We typically divide products into two types: goods products like a new laptop, and service products, like service on that laptop after you spill your soda on it.
Of course, goods products are those that we can touch and feel. The primary reason we have brick and mortar stores is to give shoppers the ability to interact with physical goods products. Feel the fine texture of a high quality garment for example.
When most of us think about service products we might think of getting some special attention at a salon, taking a laptop in for repair, or even getting a suit custom tailored. Service products are intangible and only exist in the interactions between the customer and the service provider. So are products either strictly goods or service products? Well, no.
In fact, products exist along a service-dominant vs goods-dominant continuum. At one end you might have a regular appointment at a doctor’s office. Where everything you receive as a customer (in other words as a patient) is service-based. At the other end of the continuum you might have a grocery store, where the vast majority of the value you receive comes in the form of physical products. But here’s the thing: regardless of the product, there is nearly always a service component built into it.
You might buy a new iPhone, but embedded within it are all those service-based perks you’ve come to expect from Apple such as a free iCloud account, free news delivered 24/7, even an artificially intelligent agent at your beck and call. Increasingly, auto manufacturers, especially luxury brands, are including regular oil changes with the purchase of the car.
Even that trip to the grocery store has service embedded within it. The store itself is a service. The retailer is providing a showroom for you to use. There’s a very real cost associated with that. They provide employees to help at the meat counter. They provided cashiers at checkout. Heck, even if you use that self-checkout and didn’t talk to anyone. Guess what? It’s still a service, they’re providing the technology to allow you to checkout on your own. A human doesn’t have to be involved for a service encounter to take place.
Why is this important from a retail perspective? If a retailer can add value to the shopper’s experience or even add additional value to the products it sells by embedding services within them, that’s value that becomes difficult for its competitors to replicate. And that will give you a sustainable competitive advantage.