of value creation mechanisms, and (2) the willingness-to-pay approach might overlook the transformative nature of the service. Further research is proposed to explore the implications of extended value creation mechanisms for service design.