An influential stream of thought in marketing is that all products have elements of service products and that thinking about even tangible products as service offerings can promote creative new thinking. This is not such an odd notion upon reflection. The can of beans that is served at the family dinner is a tangible product, but it also includes and replaces some service activities. Harvesting, preparation and canning are all service activities contained in the can. If the family had not opened the can of beans or some other food product in the home the family likely would have gone to a restaurant where they would purchase the services of a cook, waiter, and dish washer. This “service-dominant logic,” as it has come to be called, suggests that a narrow focus on the “product” may limit vision and innovation. More broadly, this larger view places a focus on the totality of the customer experience and the goals that the consumer is attempting to achieve with the purchase of a product or service.
It has been said that consumers do not buy drill bits they buy holes. In fact, consumers don’t really buy holes either. They buy entertainment services that happen to require a hole in the wall for wiring. The hole, like the drill bit that is used to make it, is just a means to a larger end.
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A great many software products, bought as products, are really substitutes for services. Kiosks replace fast food order takers. Consumers and companies replace bookkeepers with financial management software. Printers are replaced with desktop publishing. Travel agents disappear as web sites offer similar services and the always available ATM machines replace the not always friendly or available bank teller.
So how is it helpful to think about products as substitutes for services?
First, such a view shifts thinking from technology to customer experience. Technology is important, but it is incomplete without translation into a route for consumers to achieve their goals. If we are to replace the services of a bank teller with a machine, for example, what services must the machine deliver for the customer to perceive the service experience to be complete, and how might the new technology improve the experience?
Second, a service perspective assures that the human elements involved in product purchase and use are considered as a part of product design. People are the users of products at the end of the day. If there were a service provider present as the consumer used and consumed the product what would this service provider say and do? How might thinking about this hypothetical service provider alter the design of the product, the usage instructions, and other products bundled with the product? How might the product improve upon the service experience through standardization and improvements in quality while replacing or at least causing the consumer not to miss the human element of a transaction and consumption experience?
Third, thinking about products as services forces an examination of customer goals that drive purchase. What is required by the customer to achieve these goals? If the service sought by the customer is a printed page, what is necessary to produce this experience? The answer is not just a printer, and a service provider would know this and provide all the things necessary to produce the printed page desired by the customer, and this process would be invisible to the customer. In contrast, many printer products are sold without the necessary cables to connect to a computer or other device. This means the “service” experience is broken and the customer finds that the product does not deliver the desired service.
Fourth, this view of product as service has implications for branding and brand identity. If the product were a service provider, how would that server be described and what would this description communicate about the brand. The “Helping Hand” character that has been used to advertise Hamburger Helper for decades and Progressive Insurance’s energic, friendly, and bossy Flo character provide elaborate identities for their associated brand.
Finally, service-dominant logic can be useful in thinking about how to “productize” a service. One problem with services is that they are often poorly defined and subject to feature creep (of course a free car wash should be included in my auto repair!) Identification of the full complement of benefits a customer seeks from a service provider can provide more definition of the service “product”. Such definition can be a powerful tool for managing customer expectations and for more completely defining the brand experience. For example, what should define the driverless taxi that pulls up to the curb to pick up a passenger.
Thinking about the services embedded within and delivered by a product can make products better, suggest features, and identify opportunities for improvement over human delivery. It can also suggest how a service product should be defined. It is a thought experiment worth some time and effort.
Contributed to Branding Strategy Insider by Dr. David Stewart, Emeritus Professor of Marketing and Business Law, Loyola Marymount University, Author, Financial Dimensions Of Marketing Decisions.
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