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The Peak-End Rule

A slightly expanded tactical model based on the marketing mix framework developed by Alexander Chernev his book Strategic Marketing Management. This framework includes seven basic classes of decisions that marketers must make about the offering or selling: product, service, brand, price promotions, communication, and distribution.

Products and services

There are  major tactical decisions marketers need to make but the focus of this article in on just the first two: product and service. Taken together these two variables are most descriptive of the offering itself what it is were trying to sell.

There is a process for determining what attributes to include in your product or service. Positioning should always be the primary driver of your decisions. What do my customers want in this product or service? How can I design this product or service to give them what they want in a way that is sustainably differentiated from competitors offerings? And, so on.

With the understanding that how we position our product or service is the most important consideration when determining these two marketing mix variables let’s address some additional issues. There are a few different approaches to making tactical decisions about your products and services.

Designing services and products for customers

Designing your products and services to provide the best possible experience for your customer. The basic idea is that customers evaluations of products are really evaluations of their experiences with the products, how it feels to buy use and consume them.

Products and services are different in some very important ways. Products tend to be tangible and separable from production for example, where services tend to be intangible and consumed at the same time there created but by focusing on the customer experience we actually blur those differences.

From a customer experience standpoint it doesn’t matter so much whether it’s a product or service. What matters is what the customer thinks and feels during the interaction. In essence a focus on customer experience means treating everything like a service.

So, if we are going to design products and services around the customer experience it’s important for us to understand how people evaluate.

The peak-end rule

It turns out the researchers who have studied customer experience and have determined that when we evaluate an experience, whether it’s a phone call with customer service or dinner at a restaurant or trip to Disney World, there are two points in time that overwhelmingly determine how we evaluate the entire experience.

One point that turns out to really matter a lot is the peak, that is the best most enjoyable part of a good experience or the worst least enjoyable part of a bad experience. So maybe over the course of your week long vacation there was one point in that experience that was especially good.

The other point in time that really matters is the end of the experience what you were feeling right is the experience came to a close. So how did you feel in the moments leading up to the end of what you consider to be your vacation experience.

When people look back at an experience and rate how they felt about it what psychologists call a retrospective evaluation a simple average of the peak and the end predicts how people will rate the experience as a whole. This finding is so robust it is come to be known as the peak-end rule.