Years ago, only few authors envisioned the importance of service in manufacturing strategy and management. With the time, manufacturing organizations began to incorporate service strategies for their competitive advantage. Recently, a number of multinational manufacturing companies show how service management strategies are crucial for the growth and success of their businesses. Such initiatives have ignited the interest of researchers to start exploring and understanding how companies are managing the transition from products to services. This book is an excellent example of this growing interest of both companies and academics about moving From Products to Services. This publication is a very good, balanced combination of theoretical and practical concepts and guidelines to help executives in product companies to identify, analyze and implement those different aspects which are fundamental for the success of this strategic decision of incorporating service into the business. It does not get into the recent research findings on services in manufacturing, nor does it go into the service‐dominant logic discussion. Instead, each chapter covers a number of topics using short and clear sections illustrated with some vignette examples of product companies and their efforts to move into services. The book has the merit to include concepts, models, and techniques which might be familiar to regular service readers, but most probably are quite new for many of those in the manufacturing sector. It is also evident the effort made by the author to relate, illustrate, and discuss such service contents in the manufacturing context.
This journey starts by exploring the main reasons why business people in manufacturing companies are increasingly considering service into their endeavors. Conditions like the rise of service economies and employment levels in different parts of the world have increased opportunities to participate in domestic and international service activities. It is interesting to note the inclusion of developing countries in this trend. Services are not exclusive of developed countries anymore, and the role of regions like Asia, Latin America, Eastern Europe, and Africa in the global service economy is something readers cannot afford to ignore. Countries in these regions provide both opportunities to manufacturing companies to extend their businesses into service, and also, increasing services are demanding more labor force so manufacturing companies should be aware and plan their reaction in such situations. Also, the increasing need to differentiate due to maturity of product markets, as well as other factors like price pressure, continuous reduction of product margins and the attractive profitability of service divisions are some of the key arguments companies are considering when moving from products to services. Other organizations make more subjective decisions, as they are moved by the feeling that services are good by principle, and therefore, worthy for their businesses. This chapter includes an interesting, short vignette containing the case of Michelin Europe, the world's leading tire company, discussing its development of service businesses.
Having set the overall framework for moving into services, the author touches upon a crucial aspect of this transition. Product companies have to clarify the strategic intent of the service business. After a short note on the value and origin of strategy, Chapter 2 focuses on seven different approaches which product companies may adopt when moving into services. Manufacturers could decide to include, for example, only after‐sales service and maintenance of their own products. Others could provide technical advice and assistance to their own customers. Another alternative is that of “third party” maintenance. This type of business surges when the product company takes advantage of its technical skills to repair a range of products owned by the customer. A brief case of ThyssenKrupp Elevator is included to illustrate this type of business strategy. Other manufacturing companies could consider becoming suppliers of scalable independent services. This means a product company could take responsibility to run part of its customer's business, based on its specialized experience in one particular field. The knowledge‐based professional service such as consultancy is another route product companies could choose in moving into services. Also, companies could either decide to go for a hybrid proposition combining products and services or even, different types of service options; or, companies after all, could consider that moving into services is too risky or expensive, and therefore, not doing it at all. Another key point in this second chapter is the importance of clarifying the service concept of the product company. The nature and form of service to be included is a relevant decision to ensure adequate margins. This is further illustrated with a vignette of British Telecom, one of Europe's leading telecommunications companies. The chapter ends with some managerial tools useful to determine the strategic focus of service businesses, including, for example, the use of the Boston matrix.
Moving from manufacturing to service represents a major change for many businesses. The size of the move and the type of service business to be created will shape the degree of such change. Thus, change management is a key issue in this transition discussed throughout the book. Chapter 3 provides useful insights to understand, plan and implement change needed to move into service. First, it discusses ten different characteristics of services, widely known in the service research community over the years, such as intangibility, heterogeneity, inseparability, and the like. Describing such attributes to establish how different the service business is, is certainly more useful and pertinent considering the book is a source of ideas and fresh thinking for those leading and managing manufacturing companies. The need of understanding and planning the degree of change required is also discussed. Two different ways to do so are included. The use of service categorization would provide insights of the proposed service; and, the nature of the prime offer, either product or service dominant, with service or product elements, respectively, would allow to understand the level of transition required. A brief description of six elements needed to be changed when a company moves into service then follows; including operations, sales, marketing, pricing, brand strategy, and human resource management. Then, a number of interesting methods used by companies to successfully initiate the change from products to services are also discussed. This may happen by business leader decision; top management support or middle management pressure. Natural growth into service markets and business acquisitions are also other ways to initiate this transition. Vignettes about IBM and Michelin UK are included to illustrate their cases in developing and building their service strategies. The chapter ends with a short but relevant section including a six‐step plan to move towards service. This part could deserve to be discussed and illustrated in more detail.
Discussion then turns into the importance of gaining a clear perspective of service markets. First, seven different important market dynamics to understand are presented; including growth phases of a market, market segmentation, positioning, service standards in a market, critical success factors, and market distortions. The overall argument is that understanding market dynamics is essential for companies as new participants competing to get a share of the market. An interesting part of the chapter includes structural issues specific to service markets, including asymmetry of information, when the supplier knows more or has more information than the customer about the service. The market as a network of relationships is another peculiarity of service markets, as well as segmentation dynamics specific to service markets. Four means of gaining an objective market perspective are then presented, including the market research study and market audit. Other approaches include scenario planning, illustrated with an interesting example about Ericsson (as telecom equipment provider) and three scenarios built in the effort to shift to a more service‐driven culture; and relationship profiling, useful to get a better understanding of professional relationships existing in the market and the types of interactions among them. The chapter ends with a brief note on three different methods useful to conduct opportunity analysis, required to validate those opportunities identified when analyzing the market.
The author then gets into the discussion of service creation for the new market. Being Chapter 5 the longest, the first four sections are dedicated to cover different aspects related to new service development (NSD) and design. It discusses, for instance, a list with a brief description of 11 mistakes to explain why many new services do not make profits. The chapter then shapes different service offers for product companies. Four models are proposed, which could be seen as four progressive levels to show how product companies could move into service, beginning with high product content and ending almost entirely without it. An interesting argument is that in some cases the reverse case could also happen, that is, new products or technologies may replace services. Other key design aspects are included, such as the need to plan and decide the right combination between tangible and intangible components. Thinking and designing the customer experience is also very important at this stage; as well as the need to ensure the true value of the new service to be offered. A list of steps for an NSD process is offered. Then, it goes into the creation of a service portfolio, proposing four different tools. Relevant management issues are presented, including the need to have investment controls for NSD, senior champions, the need to create appropriate measures in the creation of new services. In particular, the need to create “product managers” for services is something worth to comment about.
After this detailed discussion of new service development and design, changing the operations of product companies to provide services is essential. Most of Chapter 6 contains a number of sections related to operational aspects of services. Interfaces between back and front office; the role of people in service operations; process design and management; the physical environment of the service; service capacity and demand, quality control issues in services. Although these topics are commonly known by service researchers, especially those involved with service operations management, they are usefully presented in the light of those employees and managers of product companies interested in learning about services. Similarly, the discussion included on the relevance an application of operational concepts to service businesses gives the opportunity to regular service researchers and practitioners to reflect upon issues like just in time, outsourcing, process re‐engineering, TQM, Six Sigma, and lean service. These concepts are widely known and used in manufacturing settings, but not so much in service businesses. Although there are obvious benefits of the application of these methods and techniques into service operations, caution and prudence is required to avoid the temptation of immediate, direct translation as if service operations were the same as in manufacturing. Using some of those key aspects discussed previously in the book, the chapter ends with a brief, useful summary of 11 components of a specific operations strategy for the move into service. To illustrate this, a vignette shows those operational initiatives developed by Fujitsu, leading provider of IT systems.
The last part of the book is focused on the marketing of services in product companies. Chapter 7 is dedicated to selling services. It first explores how people buy and how companies sell. It then discusses five sales strategies for companies wanting to move from products to services, emphasizing the important need to transform salespeople into consultants, selling solutions not only services associated to products, and even creating separate service businesses, given their own nature. A vignette illustrates Nokia services' business solutions portfolio. Combining theory with experience, the author presents a number of sales principles like the sale cycle, targeting customers, pre and post‐sales activities and meetings, sales closing techniques and loyalty, and discusses them in relation to their applicability to services.
Chapter 8 emphasizes the importance to understand why the marketing of services has to be different from marketing of products. It describes different types of organizational structures which demand different manifestations of marketing, arguing that this function is often underdeveloped, and takes time to evolve. A vignette shows the case of IBM adopting services marketing. The author then introduces services marketing with a very brief note mentioning some of the key academics and researchers on this field. Then, the differences between product and service marketing activities are highlighted, based on each of the corresponding characteristics identified in Chapter 3. Marketing implications of issues like intangibility, heterogeneity, perishability, ownership and the like, are discussed here, and then illustrated with the interesting case of Avaya, global leader in internet protocol telephony systems and communications software applications. Specific marketing techniques used in different service industries and countries are then presented, which could be useful to be considered by manufacturing companies. The chapter finishes with brief outlines of the organizational differences in services marketing and a service marketing plan.
Chapter 9 is dedicated to positioning a product brand in a service market. It analyzes different aspects of a successful brand strategy relevant for manufacturing companies in their transition from products to services. Issues like brand personality, fame, brand integrity, values, and attributes are included. It establishes the differences between product and service branding and then proposes fives steps for brand creation. An interesting topic is the need to repositioning an extending the brand as a means of entering service markets. Five steps are suggested for those manufacturing companies that already possess a strong brand to reposition themselves in a service market. A vignette illustrates the case of Unisys building a service brand. The book ends with a conclusion in Chapter 10.
From Products to Services is a very good and needed publication, which for many manufacturing companies could arrive just right on time to help shaping their service business strategy for the years ahead. For others, it might have arrived a little bit too late, as they might have ignored the wisdom of those who started thinking and discussing this management paradigm shift years ago, and perhaps today are just realizing their products are not enough to beat the competition. For academics, the book is also the confirmation of the need and importance of thinking, research, and writing about strategic aspects of service, especially in the business‐to‐business environment.
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