B2C Manufacturers Pivot to Providing Services in Addition to Products

From the International Consumer Electronics Show in January to an ongoing pilot laundry service in Chicago’s trendy Lincoln Park, manufacturing CEOs increasingly are directing their companies to leverage a number of factors in support of service-based strategies, from digital connectivity to the increasing desire by consumers for reliable brand names that can take more of the burdens of everyday life from them.

One of the biggest factors driving this trend is the spread of connected devices via the Internet of Things. Through IoT, billions of sensors and other devices are keeping all sorts of machines in continuous communication mode. Another factor is how Big Data can take all of this new information, sift it and come up with needs and patterns that companies can exploit. Thus IoT is creating the capability for manufacturers to continually enhance their relationships with their customers, as long as they come up with valuable reasons for their customers to agree.

Whirlpool, for instance, demonstrated at CES what it called the Smart Kitchen Suite of appliances that are integrated with Amazon services, including Nest, its “smart” home thermostat, and Dash, which allows automatic replenishment ordering of various consumer packaged goods. Using a Whirlpool app, the top-loading washer and dryer, and a connected dishwasher, can calculate the number of wash cycles, prompting the user to order more supplies before running out, for example.

“IoT is creating the capability for manufacturers to continually enhance their relationships with their customers.”

And more. “What’s beneficial for consumers, for example, is that if your Nest is set to “away” mode and senses that your oven is on, you’ll actually get a push notification that your Nest is set to “away” and your oven is on,” Chelsey Lindstrom, Whirlpool brand manager, told Manufacturing CEO Briefing.

Similar innovation is demonstrated by the case of startup Ring. Originally, the company’s Video Doorbell was envisioned only as a way to remotely communicate with whomever was at the front door. But soon the company was pivoting to providing a full-featured security system complete with motion alerts and motion-sensing recording.

In general, such possibilities are prompting more manufacturers to work on improvements and enhancements to products that also can take advantage of services they can provide after the goods leave the loading dock. Of course, this also means that manufacturers have to learn or expand service and support functions, and do so for the lifetime of a product.

At the same time, more traditional manufacturers are finding ways to extend their brands into services that have little to do with digital technology.

Thus Kimberly-Clark is planning to open day-care facilities bearing its iconic Huggies diapers brand. Initially, the Huggies centers will be located only in Walt Disney theme parks and on its cruise ships, but of course success there could lead to expansion of the concept and widen customer retention across other Kimberly-Clark brands.

And Procter & Gamble continues to test service ideas for extending its CPG brands, including Mr. Clean auto washes and Tide Dry Cleaning. The latest service experiment for P&G is Tide Spin, a by-the-pound laundry service that is trying to attract Lincoln Park denizens with very competitive prices—just $1.59 a pound, half that of some competing services—as well as the Tide brand name.

Consumer perceptions and digital technology will continue to blend traditional notions that separated product makers from service providers. Manufacturing CEOs need to be ahead of how this trend affects their companies.


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