Product- or service-based businesses
According to Indeed, a business market is “a method a company uses to sell products or services.” A business market’s size fluctuates with the number of customers.
Knowing and understanding the different types of business markets can help you determine how to market to your ideal consumers.
Business-to-consumer market
Businesses in this market advertise and sell products and services directly to consumers for purchase (i.e., retail.)
This market caters to the largest group of potential consumers as they base their marketing strategies around certain demographics within the population like gender, age groups and special interests.
Business-to-business market
Companies focus on advertising and selling their services or products to other businesses to reuse or resell them. Some companies may also sell to consumers.
An example of a business-to-business market is a company installing internet services or cable in an office.
Services market
A company advertises and sells services to consumers and businesses, thus working in both a business-to-business and business-to-consumer market. According to Harvard Business Review, companies benefit from maintaining long-term relationships with customers.
A professional services market helps specialized professionals advertise and sell services. These companies’ employees usually have specific certifications or licences.
Service-based business
This business sells a service consumers need.
Examples of service-based businesses include health care and home repair.
Service businesses tend to focus on individualized customer experience and maintaining positive client relationships.
The pricing varies based on the industry and the experience of those operating the service.
Product-based business
According to Small Business, a “product-based business sells actual physical things,” including raw materials and agricultural, consumer and technology products.
Google and Microsoft are product-based companies.
According to HubSpot, the more familiar you are with consumer habits, the better you can “market your product.”
Customers can easily determine a product’s purchase value and exchange, return or rate it, influencing prospective consumers. Thus, product value is determined by consumer perception.
Product-based businesses make the product compelling, due to their workforce that produces it at an enticing price.
Product vs. service business
A business’ marketing message and strategy depend on whether it’s a product or service business. The product business sells a physical product, while the service business provider sells their skills.
In a service business, you emphasize the customer’s user experience, while product-based businesses deliver consistent products.
While consumers can purchase products online from anywhere, most service businesses can only offer services to consumers in their local market.
It’s difficult to receive ratings for a service business as it may take longer for a service to be completed or take effect. Meanwhile, a product can be used, evaluated, reviewed and shared almost immediately.
According to Harvard Business Review, international economies have “become dominated by service-focused businesses.” However, a lot of the techniques and tools used by service managers were designed to address product companies’ challenges.
Product-service hybrids
A company offers a product for sale and is presented to the consumer as a service.
This is most common in technology through service-based software programs. These programs fulfill customers’ immediate needs, providing customer support.
Product classification
This organizes products based on consumers’ buying behaviour, price range and similarities with competition. This is crucial to establishing marketing strategies.
Convenience goods
These are products that are purchased repeatedly by consumers without a second thought (i.e. toilet paper.) Once they’ve chosen their brand, they usually stick with it.
Shopping goods
Products that are commodities that are researched and compared before purchase.
Specialty goods
Are unique on the market such as luxury cars.
Unsought goods
These are products folks buy because they feel they have to, such as batteries.
Tangible financial benefits
Benefits that are verifiable in value according to buyers and sellers.
Non Tangible financial benefits
Benefits with a value that sellers perceive but buyers cannot easily verify.
Intangible non financial benefits
These hold a value that neither buyers or sellers can quantify.
Product development breakdown
According to Shopify, new product development “is the process of bringing an original product idea to market” and beyond.
It requires identifying a problem for which consumers are willing to pay for a solution.
You conceptualize the product and determine how it serves customers. Then, you build your product roadmap, identify goals and establish your product vision and mission.
Research market demand. Seek unbiased feedback, draft your proof of concept and ensure the product’s technical feasibility and that problems are course-corrected.
Learn how your competitors attract customers and sell. Determine your potential customers’ preferences and your retail category.
Create a user experience prototype, then develop and release a viable product. Update your product based on user feedback.
Market your concept, find your brand voice, test packaging and prices and analyze ideas, complaints and suggestions. Consider consulting experienced professionals.
You should also source materials and secure manufacturers. Determine your cost of goods sold, including expenses, to establish a retail price. You may conduct webinars addressing how your product benefits consumers, then launch it. Zoom and Dropbox are examples of successful new product developments.
Consider brainstorming new product development ideas by conducting customer surveys and identifying problems to solve and new technologies.
To reap the most success in your business venture, you must know where to situate your business. Doing so will guide you in marketing your product or service and targeting it to your ideal customers.