THE PRODUCT IS DEAD: LONG LIVE THE PRODUCT-SERVICE!

In the emerging blend of service with tangible product, the customer receives everything necessary for success. OVERVIEW: To optimize product cycle time, producers of high-tech products long ago began marketing before they had fully specified the product. Now, they may no longer finalize the physical specification at all. We can thus proclaim, "The product is dead, "which implies the substitution of expert service for features, information, and capabilities that used to be intrinsic to the tangible product. Companies are finding that dispensing with the idea of product remains one of the few ways-if not the only way of compressing the technology cycle still further. By adapting to customers ' needs and by reducing information overload, a comprehensive package of tangible goods, service and information can serve customers better than a traditional product. The recent demonstration we witnessed at a large high-technology company was perhaps more revealing than intended. The capability we were shown provided clear benefits for customers, was being sold in a shrink-wrap box containing a circuit board and some software, and had a brand name. However, one marketing manager called it a "set of products," another called it a "technology," and a third remarked, perhaps inadvertently, that it was "going to be a product." After the demonstration, one of us gently asked a marketing executive, "If the marketing group doesn't agree on whether this is a product or not, how will the customer possibly comprehend it?" The executive replied, "Yes, but by the time we all agree on it, the next release will be out, and we'll be back where we started." Product life cycles have been, and continue to be, getting shorter than ever, particularly for high-technology products (1-3). Compression of sales cycles (and the attendant compression of development cycles) is driven by rapid introductions of successive releases and new and substitute products. It is not because of a short span of enthusiasm on the part of customers; indeed, technology may change much faster than consumer psychology and needs. This explains why some technology marketers have begun to market earlier in the technology cycle, often before a product has been specified concretely (Figure 1). "Vaporware" is one of the less salubrious results. Rather more constructive was AT&T's "You Will" campaign. The AT&T ads featured a leading question concerning future ways of communicating ("Have you ever attended a meeting from the beach?") that was superimposed on a machine with indeterminate features. The tag line, "You Will," was meant to warm customers to the idea of communicating in this new fashion-even though AT&T clearly did not have a product ready for market. Almost every tangible product has a service component (4, p. 239). For high-tech products requiring much user learning, the service component is a significant fraction of the total package. That package includes the physical product, its packaging and advertising message, its distribution, its setup, its after-sale support, and much more. The increasing role of the service component is evident to consumers, for example, in the form of telephone support for software and PC products. It is evident to industry executives in the outsourcing of data processing services, for example. The perceptive marketing executive quoted above acknowledged that the whole question of product identity could be bypassed if the benefits were delivered directly to industrial customers by knowledgeable service consultants. Indeed, the brand could then be associated with the benefit rather than with the particular circuit board, giving the company greater leverage from the brand name. The obstacle to this is the shortage of knowledgeable service consultants. "The average street-corner VAR [Value-Added Reseller]," said the executive, "is not sufficiently knowledgeable. The Big Six accounting firms [specifically, their systems integration divisions], while knowledgeable, are too few and too much in demand as resellers. …