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Product or Service

Published date: 22nd June 2015
Last modified: 18th April 2017

Services

Many of the decisions and considerations regarding the marketing mix that are applied to tangible products can also be applied to service products. This has created a blurred line between the two.

Conceptually defining service is still somewhat an unanswered question. Either everything is a service (Vargo and Lusch, 2004) 1 and the distinctions between goods and service do not matter, or new ways need to be found in order to define a service and how we interact with them.

It helps to think as a product being something that is much broader and can be both physical product and service. The CIM (2015) defines product as the following:

“A product – is anything that can be offered to a market for attention, consumption, acquisition or use.”

In this respect the CIM follows the philosophy that ‘service’ and ‘product’ become interchangeable.

prodSat3

Figure 1: CIM – service and product relationship

This broader view starts to push marketing activities towards design processes. The organisation can start to focus on what satisfies the customer and deliver on this through the marketing mix. Needs which are determined through market research.

To this end the product is seen as the whole marketing effort and not just a physical artifact. Likewise services can be regarded as products. As far as the consumer is concerned, product or services, they represent the means to satisfy personal requirements.

The various aspects of a product can be viewed through the idea of the ‘extended product’, which consists of five levels of the product. In this respect we can see how services might be bundled around the core product.

prodLev3

Figure 2: CIM – levels of product

Level 1: Core Product

This is the fundamental benefit that the product or service delivers. For example, a mobile phone’s core product would be communication. This sense of the core could run deeper. It provides self-worth, hope and belief.

Level 2: The Actual Product

Continuing our example, this would be the phone itself, features that the phone has or the quality of the production.

Level 3: The Expected Product

Customers have levels of expectations that any particular offer should provide. Organisations can live up to these expectations, exceed them or fall short. In the case of the mobile phone example, a customer’s expectations would include that it is able to make calls, send text messages, has a certain battery life. Without understanding expectations dissatisfied customers are an easy possibility.

Level 4: The Augmented Product

Here is where a lot of competitive advantage is built into an offering and what we might consider the traditional ideas of customer service and after-sales support. For our phone these are the various plans on offer, the technical support available or the insurance package on offer.

Level 5: The Potential Product

This level looks to the future of the product and what might be done in order to maintain a competitive edge. Continuing the example of mobile phones technological developments will be of major importance; blue tooth, touch screen technology, improved processors, better camera technology, are to name but some of the developments in the past.

Within the website core group there was discussion relating to a potential second phase of development, this involved a bespoke job listings page for positions available directly within the Talent Match network.

It is vital that organisations remain up to date with what is happening in the broader environment in order to plan for future developments, marketing does this through using various tool but using the PESTLE (Johnson & Scholes, 2002)2 framework here is useful.

Political Factors – The Political factors include government regulations and legal issues. It defines both formal and informal rules that an organisation must abide by.

Economic Factors – The economic factors affect the potential customers’ purchasing power and company’s cost of capital.

Social Factors – Social factors involve the cultural and demographic aspects of the external macro-environment.

Technological Factors – These factors can remove or lower barriers to entry. They can also reduce minimum efficient production levels and sway outsourcing decisions.

Environmental Factors – The environmental factors assess what kind of impact the company is having on the environment. The impact can either be negative or positive.

Legal Factors – These are factors, which deal with legal complications. You need to constantly check on new legal requirements to ensure compliance.

Ethical Factors – Ethical factors are all about the social values, which govern business behaviour. These act as the foundation for what is right and what is wrong.

This framework allows us to approach the deliverable from various different angles and helps us to conceptualise all levels being integrated with each other rather than being a distinct product or service.

 

References:

  1. Vargo, S & Lusch, F. (2004) Evolving to a New Dominant Logic for Marketing. Journal of Marketing.
  1. http://www.amazon.co.uk/Exploring-Corporate-Strategy-Gerry-Johnson/dp/0273711911

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