Fifty Five and Five

The difference between product marketing and service marketing

⭐⭐  UPDATE 27th July 2020 – This post has been updated with some additional information and even more advice. Read on to learn more… 👍

  • Want to understand the difference between product marketing and service marketing? Then this post is for you.
  • We will show you the key differences between the two, with a focus on the B2B tech industry.
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  • Get top tips and practical advice.

Successful digital marketing is complex, with different strategies needed to help increase leads, boost sales, and promote your brand. And now it’s potentially more important than ever to get right. A starting point for success is understanding the difference between product marketing and service marketing. Let’s look at how they are different.

A report from McKinsey, the business consulting firm, found that B2B companies during this COVID-19 pandemic see digital interactions as two to three times more important to their customers than traditional interactions. What this says is that your business’s digital marketing strategy has an even greater opportunity to meet customers exactly where they are looking and generate and convert leads.

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 thought to be 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 is difficult to call, 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 be returned if the customer is dissatisfied.

Services:

Services, being intangible, can be 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.

The traditional differences between product and services

…and how this might affect the marketing decisions around each.

Customisation

While products are designed, built and delivered to a range of customers ‘as standard’, services can be tweaked and customised depending on the needs or wants of customers.

Tip: 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.

Tip: When selling a service, make the customer experience as smooth and as simple as possible. It means making sure your customer touchpoints are connected and up to date.

Ownership

A product can be bought, used and then resold ‘second-hand’, while a service cannot – once it’s 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.

Tip: Marketing for services should be all about building the brand and personality of the service provider.

Expiration

It’s 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.

Tip: Remember that 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. Providing a top-quality customer experience whether you’re selling a product or a service, should be priority number one.

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.

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

Bringing product and service marketing together

At Fifty Five and Five we market B2B technology and our clients are IT companies. In this world, companies are dealing much more with a productised offering, rather than simply selling peoples’ time. However, more and more of the products they are selling are sold as services (think Microsoft 365). The cloud has played a big part in this, causing companies to rethink how they offer services to their customers.

So if you used to be a purely consultative business it’s important to understand the differences between product and service marketing so you can put in place the right strategy for your company.

Our advice when talking about a product such as software which is packaged as a service, is to err on the side of the ‘service marketing’ camp.

BONUS CONTENT: Grab a free copy of our B2B Content Marketing bible.

Finding success in the SaaS boom

Even before the COVID-19 pandemic, companies of all sizes, across industries, looking to stay competitive were realising the benefits of running their business with SaaS capabilities. However, just because the market is there, it doesn’t mean IT companies should be complacent about how they market themselves.

Why IT companies fail at marketing

This is most often to oversight when it comes to:

  1. Differentiation
  2. Brand investment

Differentiation

In a marketplace where there is a lot of competition, IT companies must find a way to stand out. If you are just another ISV or reseller you’re going to struggle. Through the right marketing strategy, they can do so.

Brand investment

Along with the right marketing strategy, you need to turn your company into a brand. Understanding how you are perceived by your audience (and using that knowledge to evolve your brand) is the key to your success.

For businesses in the B2B tech world, differentiating themselves in a competitive marketplace is difficult. Understanding the difference between product and service marketing is a crucial first step to success. Check out another of our blogs for advice on how to create a marketing strategy that will help you stand out from the crowd.

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Stephen Reilly

Stephen Reilly

Stephen leads our content team.