The relationship between product tangibles and intangibles shifts dramatically as different stages of the adoption process are achieved. As products move through the adoption process, intangibles assume more importance. This is the essence of whole product definition. Often, pioneering new products lose their initial prominence because a new entrant is more successful in product positioning based on a more effective mix of intangibles. This can be the case even if the second product is not technically superior.
The power of the tangible/ intangible mix of the perceived product is so strong that it can be used to identify markets and product categories where pioneers can be superseded.
In an existing business, with existing products, customers and competitors, the process of determining the intangible factors that influence purchasing decisions is relatively simple. It means obtaining answers from customers (and other buying influences) to two basic questions:
- What factors in the purchase and use of this product are important to you?
- How does our product compare on these factors to other alternatives?
This type of research is easy to describe but difficult to do. In our experience, many research efforts fail to achieve adequate answers to these two questions.
When it does, however, the results can be dramatic. In one recent case, interviews with 200 computer hardware customers and potential customers found that users valued the reputation of the supplier, the service and support of the company, the reliability of the product, and the availability of a number of existing software packages as the most important intangible attributes of the product. In fact, the tangible characteristics of the product ranked no higher than sixth in the customer’s ranking.
However, this company had based the majority of its marketing and sales messages on tangible product attributes: performance, technology and architecture, and product features. The research was commissioned only after a year of frustration and declining sales, and after two new competitors had made substantial early inroads into the company’s customer base.
After the product perception research was completed and after the company’s sales and marketing messages changed to reflect the results, revenues reversed their decline and climbed twenty-four percent the first year, gross margins tripled, and the market value of the company doubled. All of this occurred with only a slight increase in marketing expenditures, and with no change in the tangible product.