Moving to subscriptions: service growth through business model innovation in consumer and business markets

Abstract

Purpose

Subscription offerings are being hailed as the next service growth engine for companies in both business-to-consumer (B2C) and business-to-business (B2B) markets. The study analyzes how a manufacturing firm can develop and implement a scalable service-based subscription business model for B2C and B2B customers alongside its existing product-centric model.

Design/methodology/approach

A longitudinal case study is conducted, drawing on 25 in-depth interviews with company executives and dealers in key European markets.

Findings

The study outlines an iterative process model for subscription business model innovation. It reveals key events and decisions taken in developing, implementing, and scaling the new business model and how internal and external tensions involving intermediaries arose and were mitigated during the four stages of the process.

Research limitations/implications

The findings highlight the dynamics of business model innovation processes and underscore the importance of organizational learning, collaborative relationships with channel partners, and strategic talent acquisition during business model innovation.

Practical implications

The findings suggest how product-centric firms can implement new service business models alongside existing product models and what this means for partner and customer journey management.

Originality/value

While servitization research predominantly concerns B2B manufacturers, B2C research focuses on digital subscription contexts. The study bridges this divide by investigating the move to subscriptions in both markets.