Products and Services
Product and Services must be described in terms of their features and benefits.
Features are product and service characteristics that deliver benefits; we buy products and services for their benefits. Stated another way:
- Features are product characteristics such size, color, horsepower, functionality, design, hours of business, fabric content, etc.
- Benefits answer the customer’s question: What’s in it for me?
Describe in depth your products and/or services (technical specifications, drawings, photos, sales brochures, and other bulky items belong in the Appendix).
What factors will give you competitive advantages or disadvantages? For example, level of quality or unique or proprietary features.
What are the pricing, fee or leasing structures of your products and/or services?
- Describe the products to be produced or the services/good to be provided.
- What makes your product/service unique, or, how is your business different from others in the industry?
- What are the features/advantages that will entice customers to buy from you (i.e.., convenience, service, performance)?
- Will you offer any product or service guarantees/warranties?
- Provide information on any patents, trade secrets, or other technical advantages over the competition.
The product / service section is one of the most important parts of your business plan. It's your chance to clearly explain your products / services; identify their features and benefits, and discuss what needs or problems they address in the market.
Why do so many new products and services fail? Usually for many reasons. Companies often are so enamored of their new product ideas that they fail to do their research, or they ignore what the research tells them. Sometimes the pricing or the distribution channels are wrong. Sometimes the advertising doesn't communicate. Successful product launches result from an integrated process that relies heavily on research and solving up-front issues.
Market research is the key. Without the necessary information, you're simply flying blind in a storm, headed for a crash landing. Market research does more than confirm your "gut feeling," it provides critical information and direction. It identifies market needs and wants, product features, pricing, decision makers, distribution channels, motivation to buy. They're all critical to the decision process.
Take the example of a company several years ago that introduced a new product to the electronics manufacturing market. The research identified the pricing, the distribution channels, product features, everything but the product decision maker. Despite the fact that the new product complemented an existing one, performed a complementary function in manufacturing, and was used in close physical proximity to the existing product, the decision makers were different. The sales force couldn't efficiently call on the new decision makers, and the product failed.
Finding Your Most Valuable Product or Service
Small Business Secrets
If you are selling a product, your reader will want to know what it is, what it does, and its features and benefits. Consider including pictures if they would help your reader get a better understanding of your product.
- technological life-span and
- patent protection.
You may also wish to explain how it is produced, the materials required, and the type of labor needed.
If you offer your customers a service, explain what that service(s) are, how they work, and what need they address in the marketplace.
- Where will you operate?
- What makes your service different?
- What materials or equipment is needed?
- What are your days and hours of operation?
Explain the steps in your service process and the benefits you offer your clients. Write this section with enough information to satisfy an outsider's need to understand your service without boring them with trivial details.
Are all elements of the process coordinated? Is production on the same time schedule as the promotion? Will the product be ready when you announce it? Set a time frame for the rollout, and stick to it. Many products need to be timed to critical points in the business cycle. Miss it, and invite failure. There are marketing tales galore about companies making new product announcements and then having to reannounce when the product lags behind in manufacturing. The result is loss of credibility, loss of sales, and another failure.
If the new product or service is successful, do you have the personnel and manufacturing capacity to cope with the success? Extended lead times for new products can be just as deadly as bad timing.
Test-market the new product. Be sure it has the features the customer wants. Be sure the customer will pay the price being asked. Be sure the distributor and sales organization are comfortable selling it. You may need to test your advertising and promotion as well.
Who's going to sell the product? Can you use the same distribution channels you currently use? Can you use the same independent representatives or sales force? Is there sufficient sales potential in the new product to convince a distributor, retailer, or agent to take on the new line? There are significant up-front selling costs involved in introducing new products. Everyone in the channel wants some assurance that the investment of time and money will be recovered.
Your sales organization, inside employees, and distribution channels will need to be trained about the new product. If the product is sufficiently complex, you may need to provide face-to-face training. Or perhaps some type of multimedia program will do the job. If the product is not that complex, literature may work. Again, timing is critical. Train before the product hits the shelves, not after.
Finally, you need the promotional program to support the introduction: advertising, trade shows, promotional literature, technical literature, samples, incentives, Web site, seminars, public relations. Time it all with production, inventory, shipments, and training. The new product will simply sit in the warehouse without the right support materials.
Products and / Or Services
Try to describe the benefits of your goods and services from your customers' perspective. Successful business owners know or at least have an idea of what their customers want or expect from them. This type of anticipation can be helpful in building customer satisfaction and loyalty. And, it certainly is a good strategy for beating the competition or retaining your competitiveness. Describe:
- What you are selling.
- How your product or service will benefit the customer.
- Which products/services are in demand; if there will be a steady flow of cash.
- What is different about the product or service your business is offering.
- quality ... materials, design, durability, safety, method of manufacture and workmanship;
- models, sizes, colours, flavours, etc.;
- luxury, standard, essential;
- convenience of shopping.
- protection ... shipping, handling, theft, tampering, spoilage, etc.;
- utility ... measures, closure, reseal, disposable, etc.;
- identification ... universal product code, visual exposure, colour, label;
- display ... versatility for stacking, hanging, filing, etc.
- legal ... logo, trademark, copyright, industrial design;
- image ... memory value, goodwill value, recognition, suggestiveness, pleasingness, generic original.
- installation ... who, when, cost, delivery;
- maintenance ... who, when, cost, convenience;
- repair ... who, when, cost;
- warranty ... who, when, how long;
- accessories ... aftermarket, compatible.
You should build trust which is the foundation of selling.
Maintain your focus - do not waste time, energy or money trying to promote multiple programs.
Use business cards with web address and contact information.
Do not act as a PhD in your program - let the website, promotion movie or info call do the talking.
When contacting prospects, less is better - do not overwhelm your prospects.
Ask questions of your prospects - the power is with the questionner, not the information giver.
Look at business opportunity ads in your local newspapers/ magazines and ring up the advertiser offering your product / program.
Use the "invite" system on your program's website to invite friends, family and business colleagues to join your program.
Make an initial personal contact with your prospect by phone - it will pay off in the end.
Write articles about your product/service and submit to ezines and article directories.
Start your own blog on the topic of your product or service. Get a free blog plus hosting with Google.
The most important thing now: What do you choose: Knowledge Or Action Or Knowledge & Action?
It's been said that knowledge is power. While that's true to an extent, it isn't the whole truth.
Knowledge without action is almost useless. I tend to think of knowledge as ammunition and action as a gun. Think about it. If you have bullets and no gun, they're pretty much useless. If you have a gun and no bullets, the best you can do is throw (action) the gun at the target. Not as useless as the bullets (knowledge) since action without knowledge is more productive than knowledge without action.
You maybe wrote or read about how to make money, get high search engine ranking, find customers & prospects, motivate yourself and others and several other subjects and realized that regardless of how much info you've gained, it's worthless if you don't act on the knowledge. And it's the same for everyone. I've met some really intelligent homeless people and some stupid millionaires and the biggest difference is action. Let me say this again, ACTION. Action makes people successful to a certain degree. Not to say that any action will make people successful but action of any kind that propels you toward your target goal will get you there eventually.
Products and Services - Pricing
Pricing is a balancing process. You want to create a price that is low enough to be accepted by your market, but high enough to make you the greatest amount of profit. To do
this, follow these steps:
- The first step in defining a price is to determine your costs. Do not take into consideration the fixed cost of your business such as rent, phone, etc., because these costs will change in accordance
to both sales per period and the number of products you offer. So begin by accounting for the your initial cost plus the
cost to get the product to the consumers, such as marketing,
shipping, handling, and credit cards or bank fees.
- Now that you know your cost per product, do some research
and find out the competitions' price range. Analyze products
that are in direct competition with yours. If you sell DVD
players you shouldn't research VCRs. Only make a comparison
of items that closely resemble your product.
- If you know the characteristics of your audience, it will
be easier to create a price that will be acceptable to them.
Without this information, your business will be more apt to
fail. For example, try selling an in-depth marketing course
complete with audiotapes, videos, a hands-on workbook, and
12 months of unlimited phone support for $2000.00 to someone
who does not even know how he will pay his bills this week.
Then try selling this same course for $19.95 to a
well-established businessperson seeking ways to improve
In the first case, the person couldn't afford to buy the
course even if he wanted to. In the second case, you won't
make the sale because the low price will cause you to have a
- Decide on your desired position in the marketplace with
regard to price. A high price coupled with a quality product
conveys the message that your product is superior to that of
the competition. Low prices convey the message that you are
focusing on discount selling. So what does a middle price
convey? In-between pricing doesn't say much, does it?
- If you
decide on the high price category, be sure to add value to
your product. You can do this by bundling multiple products,
giving a guarantee that is unheard of in the industry,
Most people under price, or "lowball" their product, because
they think that a) people won't pay the higher price, b)
their product is not worth it, or c) they will make more
sales with a lower price.
Your products won't sell themselves. You must take the time
and effort to create a marketing strategy. This is one of
the most important parts of your business. It will take the
same amount of effort to create a marketing strategy whether
your product is priced high or low. The steps involved are
identical. Selling for less may result in more sales, but it will also
mean less profit, which translates into marketing that won't
allow for mistakes, or limited support for customers. Also,
it will be difficult to improve upon your product because
low profits won't allow for the added expense and customer
service will suffer. You will end up working too hard for
Selling for more allows you to increase your marketing and
improve quality, customer service, and support. Also, when
you're making a good profit in your business, you tend to
stay motivated and expand your business as opposed to just
- The above steps are a good beginning, but fine-tuning the
process means taking the market into consideration. It is
the market that will set the ultimate price. I suggest that
you start off with a low price, test the market and record
the results, then raise the price and test again. Keep doing
this until you notice that sales are starting to drop off.
When you get to the highest point before sales drop off, you
have found the ultimate market price for your product. Be
sure circumstances are similar for each of your tests to
ensure that it was the price that caused a change in sales
and not some other factor.
- By now you should have determined the optimal price for
your product based on your market. The final step is to make
sure that this price will be profitable for you. If you find
that it won't be, you will then have to find a way to cut
costs without sacrificing your product's perceived value.
Take the time to fine-tune your pricing and you will reap the benefits from increased sales and profits, or, at the very least, be reassured that your price has been right all along.
Pricing and Sales
Your pricing strategy is another marketing technique you can use to improve your overall competitiveness. Get a feel for the pricing strategy your competitors are using. That way you can determine if your prices are in line with competitors in your market area and if they are in line with industry averages.
Some of the pricing strategies are:
- retail cost and pricing
- competitive position
- pricing below competition
- pricing above competition
- price lining
- multiple pricing
- service costs and pricing (for service businesses only)
- service components
- material costs
- labor costs
- overhead costs
The key to success is to have a well-planned strategy, to establish your policies and to constantly monitor prices and operating costs to ensure profits. Even in a franchise where the franchisor provides operational procedures and materials, it is a good policy to keep abreast of the changes in the marketplace because these changes can affect your competitiveness and profit margins.
New Products and Services
A new product or service will be successful if it does a better job than existing products at satisfying the needs of a targeted customer group. But "doing a better job" actually has four dimensions. If a new product or service can exceed existing offerings across all dimensions at once, then we can guarantee that the targeted customer group will purchase it.
The dimensions fall into two categories, purchase motivators and purchase barriers. The new product has to excel at:
Providing high purchase motivators
- It must be less expensive than existing products (lower price).
- It must provide better features than existing products (greater benefits).
Eliminating purchase barriers
- It must not have any switching or adoption costs (easy to use).
- It must be readily available (easy to buy).
Customers for whom all four conditions apply will purchase the product or service because there are only benefits and no barriers. The closer any new product comes to succeeding in all four dimensions, the greater the chance that the product will be a winner. And, of course, the innovation will be a financial success if these conditions can be met at a profit.
How and Why to Price Your Products Successfully
Competition, costs, demand and market trends are all examples of issues that affect how we price our products and services. Ultimately, we all set our sights on a price that will maximize our profits, but those products and services that are most successful have often made a loss before they have become profitable. This was a result of successful pricing strategies at different times and situations in their life cycle.
All pricing strategies are debatable and there are no fixed rules: good management is the key.
- ...maximizing profits
- is not always the right
- approach to pricing
Successful pricing falls in-between two boundaries: the minimum, which will cover all costs; and the maximum, where demand starts to decline. Recognizing these boundaries requires good product management and extensive market research.
The Influences on Pricing Your Product/Service
Many businesses price their product or service to achieve an objective. Such objectives can include:
- Maximizing profits
- Sales growth
- Achieving a certain market share
- A targeted return for investment
In which case, prices will be set high or low to achieve the proposed objective.
Small businesses, particularly new start-ups, need to cover all costs in order to survive and encourage future growth. Although most businesses will not recover costs in the short term, it is important that you set a price that will recover the costs in the long term (through continuous sales).
The obvious products that are affected by legal concerns are alcohol, tobacco and petrol as they all include tax. For those businesses that offer services where vehicles are used to a high extent, you may decide to set prices to compensate for road tax and petrol (already taxed).
The number of pricing strategies that are talked about today is confusing and consequently many people adopt their own method. As a result, we have split the strategies into three main areas.
Cost Based Pricing
For Cost Based Pricing only, we talk about Direct Costs and Indirect Costs. Below are basic definitions that you can refer back to by clicking on the appropriate link within the text.
Costs that are incurred directly by producing/selling the product. For example, materials, packaging, direct labour (production/sales staff), etc.
Sometimes referred to as 'overheads', direct costs are created by running the business in general. For example, rent, insurance, wages (for all staff other than production/sales), electricity, etc. Indirect costs cannot be accurately linked to the production/sale of products or services.
Products and Services - Common Mistakes
The following are the some of the most common mistakes we find in the product / service section:
- Failing to identify the benefits of the product or service, focusing instead on the features
- Describing the product/service in language that is too technical, containing too many industry specific words or phrases
- Assuming an improved product/service will "sell itself"
- Describing the product/service in terms that are too broad
- Presenting weak plans for the future, leaving your company susceptible to competitors
- Failing to include a third-party evaluation or analysis of your product
- Underestimating the importance of legally protecting your product/service
Omitting the specific problem the product/service addresses and how it solves that problem.
A strong Business Plan may not guarantee success; but it could certainly prevent failure!
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