Products, Services, and Experiences
Products, services, and experiences form the core of what companies offer to consumers. Whether it's a physical item you can hold, a service someone performs for you, or a memorable event you participate in, these offerings all aim to satisfy customer needs and wants.
Understanding how to categorize these offerings and think about them at different strategic levels helps marketers make better decisions about pricing, promotion, and positioning.
Products, Services, and Experiences Defined
Products are tangible goods you can physically touch, hold, and own. Think cars, clothing, electronics, and food items. The key distinction is that you walk away with something physical.
Services are intangible offerings that provide benefits but can't be physically possessed. A haircut, legal advice, a car repair, or a college education are all services. You receive value, but there's nothing to put on a shelf afterward.
Experiences are memorable events or interactions that engage customers emotionally. They often combine products and services together. A theme park visit, a luxury resort stay, or a live concert all qualify. Companies increasingly compete on the quality of the experience they deliver, not just the product or service alone.
Categories of Consumer Products
Consumer products are classified by how customers shop for them. This matters because each category calls for a different marketing approach.
- Convenience products are items you buy frequently with minimal thought or comparison. Snacks, toiletries, and newspapers fit here. These need wide distribution because customers won't go out of their way to find them.
- Shopping products are purchased less often and involve more comparison before buying. Clothing, furniture, and appliances are typical examples. Customers compare quality, price, and style across brands before deciding.
- Specialty products have unique characteristics or strong brand identity that make customers willing to go out of their way to buy them. Luxury cars, designer clothing, and high-end electronics fall into this category. Buyers already know what they want and won't easily accept substitutes.
- Unsought products are items consumers don't think about until a specific need arises. Life insurance, funeral services, and fire extinguishers are classic examples. These require aggressive advertising and personal selling because customers aren't actively looking for them.
Categories of Business Products
Business products are purchased by organizations for use in their operations or production processes, not for personal consumption.
- Raw materials are unprocessed basic ingredients used in production (lumber, crude oil, minerals, agricultural products)
- Major equipment includes high-cost, long-lasting items used in production or operations (machinery, heavy-duty vehicles, buildings)
- Accessory equipment consists of less expensive, shorter-lived items that support operations (hand tools, office computers, small machines)
- Processed materials are components that have already undergone some processing before being used in further production (plastic resins, steel, flour, fabric)
- Supplies are frequently consumed items that keep operations running (paper, pens, cleaning products, light bulbs)
- Business services are intangible offerings that support operations (consulting, legal services, advertising, software maintenance)
Four Levels of Product Strategy
These four levels describe how marketers think about a product from the inside out, starting with the most fundamental question: what need does this actually solve?
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Core benefit is the fundamental need or want the product satisfies. It's the essential reason someone makes the purchase. For a car, the core benefit is transportation. For a hotel room, it's sleep and rest.
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Basic product is the tangible or intangible item that delivers the core benefit, including its essential features. A car's basic product includes the engine, wheels, and chassis. A hotel's basic product is a bed in a room.
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Expected product is the set of attributes buyers normally expect as standard for the product category. For a car, this includes safety features, comfortable seats, and a warranty. For a hotel, you expect clean towels, a working lock, and a certain level of quiet. If these expectations aren't met, customers feel shortchanged.
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Augmented product includes additional features, benefits, or services that go beyond what's expected and distinguish the product from competitors. A car might offer a premium sound system, built-in navigation, or complimentary roadside assistance. A hotel might provide a welcome gift, a rooftop pool, or a concierge service. This is where product differentiation happens, and it's often where competitive advantage is built.
The takeaway: marketers should start by clearly identifying the core benefit, make sure the basic and expected levels meet customer standards, and then look for augmentation opportunities that set their offering apart.
Product Strategy and Brand Management
A few additional concepts connect to product strategy at a broader level:
- Product lifecycle refers to the stages a product moves through over time: introduction, growth, maturity, and decline. Each stage calls for different marketing decisions around pricing, promotion, and distribution.
- Brand equity is the value a brand holds in the marketplace based on consumer perception, loyalty, and associations. Strong brand equity means customers trust the brand and may pay a premium for it.
- Product mix is the complete set of all products a company offers, organized into product lines. Managing the product mix involves decisions about which products to add, modify, or discontinue.