Hello. In this session, we will discuss the levels of a product and service. And this is a topic that you have been exposed to before. You will see some very familiar diagrams, but we will build on it and take it a step further. So a quick review. In previous sessions, we established connections between levels of a product, or what we call the whole product or the total product, and customer value or value proposition. We talked about whole product development. Remember the time when we were talking about crossing the chasm? And we said we need to pick a particular niche we establish. We need to establish a pitch head with that niche and the way we do it is by establishing the whole product or developing the whole product where we talked about whole product development and crossing the chasm, picking a niche. We also talked about whole product and growth. That you can grow not just by working on the physical product, but by adding a suite of services or a range of services to your co-product or to the quarter-inch drill. Remember, customers don't buy quarter inch drills to buy quarter inch hose. And part of the benefits can be provided by services, so we have a very instinctive relationship between, or intuitive relationship, I beg your pardon, between the whole product and growth. And finally, we also talked about the whole product and strategy formulation, marketing strategy formulation. Why? Because the whole product can provide a basis for segmenting. Why? Because we can talk about the quarter inch drill in a number of different ways. We can talk about a power drill versus a drill for amateurs. A drill for professionals, people who have their own businesses, who repair homes, plumbers, electricians, things like that. Or we can talk about companies that build buildings, okay? So we can use the whole product as a basis for segmenting. We can also use it as a basis for targeting. So, Black and Decker's DeWalt tools are targeted at professionals who have their own businesses, but who are usually solo operators. They are not targeted at industrial consumers, those people that show up to work and are given tools by their employers and build large buildings or large bridges or large electricity generators and things like that. And finally, even when it comes to positioning, I can position my product on the core product, fastest, quickest, brightest, or I can position it on the augmented product. Nobody offers you a comprehensive suite of services as does Adobe, or Intuit, or whatever. Okay, so we can talk about the marketing strategy. Segmentation, targeting, positioning, in terms of the whole product. Now, you've seen this diagram earlier. The Generic Product, the Expected Product, the Augmented Product, the Potential Product. Well it's got four layers. In this particular session, okay, you will see another diagram. This only has three layers. The Core Customer Benefit, The Actual product, and the Augmented product. And you might turn around and ask me, well what would you like us to work with? You want us to work with four levels or three levels? Well let's make life a little simple for you. Not too simple. But just a little simple. Let's work with three. Let's just work with three levels right now and let's see where that takes us, because the assignment is also around three levels. So the first step in the game could be linking levels of a product to a service. Okay what kinds of services come into play and I talked a little bit about this in the previous session. So let's go step by step from pre-manufacturing, where manufacturing hasn't yet started, but we could think about product design, features, and benefits. There are, in fact, product design right now is a very hot field. And people who know how to design a service are very much in demand. So those kinds of services can come into play pre-manufacturing. During manufacturing, it could be my know-how about technology and about materials. Today's cars and automobiles use very little metal. They use snap-on plastics which are so sturdy, so my understanding of high performance, high strength plastics may come into play. Selling and distribution, exposure and education. You may have seen that when you go to a shop sometimes or retail store or you go to a mall for shopping, or even if you go online, there are videos that demonstrate a product, how it is used, its capabilities, its features. And they also explain how it works. Those are the services that can come into play during selling and distribution. And finally, during the consumption stage, we may think about services like training and maintenance support. So linking levels of a product to service, different phases from manufacturing to consumption and again the core product comes into play maybe much later. But the augmented product, the expected product can actually come into play earlier because we are building all those features, building all those benefits into the product at an early stage so that when the product is handed off to the customer, they're looking at a total value proposition. And not just a partial value proposition. So now let me provoke you with some, with a question. Let's provoke some thinking over here. We've talked about the levels of a product, and just to refresh your memory, that we have the core product, the expected product, the augmented product, the potential product. Just the core, expected and augmented, three levels. Is it possible to do a similar type of analysis on service? All services. Let's forget a product, but is it possible to do a similar analysis on services? Well, technically speaking, why not? I mean, if you can do that, if products and services in today's world are really not distinguishable, should not be treated as two separate entities, and if you could do levels of product analysis for a product, why can't you do levels of service analysis for a service? Now, you're not gonna find a diagram on this, but I have tried my hand at it and I'm gonna share it with you because I'm convinced that this is a gap in the literature. That you can talk about levels of service. So for example a core benefit of a service could be security, piece of mind. I bought a new device. I don't want it to fail. If it does fail, I need to be able to go to someone reliable who can fix it for me. So that's my core benefit, or if I buy a service plan. The actual service may be phone support, which is free, but if I want in-person visits, I may be charged if I am a small business. If I want a rushed service, I may be charged even more. And to make matters a little more interesting, the contract now says that parts and labor are extra. They're not part of the overall service plan. So that could be the actual service that is being provided to me by the service provider. And the augmented services league asked me, would you like a long term contract? And I said, well what are the benefits? And they say, we'll give you periodic check-ups and free diagnostics. No charge to you. We'll give you free consultation on upgrades, but everything else you will have to pay for. I might find that attractive. But again, notice, what have I done? I've taken a very simple transaction where a customer or a consumer buys a high-tech, innovative, new device or gadget that they know very little about. They have an apprehension. What if the product fails? What if it breaks down? They buy a service plan. I have taken that service plan, and I have exploded it into a Core Benefit, the Actual Service, and the Augmented Service. Okay let's engage in some more provocation. We have talked about enriching products by augmenting them with services. That's what we saw earlier in the whole product. Can we enrich a service by adding a product onto it? Slightly different question, okay? What levels are added to a service by products? That's the question that I'm asking. And I maintain that services are, not just I, but yes, services can be made richer by the addition of products. So, let's take a very simple example. Let's say I'm a shipper. Let's say I am Maersk. I'm one of the largest shipping companies in the world. You are a shipper. You are utilizing my shipping services to send your goods from Florida to Norway, okay. You want to keep track of your products while they're en route. If we put RFID tags, which is a product, onto the service of shipping, I know exactly now where my product is at what time. Okay, let's talk about a software upgrade. Typically, what do we do when we have a software upgrade? Let's say we have multiple devices. Okay, maybe upgraded on one, what about the other? If I add now a Bluetooth capability on a software upgrade, I will now be able to transfer an upgraded software from one device to another. Or I may be able to just transfer documents from one to the other, okay? An additional feature enabled by the addition of a product onto a service. And let's say that the service that we're looking at is expedited processing. Well I'm an ambition person. I just want to get on with it. I am driving. I don't want to stop to pay toll. I just wanna go through the easy pass lane. Well what is easy pass? It's a little gadget that's sitting on your dashboard that sends out a signal, turns the light green, lets you run through, okay. Or an expedited processing could be also in check-in, check-out at a hotel where you are a member of their loyalty program. You get a card. Okay, and you swipe it and it lets you go through in an expedited manner. Or if you are an international traveller and you're coming back to the US after an international trip, and you happen to belong to the global traveller program, well guess what? You have a card. You have expedited, you have a machine that can expedite your immigration and customs processing. And you're out of there much faster than the others. So yes, you can add products to services, and you can make their value even greater to the customer. You can make them richer. You can make the value offering, the value proposition much richer, by adding products to services also. We have already seen as to how you can make products richer by adding services to them. So, in summary, the levels of product and service is an extremely useful concept in thinking of a number of marketing concepts, such as growth, customer value, segmentation, positioning. Different types of services support different levels of a product and add different stages from manufacturing to consumption. It is possible to think of levels of services too. And I have demonstrated that to you. And yes, it is also possible to think of enriching services by adding products onto them, and not just enriching products by adding services to them.
