In informal discussions, the term “Offering” and “Product” often get used with an intent to be interchangeable. Additional confusion occurs when the terms “Service” and “Product” are also used to distinguish between business intent (e.g. “Are we (Publishers) a Services Industry or a Product Industry?“). Even some Wikipedia entries convey the perception that “Services” are different than “Products” while other Wikipedia entries convey that “Products” include “Services”. Still others discuss the notion of a “Product Service System (PSS)” which is intended to be a combination of the two. In the big economic picture, a prevailing theory of the three sector economy discusses extraction of raw materials (fishing, farming, natural resource extraction), manufacturing of finished goods, and services as the three top level categories and corresponding evolutionary pattern of any economy. One particularly vague distinction between goods and services is the goods and services continuum.
These various conceptual models likely each serve a purpose, but their inconsistency leads to confusion and missed opportunities for proper business and technical strategy and corresponding development team execution for teams of people who, generally, think of themselves as designing and delivering technology based (products, services, offerings, and solutions).
To help drive some clarity on this topic, suggested below is a model for defining Offerings, Products, Goods, and Services. This model is heavily influenced by blending a consensus of opinion in the written literature (especially business and economic literature) with design thinking to address points where there is written literature confusion. It is intended to be relatively simple, while being consistent and meaningful for a wide range of markets as will be demonstrated through examples.
Each of the elements of the model, as well as their relationship, is described below.
Goods are items of value (aka Assets) over which ownership rights can always be established and in many case also exchanged. Ownership implies possession of an object that had been acquired through purchase, barter or gifting from the producer or previous owner. A good is always legally identifiable as the property of the current owner. Goods can be tangible or intangible. Examples of tangible goods include cars, food, clothing, land, mobile phones, computers, furniture, etc. Examples of intangible goods include software/programs, digital music, digital images, patents, copyrights, etc. Goods are also categorized as either durable, or consumable. The classic example of this is the razor and razor blade model.
Services are a transaction in which no Goods are transferred from the Producer to the Consumer. Services are defined as, themselves, being intangible however Services may, and often do, depend on tangible Assets whose ownership value is never transferred to the Consumer (distinguishing it from a Good). Services are not manufactured, transported or stocked. Services are inseparable from the Provider. Consumers cannot “store” a Service. Services are perishable in two regards: They may be scheduled for production but no consumers engage. They irreversibly vanish at the completion of consumption. Each service instance is unique hence, there is some degree of being inconsistent. Each instance can never be exactly repeated as the time, location, circumstances, conditions, configuration, etc. will be different for the next delivery, even it is the same consumer. Examples of Services include cable television, satellite radio, automobile rental, gym membership, etc.
Products, then, are defined to be a combination of Goods and certain Services that can be brought to market to serve a need. Historically, Products were roughly equivalent to Goods (which may be why there is still latent confusion on this topic). Increasingly, and almost pervasively these days, Products include certain Services as a way to further extend the usage engagement between the Consumer of the Product and the provider.
In this model, to help drive clarity, the Goods that are considered elements of a Product are tangible and intangible Assets (as defined above) that do not include any Service component. Correspondingly, the Services that are elements of the Product contain no Goods (but may contain Assets) and furthermore are limited to only those Services that are engaged by the Consumer of the Product during the Products use. Other forms of Services that are beyond the actual use of the Product are discussed as being PartOf the Engagement Platform.
One example of a Product, using this MECE model, is any General Motors vehicle (the Product) which includes the physical car (the Good) and also optionally enables SiriusXM and OnStar (the Services). Another example might be an enterprise software package that is to be installed on-premise (the Product) and, due to its complexity, includes not only the software (the Good) but also 20 hours of consulting labor to help the customer use the Good to solve their specific business problem (the Service).
Examples of Products that don’t contain any Goods (but may contain Assets) and only include Services (again, limited to use of the Product) include virtually all SaaS Products, cable television, automobile rental, gym membership, etc.
Offerings are defined, in the MECE model here, as the delivery of the full lifecycle engagement experience for a Product. The Offering Experience (also often called the complete Customer Experience) is a term that has some intuitive expectation of consistency in the industry, but, historically, falls short of being encapsulated in a form that leads to a deliverable. It is bigger than the Product experience and needs more specific treatment. The Offering Experience includes all of the usage experiences of the Product (which is the union of all the usage experiences for the Goods and Services that make up the Product), but its design, construction, and delivery reaches far beyond what is considered a conventional product delivery organization. More specifically, the Offering Experience is dependent on including the inherently familiar experiences designed, constructed, and delivered from the Engagement Platform that underlies and penetrates the Product.
All Products RunOn an Engagement Platform. The Engagement Platform delivers the inherently familiar experiences associated with the Offering Experience beyond those associated with the use-based experiences of the Product. The Engagement Platform is also composed of Goods and Services (not shown in the figure, but are inside the ‘black box’) that become an integral PartOf the Offering and are intended to support those that Create and Advance the Offering. Additionally, some of these Goods and Services become PartOf the Product or, conversely, the Product adjusts its design, construction, and delivery, to RunOn the Engagement Platform. For a complete understanding of an Engagement Platform see here.
Offerings are, by definition, the delivery of a full life-cycle engagement experience for a Product which is augmented by an Engagement Platform.
In the Product example of any General Motors vehicle, the Offering would be expanded to include a variety of experiences. For instance the Offering experience for the vehicle includes the experience for a prospect who is Exploring the GM website and trying to decide if this Offering is a viable option. The Offering experience also includes the experience of deeply Evaluating this Offering thru online discussion groups or face to face discussions with a dealer sales person to determine if this is going to be a final choice. Embracing this Offering including the experiences of (1) the initial receipt of the Product, (2) a minimally intrusive customer sentiment survey, and (3) the ability to schedule both periodic and unexpected maintenance with the dealer. These are all experiences beyond simply Using the vehicle on a daily basis. The Offering experience also includes the ease of Extending the SiriusXM(tm) and OnStar(tm) services of the Product beyond their initial terms, and Expanding to Embrace a long term warranty and branded all weather floor mats.
All of these experiences, beyond the experience of simply Using the Product, drive coveted brand trust which is critical to driving repeat business, and up-sell/cross-sell to high margin items that DependOn or are EnabledFor the Product itself.
All Products, whether explicitly considered or not, RunOn some form of Engagement Platform. If the Engagement Platform is not considered in both the Product and Offering design, construction, and delivery, the Offering (aka overall customer experience) is being left to chance and will at a minimum be sub-optimal or, worse, antagonistic to the user…even if the Product is awesome.