Products are Turned Into Services
This page is being edited by Seda Demircioglu EMBA09. In case of any questions/remarks [1] pls contact me].
Description:
Have you ever bought a mobile phone? I bet that there was a booklet inside the package, tempting you to join some club, or subscribe to a web page. Only to find out that you had to, 1. supply your personal details, and 2. would receive advertising e-mails, and "Special Offers!" for products you don't need or want. And this is not just the case for mobile phones, you see it everywhere. You want beer? Heineken will give you a mobile service for the latest news.
But why would these companies want you to join their club? Of course, you are an easy advertising target. But there is another, hidden reason: products are increasingly turned into services. Just think about why you can buy the same mobile phone for "0 euros!" if you get this or that contract with it. Apparently, the telco is paying the phone manufacturer from your monthtly payment - and anyone would understand that your monthly payment would drop if you would just pay for the phone immediately.
Products are turned into services. In software, you can see the same situation. Windows Update is a service. iTunes is a service. IBM invests in Open Source - so you can get expensive IBM consulting with your free copy of Linux - or was it the other way around? The reason why is obvious: services provide companies with a great medium to have regular contact with their customers, and to have a better guarantee of receiving money in the future.
In a few years time, you will be able to subscribe to Microsoft.com, and receive the latest copy of Windows, "Free of Charge!". Or you could of course subscribe IBM.com . It's your choice.
Enablers:
- The Internet, and
- Mass communication in general;
- Growing competition between product manufacturers
- [S. Demircioglu]Convergence of Telecommunication, Media & entertainment and Information technology
Inhibitors:
- The Internet, again (more choice, more information on competing products);
- Consumer resistance to subscriptions and advertising
Paradigm
[S. Demircioglu] Products turning into services requires managing bothservice function entails managing both product and service flows down the chain and information flowing up the chain. For corporates, it means involving everyone -- from engineers to managers to sales and service reps -- in understanding the consumer and identifying his/her needs. It means nurturing flexible teams from various parts of the value chain that design, develop, test, and sell new products based on the information gathered from the marketplace.
Timing:
Although this development has been going on for a long time (e.g. car owner's clubs) it has become more important during last decade. Probably the Internet boom has helped the development (think free e-mail, free news, free software, etc.).