Coordinate Sales Performance

Selling Products and Services

What are Products and Services?

A product is a tangible item that is put on the market for acquisition, attention, or
consumption, while a service is an intangible item, which arises from the output of one or
more individuals. Although it seems like the main distinction between the two concepts is
founded on their tangibility, which is not always the case. In most cases services are
intangible, but products are not always tangible.

One thing to keep in mind is that products and services are closely aligned. In fact, a majority
of products carry with them an element of service. For example, when a consumer buys a car,
the product comes with a lot of other service responsibilities, such as tune-up and
maintenance. Nevertheless, there is a clear difference between the two concepts, and it’s
imperative for one to understand their working definitions.

Product Classification in Marketing

Knowing the classification of a product is vital when devising a marketing strategy. It lets
you know the mindset most consumers have and the behavior they exhibit when interacting
with your product. There are four types of products and each is classified based on consumer
habits, price, and product characteristics: convenience goods, shopping goods, specialty
products, and unsought goods.

i. Convenience Goods

Once consumers choose their brand of choice, they typically stick to it unless they see a
reason to switch, such as an interesting advertisement that compels them to try it or
convenient placement at the checkout aisle. These products include gum, toilet paper, soap,
toothpaste, shampoo, milk, and other necessities that people buy regularly.

To market a convenience good, you want to consider that most people will impulse buy these
products. Placing your products near the checkout line at a store could be a good idea for
these products which is why you will often find candy and gum at the front of a store.

Since most convenience products are priced low, cost and discounting is not a major deciding
factor when considering a purchase. I will not switch my toilet paper brand just to save a few
cents.

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For convenience goods, brand recognition is key. With this in mind, you'll want to implement
widespread campaigns to spread awareness of your company if possible.

ii. Shopping Goods

Shopping goods are commodities consumers typically spend more time researching and
comparing before purchase. They can range from affordable items, like clothes and home
decor, to higher-end goods like cars and houses.

To market a shopping good, invest in content that persuades your buyer of your product’s
value. It is important your marketing materials demonstrate how your product differs from
the competition, and the unique value it provides consumers. Price also plays a role in this
product type, so the promotion of discounts and sales can attract consumers toward your
brand.

iii. Specialty Goods

A specialty good is the only product of its kind on the market, which means consumers
typically do not feel the need to compare and deliberate as much as they would with shopping
products. A good example of this is iPhones.

I have been purchasing new iPhones for years, and I have not paused to consider other
Smartphone models, because of Apple’s strong brand identity and the perception I have of its
product quality.

When marketing a specialty good, you do not necessarily need to spend too much time
convincing consumers that your product is different from competitors. They already know
already. Instead, focus on how your products are constantly innovating and improving. This
will ensure your customers will remain loyal to your brand.

Unsought Goods

Unsought products or goods are that consumers are not typically excited to buy. Good
examples of unsought goods include fire extinguishers, batteries, and life insurance.

People will typically buy an unsought good out of a sense of fear or danger. For instance, you
would not go on the market looking for the "new and best" fire extinguisher. You would only
purchase one due to the fear of a potential fire. Alternatively, some unsought goods, like
batteries, are bought simply because the old ones expired or ran out.

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When marketing an unsought good, focus on reminding consumers of the existence of your
product, and convincing consumers that purchasing your product will leave them with a
better sense of security.

Characteristics of Goods and Service Products

Service products are quite diverse and they tend to have the following characteristics.

Intangibility
Leonard Berry offers this useful differentiation: “A good is an object, a device, a thing; a
service is a deed, a performance, an effort.” With the purchase of a good, you have something
tangible an item that can be seen, touched, tasted, worn, or displayed. That’s not true of a
service, which is intangible (quite literally, “not able to be touched”).

Assessing the quality of a tangible product is very easy. Since most products are countable,
touchable, and visible, a consumer can assess its durability by examining it. A good case in
point is when an individual is buying a home. The buyer will check every nook and cranny of
the house, including the attic, basement, foundation, each individual room, and more.

In contrast, a service is not something that one can feel or try out before paying for it. There
is no definite way of evaluating the quality of a service until it’s rendered. Say an individual
needs a professional inspector to identify any hidden issues before deciding to purchase a
home. Just how experienced is the inspector with regard to plumbing, roofing, and other
structural matters?

Although you pay your money and consume the service, there is nothing tangible to show for
it. For example, if you attend a professional football game, you spend money for a ticket and
spend nearly three hours taking in the entertainment. After the game, you leave. Unless you
have purchased a good at the game, you will not take anything tangible to take away (except,
perhaps, the ticket stub).

Simultaneous Production and Consumption

Service products are consumed at the same time they are being produced. The tourist
attraction is producing entertainment or pleasure at the same time it is being consumed. In
contrast, goods products are produced, stored, and then consumed. A result of this
characteristic is that the provider of the service is often present when consumption takes
place. Dentists, hotel staff, hair stylists, and ballet dancers are all present when the product is
used.
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Perishability

The best way to illustrate perishable products is to consider a restaurant owner. Another
example is technology. Even some intangible products like software become obsolete at some
point. Imperishable products include items like jewelry and automobile parts.
However, does the distinction between perishable and imperishable exist in services?
Services can be described as perishable but not imperishable. A perishable service simply
means that it is short-lived. Ideally, such a service is consumed as soon as it is produced.
Unlike products, the service cannot be stored for later use.

Perishable services are such as airline flights, auto repair, theater entertainment, and
manicures. If an individual purchases an air ticket for a particular day, and then he suffers a
cold and is not able to travel, the ticket expires. The perishable attribute of some services
makes it hard to balance supply and demand.

Little Standardization

Because service products are so closely related to the people providing the service, ensuring
the same level of satisfaction every time is very difficult. Dentists have their bad days, not
every football game is exciting, and the second vacation to Kuriftu Resort may not be as
wonderful as the first.

High Buyer Involvement

With many service products, the purchaser may provide a great deal of input into the final
form of the product. For example, if you wanted to go on a Caribbean cruise, you would visit
a number of Web sites describing the various cruise locations, review the available options
for cabin location and size, islands visited, food, entertainment, prices, and whether they
accommodate children. Although the task would be very time consuming, you could, if you
wanted, practically design every moment of your vacation.

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Difference between Product Businesses and Service Businesses

Product-based businesses are vastly different from service-based businesses in many ways,
including startup and running costs and best marketing techniques. Selling a service is vastly
different than selling products. At the heart of it, the main difference is that a product
business sells physical, tangible objects, whereas a service business provides value through
intangible skills, expertise and time.

The marketing techniques and costs vary when selling services versus selling products, as
well. Understanding these differences can help you cultivate the right approach for your
business.

Product Based Selling

When selling a product, businesses will want to highlight specific features and display the
item in-store or online for customers to view. In some cases, customers can touch or
manipulate the product before purchase, or they may have the opportunity to see it being used
in a demonstration via sales teams or online videos.

Products are designed to meet the needs of the customer, but cannot always be customized if
there are certain requirements. If a customer is not satisfied with a product, they can easily
return it or exchange it for a different one.

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With products, it is easier for a customer to determine its value and whether or not their
purchase was worth the money they spent. Customers can rate a product online, and
prospective customers can use the ratings to determine whether they want to buy the product.

The challenge for product businesses is keeping up with product demand and finding room to
store inventory. Running out of inventory can result in bad customer reviews and
dissatisfaction, so it is important to track the manufacturing process, the number of items you
have and what customers are buying so you always have enough of each product.

A few examples of a product-based business include:

Consumer products (hygiene products, clothing, appliances, etc.).

Raw materials (metals, timber, minerals, etc.).
Agricultural products (wheat, corn, animal products, etc.).
Technology products (phones, cameras, laptops, etc.).

Service Based Selling

When selling a service, it is crucial to highlight what makes your service personal and how
you can meet the customers’ needs. Typically, marketing services requires building trusting
relationships with customers and customizing them as necessary. This may include low
monthly or yearly subscription packages or additions to the standard service offered.

Generally speaking, service businesses are less expensive to operate than product businesses
because there is no inventory, and the physical location of a service-based business is often
irrelevant (though, this will vary based on the type of service offered). The pricing for service
businesses, however, can vary greatly depending on various factors, including the specific
industry, the experience of those operating the business and the amount of time it takes to
complete the service.

However, it can be more difficult to get ratings for a service business because it may take
longer for a service to be completed or to take effect, whereas a product can be used and then
evaluated, reviewed and shared almost immediately.

Furthermore, a bad review for a service can take quite a toll on the business. A service cannot
be returned and exchanged like a product, so it’s important that businesses continually
evaluate the service they are providing. Bad reviews for a service-based business can create a

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negative brand image and turn prospective customers away. Addressing customer questions
and complaints in a professional manner will aid in resolving any issues that arise.

A few examples of service-based businesses include:

Professional services (attorneys, engineers, marketers, etc.).

Home repair (carpenters, roofers, electricians, etc.).
Creative services (writers, graphic designers, etc.).
Personal care (hair stylists, massage therapists, etc.).
Health care (doctors, physical therapists, etc.).

Whether you choose to run a product business or a service business, it is important to do your
research and understand how best to satisfy your customers. Take note of what your
competitors are doing, what prospective customers are looking for and determine how you
can compete and meet the needs of those customers. Once you start learning customer trends
and collecting feedback, you can adjust your strategies and beat out your competition.

Customer Relationships and Selling Strategies

Customer Relationships

Some buyers and sellers are more interested than others in building strong relationships with
each other. Generally speaking, however, all marketers are interested in developing stronger
relationships with large customers. Why? Because serving one large customer can often be
more profitable than serving several smaller customers, even when the large customer
receives quantity discounts. Serving many small customers calling on them, processing all
their orders, and dealing with any complaints is time consuming and costs money. To
illustrate, consider the delivery process. Delivering a large load to one customer can be
accomplished in just one trip. By contrast, delivering smaller loads to numerous customers
will require many more trips. Marketers, therefore, want bigger, more profitable customers.
Big box retailers such as Home Depot and Best Buy are examples of large customers that
companies want to sell to because they expect to make more profit from the bigger sales they
can make.

Marketers also want stronger relationships with customers who are innovative, such as lead
users. Similarly, marketers seek out customers with status or who are recognized by others
for having expertise. Salespeople are also tasked with maintaining relationships with market
influencers who are not their customers.

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Types of Sales Relationships

Think about the relationships you have with your friends and family. Most relationships
operate along a continuum of intimacy or trust. The more you trust a certain friend or family
member, the more you share intimate information with the person, and the stronger your
relationship is. The relationships between salespeople and customers are similar to those you
have, which range from acquaintance to best friend.

The Relationship Continuum

As this figure depicts, business relationships range from transactional, or one-time purchases,
to strategic partnerships that are often likened to a marriage. Somewhere in between are
functional and affiliative relationships that may look like friendships.

At one end of the spectrum are transactional relationships; each sale is a separate exchange,
and the two parties to it have little or no interest in maintaining an ongoing relationship. For
example, when you fill up your car with gas, you might not care if it is gas from Total, Shell,
or another company. You just want the best price. If one of these companies went out of
business, you would simply do business with another.

Functional relationships are limited, ongoing relationships that develop when a buyer
continues to purchase a product from a seller out of habit, as long as her needs are met. If
there is a gas station near your house that has good prices, you might frequently fill up there,
so you do not have to shop around. If this gas station goes out of business, you will be more
likely to feel inconvenienced. MRO (maintenance, repair, and operations) items, such as such
as nuts and bolts used to repair manufacturing equipment are often sold on the basis of
functional relationships. There are small price, quality, and services differences associated
with the products. By sticking with the product that works, the buyer reduces his costs.

Affiliative selling relationships are more likely to occur when the buyer needs a significant
amount of expertise needed from the seller and trust is an issue. Ted Schulte describes one
segment of his market as affiliative; the people in this segment trust Schulte’s judgment

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because they rely on him to help them make good decisions on behalf of patients. They know
that Schulte would not do anything to jeopardize that relationship.

A strategic partnership is one in which both the buyer and seller to commit time and money
to expand “the pie” for both parties. This level of commitment is often likened to a marriage.
For example, GE manufactures the engines that Boeing uses in the commercial planes it
makes. Both companies work together to advance the state of engine technology because it
gives them both an edge. Every time Boeing sells an airplane, GE sells one or more engines.
A more fuel-efficient or faster engine can mean more sales for Boeing as well as GE. As a
result, the engineers and other personnel from both companies work very closely in an
ongoing relationship.

Going back to the value equation, in a transactional relationship, the buyer calculates the
value gained after every transaction. As the relationship strengthens, value calculations
become less transaction oriented and are made less frequently. There will be times when
either the buyer or the seller engages in actions that are not related directly to the sale but that
make the relationship stronger. For example, a GE engineer may spend time with Boeing
engineers simply educating them on a new technology. No specific sale may be influenced,
but the relationship is made stronger by delivering more value.

Note that these types of relationships are not a process not every relationship starts at the
transactional level and moves through functional and affiliative to strategic. Nor is it the goal
to make every relationship a strategic partnership. From the seller’s perspective, the
motivation to relate is a function of an account’s size, innovation, status, and total lifetime
value.

Selling Strategies

A salesperson’s selling strategies will differ, depending on the type of relationship the buyer
and seller either have or want to move toward. There are essentially four selling strategies:
script-based selling, needs-satisfaction selling, consultative selling, and strategic partnering.

Script-Based Selling

Salespeople memorize and deliver sales pitches verbatim when they utilize a script-based
selling strategy. Script-based selling is also called canned selling. The term “canned” comes
from the fact that the sales pitch is standardized, or “straight out of a can.” Back in the late
1880s, companies began to use professional salespeople to distribute their products.

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Companies like National Cash Register (NCR) realized that some salespeople were far more
effective than others, so they brought those salespeople into the head office and had them
give their sales pitches. A stenographer wrote each pitch down, and then NCR’s sales
executives combined the pitches into one effective script. In 1894, the company started one of
the world’s first sales schools, which taught people to sell using the types of scripts
developed by NCR.

Script-based selling works well when the needs of customers do not vary much. Even if they
do, a script can provide a salesperson with a polished and professional description of how an
offering meets each of their needs. The salesperson will ask the customer a few questions to
uncover his or her need, and then provides the details that meet it as spelled out in the script.
Scripts also ensure that the salesperson includes all the important details about a product.

Needs-Satisfaction Selling

The process of asking questions to identify a buyer’s problems and needs and then tailoring a
sales pitch to satisfy those needs is called needs-satisfaction selling. This form of selling
works best if the needs of customers vary, but the products being offered are fairly standard.
The salesperson asks questions to understand the needs then presents a solution. The method
was popularized by Neil Rackham, who developed the SPIN selling approach. SPIN stands
for situation questions, problem questions, implications, and needs-payoff, four types of
questions that are designed to fully understand how a problem is creating a need. For
example, you might wander onto a car lot with a set of needs for a new vehicle. Someone else
might purchase the same vehicle but for an entirely different set of reasons. Perhaps this
person is more interested in the kilometers per liter, or how big a trailer the vehicle can tow,
whereas you are more interested in the vehicle’s style and the amount of legroom and
headroom it has. The effective salesperson would ask you a few questions, determine what
your needs are, and then offer you the right vehicle, emphasizing those points that meet your
needs best. The vehicle’s kilometers per liter and towing capacity would not be mentioned in
a conversation with you because your needs are about style and room.

Consultative Selling

The needs-satisfaction selling and consultative selling seem the same. The key difference
between the two is the degree to which a customized solution can be created. With
consultative selling, the seller uses special expertise to solve a complex problem in order to
create a somewhat customized solution.

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Strategic-Partner Selling

When the quality of the relationship between the buyer and seller moves toward a strategic
partnership, the selling strategy gets more involved than even consultative selling. In
strategic-partner selling, both parties invest resources and share their expertise with each
other to create solutions that jointly grow one another’s businesses.

Choosing the Right Sales Strategy for the Relationship Type and Selling Stage

The sales strategy types and relationship types we discussed do not always perfectly match up
as we have described them. Different strategies might be more appropriate at different times.
For example, although script-based selling is generally used in transactional sales
relationships, it can be used in other types of sales relationships as well, such as affiliative-
selling relationships. An affiliative-sales position may still, for example, need to demonstrate
new products, a task for which a script is useful. Likewise, the same questioning techniques
used in needs-satisfaction selling might be used in relationships characterized by consultative
selling and strategic-partner selling.

So when is each method more appropriate? Again, it depends on how the buyer wants to buy
and what information the buyer needs to make a good decision.

Why do you need a sales strategy? Here are a few benefits:

More effective use of resources

Clearly defined target audience
Improved conversion rates
Coordinated approach between sales and marketing teams
Wider understanding of your market

Developing a sales strategy starts with defining your objectives. Before you get started,
review your goals over the next one to five years, ensuring all objectives are measurable.
Think about how you want to define your brand, and what position you want to be in. For
some, this might mean developing and launching a new product. For others, this might mean
coordinating a cohesive content marketing strategy. Most new businesses will need to build a
core customer base as one of their primary objectives.

Once companies have identified their resources and objectives, it is time to get down to
business. Here are a few different types of sales strategies.

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1. Define buyer.

The first sales and marketing strategy is to focus on core demographic, learning everything
you can about buyer. What do you know about your market? You can review competitor
content, conduct market research, and send out surveys to gain a greater understanding of
who your core customers are.

An effective buyer-centric strategy will focus on choosing the most productive leads. You do
not want to waste your limited resources on leads that are unlikely to convert to a sale. To do
this, research prospects thoroughly, defining priorities and influencers. All of this can be used
to compile a buyer profile based on details like the following:
Location
Demographics
Industry (for B2B sales)
Buying behaviors

Follow up with regular surveys, listening and learning from your client feedback to refine
your buyer profile.

2. Tell a story.

A second type of sales strategy plan is to focus on telling a story using content marketing. As
humans, we are hardwired to respond to evocative storytelling. Rather than providing
customers with a dry rundown of your product features, why not focus more on the personal
benefits your products offer?

Share real-life problems that your customers can identify with, following up with examples of
how your products or services can help. This type of strategy puts customers at the heart of
the story. You can incorporate this within your social media accounts, targeted emails,
newsletters, and website.

3. Target a niche market.

A common approach for start-up businesses is to begin with a highly niche market before
expanding your sales strategy to a wider demographic. Use customer segmentation and other
forms of analysis to identify paint points that each market shares. Choose a small grouping of
companies or individuals to target, explaining how your product or service can solve these
problems. It might seem counterintuitive not to cast the widest net possible, but you’ll be able
to refine your business to a core group of customers and grow from there.

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4. Sell your brand.

Another type of sales and marketing strategy is to sell yourself. While many businesses focus
purely on marketing their products, buyers don’t want to make a purchase from a company
they know nothing about. Build customer trust by sharing information about your brand’s
background and ethos.

In addition to a strong social marketing strategy, you can grow brand-client relationships with
impeccable customer service and transparent communication. Do not confuse your buyers
with jargon or slick marketing-speak; instead, you can foster an air of authenticity by sharing
behind-the-scenes views of how your brand works.

5. Focus on internal growth.

Final sales and marketing plan is to focus not only on external outreach but internal growth.
You cannot adequately grow your business without maintenance of your existing customer
base. Track sales figures on a regular basis, monitoring all key performance indicators.

Identify what is working and what is not to tweak your strategy as needed. Keep your sales
force motivated with incentives, collecting regular feedback from all stakeholders as you
continue to grow.

The difference between product marketing and service marketing

The obvious difference between product and service marketing is that products are tangible,
and services are intangible:

Products

Tangible products are often easier to market as they can be shown, demonstrated, touched,
displayed and are easier for your audience to understand in terms of value or whether they are
needed. Whether this is true or not can be difficult to say, especially when you consider the
blurred lines of the B2B technology world, where products and services are becoming more
and more entwined.

Regardless, the aim of your marketing strategy should include finding the right market for
your product and promoting it in a way that gets the best response from your target audience.
It’s important to remember that your product stays the same regardless of who you are
targeting and can often be returned if the customer is dissatisfied.

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Services
A service, being intangible, is harder to show value. You can’t see or touch a service. Often,
then, the goal of marketing services is to create good relationships with your target audience,
developing and building trust. You are essentially selling yourself.

Customization
While products are designed, built and delivered to a range of customers ‘as standard’,
services can be tweaked and customized depending on the needs or wants of customers. Your
service marketing strategy should reflect this by highlighting the personal touches you
provide or how you listen to your customers’ needs.

Delivery
When a business sells a product to a customer, the buyer takes it away with them. In the case
of a service, the customer must go to the service provider if they want to enjoy or experience
it. You cannot separate the service from the provider. For example, if you wanted to buy a
DVD from Amazon, you click on the buy button and wait a couple of days for the product to
arrive. However, if you want to enjoy the Amazon Prime streaming service, where movies
are updated regularly, you need to head to the website and watch the film there.

Ownership
A product can be bought, used and then resold ‘second-hand’, while a service cannot - once it
has been consumed. A product is also a separate entity to the business who creates/sells it. A
service, on the other hand, is always connected to the business who provides it. Marketing for
services should be all about building the brand and personality of the service provider.

Expiration

It is also important to understand that services are consumed immediately and cannot be
returned once carried out. This is where the marketing goal of creating trust comes in. If you
provide a bad service, your customers cannot return the service, but they may not return as
customers. Once a buyer has bought a product, it doesn’t mean they will buy from you again
- but if they are happy with it, it’s more likely that they will.

Time
Usually, services are provided at a specific time for a specific period. After this, the service
agreement must be renewed or cancelled. A product can be bought and owned without any
time constraints. Marketing differences here should centre around the value of low-cost

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monthly subscriptions in the case of services, or a ‘buy once, use forever’ message for a
product.

See the chart (source) below for a comparison of the differences between product and service
marketing:

Product marketing Service marketing

Product marketing refers to the process Service marketing implies the
in which the marketing activities are marketing of economic activities,
Meaning
aligned to promote and sell a specific offered by the business to its clients
product for a particular segment. for adequate consideration.
Marketing mix 4 P's 7 P's
Sells Value Relationship
Who comes to
Products come to customers. Customers come to service.
whom?
It can be owned and resold to another It is neither owned nor transferred
Transfer
party. to another party.
Services cannot be returned after
Returnability Products can be returned.
they are rendered.
They are tangible, so the customer can
They are intangible, so it is difficult
Tangibility see and touch it, before coming to the
to promote services.
buying decision.
Product and the company producing it, Service cannot be separated from its
Separability
are separable. provider.
Products cannot be customized as per Services vary from person to person
Customization
requirements. and they can be customized.
They are non-imagery and do not
They are imagery and hence, receive
Imagery receive quick response from
quick response from customers.
customers.
Quality Quality of a product can be easily Quality of service is not always
comparison measured. easily measurable.

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