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Management article
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Reference no. R0911H
Published by: Harvard Business Publishing
Published in: "Harvard Business Review", 2009
Length: 7 pages

Abstract

Most firms are trying to combine products and services into innovative offerings in an effort to boost revenue and profit streams and balance cash flows. These hybrid solutions can help companies attract new customers and increase demand among existing ones by offering them superior value. Such offerings are commonplace - think Apple (the iPod product combined with the iTunes service). While the promise of combined offerings is great, it's easy to get them wrong. The problem is that too many companies, expecting to catch the brass ring, don't think through exactly how to structure, market, and sell their combined offerings. Over the past three years, the authors have analyzed more than 100 winning hybrid offerings from a variety of B2B and B2C companies. Their research shows that most companies stumble in at least one of four ways: failure to differentiate, failure to scale, failure to assess markets and prices appropriately, and failure to invest in the brand. The authors identify common types of hybrids: a flexible product-and-service combination allows buyers to customize their purchase. A 'peace-of-mind' bundle offers the best of breed in both product and service. A multi-benefit bundle offers customers an increasing number of add-on features or benefits. A 'one-stop' bundle focuses on convenience shopping. The authors also offer a practical set of guidelines for identifying the opportunities to create a successful hybrid offering in your own company.

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Abstract

Most firms are trying to combine products and services into innovative offerings in an effort to boost revenue and profit streams and balance cash flows. These hybrid solutions can help companies attract new customers and increase demand among existing ones by offering them superior value. Such offerings are commonplace - think Apple (the iPod product combined with the iTunes service). While the promise of combined offerings is great, it's easy to get them wrong. The problem is that too many companies, expecting to catch the brass ring, don't think through exactly how to structure, market, and sell their combined offerings. Over the past three years, the authors have analyzed more than 100 winning hybrid offerings from a variety of B2B and B2C companies. Their research shows that most companies stumble in at least one of four ways: failure to differentiate, failure to scale, failure to assess markets and prices appropriately, and failure to invest in the brand. The authors identify common types of hybrids: a flexible product-and-service combination allows buyers to customize their purchase. A 'peace-of-mind' bundle offers the best of breed in both product and service. A multi-benefit bundle offers customers an increasing number of add-on features or benefits. A 'one-stop' bundle focuses on convenience shopping. The authors also offer a practical set of guidelines for identifying the opportunities to create a successful hybrid offering in your own company.

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