The world of business is truly fascinating. Businesses provide livelihood to the majority of the human race. Even farmers also depend on businesses to sell their products and get inputs for farming.
However, to most of us, the world of business remains a mystery. In these series of blogs, we try to unravel the mysteries of business.
In this blog we will learn about ‘Purpose of Product or Service Development and Management.’
Product or service development and management is essential for the continued success of a firm. Innovation and new product/service development is necessary to meet the changing needs of the customer and to stay ahead of the competitors’ actions. The purpose of this chapter is to give an overview on how products and services are developed and managed and the various steps involved in developing, testing and launching a new product.
Product and services
A product can be either a good or a service. A good is a tangible object that can be manufactured and produced for resale, along with its associated benefits. Example – Furniture. A service is an intangible activity performed by other people in exchange for payment, along with its associated benefits. Example – Training, consulting
The features of a product are as follows:
1. Tangible features
A tangible product has some physical features that can be seen and handled, such as shape, size, color, weight, etc. It can be touched and its physical presence can be felt. Example – Computers
2. Intangible attributes
The core aspect of the product such as its performance, quality, dependability, and reliability are often built in the product or service and intangible. These key attributes cannot be seen, but rather can be felt and experienced after using the product or patronizing the service.
Example- After Sale Service
3. Association features
Products may have associated attributes to facilitate its identification and acceptance by buyers. Such attributes may be a brand name, package, warranty, credit terms, delivery terms, or payment options.
4. Exchange value
For marketing purposes, every product, whether tangible or intangible, should have an exchange value and should be capable of being exchanged between buyer and seller, based on mutually agreed considerations. This exchange is a function of product value and the asking price. If the buyer feels that the value he is receiving from the product is equal or even higher than the money he is giving out, he feels satisfied and contented. Otherwise, he feels cheated and shortchanged and will most likely not buy it again and may even de-market the product if he gets the chance.
5. Customer satisfaction
The product should be able to satisfy consumer needs. Satisfaction can be both real and psychological. For example, when we eat food, wear clothes, or take medicines; we get a real satisfaction; whereas, when we buy insurance plan, services of travel agency, or beauty salon, we derive psychological satisfaction.
Intangibility is used in marketing to describe the inability to assess the value gained from engaging in an activity using any tangible evidence. It is often used to describe services where there isn’t a tangible product that the customer can purchase, that can be seen, tasted, or touched. This is the most defining characteristic of a service that differentiates it from a product.
Inseparability is a service characteristic that renders it impossible to divorce the supply or production of the service from its consumption. Moreover, it is very difficult to separate a service from the service provider. They are inseparable.
Perishability is used in marketing to describe the way in which a service capacity cannot be stored for sale in the future. Services cannot be stored, saved, returned, or resold once they have been used. Once rendered to a customer, the service is completely consumed and cannot be delivered to another customer.
While products can be homogeneous and mass produced, the same is not true of services. The term heterogeneity describes the uniqueness of service offerings.
Product/Service Life Cycle
Just as businesses go through stages, so do products and services. The product or service life cycle is determined by how long it’s marketable.
4 stages of the product life cycle
Profits are low in this stage because things such as research and development, production and marketing costs are high. Prices are set high on the product or service to recover development and introduction costs (but maybe low as a way to more quickly build market share).
Sales generally increase with the demand for the product. Cash flow improves and profits are at their peak. Although competition may be minimal in this stage, it’s important to continually make refinements and stay ahead of the competitive curve.
Sales may continue to increase but profits decrease since prices are continually lowered to compete. Still, a great amount of cash flow is generated through sales. Conduct market research to determine trends. Adapt your product or service to meet the coming trends — this is the stage in which differentiation is more important than ever.
Sales drop even though prices continue to fall. Profits are extremely low at this stage, but the product or service has generated sufficient cash flow during its life. When a product or service hits this stage, reintroducing the product or adding a new feature could be the solutions.
About Adaptive US
Adaptive US is world’s #1 leading IIBA EEP. It is the only training organization that provides IIBA certification training with Success Guarantee. Adaptive is a World Leader in CBAP training, ECBA training, IIBA CCBA training, , IIBA CBDA training, IIBA CCA training and IIBA AAC training.
Adaptive is a global leader in business analysis certification training with 800+ internationally certified professional. It also conducts BA skill training on Jira, BPM, MS Visio, Balsamiq, UML, Interview Preparation as well as Resume Preparation.
Adaptive has published following books on business analysis-
- The Handbook of Business,
- 1000 BA Interview Questions,
- Business Consulting 101,
- Practical Requirements Engineering,
- Agile Business Analysis,
- Big Book Of Corporate Jargons,
- Giant Book of BA Techniques,
- Stories for Trainers,
- Practice BA Techniques with Lucidchart,
- Mastering CPRE-FL,
- CPRE-FL Question Bank,
- A Beginner’s Guide to IT Business Analysis.