When I first started in the marketing research biz, a friend and mentor told me I needed to fix my language, and start referring to the target of research activities as "consumers". I'd been marking myself as a neophyte among all the advertising and packaged goods people by calling these folks "customers".
My real problem was that I'd crossed over from a world where the buyers of your services have individual names (financial services), to a world where the buyers of your goods are largely a nameless mass (most consumer products).
After a little research, I found the definition and compiled and created the list below, adding some handy-dandy examples for each attribute.
With this convenient de-coder list in hand, you too will be able to spot people who have crossed over in some way, and are calling apples by an orange name.
What's the difference between a product and a service, really?
Here's a nice definition for a service:
"Any act or performance offered that is essentially intangible and does not result in ownership of any thing"
- Prof. Brian Engelland, MSU
There are many more attributes that we can dig down into, however, to understand why services and products are very different. Here's my list.
You are dealing with a service when...
[1] Production and consumption are hard to separate. Examples: travel, investments
[2] Intangibles form a large part of what is being purchased. Examples: insurance, consulting
[3] There is no change of ownership. Customers typically rent a service, rather than owning it. Examples: credit card or loan, hotel room
[4] A sale that does not happen today cannot be recovered in the future. Examples: empty seats in a theatre, lost interest on a mortgage
[5] Customers must evaluate the purchase decision with few tangibles to go on. Examples: health care
[6] Output quality is variable, and depends on the performance of individuals. Examples: Hair styling, interior decorating, surgery
[7] Manner of dress, body language, and expressed language form part of the brand experience. Examples: air travel, retail banking
[8] Cycle of purchase is repeated through 'rental payments'. There is no smooth movement through a consumption cycle, and there are frequent 'moments of truth'. Examples: health club membership, anti-virus software rental, weight-loss groups
[9] Employees behavior and knowledge is central to delivery and quality. Examples: financial planning
[10] The memories of the experience may be as important as the experience itself. Examples: vacation travel, theme parks
[11] There are high degrees of customer contact during production. Examples: health care, spa services
[12] Competing offerings may differ in how much of the work of production is shifted to the buyer. Examples: online brokerage vs. full service, self-serve vs. full service gas station
[13] Suppliers assume real economic risks (exceeding the revenue potential) by choosing a given customer. Some interested customers must be rejected. Examples: credit cards, insurance, auditing
[14] Customers assume real economic risks (exceeding the fee paid for the service) by choosing a given supplier. Examples: mutual funds, home insurance
[15] Everyone calls them clients, users or customers, rather than consumers
So now you know. There you have it. Try to keep your customers and your consumers straight now, okay?
Understanding the difference between customers and
consumers gives you some important insights into underlying truths that
truly do affect decisions about marketing and other real world issues.
Resources:
The graphic came from the Prelinger Archives, from a composite movie called Much Better.
