What term refers to any physical good service or idea created by an entrepreneur to address the needs of customers?

A product is a bundle of attributes (features, functions, benefits, and uses) that a person receives in an exchange. In essence, the term “product” refers to anything offered by a firm to provide customer satisfaction, tangible or intangible. Thus, a product may be an idea (recycling) , a physical good (a pair of jeans), a service (banking), or any combination of the three.

Broadly speaking, products fall into one of two categories: consumer products and business products (also called industrial products and B2B products). Consumer products are purchased by the final consumer. Business products are purchased by other industries or firms and can be classified as production goods—i.e., raw materials or component parts used in the production of the final product—or support goods—such as machinery, fixed equipment, software systems, and tools that assist in the production process. Some products, like computers, for instance, may be both consumer products and business products, depending on who purchases and uses them.

The product fills an important role in the marketing mix because it is the core of the exchange. Does the product provide the features, functions, benefits, and uses that the target customer expects and desires? Throughout our discussion of product we will focus on the target customer. Often companies become excited about their capabilities, technologies, and ideas and forget the perspective of the customer. This leads to investments in product enhancements or new products that don’t provide value to the customer—and, as a result, are unsuccessful.

Four Levels of the Product

There are four levels of a product (shown in the figure below): core, tangible, augmented, and promised. Each is important to understand in order to address the customer needs and offer the customer a complete experience.

The Core Product

The core product satisfies the most basic need of the customer. For example, a consumer who purchases a healthy snack bar may be seeking health, convenience, or simply hunger relief. A student who buys low-priced, sturdy sneakers may just be seeking footwear. A student on a tight budget who buys top-of-the-line sneakers might be hoping to achieve status. Or, the student might be seeking a sense of freedom by splurging on an item that represents a true sense of style, even though he can’t really afford it. Footwear, status, and freedom are all legitimate core products. The core product is complex because it is so individualized, and, often, vague. The marketer must have a strong understanding of the target customer (and the different segments of target customers) in order to accurately identify the core product.

The Tangible Product

Once the core product has been identified, the tangible product becomes important. Tangible means “perceptible by touch,” so the tangible aspects of a product are those that can be touched and held. This idea can be expanded to also include the characteristics of the product that directly touch the buyer in the buying decision. These are the product elements that the customer will use to evaluate and make choices: the product features, quality level, brand name, styling, and packaging. Every product contains these components to a greater or lesser extent, and they are what the consumer uses when evaluating alternatives.

The importance of each aspect of the tangible product will vary across products, situations, and individuals. For example, at age twenty, a consumer might choose a particular brand of new car (core product=transportation) based on features such as gas mileage, styling, and price (choice=Toyota Yaris); at age forty-five, the core product remains the same, while the tangible components such as quality level, power, features, and brand prestige become important (choice=Audi A6).

The Augmented Product

Every product is backed up by a host of supporting services. The augmented product includes the tangible product and all of the services that support it. Often, the buyer expects these services and would reject the tangible product if they were not available. For example, if you shop at a department store, you are likely focused on a core and tangible product that centers on the merchandise, but you will still expect the store to have restrooms, escalators, and elevators. Dow Chemical has earned a reputation as a company that will bend over backward in order to service an account. It means that a Dow sales representative will visit a troubled farmer after hours in order to solve a serious problem. This extra service is an integral part of the augmented product and a key to their success.

When the tangible product is a service, there is still an augmented product that includes support services. Westin hotels offer hotel nights with a specific set of features as their tangible product. The augmented product also includes dry cleaning services, concierge services, and shuttle services, among others.

In a world with many strong competitors and few unique products, the augmented product is gaining ground, since it creates additional opportunities to differentiate the product from competitive offerings.

The Promised Product

The outer ring of the product is referred to as the promised product. Every product has an implied promise, which is a characteristic that is attached to the product over time. The promised product is the long-term result that the customer hopes to achieve by selecting the product. The promised product may be financial—the resale value of a car, home, or property, for example—but it is often more aspirational. The customer hopes to be healthier, happier, more productive, more successful, or enjoy greater status.

Like the core product, the promised product is highly personal. Generally, marketers find that there will be groupings of customers seeking a similar promise but that there is not a single promised product across all customers.

Can the core product and the promised product be the same thing? Yes, they can, but often the the core product is more focused on the immediate need and the promised product has a longer-term element.

Let’s compare two different examples of the same purchase to understand how the product levels might change for different customers.

In the first case, the customer’s impetus to buy is transportation, so that is the core product. In the second case, the purchase is more aspirational and less concrete, so the core product and the promised product are quite similar.

For a marketer, the most important element is to have a holistic view of the product. If I believe that I’m simply selling airline tickets, then I fail to provide the full product offering that will satisfy either of my customers in the example above. And of course, it is always key to truly understand the motivation and perspective of the target customer.

Service design is concerned with the design of services and making them better suit the needs of the service’s users and customers. It examines all activities, infrastructure, communication, people, and material components involved in the service to improve both quality of service and interactions between the provider of the service and its customers.

The objective of service design is to formulate both front office and back office strategies that meet the customers’ needs in the most relevant way whilst remaining economic (or sustainable) for the service provider. Ideal services are considered to be user-friendly and competitive within their market.

There are many different disciplines that comprise service design. The most common are ethnography, information and management sciences, interaction design and process design.

Service design is used both to create new services and to improve the performance of existing services. As Matt Beale, from the Carnegie School of Design says; “Design is about making things good (and then better) and right (and fantastic) for the people who use and encounter them.”

A Brief History of Service Design

In 1982, the term “service design” was coined by Lynn Shostack. They considered service design to be a responsibility of marketing and of management. It was proposed that a business should develop a “service blueprint” which details the processes within a company and how each process interacts with other processes. While this blueprint was initially only used for service design – it has now become a tool for managing operational efficiency as well.

The service design blueprint clearly articulates the interactions between each part of the process.

Then in 1991, Prof. Dr. Michael Erlhoff (of Köln International School of Design - KISD) proposed that service design be considered a design discipline. He would go on to form an international conglomerate of universities that provided service design education and a network for academics and professionals involved in the discipline.

This network then proposed some structure for the discipline:

"[Service Design] is an emerging discipline and an existing body of knowledge, which can dramatically improve the productivity and quality of services.

Service Design provides a systematic and creative approach to:

• meeting service organisations’ need to be competitive

• meeting customers’ rising expectations of choice and quality

• making use of the technologies’ revolution, that multiplies the possibilities for creating, delivering and consuming services

• answering the pressing environmental, social and economic challenges to sustainability

• fostering innovative social models and behaviours

• sharing knowledge & learning”

They also provided the format for a service designer’s responsibilities:

“The Service Designer can:

• visualise, express and choreograph what other people can’t see, envisage solutions that do not yet exist

• observe and interpret needs and behaviours and transform them into possible service futures

• express and evaluate, in the language of experiences, the quality of design”

As well as setting out expectations for the way service design would perform:

• “Service Design aims to create services that are Useful, Useable, Desirable, Efficient & Effective

• Service Design is a human-centred approach that focuses on customer experience and the quality of service encounter as the key value for success.

• Service Design is a holistic approach, which considers in an integrated way strategic, system, process and touchpoint design decisions.

• Service Design is a systematic and iterative process that integrates user-oriented, team-based, interdisciplinary approaches and methods, in ever-learning cycles."

While these definitions have evolved a little over the years – they remain the core ethos of service design and what service designers should do in their work.

Service Design fits neatly into all industries – including those managed by ITIL process (shown here).

Service Design Methodology

Morelli proposed in 2006 that service design methodologies should operate in 3 directions:

• The actors on the service must be identified and defined with respect to the service. This can be done using analytical tools.

• The service scenarios should be defined. Then user cases should be developed and sequenced to reflect the interactions with the actors.

• The service should be then represented using diagrams and written elements as required to show all the physical components, actors, interactions and sequences.

The tools for analysis can involve social studies, ethnographic studies, anthropology, etc. these areas offer an incredible number of tools and care should be taken to select the right tool for the service design project.

Design tools are used to create the blueprint of the service and the nature and characteristics of the interactions that fall within it. These tools include (but are not limited to) development of service scenarios and use cases. These tools are similar to those employed in software design and UX designers should have little trouble adapting to them. It is worth noting that in service design these tools tend to be broader in scope and accommodate management techniques (such as Kaizen, Just-In-Time – JIT, Total Quality Management – TQM, etc.). Care should be taken when selecting management techniques as in many service systems customer interactions are too loosely defined to be forced into the narrow path of quality management (which was originally designed for manufacturing).

Blueprints can be any useful form of diagram which elicits the services’ scope. Storyboards are often the preferred tool but there is no requirement for this and designers should choose the tool which suits them and the project best.

The Take Away

Service design is every bit as important as product design and UX designers will find that as web products evolve to become web services, they are more and more involved in service design. The good news is that the core skills of UX design are similar when it comes to service design – they are just altered somewhat in scope.

Service design methodologies are very similar to existing UX methodologies. UX designers may find big opportunities in this field.

Resources

Lynn Shostack’s original publications can be found here "How to Design a Service." European Journal of Marketing 16(1): 49–63. and here "Design Services that Deliver." Harvard Business Review(84115): 133-139. They are available in hard copy only.

You can find out more about Service Design Blueprints here at Wikipedia - https://en.wikipedia.org/wiki/Service_blueprint

Morelli’s work can be found here - "Designing product/service systems. A methodological exploration." Design Issues 18(3): 3–17 and "Developing new PSS, Methodologies and Operational Tools." Journal of Cleaner Production 14(17): 1495–1501.

The Design4Services website is also a great resource for service designers in general - http://design4services.com/

Hero Image: Author/Copyright holder: Marcel Münch. Copyright terms and licence: CC BY-NC-ND 2.0