The Role of Technology in Defining Service-
Oriented Products

There are two broad ways to analyze the economy and classify the industry. They are the market-driven approach and the production-driven approach. While the North American Industry Classification System (NAICS) employs the market driven approach, the product-driven approach is preferred by the Standard Industrial Classification (SIC).

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The Market-Driven Approach

This consists of industries involved in goods production and service delivery. Examples of industries in the good producing category are mining, manufacturing and construction, while the service-providing industry includes the telecommunications, leisure and hospitality, consultancy, creative, financial services, professional and business services, health, education and transportation services among others.

The Production-Driven Approach Under this approach, the economy can be further classified into the product-driven and service- driven industries. In product-driven industries, inventory management which may involve extensive cost accounting and operation practices are often used. Industries that fall in this category are the food, wholesale and retail industries. Sometimes an industry can have both the product-driven and service-driven aspects of it. A good example is the hospitality industry which is widely regarded as a service-driven industry, but has its product-driven areas too, such as the bar and restaurant. A pharmacy is product-driven even if it is located within a health facility which is largely a service-driven industry. The same applies to the entertainment industry which is mostly service driven, but has its product aspects too.

However, these are all service-providing establishments under the market-driven approach. The manufacturing industry for instance, produces goods under the market-driven approach, and is at the same time regarded as product-driven under a production-driven approach. It can also be regarded as a service provider if it operates a retail delivery system. This essentially means that it falls into two industry categories. The dynamics of the economy changes as new industries are established and old ones hit maturity and decline eventually. Again, the manufacturing industry provides a good example of this as it makes the shift from vertical integration to strategic outsourcing. As the information-communication technology industry continues to grow with daily advancement in the digital world, industries like biotechnology and nanotechnology are emerging.

Products and Services

A product refers to a physical item – a checklist of items from activities in sectors such as mining and drilling, agriculture, manufacturing and construction. Outputs are usually final products or parts assembled into final products in the downstream within the venture or in its customers. A service on the other hand is an intangible act or work delivered during or after a sale. Supporting services can be bought at the time of a sale or after for downstream use. It is a system of supplying public needs such as utilities like transport, water and electricity. The uses and components of products are easier to identify than those of services

  • A “Time of Sale” occurs when a contractual or non-contractual agreement is made between a buyer and seller. This does not necessarily translate to earned revenue. Revenue is acknowledged and earned according to accounting principles that suit the service offered.

  • A commodity is a product or service that cannot be differentiated and can be exchanged with another of the same type. We have natural commodities like solid minerals, coal, oil and gas as well as produce. Services can also be seen as commodities. The factors that distinguish a commodity provider include convenience, quality of service and price..

  • RProduct-driven enterprises offer delivery services in the mold of training, logistics, and gift wrapping. They also offer supporting services cleaning, repairs and maintenance. In order to remain in competition, enterprises cannot afford to rely solely on their product offerings; rather they must add services so as to exceed customer expectations. While it is acknowledged that services are intangible, their effects are not.

Service-driven ventures can produce tangible deliverables. A good example can be found in the dry cleaning business where clothes are delivered, washed and ironed; and professional service firms such as attorneys, consultants and engineers.

The recording and movie industries use technologies that can capture sound and pictures. They transform science into art, therefore live performances can be recorded. The downside of this however is that recordings can easily be mass produced and shown publicly without approval.

Process control and ICT have allowed seamless blending between designers and manufacturers. The “design-to-construction” process is now everywhere as computer-aided design and manufacturing technologies enable a designer in one location to transmit specifications to manufacturers in a different location. The structure of the industry is bound to change as more enterprises adopt this model.

Strategic outsourcing can be applied to virtually all functions of a business as long as intellectual property is protected. Nevertheless, the ultimate responsibility for planning, deployment, execution and performance lies with the government function even though management consultants may be deployed to develop strategy.


Products and/or services

This refers to all types of products and services. These days, service-driven industries provide both service-oriented and product-oriented services. Service-oriented products must be capable of being defined, duplicated and repeated. Hard products are tangible, while soft products are intangible. In the financial and professional services industry for instance, service-oriented products are packaged in agreements, brochures, accounts, databases and the likes. In the hospitality industry, flights and car rentals which are service-oriented products are packaged with facilities, equipment and supplies.

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Consumables, durables, and facilities

Consumables consist of food, clothing, healthcare, household items among others, while durables are long lasting equipment such as vehicles, furniture and appliances. Facilities on the other hand are made of durable materials and are products of construction activities. Consumable products are often sold with the right to return or exchange within a certain period, while durables usually come with agreements on warranties and maintenance.

Digital construction and digital-manufacturing

It is inevitable that new knowledge-based industries will emerge as service-products become more common due to developing technology. Reproducing software on physical media is classified as goods producing, while other development and publishing activities are classified as service providing under NAICS.