How do you write the Products and Services section of a business plan? It may be necessary to give some basic background if this is an area or industry people are unfamiliar with.
Your business plan will vary depending on your type of business, but one main difference to take into account is whether your business is product-based or service-based.
As the names imply, a product-based business sells actual physical things, such as clothing or boxes, while a service-based business sells a service that consumers need, such as plumbing or consulting.
Product vs Service Business While it may seem to go against traditional thinking, in some ways there is very little difference between product based and service based companies. In actuality, both sell a product. The distinction between the two is that the product business sells a physical, tangible product, while the service business owner sells his skills as the primary product.
In the service-based business, customers purchase the skills of a service provider or owner, such as a plumber or lawyer, This type of business has a strong emphasis on the client relationship and makes the customer's user experience very important.
Product-based businesses, on the other hand, deliver physical products that are reasonably consistent in quality for each customer, making the customer experience fairly predictable.
As such, businesses need to target their product and service based businesses to the appropriate markets. Consumers located anywhere in the global market can purchase a product via the internet as long as they can have their purchase delivered locally and cost effectively.
However, most service businesses can only provide services to customers within their local target market. For example, while a computer store can ship computers all over the world, a hairstylist will only attract clients within a reasonable driving distance from her home or business.
As a result, businesses need to consider how their customer base will influence their marketing efforts. Marketing Message and Scope A business's marketing message and strategy varies therefore depending on if it is for a product vs service business.
Usually, product-based businesses invest in branding efforts to build customer awareness of the product, and they try to make their products stand out as different from similar ones.
Marketing can be global and seek to attract a wide range of customers. However, service-based companies need to focus their marketing to prospective customers within local ZIP codes in a particular area.
This type of business tends to use individualized marketing messages and focus on the customer experience, specifically proven client satisfaction.
For example, most small plumbing companies compete with other companies that offer the same services in the same neighborhoods.
In this case, the plumber typically advertises faster turnaround times or guaranteed services to differentiate himself from other local plumbers. Business Reputation and Repeat Sales In terms of a business plan, product businesses tend to focus on building their brand reputation, improving their market position and making sales.
Once a consumer purchases a product the may not need to ever make a similar purchase again. A quality reputation, however, may bolster sales from word of mouth advertising or result in a repeat purchase of that product in the future.
However, service businesses tend to focus on establishing credibility and developing personal relationships with clients. If a service provider delivers quality service with a friendly demeanor and in a timely manner, customers are likely to call that provider when they need help again.
For example, if a plumber responds quickly, fixes your leaky pipe and interacts in a courteous and friendly manner, you are likely to call again when another plumbing issue arises. Product-Service Hybrids As businesses evolve and grow it is sometimes feasible that they adapt a product to service business model.
In this situation, a company offers a product for sale but it is also offered as a service to the consumer. This is most commonly seen the technology world in the form of service based software.
For example, Microsoft offers a variety of software programs that fulfill a customer's immediate need but they also provide continuing services such as customer support, regular upgrades to the program or discounts for add-on features.
In the same way, a John Deere dealer may complete the one-time sale of a riding tractor mower, but the annual maintenance on the machine is subsequently performed as a service to the same customer.Search All Business Plan Templates Search all templates for: If you don't see a template design or category that you want, please take a moment to let us know what you are looking for.
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