Service Delivery Strategies for Alleviating Pandemic Suffering While Maintaining Profitability

Abstract

The postpandemic world requires a renewed focus from service providers on ensuring that all customer segments receive the essential services (food, healthcare, housing, education, etc.) that they need. Philanthropic service providers are unable to cope with the increased demand caused by the social, economic, and operational challenges induced by the pandemic. For-profit service providers offering no-pay services to customers, allowing them to self-select a service option, is becoming a popular strategy in various settings. Obtaining insights into how to efficiently balance societal and financial goals is critical for a for-profit service provider. We develop and analyze a quantitative model of customer utilities, vertically differentiated product assortment, pricing, and market size to understand how service providers can effectively use customer segmentation and serve the poor in the lowest economic strata. We identify conditions under which designing the service delivery to be accessible to the poor can simultaneously benefit the for-profit service provider, customers, and the entire society. Interestingly, we observe that the increasing customer valuation of the no-pay option because of a superior quality service offered by a service provider need not benefit customers. Our work provides a framework to obtain operational, economic, and strategic insights into socially responsible service delivery strategies.