marketing intangible products and product intangibles

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Marketingintangible productsandproduct intangibles

Giving tangibility toimperceptible product featurescan aid both sales

and postsales efforts

Theodore Levitt

All products, whetherthey are services orgoods, possess a cer-tain amount of intan-gibility. Services likeinsurance and trans-portation, of cours;,are nearly entirelyintangible. And evengoods, while they canbe seen, often can': betried out before they

are bought. Underjitand-ing the degree of a prod-uct's intangibility canaffect hoth sales andpostsales follow-upstrategies. While ser-vices are less able tobe tested in advancethan goods, the in-tangible factors in bothtypes of products areimportant for convincingprospective customers

to buy. Sellers of services,however, face specialproblems in making cus-tomers aware of thi;benefits they are re-ceiving. The authorconsiders the intangiblefactors present in allproducts and also ad-vises pro ducers ofservices about howbest to hold on to theircustomers.

Mr. Levitt is theEdward W. Carter Pro-fessor of BusinessAdministration and headof the marketing areaat the Harvard BusinessSchool. He has w rittennearly two dozen arti-cles for HBR, includingthe well-known "Market-ing My opia" {publishedin i960 and reprinted

as an HBR Classic inSeptember-October 1975)and "Marketing WhenThings Change" [Novem-ber-December 1977).

//lustration hy]im Kingston.

Distinguishing between companies according whether they market services or goods has onlimited utility. A more useful way to make tsame distinction is to change the words we use. Istead of speaking of services and goods, we shouspeak of intangibles and umgibles. Everybody seintangibles in tbe marketplace, no matter wbat produced in tbe factory.

Tbe usefulness of the distinction becomes aparent when we consider the question of how tmarketing of intangibles diflers from tbe marketinof tangibles. While some of tbe differenees migseem obvious, it is apparent that, along witb tbedifferences, there are important commonalities btween tbe marketing of intangibles and tangibles

Put in tertns of our new vocabulary, a key areof similarity in tbe marketing of intangibles antangibles revolves around the degree of intangibiity inberent in botb. Marketing is concerned wigetting and keeping customers. Tbe degree of prouct intangibihty bas its greatest effect in tbe proceof trying to get customers. Wben it comes to boling on to customers—to keeping tbem—bigbly itangible products run into very special problems

First, tbis article identifies aspects of intangibilitbat affect sales appeal of botb Intangible and tagible products. And, next, it considers tbe speci

>lii(fior 's noier The current arricle expands on and further develops some

of the concepts I introduced in my last ankle for HBR, "Marketing

Success Throug h DifEereniiation Of An yth ing ," whic h appeared in the

January-February 1980 issue. Other articles 1 have w riuen for HBR treat

this general subjtci in yet other ways. The^e include "T he Indus trjaliza tior

of Service" [September-October 1976) arid "Production-Line Approach io

Service" (Septemher-Octoher 1971). To drive hom e w hat i believe is a badly

neglected distinction, the present article refers to ihe role ai maaag cmen iin the industrial revolution, a subject mote fully developed in my article,

"Management and Pos t Indus tr ia l Society ," The Public Interest. Suouner

1976-



Marketing intangibles 95



96 Harvard Business Review May-June 198

difficulties sellers of intangibles face in retainingcustomers.

Intangibility of all productsIntangible products—travel, freigbt forwarding, in-surance, repair, consulting, computer software, in-vestment banking, brokerage, education, bealthcare, accounting-can seldom be tried out, inspected,or tested in advaiice. Prospective buyers are general-ly forced to depend on surrogates to assess whatthey're likely to get.

Tbey can look at gloriously glossy pictures of ele-gant rooms in distant resort botels set exotically bytbe sbimmering sea. They can consult current users

to sec bow well a software program performs andbow well tbe investment banker or the oil welldrilling contractor performs. Or tbey can ask ex-perienced customers regarding engineering firms,trust companies, lobbyists, professors, surgeons,prep scbools, hair stylists, consultants, repair sbops,industrial maintenance firms, sbippers, francbisers,general contractors, funeral directors, caterers, en-vironmental management firms, construction com-panies, and on and on.

Tangible products differ in that tbey can usually,

or to some degree, be directly experienced—seen,toucbed, smellcd, or tasted, as well as tested. Oftentbis can be done in advance of buying. You can test-drive a car, smell tbe perfume, work tbe numericalcontrols of a milling machine, inspect the seller'ssteam-generating installation, pretest an extrudingmachine.

In practice, though, even the most tangible ofproducts can't be rehahiy tested or experienced inadvance. To inspect a vendor's steam-generatingplant or computer installation in advance at anotherlocation and to have thoroughly studied detailed

proposals and designs are not enough. A great dealmore is involved than product features and physicalinstallation alone.

Though a customer may buy a product wbosegeneric tangibility [like tbe computer or tbe steamplant] is as palpable as primeval rock—and tbougbtbat customer may have agreed after great studyand extensive negotiation to a cost tbat runs intomillions of dollars—tbe proeess of getting it builton time, installed, and then running smootbly in-volves an awful lot more tbati the generic tangibleproduct itself. Sucb intangibles can make or break

tbe product's success, even witb mature consumergoods like dishwasbers, sbampoos, and frozen

pizza. If a sbampoo is not used as prescribed, oa pizza not heated as intended, tbe results cabe terrible.

Similarly, you commonly can't experience in advance moderate-to-low-priced consumer goods suc

as canned sardines or purcbased detergents. To makbuyers more comfortable and cotifident about tangibles tbat can't be pretested, companies go beyontbe literal promises of specifications, advertisements, and labels to provide reassurance.

Packaging is one common tool. Pickles get puinto reassuring see-tbrougb glass jars, cookies intcellopbane-windowed boxes, eanned goods gestrong appetite-appealing pictures on tbe labelarcbitects make elaborately enticing renderingand proposals to NASA get packaged in binders tbamatcb the craftsmanship of Tyrolean leatherwork

crs. In all cases, the idea is to provide reassuring tangible [in tbese examples, visual) surrogates fowbat's promised but can't be more directly experienced before tbe sale.

Hence, it's sensible to say tbat all products are isome important respects intangible, even giant turbine engines tbat weigb tons. No matter bow dilgently designed in advatice and carefully constructed, tbey'll fail or disappoint if installed or used incorrectly. Tbe significance of all this for marketincan be profound.

Wben prospective customers can't experience tbproduct in advance, they are asked to buy wbaare essentially promises-promises of satisfactionEven tangible, testable, feelable, smellable productare, before tbey're bougbt, largely just promises.

Buying promises

Satisfaction in consumption or use can seldom bquite tbe same as earlier in trial or promise. Som

promises promise more tban otbers, depending oproduct features, design, degree of tangibility, typof promotioti, price, and differences in wbat customers bope to accomplisb witb what they buy.

Of some products less is expected tban wbat iactually or symbolically promised. Tbe rigbt kinof eye shadow properly applied may promise ttransform a woman into an irresistible tigress ithe nigbt. Not even tbe most eager buyer literallbelieves tbe metapbor. Yet tbe metaphor belpmake the sale. Neither do you really expect thproposed new corporate headquarters, so artfull

rendered by the winning architect, automaticallto produce all those cheerfully productive employ



Maiketing intangibles 97

ees lounging with casual elegance at lunch in the

verdant courtyard. But the metaphor helps win the

assignment.Thus, when prospective customers can't proper-

ly try the promised product in advance, metaphor-

ical reassurances become tbe amplified necessity oftbe marketing effort. Promises, being intangible,have to be "tangibi l ized" in tbeir presentation—hence tbe tigress and the contented employees.Metapbors and similes become surrogates for tbetangibility tbat cannot be provided or experiencedin advance.

Tbis same tbinking accounts for tbe solid, somberEdwardian decor of d o wn to wn law offices, the pru-

dentially elegant and orderly public offices of in-vestment banking houses, tbe confidently articulateconsultants in dark vested suits, engineering and

project proposals in "executive" typeset and leatherbindings, and the elaborate pictorial documentat ionof the performance virtuosity of newly offered ma-

chine controls. It explains why insurance companiespictorially offer "a piece of the rock," put you undera "blanket of protect ion" or an "umbrel la , " orplace you in "good bands."

Not even tangible products are exempt from tbe

necessity of using symbol and metapbor . A comput-er terminal has to look rigbt. It bas to be packagedto convey an impression of re l iab le modern i ty -

based on the assumption that prospective buyerswill translate appearance into confidenee about per-

formanee. In that respect, the marketing ideas bc-

bind tbe packaging of a $i mill ion computer, a $2

million jet engine, and a $.5 mill ion numerical lycontrol led mil l ing machine arc scarcely differentfrom tbe marketing ideas bebind the packaging ofa S50 electric shav er or a $2.50 tub e of lipstick.

Importance of impressions

Common sense tel ls us, and researcb confirms, tbat

people use appearances to make judgments aboutrealities. It matters l i t t le whether tbe products arebigb priced or low priced, whetber tbey are tecb-nically complex or simple, wbether tbe buyers are

supremely sopbisticated in tbe tecbnology of wbat 'sbeing considered or just plain ignorant, or whethertbey buy for themselves or for tbeir employers.Everybody always depends to some extent on bothappearances and external impressions.

N or do impressions affect only the generic prod-uct i tself- that is, the technical offering, such as thespeed, versatility, and precision of the l a the; the

color and creaminess of the lipstick; or the appear-ance and dimensions of the lobster thermidor. Con-

sider, for example, investment banking. No mat terbow tborougb and persuasive a f irm's recommenda-tions and assurances about a proposed underwrit-in g and no matter how pristine its reputat ion forintegrity and performance, somehow the financial

vice president of the billion-dollar client corpora-tion would feel better bad tbe bank's representat ivenot been quite so youtbfuUy apple-cbeeked.

The product will be judged in part by wbo offersit—not just wbo the vendor corporation is but alsow bo the corporat ion 's representat ive is. Tbe vendorand tbe vendor's representative arc botb inextri-cably and inevitably part of tbe "product" tbat pros-pects must judge before they buy. Tbe less tangibletbe generic product, tbe more powerfully and per-sistently tbe judgment about it gets sbapcd by tbe

packaging—how it's presented, wbo presents it,

and wbat 's implied by metapbor, simile, symbol,and otber surrogates for reality.

So, too, witb tangible products. The sales engi-neers assigned to work witb an electric utility com-pany asking for competitive bids on a $100 millionsteam boiler system for its new plant are as power-fully a part of the offered product (the promise) as

is the investment banking firm's partner.

Tbe reason is easy to see. In neither case is therea product until it's delivered. And you won ' t knowhow well it performs until it's put to work.

The ties that bind

In botb investment banking and big boilers, becom-in g tbe designated vendor requires successful pas-

sage tbrougb several consecutive gates, or stages, in

the sales process. It is not unlike courtsbip. Both"customers" know that a rocky courtship spellstrouble ahead. If tbe groom is not sufficiently solici-tous during the courtship—if he's insensitive tomoods and needs, unresponsive or wavering duringstress or adversi ty-there wil l be problems in the

marriage.But unlike a real marriage, investment banking

and installed boiler systems allow no room for di-

vorce. Once tbe deal is made, marriage and gesta-tion bave simultaneously begun. After tbat, thingsare often irreversible. Investment banking may re-qui re m onths of close work with the client organiza-tion before the underwrit ing can be launched—thatis, before tbe baby is born . And the construct ion of

an electric power plant takes years, througb sicknessand in beal tb . As witb babies, bir tb of any kindpresents new problems. Babies bave to be coddled

to see tbem tbrougb early life. Illness or relapse basto be conscientiously avoided or quickly corrected.



98 Harv ard Business Review May-Iune 1

Similarly, stocks or bonds should not go quickly todeep discounts. The boiler should not suddenly m al-function after several weeks or months. If it does,it should be rapidly restored to full use. Understand-ably, the prospective customer will, in courtship,

note every nuance carefully, judging always whatkind of a husband and father the eager groom islikely to make.

The way the product is packaged [how the prom-ise is presented in brochure, letter, design appear-ance), how it is personally presented, and hy whom—all these become central to the product itself be-cause they are elements of what the customer fi-nally decides to buy or reject.

A product is more than a tangihle thing, even a$ioo million boiler system. From a buyer's view-point, the product is a promise, a cluster of valueexpectations of which its nontangibic qualities areas integral as iis tangible parts. Certain conditionsmust be satisfied before the prospect buys. If theyare not satisfied, there is no sale. There would havebeen no sale in the cases of the investment bankerand the boiler manufacturer if, during the prebid-ding [or courtship) stages of the relationship, theirrepresentatives had been improperly responsive toor insufficiently' informed about the customers' spe-cial situations and problems.

In each case, the promised product—the whole

product-would have been unsatisfactory. It is notthat it would bave been incomplete; it just wouldnot have been right. Changing the salespeople inmidstream probably would not have helped, sincethe selling organization would by then have al-ready "said" the wrong thing about its "product."If, during the courtship, the prospective customergot the impression that there might be aftermarketproblems—problems in execution, in timeliness, inthe postsale support necessary for smooth and con-genial relations-then the customer would have re-ceived a clear message that the delivered product

would be faulty.

Special problem s for intang ibles

So much, briefly, for making a sale—for getting acustomer. Keeping a customer is quite anotherthing, and on that score more pervasively intan-gible products encounter some distinct difficulties.

These difficulties stem largely from the fact thatintangible products are highly people-intensive in

their production and delivery methods. Corporatefinancial services of banks are, in this respect, not

so different from hairdressing or consulting. Tmore people-intensive a product, the more roothere is for personal discretion, idiosyncracy, errand delay. Once a customer for an intangible prouct is sold, the customer can easily be unsold as

consequence of the underfulfillment of his expections. Repeat buying suffers. Conversely, a tangiproduct, manufactured under close supervision a factory and delivered through a planned and ordly network, is much more likely than an intangiproduct to fulfill the promised expectation. Repbuying is therefore less easily jeopardized.

A tangible product is usually developed by desiprofessionals working under conditions of beniisolation after receiving guidance from market telligence experts, scientists, and others. The prouct will be manufactured by another group of spcialists under conditions of close supervision tfacilitate reliable quality control. Even installatiand use by the customer are determined by a retively narrow range of possibilities dictated by tproduct itself.

Intangible products present an entirely differepicture. Consider a com puter software program. Tprogrammer does the required research directly agenerally on the customer's premises, trying to uderstand complex networks of interconnecting oerations. Then that same person designs the systeand the software, usually alone. The process of dsigning is, simultaneously, also the process of manfacturing. Design and manufacturing of intangibproducts are generally done by the same peopleor by one person alone, like a craftsman at a benc

Moreover, manufacturing an intangible prodis generally indistinguishable from its actual livery. In situations such as consulting, the deliveis the manufacturing from the client's viewpoiThough the consulting study may have been exclent, if the delivery is poor, the study will he viewas baving been badly manufactured. It's a fau

product. So too with the w ork of all types of brokeeducators and trainers, accounting firms, engineing firms, architects, lawyers, transportation copanies, hospitals and clinics, government agencibanks, trust companies, mutual funds, car rencompanies, insurance companies, repair and matenance operations, and on and on. For each, dlivery and production are virtually indistinguiable. The whole difference is nicely summarized Professor John M. Rathwell of Cornell Universi"Goods are produced, services are performed." ^

1. )ahn M. Rathwctl , Maiketing in tbe Service Sector {Cambridge, Mass.:Winthrop Publisheis, 1974I, p. 58.




Minimizing the hum an factor

Because companies making intangible products arehighly people-intensive operations, they have anenormous quality control prohlem. Quality control

on an automohile assemhly line is huilt into the sys-tem. If a yellow door is hung on a red car, somehodyon the line will quickly ask if that's what was in-tended. If the left front wheel is missing, the personnext in line, whose task is to fasten the lug bolts,will stop the line. But if a com mercial banke r missesan important feature of a financing package or if hedoesn't do it well, it may never be found—or foundtoo late. If the ashtrays aren't cleaned on a rentedear, that discovery will annoy or irritate the alreadycommitted customer. Repeat business gets jeopar-dized.

No matter how well trained or motivated theymight be, people make mistakes, forget, commit in-discretions, and at times are uncongenial-hencethe search for alternatives to dependence on peo-ple. Previously in HBR, I have suggested a varietyof ways to reduce people dependence in the so-called service industries. I called it the industrializa-tion of service, which means substituting hard, soft,or hybrid technologies for totally people-intensiveactivities:

D Hard technologies include automatic telephone

dialing for operator-assisted dialing, credit cards forrepetitive credit checking, and computerized mon-itoring of industrial processes. And the benefits areeonsiderable. Automatic telephone switching is, forexample, not only cheaper than manual switchingbut far more reliable.

• Soft technologies are the substitution of divi-sion of labor for one-person craftsmanship in pro-duction-as, for example, organizing the work forcethat cleans an office building so that each workerspecializes in one or several limited tasks [dusting,waxing, vacuuming, window cleaning) rather than

each person doing all these jobs alone. Insurancecompanies long ago went to extensive division oflabor in their applications processing—registering,underwriting, performing actuarial functions, is-suing policies.

D Hybrid technologies combine tbe soft and thehard. The floor is waxed by a machine rather thanby hand. French fries are precut and portion packedin a factory for finishing in a fast-food restau rantin specially designed deep fryers that signal whenthe food is ready. A computer automatically calcu-lates and makes all entries in an Internal Revenue

Service form 1040 after a moderately trained clerkhas entered the raw data on a console.

The managerial revolutionIndustrializing helps control quality and cut costs.Instead of depending on people to work hcttCT, industrialization redesigns the work so that peoplework differently. Thus, the same modes of man-

agerial rationality are applied to service-the pro-duction, creation, and delivery of largely intangibleproducts—that were first applied to production ofgoods in the nineteenth century. The real signifi-cance of the nineteenth century is not the industrialrevolution, with its shift from animal to machinepower, but rather the managerial revolution, withits shift from the craftsman's functional indepen-dence to the manager's rational routines.

In successive waves, the mechanical harvester,the sewing machine, and then the automohile epit-omized the genius of that century. Each was ra-tionally designed to become an assembled ratherthan a constructed machine, a machine that de-pended not on the idiosyncratic artistry of a singlecraftsman but on simple, standardized tasks per-formed on routine specifications by unskilled work-ers. This required detailed managerial planning toensure proper design, manufacture, and assemblyof interchangeable parts so that the right numberof people would be at the right places at the righttimes to do the right simple jobs in the right ways.Then, with massive output, distribution, and after-

market training and service, managers had to createand maintain systems to justify the massive output.

On being appreciated

w ha t's been largely missing in intangible goods pro-duction is the kind of managerial rationality thatproduced the industrial revolution. That is why thequality of intangibles tends to bc less reliable thanit might be, costs higher than they should be, and

customer satisfaction lower than it need be.While I have referred to the enormous progress

that has in recent years been made on these mat-ters, there is one characteristic of intangible prod-ucts that requires special attention for holding cus-tomers. Unique to intangible products is the factthat the customer is seldom aware of being servedwell. This is especially so in the case of intangibleproducts tbat have, for the duration of the contract,constant continuity-that is, you're buying or usingor consuming them almost constantly. Such prod-ucts include certain banking services, cleaning ser-

vices, freight hauling, energy management, main-tenance services, telephones, and the hke.



100 Harvard Business Review May-June 19

Consider an international banking relationship,an insuranee relationship, an industrial cleaning re-lationship. If all goes well, the customer is virtual-ly oblivious to v/hat he's getting. Only when thingsdon't go well (o;- a competitor says they don't) does

the customer become aware of the product's exis-tence or nonexistence—when a letter of credit is in-correctly drawn, when a competitive bank proposesbetter arrangements, when the annual insurancepremium notice arrives or when a claim is disputed,when the ashtrays aren't cleaned, or when a favor-ite penholder is missing.

The most important thing to know about intan-gible products is that the customers usually don'tknow what they're ^.etting until they don't get it.Only then do they become aware of what they bar-gained for; only on dissatisfaction do they dwell.

Satisfaction is, as it should be, mute. Its existenceis affirmed only by its absence.

And that's dangerous—because the customers willbe aware only of failure and of dissatisfaction, notof success or satisfaction. That makes them terriblyvulnerable to the blandishments of competitive sell-ers. A competitor can always structure a more in-teresting corporate financing deal, always propose amore imaginative insuranee program, always finddust on top of the framed picture in the office, al-ways cite small visible failures that imply big hid-den ones.

In getting customers for intangibles it is impor-tant to create surrogates, or metaphors, for tangibil-ity-bow we dress; how we articulate, write, design,and present proposals; how we work with prospects,respond to inquiries, and initiate ideas; and howwell we show we understand the prospect's busi-ness. But in keeping customers for intangibles, itbecomes important regularly to remind and showthem what they're getting so that occasional fail-ures fade in relative importance. If that's not done,the customers will not know. They'll only know

when they're not getting what they bought, andthat's all that's likely to count.

To keep customers for regularly delivered andconsumed intangible products, again, they haveto be reminded of what they're getting. Vendorsmust regularly reinstate the promises that weremade to land the customer. Thus, when an insur-ance prospect finally gets "married," the subsequentsilence and inattention can be deafening. Most cus-tomers seldom reeall for long what kind of life in-surance package they bought, often forgetting aswell the name of both underwriter and agent. To

be reminded a year later via a premium notice oftenbrings to mind :he contrast between the loving at-

tention of courtsbip and the cold reality of mariage. No wonder the lapse rate in personal life isurance is so high!

Once a relationship is cemented, the seller bcreated equity. He has a customer. To help kee

the customer, the seller must regularly enhance tequity in that relationship lest it decline and becomjeopardized by competitors.

There are innumerable ways to do that strengtening, and some of these can be systematized, industrialized. Periodic letters or phone calls thremind the customer of how well things are goincost little and are surprisingly powerful equimaintainers. Newsletters or regular visits suggestinnew, better, or augmented product features are usful. Even nonbusiness socializing has its valuas is affirmed by corporations struggling in rece

years with the IRS about the deductibility of huning lodges, yachts, clubs, and spouses attendinconferences and customer meetings.

Here are some examples of how companies havstrengthened their relationships with customers:

• An energy management company sends outperiodic "Update Report" on conspicuous yellopaper, advising clients how to discover and correenergy leaks, install improved monitors, and acomplish cost savings.

n A computer service bureau organizes its a

count managers for a two-week series of blitz cutomer callbacks to "explain casually" the installtion of new central processing equipment that is epected to prevent cost increases next year whiexpanding the customers' interactive options.

• A long distance hau ler of high-value electronequipment (computers, terminals, mail sorterword processors, medical diagnostic instrumenthas instituted quarterly performance reviews wiits shippers, some of which include customers whare encouraged to talk about their experiences anexpectations.

n An insurance company sends periodic onpage notices to policyholdcrs and policy beneciaries. These generally begin with a single-sentencongratulation that policy and coverage remanicely intact and follow with brief views on recetax rulings affecting insurance, new notions abopersonal financial planning, and special protectiopackages available with other types of insurance

Iu all these ways, sellers of intangible products rinstate their presence and performance in the cutomers' minds, reminding them of their continuin

presence and the value of what is constantly, ansilently, being delivered.




Making tangible the intangible

It bears repeating that all products bave elementsof tangibility and intangibility. Companies that sell

tangible produets invariably promise more thanthe tangible products themselves. Indeed, enormousefforts often focus on the enhancement of the in-tangibles—promises of bountiful benefits conferredrather than on features offered. To the buyer of pho-tographic film, Kodak promises with unremittingemphasis the satisfaetions of enduring remem-brance, of memories clearly preserved. Kodak saysalmost nothing about the superior luminescence ofits pictures. The product is thus remembrance, notfilm or pictures.

The promoted products of the automobile, aseveryone knows, are largely status, comfort, andpower—intangible things of the mind, rather thantangible things from the factory. Auto dealers, onthe other hand, assuming correctly that people'sminds have already been reached by the manufac-turers' ads, focus on other considerations: deals,availability, and postpurchase servicing. Neitherthe dealers nor the manufacturers sell the tangiblecars themselves. Rather, they sell the intangiblebenefits that are bundled into the entire package.

If tangible products must be intangibilized to add

customer-getting appeal, then intangible produetsmust be tangibilized-what Professor Leonard L.Berry calls "managing the evidence." ^ Ideally, thisshould be done as a matter of routine on a system-atic basis—that is, industrialized. For instance,hotels wrap their drinking glasses in fresh bags orfilm, put on the toilet seat a "sanitized" paper band,and neatly shape the end piece of the toilet tissueinto a fresh-looking arrowhead. All these actionssay with silent affirmative clarity that "the roomhas been specially cleaned for your use and com-fort"—yet no words are spoken to say it. Words, in

any case, would be less convincing, nor could em-ployees be reliably depended on to say them eachtime or to say them convincingly. Hotels have thusnot only tangibilized their promise, they've also in-dustrialized its delivery.

Or take the instructive ease of purchasing houseinsulation, whieh most home owners approach withunderstandable apprehension. Suppose you call twocompanies to bid on installing insulation in yourhouse. The first insulation installer arrives in acar. After pacing once around the house with mea-

2. Leonard L. flerty, "Service Marketing Is DiSerent," Business, May-June

ig8o, p. 24. He is with the University of Virginia, Charlottcsville.

sured self-assurance and after quick calculations onthe back of an envelope, there comes a confidentquote of $3,400 for six-inchfiberglass—totalsatisfac-tion guaranteed.

Another drives up in a clean white truck with

clipboard in ha nd and proceeds to scrupulously m ea-sure the house dimensions, count the windows,crawl the attic, and consult records from a sourcebook on the area's seasonal temperature ranges andwind velocities. The installer then asks a host ofquestions, meanwhile recording everything withobvious diligence. There follows a promise to re-turn in three days, which happens at the appointedhour, with a typed proposal for six-inch fiberglassinsulation at $2,800—total satisfaction guaranteed.From which company will you buy?

The latter has tangibilized the intangible, madea promise into a credible expectation. Even morepersuasive tangible evidence is provided by an in-sulation supplier whose representative types therelevant information into a portable intelligentprinting terminal. The analysis and response are al-most instant, causing one user to call it "the mostpowerful tool ever developed in the insulation in-dustry." If the house owner is head of a projectbuying team of an electric utility company, thetreasurer of a mighty corporation, the materialspurchasing agent of a ready-mixed cement com-pany, the transportation manager of a fertilizermanufacturer, or the data processing director of aninsurance company, it's almost certain this personwill make vendor decisions at work in the sameway as around the house. Everybody requires therisk-reducing reassurances of tangibilized intan-gibles.

Managers can use the practice of providing re-assuring ways to render tangible the intangible'spromises-even when the generic product is itselftangible. Laundry detergents that claim specialwhitening capabilities lend credibility to the prom-

ise by using "blue whitener beads" that are clearlyvisible to the user. Procter & Gamble's new decaf-

feinated instant coffee, "High Point," reinforces thenotion of real coffee with luminescent "milledflakes for hearty, robust fiavor." You can see whatthe claims promise.

Keeping customers for an intangible product re-quires constant reselling efforts while things go welllest tbe customer get lost when things go badly. Thereselling requires that tasks be industrialized. Therelationship with the customer must be managedmuch more carefully and continuously in the case

of intangibles than of tangible products, though itis vital in both. And it gets progressively more vital



102 Harvard Business Review May-lune 19

for tangible products that are new and especiallycomplex. In such cases, "relationship man agem ent"becomes a special art—another topic all its own.

Meanwhile, the importance of what I've tried tosay here is emphasized by one overriding fact: a

customer is an asset usually more precious than thetangible assets on the balance sheet. Balance sheetassets can generally be bought. There are lots ofwilling sellers. Customers cannot so easily bebought. Lots of eager sellers are offering them manychoices. Moreover, a customer is a double asset.First, the customer is the direct source of cash fromthe sale and, second, the existence of a solid cus-tomer can be used to raise cash from bankers andinvestors-cash that can be converted into tangibleassets.

The old chestnut "nothing happens till you makea sale" is awfully close to an important truth.What it increasingly takes to make and keep thatsale is to tangibilize the intangible, restate thebenefit and source to the customer, and industrial-ize the processes.^

To call forth a concept

It is impossible to dis-sociate language fiomscience or science fromlanguage, because everynatural science alv/ays in-volves three things: thesequence of phenom enaon which the scienceis based; the ab stractconcepts which call thesephenomena to min d; andthe words in whicli the

concepts are expressed.To call forth a concept aword is needed; to portraya phenomenon, a conceptis needed. All three mir-ror one and the samereality.

From

Antoini; Lauient LavoUier,

Traiie Elememaiie de Chimie.



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