Fundamentals of the Business Environment
In this video, Paulson Thomas, MBA, discusses the business environment's fundamentals, covering productized services, market segmentation, and pricing models. If you want to learn more about the business world, this video is for you! By the end of watching this video, you'll have a better understanding of the fundamentals of the business environment, which will help you in your business venture!
Productized services are standardized services sold like products with clearly defined parameters and pricing. When we outline precisely what a customer will get and at what price, we can market and sell this “product” many times. The customer is still receiving a service, now with the appeal of predictability.
Paulson also explains why products are better to market and sell than services, where you end up trading time for money, which is hard to scale. This is especially true when starting a new business.
More about what's covered
Products versus Services
Some other key differences between products and services include:
- Ownership: When a customer purchases a product, they own the item and can use it as they see fit. When a customer receives a service, they do not receive any physical ownership, but rather the benefit of the service being performed.
- Tangibility: Products are generally tangible and can be touched, held, or seen. Services are intangible and cannot be physically experienced in the same way.
- Production: The production of products typically involves creating or manufacturing the item, while the production of services involves providing the service to the customer.
- Inventory: Products require inventory management, including the storage, distribution, and tracking of items. Services do not involve the same level of inventory management.
- Returns: Products can be returned if they are defective or not as expected, while services cannot be returned in the same way.
- Pricing: The pricing of products is often based on the cost of production, while the pricing of services is often based on the value of the service to the customer.
Overall, the choice between offering a product or a service will depend on the specific business and its goals and resources. Both products and services can be successful business models, and many businesses offer a combination of both.
Disadvantages of offering a service over a product:
There are several potential disadvantages to offering a service rather than a product:
- Intangibility: Services are intangible and cannot be physically experienced in the same way as products. This can make it harder for customers to understand the value of the service and may make it more difficult to generate customer interest.
- Lack of ownership: When a customer receives a service, they do not receive any physical ownership, but rather the benefit of the service being performed. This can make it more challenging to create a sense of value for the customer.
- Perceived risk: Customers may be more hesitant to purchase a service due to the perceived risk of not being able to fully understand or evaluate the service before paying for it.
- Lack of control: Because services are intangible, businesses may have less control over the delivery of the service and may be more dependent on the skill and performance of their employees.
- Difficulty scaling: It can be more challenging to scale a service-based business compared to a product-based business, as it can be difficult to increase the number of services provided without increasing labor costs.
Overall, while there are some potential disadvantages to offering a service, there are also many advantages to this business model, including the ability to differentiate from competitors and the potential for higher profit margins. It's important for businesses to carefully consider the pros and cons of offering a service versus a product and to choose the model that best fits their goals and resources.
Advantages of Click IT over traditional MSPs
With over 100 productized services, Click IT uniquely provides a framework that promotes a scalable business more easily and quickly.
Productized services are a type of business offering in which a service is packaged and sold as a product, rather than being customized for each individual client. This means that the service is standardized and delivered in a consistent, predefined way, with a set price and list of included features.
Some examples of productized services include:
- Website templates: These are pre-designed website templates that can be customized with a client's own branding and content. The service includes the design and development of the website template, and the client pays a set price for the finished product.
- Subscription boxes: These are boxes of pre-selected products that are delivered to customers on a regular basis, such as monthly or quarterly. The service includes curating and sourcing the products, packaging and shipping the boxes, and managing the subscription service.
- Online courses: These are pre-recorded educational programs that are delivered online and can be accessed by students at their own pace. The service includes creating and recording the course content, hosting the course on a learning management system, and providing support to students.
- Managed social media services: These are services that manage a company's social media presence on platforms such as Facebook, Instagram, and Twitter. The service includes creating and scheduling posts, engaging with followers, and analyzing performance.
What types of businesses offer productized services?
Productized services can be offered by businesses of all sizes, in a wide range of industries. Some examples of businesses that might offer productized services include:
- Marketing and design agencies: These businesses might offer productized services such as website templates, social media management, or email marketing campaigns.
- E-commerce businesses: These businesses might offer productized services such as subscription boxes or online courses.
- Consultants: Independent consultants or consulting firms might offer productized services such as training programs or coaching packages.
- Service-based businesses: Businesses that offer services such as cleaning, lawn care, or pest control might package their services as productized offerings for a set price and list of included services.
Overall, any business that offers a service can potentially package that service as a productized offering, as long as the service can be standardized and delivered in a consistent way.
What amount of revenue do businesses providing managed productized services generate?
It's difficult to provide a general estimate of the revenue generated by businesses offering productized services, as the amount can vary widely depending on the specific business and industry. Factors that can impact a business's revenue include the demand for the service, the price of the service, the competition in the market, and the efficiency of the business's operations.
In general, businesses that are able to offer high-demand services at competitive prices and operate efficiently will tend to have higher revenues. However, it's important to keep in mind that generating a high level of revenue is not the only indicator of a successful business, and other factors such as profitability, customer satisfaction, and employee satisfaction can also be important considerations.
Both consumers and businesses can be targeted as customers for productized services. The specific target audience will depend on the nature of the service being offered. In general, productized services that offer a solution to a common problem or need are often successful in attracting both consumer and business customers.
Click IT Store owners provide solutions to consumers (B2C) and businesses (B2B), giving Click IT business owners a wider audience to market to.
- How do productized services differ from traditional services? Productized services are standardized and delivered in a consistent, predefined way, with a set price and list of included features. Traditional services, on the other hand, are customized for each individual client and may involve more one-on-one interaction between the business and the client.
- Can productized services be profitable for businesses? Yes, productized services can be a profitable business model for many businesses. By standardizing and pre-packaging their services, businesses can often streamline their operations and reduce costs, which can increase their profitability. In addition, by offering a set price and list of included features, businesses can often generate more predictable and stable revenue streams.
- How can businesses determine the price of their productized services? There are several factors that businesses can consider when determining the price of their productized services, including the value of the service to the customer, the cost of providing the service, and the competition in the market. Businesses can also consider conducting market research or running pilot programs to gather data on pricing and customer demand.
- How can businesses market their productized services? There are many ways that businesses can market their productized services, including through social media, content marketing, email marketing, search engine optimization, and paid advertising. It's important for businesses to identify their target audience and determine the most effective marketing channels for reaching them.
Productized services are a type of business offering in which a service is packaged and sold as a product, rather than being customized for each individual client. This means that the service is standardized and delivered in a consistent, predefined way, with a set price and list of included features. Productized services can be offered by businesses in a wide range of industries and can be a profitable business model for many businesses. Some examples of productized services include website templates, subscription boxes, online courses, and managed social media services. Both consumers and businesses can be targeted as customers for productized services.