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The impact of intangible value on the design and marketing of new products and
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 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
The Impact of Intangible Value on the Design and Marketing of New Products
and Services: An Exploratory Approach
Frank Steiner1, Robert Harmon2
1
Technology and Innovation Management Group, RWTH Aachen University, Aachen, Germany
2
School of Business, Strategic Marketing Group, Portland State University, Portland, OR, USA
Abstract--Innovators are always confronted with the issue of
how to identify, measure, design, produce, communicate, and
deliver the intangible qualities of their new products and
services to their target markets. Intangible product attributes
can have a dramatic affect on the market success of a new
product or service, but the product and service design process
seldom accounts for such attributes. Customers desire complete
solutions. It is not sufficient to “just” offer a core product or
service. Companies need to deliver products that are unique,
create customer value, and build long-term relationships with
customers that often depend on intangible factors. In addition
to the physical product, services and intangible product
attributes such as knowledge, emotion, and the customer
experience are important and perhaps primary elements, in the
total value equation.
This paper will present a taxonomic review of the literature
on intangible product and service value, identify key research
issues, propose intangible-value models for future research, and
explore the impacts on the new product development and
marketing strategy processes.
I. INTRODUCTION
The concept of intangible value has long generated debate
concerning its definition, components, and its impact on
consumer decision making [58]. The debate has typically
been framed in terms of explaining the key differences
between products and services where intangibility is often
cited as the primary distinguishing characteristic of services.
Vargo and Lusch appropriately label the tangible vs.
intangible dichotomy (along with heterogeneity,
inseparability, and perishability) as one of their “four service
marketing myths” [68]. The dichotomy does not hold up
since there are no pure services or goods. It is more useful to
think of goods and services being arrayed on a continuum of
relative tangibility, with good being more tangible and
services more intangible [65].
Some researchers have started to question whether, from a
total customer value perspective, the tangible vs. intangible
distinction (either dichotomy or continuum) is a distinction
without a difference. In an absolute sense, customers may
perceive both product and service attributes as relatively
tangible [29] and the resultant attitudes about the service
outcomes are stored as tangible facts [8].
Although the argument concerning the tangibility of good
vs. services appears to have been resolved, the issue of
intangible value and its potential impact remains. It is the
purpose of this paper to address this issue. What is intangible
value, how is it defined, what are its components and what is
2066
the impact of intangible value on design and marketing of
new products and services?
II. LITERATURE REVIEW
A. Intangible Value
Webster’s New World Dictionary defines “intangibles” as
1. That cannot be touched; incorporeal; impalpable
2. That represents value but has no intrinsic value or no
material being
3. That cannot be easily defined, formulated or grasped.
Mittal identifies five properties of intangibility [43]:
x Incorporeal existence: Defined as not being made out of
physical matter and not occupying physical space. This is
the core property of intangibility.
x Abstractness vs. concreteness: Something that is apart
from a material object. Peace of mind, joy, happiness,
and financial security are examples of product or service
benefits.
x Generality vs. specficity: a class of things, persons,
events, properties, or the like, as opposed to specificity,
which pertains to one specific object, person, event, or the
like.
x Nonsearchability: Derived from Darby and Karni’s idea
of three types of attributes: search, experience, and
credence [14]. Search attributes can be evaluated before a
purchase. The consumption experience is evaluated as the
product or service is consumed. Credence attributes can
neither be searched or experienced and must be taken on
faith and the reputation of the provider.
x Mental impalpability: The inability to mentally grasp the
intangible aspects of a product or service because they are
too complex, abstract, or not previously experienced.
Impalpability is associated with a lack of prior exposure,
familiarity, or knowledge necessary for proper
assessment.
Although the above criteria are serviceable in terms of
defining intangibility, they do not provide sufficient insight
concerning a useful definition of intangible value. The
accounting discipline offers some perspective. The
accounting concept of goodwill is defined as an intangible,
salable asset that arises from the reputation of a business and
its relations with its customers, distinct from the value of its
stock and other tangible assets. Goodwill is an intangible
asset that provides evidence that value, which is accounted
for in the increased value of the firm, has been created.
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
Created by unique manifestations of human knowledge,
intangible assets are more difficult for competitors to imitate
which makes them a powerful source of sustainable
competitive advantage [32]. They identify three intangible
asset categories:
x Human capital: Knowledge, skills, and training possessed
by a company’s employees in the form of a motivated and
prepared workforce.
x Information capital: A company’s knowledge store in the
form of information systems, customer databases,
networks, technology infrastructure, and intellectual
property.
x Organizational capital: A company’s culture, its
leadership, business strategies, employee alignment with
strategic goals, ability to share knowledge, customer
service orientation.
Intangible assets are based on the knowledge which is
necessary to develop new products, business infrastructure,
processes, and strategies. But intangible assets must create
outcomes that are perceived and desired by the customer in
order to create value. A business’s brand reputation will
depend on its ability to develop strong and sustainable
customer relationships by delivering outstanding customer
value. The challenge then is to convert intangible assets into
negotiable forms of value [6]. The ability to influence
customers’ perceptions about the business and its products
and services is critical to this value creation process.
Market researchers have long understood that marketing
stimuli, products, and brands can evoke emotional reactions
in consumers that can drive subsequent consumption
behavior [37]. The customer’s perception of the consumption
experience is heavily dependent on the consumer’s emotions
about the company, the product, and general emotional state
prior to, during, and post consumption [61]. It is important
for marketers to understand and manage the emotional
dimensions of the customer experience since they influence
customer satisfaction and loyalty.
B. Customer Value
One needs to look beyond the actual product or service to
define total customer value. The total value of a product
cannot solely be derived from the core product and its
functions. The total cost of a product, for example, might not
only include the initial cost, but a customer could also
consider the cost of ownership, cost of maintenance,
switching costs, and cost of disposal. Furthermore, a
customer could include cost factors in the total cost that
cannot be easily expressed as monetary values: an example of
this would be the cost of the damage that a product might
cause towards the environment. Similarly, the overall benefit
that a customer perceives from buying a product can consist
of many different elements. When a product is sold to the
customer it is not sold in isolation, but the product comes as a
whole bundle of benefits, a complete solution for the
2067
customer. To display this idea of multiple sources of benefits
several definitions have been put forward in literature.
Kameoka, et al., suggests that adding services to the
product definition can enhance the value of a physical
product [31]. The authors depict total customer value to
consist of product value, service value, and a third category
of “individual user’s additional” value added by the customer
that is not well defined. In their model, they hypothesize that
services may actually have the greatest potential to create
value for the customer. This definition is supported by
Monroe that defines total benefits to be a combination of
physical attributes, service attributes, and technical support
available in relation to a particular use situation [44].
However, these definitions of total perceived benefit do
not adequately consider the impact of intangible attributes.
For example, Starbucks was able to grow rapidly while
pricing its coffee well above the prices of other coffee shops
[66]. Obviously, Starbucks coffee is more valuable to its
customers than the coffee of the other competitors, even
though the physical product and the services are basically
identical. Similarly, Nike and BMW are able to sell their
basketball shoes and vehicles for a higher price than their
competitors and for more than the combination of the
physical product and the additional services that come with
the product would justify. There are numerous examples like
these that make it obvious that customers do not only
perceive benefits from the physical product and the services
that are bundled with that product.
Kameoka et al.’s “individual user’s additional” value may
conceptually provide a link to the intangible value dimension
[31]. Although the authors did not define this category in
detail, they obviously conclude that some customer value is
not related to either the physical product or the service layer.
It is added by the customer. Since all value is perceived, is
this value created by the customer or the provider? How is
this value defined and how is it created?
Customer value is the overall benefit derived from a
product, as perceived by the customer, at the price the
customer is willing to pay [27, 63]. Customer value then can
be envisioned as a tradeoff between total perceived benefits
(what is gained) and the perceived total cost (what is
sacrificed) of the product or service that delivers the benefits
[26]. Perceived value is increased when perceived benefit
increases relative to the cost of the product. It is necessary to
understand what these tradeoffs are between benefit and cost
and what attribute configurations of the product or service
will maximize customer value and business outcomes [16].
Those products that deliver superior value have a higher
potential for winning in the marketplace [27].
Whittaker et al. [72] developed a theoretical model of
value based on findings from Sheth et al. [63], LeBlanc and
Nguyen [38], and Lapierre [36]. Sheth et al. features five
consumption values (functional, emotional, social, epistemic,
and conditional values) that can influence consumer choice
behavior [63]. Whittaker et al. excluded the conditional
values dimension from their model since it is thought to be
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
derived from temporary functional or social value and thus
could be considered to represent a special case of the
remaining four dimensions. They added dimensions of image
value [36, 38] and price/quality [36] to their model. We have
modified the price/quality dimension to reflect only economic
TABLE 1: THE INTANGIBLE DIMENSIONS OF VALUE
Customer Value Dimension
Functional value – derives from the perceived performance or
utility of a product or service. Impacts the customer experience. Although some benefits are intangible, others that relate to
Epistemic value – associated with knowledge value and the
ability to arouse curiosity and improve the skill and learning
Emotional value – associated with the ability to incite actions
based on emotions
Social value – derives from the perceived social impact of a
product or service in terms of relationship or group membership. impact the consumer experience.
Image value – individual benefit derives from owning a product
or service from a highly reputable/prestigious brand or supplier. with the consumer experience but may be associated with
Economic value – the perceived total cost of acquiring, owning,
installing, using, and disposing of a product or service. The
concept encompasses costs savings and the ROI impact deriving
from the purchase.
Table 1 suggests that the intangible dimensions of
customer value are associated with knowledge, emotion, and
experience. There is further support from several authors
who have explored the concept of intangible product
elements [6, 15, 22, 58, 71]. It is commonly agreed that
products and services have intangible elements associated
with their product definitions. There is an emerging
understanding that these intangible elements have knowledge,
emotion, and experience dimensions. Emotions are thought
to enhance a product’s or service’s uniqueness and thus
influence the value potential of the customer’s experience
[53]. Brands achieve success if they are unique in terms of
the experience they offer to their customers. Customer
experience can be driven by physical attributes of total value
such as the product, price, location, weight, and size [62].
But it is the intangible elements such as knowledge and
emotions, what a customer knows about the product and how
the customer feels about it, which may be most important in
driving the customer experience. Indeed, some authors have
found emotions to account for over 50% of the customer
experience and can be specifically designed to elicit specific
results [61].
For the purposes of this paper we recognize that products
and services both have tangible and intangible elements [58,
68]. From a business point of view the basic product or
service has tangible attributes that are well defined. From the
customer’s point of view whether a product attribute is
tangible or intangible is not important. They are interested in
the potential value that purchase of the product or service
might provide. However, the total perceived value of the
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value (price) since quality is essentially a
functional/performance value [25]. Table 1 briefly
summarizes the value constructs and categorizes their relative
intangibility according to Mittal’s criteria [43].
Intangibility Properties
This dimension has both tangible and intangible properties.
tangible features or performance outcomes are not. Functional
value has an experience dimension that includes intangible
benefits.
The knowledge dimension is highly intangible meeting the
incorporeal, abstractness, and mental impalpability criteria. It
can be argued that knowledge is searchable and can be specific.
The emotional dimension meets the criteria for intangibility. Its
impact on inciting actions affects the customer’s ultimate
experience. Emotions may also accrue from the customer
experience and affect satisfaction and repurchase intentions.
Social value meets the criteria for intangibility would appear to
Image value meets the criteria for intangibility and is associated
knowledge and emotions as well.
Economic value is tangible and does not meet Mittal’s criteria.
product is certainly influenced by the intangible dimensions
of the product, which we define to be information, emotion,
and experience. Therefore, it is the objective of the business
to understand the impact of each intangible variable and to
maximize their value creation potential.
This paper will follow these categories because they
clearly display the characteristic of intangibility. The
knowledge, experiences and emotions that a customer gains
from a product are depending on the customer as an
individual. These parts of the product cannot be part of a
contract because a customer does not know what he can
expect from the product in terms of knowledge, experience or
emotion. These elements of a product are truly intangible, but
obviously they are capable of adding enormous value for the
customers. Therefore the paper will take a more detailed look
at the three categories of intangibles and how they can create
customer value.
C. Knowledge
The first category of intangibles that will be considered is
“knowledge” which is subjective in nature and depends on
the customer’s perception of the expertise and capabilities of
a company and its products. Knowledge is a key dimension
of the customer’s consideration set of product alternatives
from which to choose [17]. The perception of expertise is
essential for trustworthiness and brand credibility and makes
customers consider a product as a potential solution [17]. In
this context it is not crucial that a company indeed has unique
expertise, but that the customer believes it has. “Tide isn’t
the only detergent with whitening power [and] BMWs aren’t
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
the only cars on the road with superior handling” [34].
However, these companies were able to establish their brands
in a way that makes customers believe that they know these
companies as particularly knowledgeable companies in their
respective field. This perception of knowledge makes the
product more valuable for the customer because he or she
believes in the special abilities of the manufacturer and the
product. Therefore, the customer also expects more benefits
from the product.
If a customer has not yet experienced a product,
knowledge may be easily influenced by other consumers who
have. Consumers that received recommendations about a
product are more likely to buy a product than consumers that
do not get any recommendations. Senecal and Nantel found
that subjects that read online recommendations selected the
recommended products twice as often as others did without
the recommendations [60]. Similar results were found by
Söderlund and Rosengren that concludes that word-of-mouth
and non-verbal communication can alter customers’
perceptions [64]. Furthermore, it is important to emphasize
that this result is not only valid for supportive, positive word-
of- mouth, but also for negative aspects that can cause
customers to regard a product as less favorable [64].
The advantage of perceived knowledge is not restricted to
brands or single companies that are highly respected by
customers. Yasin et al. found that a positive image of the
country-of-origin is an advantage for manufacturers of
consumer products [75]. If consumers believe or “know” that
a country is highly developed and technologically advanced,
they are more likely to believe that products from this country
will be of high quality. Of course, this phenomenon is also
valid for a negative image of a country. Products that are
“Made in China” are often considered to be standardized,
mass-manufactured commodities, and perhaps dangerous to
one’s health. That might be true for some products, but
definitely not for all Chinese products. Apple’s iPod Nano
bears the label: “Designed by Apple in California.
Assembled in China”. Apple seeks to assure the customer by
emphasizing that the iPod is still has American roots.
In summary, it can be demonstrated that knowledge
impacts customers’ perceptions of product value. Knowledge
should be considered to be a key intangible product attribute.
Companies need to learn how to design and manage this
knowledge dimensions to maximize perceived customer
value. This is especially important since the knowledge
component can serve to enhance or decrease a customer’s
interest in the product.
D. Emotions
The second major category of intangibles is emotions
which can arise in various forms. Happiness, hope, joy,
enthusiasm, peaceful, sexy, passionate, warm-hearted and are
only some of the examples for positive emotions that can
make a product unique and more valuable to a customer [53].
Of course, emotions can be negative as well and negative
emotions towards a product will lower its perceived customer
2069
value. Therefore, companies will always try to evoke
positive emotions in their customers.
Marketers have long understood the association of
emotions with their products. They use “emotional branding”
to connect products to positive customer emotions [21]. For
instance, some American car companies are re-releasing
muscle car brands from the 1960s and 1970s. These cars
were very popular with young people at that time and can still
evoke strong emotions. The re-releases make it possible for
the baby boom generation to reconnect with the experiences
of their youth. Such emotions increase the personal customer
value of the product to these people [53].
Athletes and or musicians are often positioned as human
brands by combining their name, reputation, and image into a
coherent story, to which the consumers get emotionally
attached [67]. Once customers have an emotional bond to
that human brand they will be more favorable disposed
towards the brands and products that their idols represent.
Nike uses this technique very successfully to sell athletic
shoes and sports apparel. Michael Jordan, Lance Armstrong,
Michelle Wie, Tiger Woods, Maria Sharapova, and Rafael
Nadal are only some of the world-class athletes that Nike
uses as human brands. The idea of human brands and the
concept of emotional value are also an important factor in
politics. Drew Westen, a psychologist and brain researcher,
claims that “the political brain is an emotional brain” and that
voters make their decisions not only based on facts or
arguments, but also based on emotional appeal [2].
These examples show that customers can develop
emotions that tie them to a certain product or a certain brand.
These customer feelings can be so strong that customers are
not only loyal to a brand, but are even able to develop real
relationships with brands [19]. In her opinion, this is possible
because brands are not passive objects, but they are an active
partner that affects and defines the relationship through its
actions. Brands can have such an active role in a relationship
due to the fact that brands have a personality and
relationships are always affected by the personalities of the
partners.
Aaker et al. identifies reliability, trustworthiness, and
supportiveness as some of the key characteristics of brand
personalities [1]. The authors differentiate between “exiting
brands” and “sincere brands.” Exiting brands are supposedly
those brands that try to transmit youthfulness, excitement, or
energy, whereas sincere brands focus on building trust and
long-term customer-brand-relationships. Both types of brand
personalities are very different from each other, but each
targets certain emotions of the customers and they are able to
create additional customer value through the use of emotions.
Raju and Unnava found that once customers become
committed to a brand they are so loyal that they will
oftentimes ignore negative information about “their” brand
[55]. Information that does not comply with their positive
attitude towards a product will be ignored or discredited
rather than the customer changing his or her attitude towards
the product. Even though such strong customer commitment
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
is very valuable for a company it can be discredited over
time. Companies have to live up to their perceived brand
personalities and that they have to meet the emotional needs
of their customers. This is very difficult since companies are
active members of a customer-brand-relationship and brands
are subject to constant change and innovation [1]. In this
process it might very well happen that a brand moves to far
away from their customers and thereby loses its emotional
advantage over other brands.
Another problem with brand personalities can arise in so
called “doppelgänger brand images” [66]. Disappointed
customers or enemies of a brand can create a new negative
image of a brand that competes with the personality that the
brand actually wants to present. Starbucks again represents
the case in point. The company tries to establish itself as
being fair and generous towards its employees and suppliers
and to offers customers high-quality coffee and a pleasant
ambiance. However, there are many people that dislike
Starbucks and criticize the brand for being a big, capitalistic,
mass-marketing company that exploits its suppliers [66].
These two images describe completely different brand
personalities and customers have to decide which image they
will believe in. The doppelgänger image can destroy positive
emotional customer value.
Overall, emotion is a very strong creator of customer
value and an important part of the intangible dimensions of a
product. Therefore, companies should try to bind customers
emotionally to their products whenever it is possible.
Although emotions offer such great opportunities it is not
easy to target customer emotions since there are many
different emotions that can be evoked. Emotions are also
difficult to measure and to control and to elicit consistently
predictable value as perceived by the customer [56].
Subsequently the role of emotions in the value creating
process needs to be researched more fully. The diversity of
emotions and the fact that emotions are so difficult to
measure make it difficult to utilize this factor in a targeted
way. Questions such as “Are there subcategories that make it
easier to understand and measure emotions?” and “Can
emotions be pre-planned to be part of a product?” will be
interesting subjects of future research.
E. Experience
Experience is strongly connected to the concepts of
customer satisfaction and customer retention. Customers that
are satisfied with a product are willing to enter a long-term
relationship with a company or a brand because they have
experienced the product in a positive way. These customers
want to have this same satisfaction, the same experience, over
and over again. Companies need to retain these customers
and need to make them loyal consumers that will repeatedly
order products [76]. Therefore, the intangible factor of
experience plays an important role when a customer actually
buys or uses a product. The experience of the buying or
usage situation has to be so satisfying to the customers that
they feel the need to experience this satisfaction again.
2070
In terms of the buying situation the importance of
experience can be seen in the retail business. For retailers it is
not enough anymore to just sell their goods to their customers
[24]. They have to offer a shopping experience that makes
the buying situation unique and more valuable to the
consumer. For example, retailers try to create a pleasant
shopping atmosphere. IKEA retail stores usually include big
cafeterias that offer Swedish specialties. Cabela’s, an
outdoor sporting goods retailer, builds enormous sports stores
that offer rock-climbing walls and shooting ranges where
customers can experience the sports equipment before they
buy it [24].
A positive experience does not necessarily have to be
connected to the act of buying or using a product itself.
Another source of satisfaction can be the experience of
portraying a certain image, status or self-concept to others. In
an article by Chaplin and John the authors describe the result
of their study of children and adolescents and the way they
connect certain brands to their self-concepts [11]. The study
shows that children are able to develop a deeper
understanding of self-brand connections within the age range
from 7 to 13 years. They understand the underlying
characteristics that brands portray and they start to use certain
brand products to express themselves. Being able to express
their feelings or status by using certain brands creates
feelings of satisfaction. The children want to experience this
feeling more often and therefore they become loyal to a brand
and repeatedly buy from this same provider.
Over one hundred years ago Thorstein Veblen coined the
term “conspicuous consumption” to describe the consumption
behavior of people who purchased goods to portray their
financial and social status [69]. In a recent Wall Street
Journal article Joseph Rago turned Veblen’s theory on its
head by introducing the concept of “conspicuous virtue” to
describe activities where people consume to demonstrate
their innate goodness rather than wealth [54]. Customers
who buy organic foods, furniture built with “sustainable
leather,” or hybrid cars such as the Toyota Prius do it because
it makes them feel good. They are doing “something
righteous” and they want to let other people know about it.
Rago concludes that conspicuous virtue may offer those with
guilty consciences a way to feel good about their
consumerism. A fine scotch might be vulgar, but a “fair
trade” scotch can be downright righteous [54].
Both concepts, “conspicuous consumption” and
“conspicuous virtue”, go along well with the findings of
Schouten and McAlexander [59]. They conclude that it is
consumer goods that substantiate the consumer’s place in the
social world. It is through objects that they relate to other
people and make judgments about shared values and
interests. The social network that a person lives in has a
strong impact on the consumer experience. Buying and using
products is not only an experience for the customer, but it can
be a valuable experience for the people around that customer
as well.
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
When family members or friends have experiences with a
product they can share these experiences with others. Family
members have great influence on customer perceptions and
behavior with their experiences [45]. The same is valid for
other customers of a brand or a product; they do not need to
be family members or even friends in order to have an
impact. Customers look for fellow customers to enhance
their own product experience. So called “brand
communities” are formed where customers of the same brand
can share, in person or virtually, their experiences, provide
recommendations, and offer help with product-related
problems [46]. Brand communities provide a useful way for
customers to enhance their product experience and to make a
product more valuable.
To conclude the literature review of experience elements
of products one can say that experience can influence
customer value in many different ways. In general experience
reflects customer satisfaction and may have an effect on the
customer’s purchase behavior [35]. Experience can therefore
make a product more valuable for the customer and be the
starting point of a strong customer-brand-relationship.
However, experience does not only include personal
experience with a product, but it can also mean the
experience of friends, family or members of certain
communities. Therefore more research in this area is needed:
“Can the influence of experiences, especially experiences of
others, be measured?” Such research could show how
valuable customer testimonials are and how marketing efforts
could be improved by taking advantage of customer
experiences.
Figure 1: The Extended Customer Value Model
2071
F. Extended Customer Value Model
The intangible elements of products and services can
impact customer value because they can enhance uniqueness,
as perceived by the customer, in ways that are not easily
copied by competitors. This conclusion is valid for all three
categories of intangibles. A product can be unique, because a
customer has an emotional bond with the product or a brand,
a product can be unique, because customers have had great
experiences with it or a product can be unique, to the
customer because he or she perceives the manufacturer to be
very knowledgeable and credible in the respective field. Not
all categories apply for each customer and the impact on each
customer is different, but all three intangible product
elements have the potential to make a product more valuable
for a customer. Furthermore, the categories of intangibles are
all interact closely with each other. Once a customer
perceives a company or brand as knowledgeable the customer
is more likely to build and emotional bond which will drive
purchase intentions and influence the customer experience.
Likewise the customer experience will generate some
assessment of satisfaction that elicits emotions that will
influence intentions to rebuy. Trust and satisfaction will lead
to customer-brand-relationships and the customer will
repeatedly experience the brand and will strengthen his or her
belief in the company’s superior knowledge. This iterative
process will keep repeating itself and thereby create more and
more intangible value to a product as long as the customer
does not experience disappointment.
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
How much the customer value is impacted by the
intangibles depends, of course, on the personal perception of
each individual customer. Figure 1 above shows the
extended model of customer value after adding the intangible
elements of knowledge, emotion, and experience. The
intangibles can interact with the product lay and the services
layer to form a “value platform” from which total customer
value is some combination of each layer of the total product.
III. A TAXONOMY OF INTANGIBLES
The literature review introduced a possible categorization
of intangibles into the three categories knowledge, experience
and emotion. Based on these categories the paper will offer a
taxonomy of intangibles. In doing so, the paper will suggest
subcategories of the knowledge, emotion, and experience
intangibles that are consistent with the literature review.
As previously mentioned, the knowledge category
includes all those epistemological aspects of a product, brand,
or a company that influence the customer’s subjective
perception of the potential consumption decision. The
subcategories in the taxonomy include customer awareness of
the product or company, perceived expertise of the company,
2072
trustworthiness of the company, and recommendations or
shared knowledge.
The emotions category is difficult to describe or measure
because there are so many different emotions that humans
can express and some of them are so similar to each other that
it is difficult to differentiate them [56]. Furthermore, it is
hard to tell which emotions will be beneficial to product
value and which emotions will decrease the value. The
subcategories for the taxonomy are emotions towards the
product or service, emotions towards the supplier, emotions
towards the brand, and emotions connected to memories.
The last category of intangibles is experience. For the
taxonomy five subcategories are identified: personal
experience, experience of others, the experience elements of
the buying situation, status/prestige, and loyalty/routine.
Table 2 below visualizes the complete taxonomy that this
paper introduces and cites quotes from literature to support
provide context for the subcategories of intangibles. Table 3
gives examples for all subcategories to give the reader a
better understanding of the paper’s view of intangible product
elements and how they can increase the customer value of a
product or service.
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
TABLE 2: TAXONOMY OF INTANGIBLES
"The role of brand awareness in brand
equity depends on the level of awareness
that is achieved. The higher the level of
awareness the more dominant is the
brand, which will increase the probability
customer awareness of the brand being considered in many
purchase situations." [75]
"A brand […] is not a vital entity. In fact,
the brand has no objective existence at
all: it is simply a collection of
perceptions held in the mind of the
perceived expertise consumer." [19]
"[…] we also found that trustworthiness,
Knowledge
rather than expertise, has the bigger
impact on consumer choices." [17]
trustworthiness /
authenticity
"copious studies show that satisfaction is
associated with word-of-mouth
transmission […]. Several studies also
show that other global evaluation
recommendations / variables, such as perceived service
word of mouth quality and perceived service value, are
positively associated with word-of-mouth
transmission." [64]
"Purchase behavior always occurs within
a situational context. The situation may
act as a constraint or to facilitate a given
purchase or it may have no effect at all."
[27]
Experience buying situation
"One of the most important roles played
by brands (understood to be "a name,
term, sign, symbol or design, or a
combination of them which is intended to
identify the goods and services of one
seller or a group of sellers and to
differentiate them from those of
competitors") is their effect on consumer
brand choice and consideration." [17]
"Maytag is distinguished by
dependability, Tide by whitening power,
BMW by superior handling. Such points
of differentiation are, in many cases,
what consumers remember about a
brand." [34]
"General perceptions regarding the
partner's dependability and reliability,
trustworthiness, supportiveness, and
accountability also appear significant in
gauging partner capabilities, intentions,
and motives in meeting relationship
obligations." [1]
"The influence of local context and social
networks on product involvement has
also received some attention. Bloch and
Richins posit that interpersonal influence
and a supportive social context might be
significant in initiating and sustaining
product involvement." [18]
"In retail, it's not enough to simply sell
stuff anymore. These days, retailers say
they must sell "an experience." That's
retail-speak for glitzy decor, fun activities,
ramped-up customer service and, often,
food." [24]
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"Kardes et al. (2002) demonstrated that
consumers typically are overly favorable
toward a given consideration set because
they neglect consideration of brands not
present in the set." [51]
"Since brand distinctiveness in this study
refers to favorable and positive aspects
that are associated to the brand, such as
quality, this suggests that favorable
country image leads to favorable brand
image, which in turn influences brand
distinctiveness." [75]
"Weary of asinine customer hugathons
and analogous brand-bonding brouhaha,
consumers increasingly appreciate the
honesty of upfront, forthright, show-me-
the-money sales pitches. Today's
customers are cognizant that underneath
all the servile, sanctimonious, socially
responsible rhetoric, marketing boils
down to selling stuff." [10]
"Results strongly support our contention
that consumers are influenced in their
online product choices by online
recommendations. […] products were
selected twice as often if they were
recommended." [60]
"Previous research demonstrates how
ambient conditions, including store
layout, design and signage, and employee
and customer appearance, evoke varying
levels of emotions among patrons, and
these emotions impact store shoppers'
approach/avoidance behaviors,
willingness to buy, price perceptions,
perceived value, current period purchase
behavior and customer satisfaction." [7]
"I find that most marketers are so busy
figuring out how their companies can create
value that they don't pay attention to
communicating the benefits their
companies deliver to customers." [47]
"David Garvin points out that there are
many dimensions to what a consumer
means by quality and that is a major
challenge to design products that satisfy all
of these at once." [28]
"Thus, a brand’s legitimacy—the
“generalized perception or assumption that
the actions of an entity [a brand, in the
present context] are desirable, proper, or
appropriate within some socially
constructed system of norms, values,
beliefs, and definitions” (Suchman 1995, p.
574)—may be negotiated among
consumers, affecting its cultural meanings."
[33]
"Our theory thus implies that, in forming a
subjective norm, an individual takes into
account the normative expectations of
various others in her environment. That is,
she considers whether specific individuals
and groups think she should or should not
engage in the behavior." [5]
"Knowing what environmental factors
impact on the feeling states of shoppers can
suggest appropriate marketing strategies to
help create and maintain positive shopping
experiences. Pleasurable shopping
experiences induced by environmental
factors in turn are likely to encourage
consumers to spend more time in stores and
to spend more money than intended." [13]
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
"In a survey by GfK Roper Consulting,
83% of adults cited past experience with
a brand as the most important factor in
their purchase decisions." [30]
personal experience
"Given the opportunity for context-rich
interaction […] participants share
extraordinary consumption experiences.
Sharing meaningful consumption
experiences strengthens interpersonal ties
experience of others and enhances mutual appreciation for the
product, the brand, and the facilitating
marketers." [59]
"Research demonstrates that individuals
use products to create and communicate
their self-concepts […]. Consumer brands
are ideally suited to this process given the
wide availability of brands and the range
of distinctive brand images they reflect."
[11]
status / prestige
"Customer loyalty can be de-fined as a
commitment to con-tinue do business
with a com-pany on an on-going basis.
[…] In other words, company-ies are
seeking to create committed customers,
loyalty / routine not customers who are “locked in”. A
customer who is locked in is a "prisoner"
and is un-likely to stay with a company if
an alternative supplier makes a
satisfactory offer." [76]
"In the past, companies have primarily
focused on the physical aspects of the
product, while totally neglecting the
emotional and value aspects and hence,
losing many customers in the long run. To
compete successfully in this customer
experience territory, a growing number of
organizations are systematically applying
the principles and tools of total customer
experience to generate, strengthen and
sustain enduring lasting customer
loyalty." [40]
"Assisting in the use of the brand is one of
the places where computer-mediated
communication offers a great deal of
information. […] This information in turn
enables consumers to solve problems and
have a better consumption experience."
[46]
"Choices involving highly visible
products (e.g., clothing, jewelry) and
goods or services to be shared with others
(e.g., gifts, products used in entertaining)
are often driven by social value. For
example, a particular make of automobile
may be chosen more for the social image
evoked than for its functional
performance. Even products generally
thought to be functional or utilitarian
(e.g., kitchen appliances) are fre-quently
selected on the basis of their social value."
[63]
"Consumers return loyalty to brands that
engage them in habit-forming,
emotionally satisfying experiences. The
top 20% of Starbucks' customer base
averages 16 visits a month, fueled by a
passion for coffee experiences." [53]
2074
"In short, consumers, today, seek much
more than a product or service, or even a
brand or its company to satisfy them,
they want an engagement, an experience,
an excitement and in sum, they want
consumer delight." [39]
"Although intergenerational influences
have not explicitly been noted thus far in
the brand equity literature, they deserve
consideration as a force that develops
such meaning in consumers' minds.
Consider the number of opportunities
family members have, year after year, to
jointly consume, shop for, and comment
on favored brands, thereby influencing
children's brand associations." [45]
"Conspicuous consumption stays with us
today. But increasingly, it seems to me,
many consumers are not seeking an
outright demonstration of wealth.
Instead, they consume to demonstrate
their innate goodness.[…] We inhabit, to
update Veblen, an age of conspicuous
virtue." [54]
"Intergenerational influences can be
extremely important to marketers, since
they mean that every year a new
generation of consumers goes out on
their own, to continue using products
they had been socialized to use while
living at home." [73]
"Marketers attempt to satisfy peoples’
wants and according to Byrne (2003) this
mechanism empowers consumers:“In a
well-functioning market consumers who
dislike a product [or shopping experience?]
will turn to another one, punishing the
producer who has not fulfilled their
expectations, and rewarding those who are
in tune with their demands. This is what
increases competition, and
competitiveness”." [48]
"Moreover, with regard to the message, we
used a stimulus situation in which there was
no explicit recommendation to avoid or
patronize the focal firm; the stimulus person
merely shared her experiences in our
scenarios. Many word-of-mouth instances
are likely to be of this kind, especially for
experience products such as travels and
restaurants." [64]
"A riddle: Why has the Toyota Prius
enjoyed such success, with sales of more
than 400,000 in the United States, when
most other hybrid models struggle to find
buyers? One answer may be that buyers of
the Prius want everyone to know they are
driving a hybrid." [41]
"Consumer socialization research has
studied the roles of family, peers, and mass
media in teaching children about
consumption, the impact of parenting style,
and the way parents and children interact in
making household purchase decisions" [45]
 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET

"Informants in strong brand relationships
felt that "something was missing" when
they had not used their brands for a while.
Strongly held brands were characterized
as irreplaceable and unique to the extent
that separation anxiety was anticipated
Emotions towards the upon withdrawl. Feelings of love ranged
product from warmth and affection to passion,
infatuation, and selfish, obsessive
dependency." [19]
"Goods and services are frequently
associated with emotional responses (e.g.,
the romance aroused by a candlelight
dinner, the fear aroused while viewing a
horror movie). Emotional value is often
associated with aesthetic alternatives […].
However, more tangible and seemingly
utilitarian products also have emotional
value. For example, some foods arouse
feeling of comfort through their asso-
ciation with childhood expe-riences, and
consumers are sometimes said to have
“love affairs” with their cars." [63]
"It has become a truism that brand
marketing is in the business of
communicating and selling emotional
connections and benefits rather than just
products and services." [74]
„Love and Passion. The consumer feels
affection or passion for the product or is
obsessed with it-and can experience
separation anxiety if the product is not
available. [...]
Intimacy. The consumer describes a sense
of deep familiarity with the product and an
understanding of its attributes." [20]

"The buyer's perception about the
supplier is a major factor in gaining
acceptance for a brand. Where economic
and performance value can be influenced
relatively rapidly by changes in price and
Emotions towards the product design, it takes much longer to
supplier change perceptions about a company."
[27]
Emotion
"Attachments are a type of strong
relationship that people usually first
experience with their parents; later in life,
these attachments routinely develop with
other "targets," such as human brands
Emotions towards […]. This literature suggests that
personified brands attachment theory can make a
contribution to marketing because of the
distinctive qualities of an attachment."
[67]
"Currently, in the mid-2000s, it is
customers' emotional attachment with the
brand, the brand community and the brand
company via customer experience that is
gaining importance in the literature." [40]
"Consumers' acceptance of advertisers'
attempts to huma-nize brands and their
tenden-cies to animate products of their
own accord suggest a willingness to
entertain brands as vital members of the
relationship dyad. […] Spokespersons
may have personalities that so strongly fit
those of the brands they advertise that the
brand, in a sense, becomes the
spokesperson with repeated association
over time." [19]
"Emotional branding is a consumer-
centric, relational, and story-driven
approach to forging deep and enduring
affective bonds between customers and
brands.[…] The potent consumer-brand
linkages typically emerge when branding
strategies use narratives and tactics that
demonstrate an empathetic understanding
of customers' inspirations, aspirations,
and life circumstances [...]." [66]
"What people here do see in the use of
celebrities is amplification of the brand
characteristics […]. The amount of
research done to decide on the right
celebrity and their ability to enhance
attributes has become a fine art of brand
building." [42]
"Millions of words have been written about
how to create long-term differentiation and
build sustainable value. [...] Driven by the
fundamental shift in control from
manufacturers and retailers to consumers,
the future belongs to those who make
emotional connections with them." [57]
"Findings show that celebrities make
advertisements believable and enhance
message recall. Furthermore, celebrities aid
in the recognition of brand names, create a
positive attitude towards the brand, and
create a distinct personality for the endorsed
brand. Ultimately, celebrity endorsements
are believed to generate a greater likelihood
of customers' choosing the endorsed brand"
[3]

"We propose that consumers’ autobiographies can provide marketers with memory "Retired baby boomers are spending big " A brand of air freshener that grandmother
stories that can be a projective tool for understanding consumers’ thoughts and feelings sums fondly relating back to items of kept in her bathroom, a floor cleaner that an
about a product or brand. The logic for this method is based on the following ideas: their youth. A Chevy Camaro that cost a ex-husband always used - these brands can
First, autobiographical memory is the center of identity and contains memories of few thousand dollars in the 1970s now become so strongly associated with the
experiences that are the foundation for the self-concept. Second, although fetches hundreds of thousands." [53] past-other that the person's spirit comes to
Emotions connected to autobiographical memory is self-centered, it also indirectly contains information about dwell in the brand as a vital entity in the
memories / nostalgia brands/products and the meanings they have added to consumers’ lives. Third, despite a consumer's mind." [19]
lifetime of experiences, only a fraction are retained, so those that are remembered hold
meaning. Fourth, the more distant and more repeated experiences are more likely to
become myths and reveal important symbolic meanings about the product/brand." [9]

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 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET

TABLE 3: EXAMPLES OF INTANGIBLES IN INDUSTRY

In order to be able to consider a product the customers have to know about its existence. For this reason
new products are often announced with promotion tours. Red Bull, for example, visits university to give
customer awareness out free product examples, musicians tour the country with their newest album and politicians give
speeches to get known.

There are many different reasons that could make customers believe in special abilities or expertise of a
perceived expertise company. Often this is connected to past success or to the history of a company. Saab, for example, was
founded by several aircraft engineers and uses this fact for advertisement.
Knowledge
Trust is especially important for certain groups of products and services. Banking and Insurance, for
trustworthiness / example, is a business that is often hard to understand for the customer and the customer just has to trust
authenticity the supplier.
Amazon.com uses the advantages of product recommendations in two different ways. Firstly the
recommendations / company allows customers to post their ratings and recommendations of books on their homepage and
word of mouth so other customers can read these recommendations before buying a book. Secondly Amazon
recommends additional books based on the choices the customers have made so far.

The buying situation can be influenced by many different factors. During Christmas time, for example,
the shopping behavior of customers is different than during the rest of the year. A different kind of
buying situation situational impact can be seen when looking at Cabela's Inc.. The company offers customers to
experience their sporting goods instead of just selling products off the shelf.

Every time a customer buys a product he or she can relate back to the experiences that he or she made
personal experience with similar products. These past experiences influence the decision.

When customers have not experienced a product yet, they can ask other customers to share their
Experience experience of others experiences. This is the underlying idea of IgoUgo.com where travelers can share their experiences and
pictures of journeys.

Many products display a certain status or mindset and people use this to express themselves. The
status / prestige Toyota Prius, for example, is a very common way to show concerns about the environment and the
dependency on fossil fuels.
Humans become loyal to products that they have used for a long time. The products become part of
loyalty / routine their routine. Therefore it happens that children, after they moved out, keep using the same laundry
detergents or cleaning supplies as their parents.

emotions towards the Customers can build emotional bonds with certain products. The Mini Cooper, for example, is a car that
product evokes many emotions with its rather unusual appearance and its successful history in rally sports.

Emotional bonds can also exist between customers and certain companies. Harley-Davidson, for
emotions towards the example, was able to make its company the center of a whole lifestyle. Other customers like to stick to
supplier Macintosh computers, just because they hate Microsoft.
Emotion
emotions towards Nike uses many athletes to build emotional connections between customers and Nike apparel. World
personified brands class athletes such as Tiger Woods (Golf) or Rafael Nadal (Tennis) are sponsored by Nike.

Emotional bonds can also be connected to positive memories that a product or a brand evoke in a
emotions connected to customer. For this reason many car companies offer remakes of popular cars from the 1970s such as the
memories Chevrolet Camaro. People connect memories to these cars and want to own them again.

IV. IMPLICATIONS OF INTANGIBLE VALUE FOR
THE DESIGN AND MARKETING OF NEW
PRODUCTS AND SERVICES
As discussed earlier in this paper, intangible assets must
create outcomes that are perceived and desired by the
customer in order to create value. Companies need to learn
the ability to influence customers’ perceptions about the
business and its products and services and therefore it is
important that the customers’ needs and preferences are
known and understood. This is a key driver for success in
today’s markets. However, in today’s fast changing world
the task of matching products with the preferences of the
customers becomes increasingly more difficult and recent
reviews show large failure rates in the commercialization of
new designs [23]. In most of the cases, the reason of failure
has been not a lack of technological capability of the firm,
but a wrong understanding of the real customer needs and
demands.
Cooper outlines a potential in minimizing the new
product development failures through integrating the
customer more into the process [12]. Thus, the best way to
learn about the preferences of customers seems to be the
interaction with the users themselves. This is necessary,
because according to von Hippel it is not trivial to transfer
need information from the customers to the company:
Some needs will not be mentioned by the customers,
because they are considered to be a basic prerequisite and
therefore they might be taken for granted. Other
preferences will not be stated, because customers are either
not able to correctly express certain needs or they are not
aware of certain needs. It becomes obvious, that a company
might not be able to retrieve enough need information by
just asking their customers, because the information is

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 PICMET 2009 Proceedings, August 2-6, Portland, Oregon USA © 2009 PICMET
difficult to transfer. This is what von Hippel calls “sticky
information”, because the need information seems “to
stick” to the customer [70].
One possible method that seems to lower the barrier of
“sticky information” is the so called user co-creation or co-
design. The idea of this method is to involve the customer
in the process of designing or creating a new product by
allowing users to implement their own ideas and actually
create their own product [52]. With the help of customer
co-creation customers design the features and intangibles
they need directly into the product and the user innovations
will most likely have a better fit to the preferences of the
customers than any closed innovation will be able to create
[50]. Ajayi and Smart, for example, emphasizes the
importance of the feedback and customization from the
field about the performance of products in use in order to
maintain a successful product development; That way the
design of future products and services will genuinely
contribute to increased customer satisfaction [4].
While customer co-creation is a valuable approach to
include the concept of intangibles in the design process,
intangibles also need to be taken into account in the arena
of marketing. In this context branding seems to be a central
aspect: Since all value is perceived by the customer, a
product or service has to impact the customer’s perception
as a complete bundle. That means that across all aspects of
marketing - product, place, promotion and price [49] – a
company has to build a consistent image, a brand, for the
customer’s perception. Branding can deliver a brand
identity, it can attract consumers through advertising,
contribute to social buying pressure’s influence, and add to
customer loyalty. “Brand choice is based on emotional and
intuitive feelings about brands, their images and meanings
for consumers and how these brands satisfy customer needs
and seem to fit into the consumer’s relationship with
his/her world” (Meenaghan 2005). The relationship
between the consumer and a brand seems to be a key factor
in buying behavior and it is controlled by intangible factors.
Thus, intangibles need to be a part of the marketing
strategy of a company and need to be the key drivers in the
build-up of a brand.
V. CONCLUSIONS
In conclusion one can say that intangibles offer an
enormous potential to increase the customer perceived
value of a product or a service. The potential that the
intangibles bear justify a bigger influence of intangibles on
the design and marketing of products and services. This
paper has made an approach to give a more detailed
definition of intangibles and a taxonomy was presented as
an attempt to structure the wide field of intangibles.
Furthermore we suggested open innovation through user
co-creation and branding as possible methods to include
intangibles in the design and marketing of new products
and services.
It will be important to verify the potential impact of
intangibles on product success in future. This could be done
with the help of industry experts, as well as through a
survey of consumers. Future research needs to investigate
2077
the way industry approaches the task of developing new
products and services, while taking intangibles into
account. In this context it will be especially interesting to
find out whether industry is not considering intangible
aspects of product management at all or integrating
intangibles without being aware of it.
In regard of user co-creation and branding future
research needs to reveal a connection between these
methods and the idea of intangibles. Both concepts are well
researched, but to our knowledge there has not been any
research in these areas with special attention to the concept
of intangibles yet. Especially interesting could be research
on brand communities, as this concept could combine the
concepts of branding and user co-creation.
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