Search, Experience and Credence Attributes
From a marketing perspective, products and services can be separated into three useful classes: search products, experience products, and credence products.
- Search products or services have attributes customers can readily evaluate before they purchase. A hotel room price, an airline schedule, television reception, and the quality of a home entertainment system can all be evaluated before a purchase is made. Well-informed buyers are aware of the substitutes that exist for these types of products and thus are likely to be more price sensitive than other buyers, unless there exists some brand reputation or customer loyalty. This sensitivity, in turn, induces sellers to copy the most popular features and benefits of these types of products. Price sensitivity is high with respect to products with many substitutes, and since most buyers are aware of their alternatives, prices are held within a competitive band.
- Experience products or services can be evaluated only after purchase, such as dinner in a new restaurant, a concert or theatre performance, a new movie, or a hairstyle. The customer cannot pass judgement on value until after he or she has experienced the service. These types of products tend to be more differentiated than search products, and buyers tend to be less price sensitive, especially if it is their first purchase of said product. However, since they will form an opinion after the experience, if it is not favourable, no amount of differentiation will bring them back. Product brand and reputation play an important role in experience products, due to consistency of quality and loyalty. For instance, when customers travel, so does brand reputation, as with airlines, hotels, rental cars, and so forth.
- Credence products or services have attributes buyers cannot confidently evaluate, even after one or more purchases. Thus, buyers tend to rely on the reputation of the brand name, testimonials from someone they know or respect, service quality, and price. Credence products and services include health care; legal, accounting, advertising, consulting, and IT services; baldness cures; pension, financial, and funeral services; and even pet food (since you have to infer if your pet likes it or not). Credence services are more likely than other types to be customized, making them difficult to compare to other offerings. Because there are fewer substitutes to a customized service and there is more risk in purchasing these types of services, price sensitivity tends to be relatively low — that is, the majority of customers purchasing credence services are relatively price insensitive compared to search or credence goods.