Posted by The idea to open your own business almost always starts with the thought of a product or service that we can sell to others. If you have such an idea, that’s where to start. Sometimes it’s a product that will meet with a lot of interest, and sometimes it turns out that we are the only customers of our own product! It happens both ways. What is the right decision to make at the beginning to determine well what you really want to sell?
All the goods we buy, own, get, etc., can be divided into two extreme types. They are either products or services. As I will show in a moment, it is not the case that there are only “pure” products and services around us. Sometimes it’s something that we deliver to the customer that is some combination of these two categories, but let’s focus on the simplest version of your business at first.
A product differs from a service in that the product lives a long time without the one who made the product. A service, on the other hand, cannot exist without the man or machine that performs that service. So a product is a table because it exists without the presence of the carpenter who built it. The carpenter may have already changed professions, retired or died, and the table continues. With a service, the opposite is true – for example, a service is a doctor’s appointment. If the doctor doesn’t come to work, the service doesn’t exist. If the doctor or you leave the office, the service ends. Of course, the effects of the service may continue, may even last forever (building a house, removing a tooth, etc.), but the service itself has ended.
As you can see, your idea may fit one of these two examples of a product or service. I wrote – may – because sometimes there is a vision in our minds of a good, value or thing sold to a customer that combines the features of a product and a service. If you want to open a coffee shop, you will certainly have a dilemma: what is the value you want to provide? Is it a product – coffee, tea, hot chocolate – or is it a service – an opportunity to drink coffee, spend time with each other, get to know someone?
It will be your decision as to what value you intend to deliver to the customer. My first association with a coffee shop is just to provide me with the service of having a nice time, and products such as coffee or tea are secondary to me. Therefore, I would choose a cafe with an original interior, an interesting history, where it is cozy and inspiring. It would be a place away from traffic and in a hurry of passing pedestrians. I would choose a service business – a café – that sells services – having a cup of coffee or tea in peace. And what kind of coffee shops do you enjoy going to?
Of course, that would be my choice under certain circumstances. At other times, I would like to buy coffee quickly and with absolutely no hassle, to refresh myself on a trip or a monotonous job. Then all those features I stated above would be completely irrelevant or even incompatible with my needs. Then I would look for a manufacturing company that would “produce” coffee for me in a portable cup so that I could buy it quickly and drink it on the road or at work. I would buy a product – coffee – not a service to drink coffee.
As you’ve now probably guessed, extreme examples of products or services rarely occur “in nature,” unless it’s, for example, selling LEGO bricks through Allegro or a rehabilitation service. There is a whole group of “product-services” or “service-products” that we buy every day. A simple hotel stay is just such a combination. It is also a replacement of windows in a house, a periodic inspection in a car, a computer repair (with replacement of some electronic parts), and even a training or educational service in general (a service of teaching someone and a product in the form of post-training materials or access to tools).
Think about what category – product, service or a combination of them – your idea of the value you will provide to the customer falls into. Sometimes it’s hard to decide, but believe me, it’s worth it. Such a decision then determines the next steps in thinking about the promotion of your business, how to deliver value to the customer, how to set the price, and so on. I will describe these mechanisms, depending on the category of good, in future blog posts.