A product or service fulfills a customer’s need or want, and understanding that need is crucial for setting appropriate prices and optimizing the marketing mix to achieve higher sales and profits through continuous improvement.
Primary Implication
Your business exists to deliver a product or service at a price a customer is willing to purchase from you. You pay your employees and buy from vendors and suppliers for the sole reason to deliver the products and services you provide for sale to prospective customers.
Without products and services offered for sale, there is no business. The ultimate question in business is whether you are consistently making money on the products and services you sell. If the answer is yes, you have a viable business. A no answer means you have problems that must be solved before you leave business.
Overview
In business, a product is an article or substance that is manufactured or refined for sale. A service is an intangible item that is delivered from the output of an individual or a team. The purpose of both a product and service is to satisfy a need or serve the want of paying customers.
Knowing what problem your customer is trying to solve is the key to providing products and services for which your customers will pay you a fair market price to own. Not knowing what problem they are trying to solve means that you will never know how much specific product features are valued. Fail to know the value of your product features that solve your customer’s problems means you are at risk of “under-selling” your product or “over-spending” on its production. Either way, you won’t earn the profits you should.
Answering the what question matters to every aspect of your business. Knowing “what” is the best way to ensure that your business solves its customers’ needs better, differently, and at a lower cost than anyone else. Finding this “sweet spot” in your solution to your customer’s problems is how you make more money through your products and services.
Time and money are wasted every day by failing to connect how your customers view your product with the marketing mix elements of promotion, packaging, place, and price. Each marketing element plays a different role depending on whether your product is viewed as new and innovative or existing and proven. Know which to dial in your marketing and sales efforts by knowing which marketing mix element is most important to driving higher sales.
The world is a dynamic place. No product is static, and new ways of doing things will always replace the old. As a result, there will always be opportunities to do and be better in any business. Continuously improving your products by adding new features and benefits or more efficient production and distribution to keep costs down is another core business model organizing principle that creates value for your customers and higher profits.
