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March  2004

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Value-Added Services
Differentiating Products and Adding Value—Really
by John Matukaitis

Window and door manufacturers constantly seek ways to differentiate their companies and products from those of their competitors. More and more companies are seeking differentiation by offering, in conjunction with the product itself, value-added services that their competitors cannot or will not offer. In some cases the service is provided gratis, in others, it is offered for an additional cost in order to create value.

Some companies are very successful in these types of endeavors, while others show varying degrees of success, or none at all. Success is measured in increased sales dollars, increased number of customers, increased market share, marketplace recognition, etc. 

The key elements that allow a company to realize the benefits of providing value-added services to a tangible product need to be identified and fully evaluated prior to offering whatever service it decides upon, and, if the service truly adds value to the product.

Selling the Intangible 
In our product-oriented business, the physical reality of the product provides a simple but powerful base on which to build a business description. The question is far more difficult for a service-oriented endeavor to answer because services are more abstract than products. For example, it may be difficult to describe management consulting as a business to someone who has never experienced the consulting relationship. What does a consultant do?

The traditional image of a service is that it is almost always personal, as something performed by individuals for other individuals. This perspective is erroneous. Automatic car washes, automated banking services, vending machines are just three of the many examples of businesses in which the service is provided by automated equipment.

Services can be provided from an equipment-based or people-based structure. Equipment-based services can be further defined as automated (such as automated banking), monitored by relatively unskilled labor (dry cleaning, taxis, central station protective services), or by skilled operators (airlines, excavation). People-based services likewise have a hierarchy; unskilled labor (lawn care, janitorial services), skilled labor (plumbing, catering, appliance repair) and professionals (lawyers, accountants).

Product vs. Service-Oriented
Most managers within the door and window manufacturing industry have been educated through experience or formal education to think in product-oriented terms. In a service-oriented endeavor, any transfer of a physical or concrete product is incidental to the service. For example, a lawyer delivers your will (the physical product), while the service is provided in the process of preparing the will.

Before embarking on the introduction and selling of a value-added service, be sure to ascertain that the service does provide real value and is not simply a marketing gimmick. Equally as important, be sure that the manager with responsibility for the provision of the service does indeed possess the service-oriented background and experience. The strategy in providing a service is very different than that utilized in providing a physical product. They differ greatly, and an understanding of their differences helps the thoughtful manager to understand the nature of the strategic opportunities in each.

Remember, you are in a product-oriented business. A pure service business is one in which the service is the primary entity that is sold. Melding the two is not as easy as it may first appear. 

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