Jessie Paul on Services Marketing For a FlatWorld

Saturday, February 16, 2008

Is a TV a product or a service?

Did I hear you say duh? Hear me out. Any complex product today has a large service component built into it. So if you buy an iPod, you also hope to be able to use iTunes which is a service. (different matter that iTunes can't be used in India though people buy the product anyways). If you buy a car, you hope that they will do a good job of maintaining it for you, which is again a service. If you buy a credit card, you expect that if you lose it or it gets stolen the card company will ensure you don't get robbed of your money, and will replace the card quickly. And if you buy an apartment, you expect that if the roof leaks it will be taken care of immediately. And, coming back to my original question, if you buy yourself a $4000 TV with all the bells and whistles, you sure expect that if it conks it will be serviced in a day or two.

But today, not many manufacturers are selling their goods on the basis of their superior service. Read any car magazine and while it will drill with agonizingly nerdy detail into features such as torque or mileage, it will spare barely a moment on how long it will take for you to get a servicing appointment, or get a spare part. Similarly, when you buy a TV there is a whole bunch of gobbledygook on the virtues of Plasma vs LCD vs HDTV but nothing on how long it will take the company to replace the PCB when it blows two years down the line. Contrast this with a "pure service" company like say IT or BPO. It has to clearly define its after-sales offering and set up things like Service Level Agreements (SLAs) which determine how long it will take to rectify a bug. Or even hotels - they are up-front about the services they offer - 24-hr concierge, room service, valet parking etc in the same breath they talk about their rooms.

Of course, part of the reason manufacturing firms don't yet think like service firms is because the consumers are not forcing them to. And I am as naive as the next person. When I bought an LG Plasma TV a couple of years ago, we checked out picture quality and features and never thought much about their service lead was truly a surprise to discover that they need constant follow up and can take a week to replace a faulty part. Ditto with our 5 year old GM car - but their authorized service center moved considerably faster and replaced the defective part within 3 days. Faber took just 2 days to replace a defective part. Of course today Annual Maintenance Contracts are available for many products, but even they rarely have time-based SLAs. But wouldn't the industry landscape start looking different if customers demanded SLAs for product services before buying?!

I think that as services become an ever greater part of products, this could happen. And then along with energy ratings and eco-friendly certifications, there will be "customer-service" ratings posted on every product! This is all the more important because products have an ever shorter window of being unique so what matters more is its survival rate in the home. Yes, the replacement rate of products is considerably higher, but this makes it all the more important that a company supports its products through its considerably shorter lifespan, so that customers will continue to upgrade with their brand.


Anonymous said...

The concept of manual after-sales service is archaic. Products should be (1) throw-and-use, or (2) capable of being self serviced, or (3) auto-serviced remotely. So Jessie, the sustainable solution to your problem is any one of the three: (a) wait for the electronics industry to do-a-Nano, or (b) use your electronics engineering degree and DIY, or (c) invent a thin client, internet-linked TV thats really low on hardware and high on software.

While you contemplate these options, please let your husband watch the cricket in peace...

Unknown said...

I apprectiate your thoughts and this definately can shape the indian industry and consumer orientation. Will be a strong peg for revamping the marketing mix. Once a industry leader sets the tone the followers/laggards are sure to follow.

Hopefully the IT Outsourcing companies will change the way we think.

Lovely thought and enjoyed reading.
Asheem Bakhtawar

Siva Rajendran said...

Nice post.
Many top companies do have an internal SLA within their teams. When I went to HP service center for adapter replacement, I've seen that. Every time I call Tata Sky regarding a technical problem I heard their call centre executive giving a commitment that their engineer will visit our premises with in a day. Only thing is these companies are not taking the bold step and advertise the same to the customers. Doing that will also push other competitors to provide better service.

Anonymous said...

One reason why a product like a TV does not mention its service terms is becasue service is very rarely needed. My TV is 5 years old and I have not once had to call their service people. Also service terms will only be influencers in a purchase decision for such a product... I would rather buy a TV brand with better picture and sound quality that promises service in 3 days than a TV brand with picture and sound that is not as good but promises service within 12 hours.
However when all is constant, as was the case with my microwave, I went for the cheapest microwave with a known brand name which was offering a 3 years warranty on magnetron.

Anonymous said...

value of a service is highest just BEFORE it is consumed