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Products Services
by Venkatesh Shankar, Leonard L. Berry, and Thomas Dotzel
Authors
Agenda
Introduction
Common Hybrid Offerings
Developing Your Offering
Introduction
Introduction
These days, many firms are trying to mix products with services
in an effort to boost revenue and balance cash flows
Increase demand
Products
Hybrid
Solutions
Services
Apple
The iPod product combined with
the itunes service
combined
bundled
Introduction
While the promise of combined offerings is great,
Its easy to get them wrong.
How to structure
Many companies
dont think through
How to market
How to sell
About their research
Failure to differentiate
Failure to scale
Complementarity
Independence
Flexible bundle
Peace-of-mind bundle
Multibenefit bundle
One-stop bundle
Flexible bundle
Dependent
Independence
Peace-of-mind
bundle
One-stop bundle
Multibenefit bundle
Low
High
Complementarity
Flexible bundle
Independent
Flexible bundle
Dependent
Independence
Peace-of-mind
bundle
One-stop bundle
Multibenefit bundle
Low
High
Complementarity
Flexible bundle
This type is best suited to complex products and services
that address thorny customer problems
Highly independent
Highly complementary
Database
Hybrid
Solutions
Ex. Oracle
Products
Hybrid
Solutions
Services
Peace-of-mind bundle
Independent
Flexible bundle
Dependent
Independence
Peace-of-mind
bundle
One-stop bundle
Multibenefit bundle
Low
High
Complementarity
Peace-of-mind bundle
This type appeals to customers looking for the assurance
that they are getting a complete, best-of-breed offering
High independence
Low complementarity
Elevator
Hybrid
Solutions
Ex. OTIS
Products
Hybrid
Solutions
Elevator
Services
Multibenefit bundle
Independent
Dependent
Independence
Peace-of-mind
bundle
Flexible bundle
One-stop bundle
Multibenefit bundle
Low
High
Complementarity
Multibenefit bundle
Here, the products and services are often inseparable
Dependent
Highly complementary
Tivos product
is useless with
its service
Ex. TiVo
Products
Hybrid
Solutions
Services
One-stop bundle
Independent
Dependent
Independence
Peace-of-mind
bundle
Flexible bundle
One-stop bundle
Multibenefit bundle
Low
High
Complementarity
One-stop bundle
This combination does not provide additional value in itself; rather,
customers are attracted by reliability of service and shopping convenience
Independent
Minimally complementary
Salons
Customers service
experience may not be greatly
improved by buying these
products, but customers value
the convenience and the
recommendations of their style
One-stop bundle
Products
Hybrid
Solutions
Salons
Services
consulting
service
Equipment
Low
High
Helps customers
publish documents,
manage
documentation
budgets, and secure
important information
Cost
Lower cost
Low
If services cannot be
delivered from a central
location
Which should lead the customer purchase, the product or the service?
Especially for a one-stop bundle, its often best to lead with the product or
service that customers choose first.
Products
Huge market
Services
Music downloading
Products
Services
Which should lead the customer purchase, the product or the service?
Especially for a one-stop bundle, its often best to lead with the product or service that customers
choose first.
Which should lead the customer purchase, the product or the service?
Because their reputations are built on service, successful hybrid providers like AT&T and
Sprint exploit this order of choice to more effectively sell their own branded handsets
Customers
Services
Products
In the U.S.,
customers typically
Products
Branding
activity
Branding
activity
Companys
credibility
Services
Branding
activity
Commoditization
Revenue potential
Low
High
Low
High
Flexible bundle
Peace-of-mind
bundle
One-stop
bundle
Multibenefit
bundle
Conclusion
As companies look to the future, they will need to pay more attention to
hybrid offerings if they want to increase their top and bottom lines.
Hybrid offerings attract new customers and improve demand among
existing ones by providing superior value.
They enable firms to boost their revenue and profit streams and improve
liquidity at low risk.
The rules above can help you identify successful hybrid offerings