The case for turning products into services and redefining ‘ownership’

  • by helga
  • 06/07/2013

You may have noticed some interesting shifts in consumer models coming from several brands and different markets. I’ll start off with a few examples and elaborate from there:

Puma trainers – Puma have looked at their product and realised that the largest toll on production costs and environment is coming from the raw products in which they build their trainers. They are therefore considering a new model, where the buyer pays a yearly fee giving access to a few pairs of Puma trainers per year, in exchange for returning the previous pair once it has worn off. This will allow Puma to recycle more trainers, reducing costs and improving the footprint on the environment, while still providing a good product and service to customers.

Adobe Creative Cloud – Adobe is trying to move from getting consumers to buy, download and regularly upgrade their software products, into selling them a monthly membership of a packaged SaS (‘Software as a Service’) which includes all the above, accessed through the ‘cloud’.

Amazon kindle, and many other similar readers + e-books – The book is not an entity you ‘own’ anymore. Now you buy a service that provides you with entertainment, training, educational services and much more on-the-go, through a practical access tool (the device) and reading material (the e-books). I’m not discussing here the virtues and evils of proprietary vs. open source models and effects on brand loyalty, I’m just saying that the book-product, the tangible object, has taken a step towards the background. The focus became the service, the access.

Amanda Palmer, singer / musician – Amanda is using a crowdsourcing model (Kickstarter) to fund her music. She doesn’t have a publishing label an doesn’t sell albums in shops; instead, you can donate different amounts on the website which will give you access to different items. If you manage to put together $5,000, Amanda herself will come to your house party!

What do all these examples have in common?

Probably more than one thing. It’s likely that Neil Gaiman, famous novelist and Amanda’s husband, is published on Kindle, and probably Neil’s marketing agency use Adobe Creative Cloud, and Amanda herself jogs with Puma trainers – but no, that’s not what I want to elaborate on.

The thing I’ll highlight here is that all these examples are moving away from provision of products to provision of services. This is a fairly new trend that has been documented in the world of marketing.

In my humble opinion, why is it important? And why is this good?

Well, to start, and because we don’t live forever, I’d say people NEVER need to own products – they need the services that those products represent. At a basic level: Housing. Education. Healthcare. Nurturing.

If we go down to less basic products: books are about nourishing the mind. Shoes are about protecting your feet from the roughness of walking surfaces, servicing your walking needs and making you feel good about your looks.

How long do shoes last? Why is recycling a cost and a responsibility for councils and not for those who create and profit from selling the product? Partly because they’re products, not services. Companies are trying to maximise their profits on the basis of selling products with limited application, not services taking a holistic view of our needs. That stands not just for our individual, selfish needs, but also the (urgent) need to reduce negative social, economical and environmental impacts, of creating markets that are more efficient, effective and sustainable. If brands had to account for the full lifecycle of products, they would end up at the very least with a very similar model to Puma.

I guess the vast majority of brands adopting a ‘service model’ for products would still be driven by customer loyalty and bottom line, not environmental concerns. But that would be a case of the ends absolving the means.

Can you think of more products that turned into services? What is the true service being provided by brands, and how could we expand and re-think business models by turning more products into services? How would the tangible, production side of the business need to change, and how would we market these new services?

Leave a Reply

The Marketing Cube is a marketing, brand and digital consultancy service based in London. Please note that we're not accepting new clients at the moment. However, the blog is still active and available for your perusal!
Latest from our blog
2017: what will be trending in digital marketing

Ladies and gentlemen, as has been my tradition for the last...

Viva la pensions revolution – the UK pensions and retirement market

I haven't touched much on the pensions and retirement...

  • our-clients-handsetexpert
  • our-clients-Altitude_Parks
  • our-clients-yourinterest
  • our-clients-jacaranda-capital
  • our-clients-orchard-media-ventures
  • our-clients-shopwyre