Many businesses that are started these days tend to sell services of some kind and are particularly focused online. When it comes to launching a product business, it can sometimes feel like something out of a different era. But, if you have the right product, then a huge amount of success could be waiting around the corner for you. Though some of the principles of product and service businesses remain the same, there are a few obvious differences. Here are just a few of them to give you a general idea of the pressures and pitfalls of each business type.
The Product Itself
At the end of the day, both product and service businesses are selling a particular product. The difference is that with a product business, it is something physical and tangible. To this end, you need to make sure that your product stands out from the crowd, so this will involve careful planning, designing and enlisting the support of a product development company such as http://www.mindflowdesign.com/services/complete-product-development/. Product-based businesses have the natural advantage of the assurance that the product will always stay consistent, making the customer experience more predictable.
In general, product and service businesses have differing target markets. While both have become more globalized to an extent, people are much more comfortable buying products from anywhere in the world whereas service businesses still primarily deal with those people and businesses that are nearby. A good product transcends language and culture, meaning that the market is potentially a lot larger. However, accessing it in the first place is where many people end up tripping up.
Product-based businesses channel a lot of their funds into making sure that they develop a strong brand and improve customer awareness of the distinct advantages that their product has over competitors in their field. Marketing and advertising are often global these days. Service-based businesses tend to have a more localized approach (unless they are offering a universal online service). Product businesses are usually competing on a much wider scale, but once a reputation has been established, businesses can suddenly take off at a rapid rate and achieve a huge amount of success.
Business and Sales Strategy
Product businesses are very much focused on enhancing their overall brand reputation, improving their market position and making sales. Service businesses tend to put their focus on increasing revenue instead of market share. The sales process itself also tends to vary wildly. While product businesses have quick turnaround times, service businesses tend to operate at a slower pace as negotiations and customer contracts can take a lot longer. As well as this, service businesses tend to run operations entirely themselves, albeit they can have various different bases. Product businesses often have partner organizations that do the selling for them. The mark of a good product business is often the number of retailers that actually choose to stock the product in the first place.