Insights & Resources

The era of servitization

Servitization delivery

The key is in the services

Smart products, given their ability to integrate with digital products such as applications and web portals, can combine physical products with additional services. This feature makes them Product-service systems (PSS).

These products create an ecosystem of products and services, giving the opportunity to develop new business models that can be implemented to create value for both the customer and the company offering them.

Product-service systems

The development of PPS stems from the need of companies to meet changing market needs and the realization that services and products together can offer higher profits than the sale of products alone. In addition, with the increase in competition on traditional products and the reduction of margins associated with their sale, the offering of services becomes a reason for differentiation from competitors.

PPS

The ability to create an ecosystem of services connected to the product allows the company to create new business models that continue for the entire product usage time. No longer a single sale, but a continuous flow for the entire product life span.

Development of new business models

To reach the development of new business models, it is necessary to start from the mapping of value drivers. It is necessary to identify which are the characteristics that bring value to the customer. These features can also be present on existing products and managed offline. Taking the example of classic car rental, innovation was to create sharing services that allowed users to easily and easily rent a vehicle to be used only for the actual time needed. The main value driver is the ability to use the rental car, the car becoming a smart product allows the development of a new business model.

Value drivers

A value driver can also open the door to more than one possible business model. In the case of a washing machine, for example, different business models can be adopted. The purchase of the appliance can be turned into a rental fee that, if not paid, blocks the operation. Another option is to use the mobile application as a vehicle for selling consumables, such as detergent to be used.

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Insights & Resources:

  • - The key is in the services
  • - Product-service systems
  • - Development of new business models

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