∥ In tough economic times, companies need new ways to innovate and drive revenues. By combining a product with a service, or vice versa, firms can improve their bottom and top lines. However, if a hybrid offering is to be successful, managers need to understand which of four potential combination is most appropriate.

     If you have a trusted product brand,
     the untried service component will benefit from the "halo effect"

 

1. A "flexible" product-and-service combination allows buyers to customize their purchases.
- The products and services are highly independent (customers could easily buy them separately), but they are also highly complementary (their value can be significantly enhanced by combining them in flexible ways).
      ex. Oracle, packaged database software products + consulting and management                     service for customization of the product

2. A "peace-of-mind" bundle offers the best of breed in both the product and the service.
- Despite the low complementarity and high independence between the product and the service, companies can leverage a strong product brand to attract customers to an otherwise undifferentiated service, or vice versa.
     ex. Elevators. Otis, combining high quality elavator equipment with a premium service(maintanance)

3. A "multibenefit" bundle offers customers an increasing number of add-on featuers or benefits.
- The products and services are often inseparable.
- Have a better chance of success if you hedge between the product and service pruchase cycles.
     ex.  Apples, IPOD + ITUNES

4. A "one-stop" bundle focuses on convenience shopping.
- This combination does not provide additional value in itself; rather, customers are attracted by reliability of service and shopping convenience.
- The product and services are minimally complementary and independent, companies increase their share of wallet simply by making products or services available at the point of sale.

∥ Four rules help managers discover which hybrid combination is most likely to be successful for their firm.