The difference between a product and a service

In my last post, I shared my experience of pouring hundreds of cans of beer down the drain in Vietnam due the high level of care Heineken take to ensure that every can of their lager meets their strict quality standards.

I mentioned several more of my favourite brands that, presumably, are managed in the same way: Johnson’s Baby Shampoo, Weetabix, Marmite, Heinz Baked Beans, Guinness, Laphroaig.

I am sure you have your favourites too.

Brands like this are known in the trade as Fast Moving Consumer Goods (FMCG) – and the CV of anyone who is anyone in marketing is strengthened by FMCG experience.

The easiest way to understand FMCG products is to think of them as products sold in the ‘major multiples’ (supermarkets to the great unwashed): fresh food, chilled food, frozen food, fruit and veg, milk and dairy, toiletries, household cleaning etc. These products, which we use and consume on a daily basis, are the staple diet of the supermarket business.

Yes, I know that, in their bigger stores, the supermarkets have expanded into white goods, brown goods, books and clothing, none of which are FMCG products.

I know the range of products offered by the supermarkets online is vastly greater than the stock on the shelves in their shops. Look how many products there are at Amazon beware!

And I know that you can buy these products in other retail outlets such as corner shops, which are known in the trade as ‘CTNs’ (Confectioners, Tobacconists and Newsagents).

There is no love lost between CTNs and supermarkets.

And, as I have written before, I have a particular admiration for the couple who manage my local corner shop.

But I also listened to the thoughtful defence of his sector by Sir Terry Leahy, the former CEO of Tesco, on Desert Island Discs. One-sided, perhaps, but also human:

‘If you talk to people, you will find that 95% of the population like supermarkets. 5% don’t. But of course, in Britain, 5% is 3 million people. They have a voice and right to say what they think…. ou have to be careful to make sure that you are creating things which are beneficial. You are not manipulating the customer. The best organisations do put their customers at their heart.’

Sir Terry was also interesting on how his modest background helped him relate to the people in his company which he felt was his most important responsibility in his job.

We don’t often think of the people who work in supermarkets do we?

I visit a regular round of supermarkets: Waitrose, Co-op, Tesco every week; Sainsbury and M&S every so often – and I can say that I enjoy relating to all of the people who work in these places. They are invariably polite, friendly and helpful and a credit to their companies.

While it is a challenge for supermarkets to keep their shelves stocked with fresh, up-to-date products all spick-and-span with their fancy packaging, they also manage the bit between the customer selecting a product from the shelves and walking out of the door particularly well.

This part of the process is called service.

And, even in highly automated world of major multiple retailing, the human aspect of their business – customer service – is very important.

Yet some businesses have nothing to offer other than the service they provide.

These companies, unlike those in the FMCG sector, don’t have ingredients to buy, factories to manufacture their products, or sales forces to sell them, marketing companies to brand them, supermarkets to negotiate with, or distribution networks to transport them around the country.

Services are all they have.

You know the companies I am talking about – mobile phones, insurance, water, gas, electricity etc. They don’t have to work very hard or do very much do they? As I hope I showed last time, all they are is middle men. Brokers.

How did you feel when you last engaged with O2 or Vodafone or Direct Line or eSure or Thames Water or Severn Trent or British Gas or EDF or nPower?

Not a very appealing bunch are they?

But these people depend on the point of human interaction as their most crucial point of the purchasing process. This is the moment when the customer presses the ‘buy’ button online or reads out their credit card details on the phone.

What emotional reward have any of these companies ever given you?

They certainly don’t fill you with the warmth of human kindness that I feel at the check-out counters in my local supermarkets.

Yet, as it is all they have, you would think the human interaction when we engage with these businesses would be at the very top end of the emotional spectrum.

But they are not are they?

We still have to press a number on the phone to choose the right option, listen to excruciating muzak while we hang on the line and  understand the local accent of wherever in the world their call centre is based.

Online, we don’t get an emotional reward from buying things either. With all the technology in the world, can’t these people find a way of showing me they care? All it would take is a pop-up of a human being to smile at you and say thank you.

And what about our public services? Have they got ‘their customers’ at their heart?

Do you know anyone who has fallen on hard times and needs to sign on the dole?

Or do you know anyone who has got sick and needs to claim disability benefit?

Do you?

Have you any idea of the indignity of the process, where the assumption they are on they take overrides the care they need?

Have you read my post over two years ago called DLA disgrace on what disabled people have to go through to qualify for help from the world’s greatest country? The true story behind that post still appals me – and I wrote the damn thing.

Public service?



You must be joking.

I do think it is very important for us to remember at all times that as soon as we use the word ‘service’, the word ‘human’ should be attached inextricably to it.

What a sorry state we are in when our public services can’t match the personality of a pack of Corn Flakes.

About Hugh Salmon

Business leader. Adman. Writer.
This entry was posted in Blog posts and tagged , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *