OK – so it’s a basic question, but an important one to understand.
What is a Product?
A product can be made up from tangible and intangible elements; a physical ‘good’, service, idea or person! e.g. a TV, bank loan or Lady Gaga. A product is something which meets a customer’s needs and for which they are prepared to pay.
What is a Service?
A service can form part of a product and is intangible e.g. an interest free loan on your new TV or Technical support. There may or may not be a direct charge for the service.
A product can be made up from three levels:
This is the base product with no brand, packaging or styling e.g. a TV
This is the tangible product complete with packaging, styling, branding and quality e.g. a Samsung TV
This is the actual, tangible product with extra services and benefits e.g. a Samsung TV with a five year guarantee, two years interest free credit and technical support. The augmented product also includes the ‘brand’, which are elements other than the branding i.e. the logo, colours ect on the actual product; brand elements include the brand’s personality and brand’s values. It’s often these augmented products which can differentiate you from the competition and secure the sale.
So products and services are different - services are intangible and being commonly included as part of an augmented product.