Product-based Companies or Service-based Companies: Which one is better for you?

While going through the Job descriptions while applying you must have come across two terms; ‘Product Based Companies’ and ‘Service Based Companies’. Ever wondered what they actually are? If you have no idea about the difference, then read this article till the end.

First of all, let’s define what we mean by “product-based” and “service-based” companies.

What is Product based companies?

Think of all the electronic items or skincare products that you have in your house, the companies that produced those products are all product-based companies.

So, we could say that a product-based company is one that deals with the innovation and introduction of its own products. The products are generally the ones with high market value. Also, these products have the potential to meet the needs of the customer. They aim to produce top-quality products. Also, it strives for improving the products by adding new features. They do so use state-of-the-art technology. Such companies create a valuable product that is capable of solving crucial business problems.

Example:

TATA Motors, Cipla, Apple, Nestle

What are Service based companies?

Think of the broadband service, electricity service or gas service that you avail at your home, the companies that render those services are all service-based companies. Service based company is one that primarily sells intangible services to customers.

For a service-based company, customer needs are their topmost priority. This is because they offer services and solutions as per the needs of the customers. But innovative ideas that can ease the work of different customers are the priority of a product-based company.

Example: IBM, Master Card, Uber, Airbnb

Now that we’ve defined the terms, let’s talk about some of the key differences between product-based and service-based companies.

Tangibility:

• Product-based companies deal with tangible items, that means that product-based companies have a physical item to sell.
• Service-based companies provide intangible services, that means service-based companies offer their expertise or time.

Revenue model:

•Product-based companies generate revenue by producing and selling products.

•Service-based companies generate revenue by providing high-quality services that meet their customers’ needs.

Marketing:

•Product-based companies usually focus on advertising and promotion of their products and rely on the quality and features of their products to attract customers.

•Service-based companies focus on building relationships and trust with their clients, and they need to demonstrate their expertise and skills to potential clients.

Scalability:

•Product-based companies can often increase production and distribution more quickly than service-based companies can scale their services.

•Service-based companies need to ensure that they have enough staff and resources to meet demand.

Product-based Companies or Service-based Companies: Which one is better for you?

Deciding on a career path is a very crucial step in one’s life. One has to choose the type of company that best suits their ideologies and method of working. Now, you might be wondering: which type of company is better? Well, it really depends on your personal preferences and skills. If you’re someone who loves working with your hands and creating physical products, then a product-based company might be a better fit for you. On the other hand, if you’re someone who enjoys working directly with people and providing customized solutions to their problems, then a service-based company might be a better fit. Ultimately, the choice between a product-based company and a service-based company comes down to what you’re passionate about, what you’re good at, and what you think will be most profitable for you. Whichever one you choose, remember that there’s no one right answer — it’s all about finding the path that works best for you. Good luck!