How do you plan a business product or service so that customers will love it? Our guide outlines the strategies and steps you need to take.
Even if the term “product” sounds like you’re only affected if you want to build an industrial business, for each business model you need to be able to identify the steps that are necessary for your customers to take advantage of your offer.
Strategies to plan a business product or service
Here you can apply the knowledge from this guide right away and continue to fill in your business model. Record all the work that needs to be done to ensure that your offer (whether goods or services) arrives at or can be used by the customer. Don’t forget sales. By our definition, it is part of the production process, even if it is described separately in the business model.
- Which production processes are required? What are the most important steps?
- What do you do yourself (core activities)? What can others do better – and who?
- What can you do differently than usual?
- Which parts of the production can you transfer to your customers?
Even if you sell something that you can’t touch, we’re talking about production. Even then, certain steps must be completed to plan a business product or service until your customers can take advantage of your offer.
The clearer you can name the individual steps of this creation process, the better your business model will be. Look at each step through your customers’ eyes and consider what would be the best solution from a customer’s perspective.
The production channels for the same product can vary greatly depending on the business model. An example: Traditional bakers buy and store flour and salt, make dough from it and shape it into breads. After baking, the loaves are delivered to stores that sell them. Discount baking companies, on the other hand, produce frozen dough blanks, which they deliver to stores. There they are baked and placed on the shelves. Customers serve themselves.
With your business model, you determine who takes on what tasks within the production.
Customers can also take on work steps. For example, a globally renowned Swedish furniture store has become internationally successful by transferring part of its production to its customers: the transport and construction of the furniture. This saves money and customers are happy because they can take the goods with them immediately.
You don’t have to be 100 percent sure what steps you’re outsourced and to whom. The main thing is that you are aware of the steps required and that you do not have to do everything yourself.
How can I improve ‘production’?
If you refer to the term “production” in the economic lexicon, you will probably find a definition in business administration that refers to the concrete production of goods, i.e. the factors of production and the means of production that necessary for this purpose. However, we use a broader definition that goes beyond the production of a product and additionally includes sales.
The production process in the sense of this understood offers a lot of adjustment screws that you can turn to make your business model even better. The fact that furniture customers bring their shelves home and assemble them is one of the peculiarities that distinguishes the well-known Swedish furniture store from others.
Or think of packaging. It is also one of the factors of production and offers many opportunities to refine your offer. If your customers are particularly concerned about sustainability, you should use environmentally friendly material and use it sparingly. With a very elaborately designed packaging you can underline the value of exclusive goods. Some electronics manufacturers are so concerned about the packaging of their products that unpacking becomes an experience for their customers (countless “unboxing” videos on social media bear witness to this).
For the start, it is sufficient to be able to name the most important steps in the production process. But the further you get with your business model, the more you can worry about the details. Because they are the ones who can make the difference!
Example of overnight marketplaces: travel providers without hotel rooms
The business model of now internationally renowned online marketplaces for overnight stays is based on people all over the world being able to offer and book apartments, houses or rooms online. Some of the money that is spent on the overnight stay goes to the platform as commission.
Travellers can choose from millions of accommodations in tens of thousands of cities – from Art Nouveau villas to treehouse. Many accommodations are comparatively inexpensive and offer authentic insights into local life. The hosts can improve their income by renting and receive visitors from all over the world.
With this idea, which is actually ancient, but only came to a breakthrough through technical development, the platforms have revolutionized the tourism industry. And that without owning a single hotel room.
What exactly does an overnight marketplace produce?
Of course, online marketplaces also have a production chain and take over certain core activities so that customers can benefit from the offer (whereby two customer segments are to be distinguished: on the one hand, the travellers, the low-cost and original Seek accommodation and exchange with locals, on the other hand the hosts who make money and want to show strangers their world).
The production focuses on matching supply and demand and protecting hosts and guests. For this, suitable accommodation must first be acquired. In addition, an important task of the platforms is to build the trust that is indispensable for this type of mediation. Special protection mechanisms are designed to protect guests from fraudsters and hosts from damage to their property.
Which parts of production are outsourced to marketplaces?
Overnight platforms provide the framework conditions that allow hosts and guests around the world to get in touch with each other. All tasks related to the accommodation (maintenance, equipment, cleaning, etc.) are carried out by the hosts. They move into the beds, hand over the keys and explain to their guests where they can park. So you are reception, room service and guest service in one person. They also ensure that their accommodations are adequately presented on the platform by posting meaningful photos and descriptions.
Use as needed instead of owning
In this business model, the production process primarily comprises core activities that relate to the mediation between supply and demand. Thus, online marketplaces are a typical example of the sharing economy, in which it is no longer the possession but the use and sharing that matters, and whose technical prerequisite is the Internet.