What is a product?

A product is any item or service you sell to serve a customer’s need or want. They can be physical or virtual. Physical products include durable goods (such as cars, furniture, and computers) and nondurable goods (such as food and beverages). Virtual products are offerings of services or experiences (such as education, software, and other digital products). A product may be a hybrid and include both physical and virtual elements. Hybrid products are becoming more common, as traditionally analog products are incorporating digital technology as a way to better reach and serve customers.

As you will learn in this guide, there is a lot more to a product than its at-first-glance attributes and what the customer thinks they are paying for.

Create your own product plans

Software can be considered both a product and a service. You can purchase a physical version of the software and install it on-premises, which is what was traditionally done. This simply means that the software is installed on the user’s computer, versus a remote server or in the cloud. Many software products today are sold virtually. This where the term software-as-a-service (SaaS) originates. This approach uses a web-based delivery model and customers pay a monthly or annual subscription fee to access the software.

There is likely a product expert at your company who is responsible for planning and maintaining a product throughout its lifecycle. This is often the product manager. The role of product management in technology companies is to think holistically about the customer experience. This is because customers decide what they think and how they feel about a product based on the total set of interactions they have with a company — providing a good product at a competitive price is not enough to earn long-term loyalty.

Product classifications

There are many additional ways to classify products. In this guide, we are going to focus on a few areas, including customer type, purchasing behavior, business products, and industry.

Customer types

You can start by splitting products among two major customer types — consumer and business. Products are commonly categorized as business-to-business (B2B) or business-to-consumer (B2C) based on which type of customer they serve. There is a third category called B2B2C. This is where a company targets the consumer market via another business. OpenTable is an example of a B2B2C product. The company sells its online reservation booking software directly to restaurants, but it is used by consumers looking for available dining options.

A company can have both consumer and business customers, but understanding how each type of buyer will purchase and use a product is foundational to your product and marketing strategy.

Purchasing behavior

Consumer products are commonly further categorized by purchasing behavior. Each type of product has a distinct set of characteristics that influences the way customers buy them. The table below explains the four major product classifications and the impact of technology on consumer behavior.




Convenience products are purchased frequently and with little planning or effort. This type of product is widely available, easy to obtain, and typically has a low price. Digital technology has changed the meaning of “convenience” by making many types of products and services available on demand through software applications.


Shopping products are purchased less frequently than convenience products and have a higher price. Buyers compare attributes such as quality, style, and price before making a purchasing decision. Widespread access to the internet makes it easier for customers to learn about a product, compare alternatives, and determine if it is the right product to meet their needs and wants.


A specialty or niche product has features that appeal to a specific group of customers. In technology, this category includes vertical market software such as real-estate or banking applications. This type of product requires more targeted promotion to reach the right people. Digital marketing approaches provide new ways for companies to successfully reach and engage specific target audiences.


Products that have little or no proactive customer demand are called unsought products. This category includes new products and products where the direct benefit to the customer is low. Because customers do not perceive a need for these products, the offer and its benefits must be directly promoted to potential customers to generate interest. New technology products focus on innovators and early adopters to gain momentum and influence others.

Business products

Business products on the other hand help companies create their own products or operate their business. Examples of business products include raw materials, equipment, component parts, supplies, and business services. Business software is used by companies to support key business functions. Examples of business applications include accounting, customer relationship management (CRM), human resource management, and strategic planning software. Business applications are further categorized by the size of the company — small and medium businesses or enterprises.


Products are also described by the industry they serve. Industries are broad categories such as energy, healthcare, financial services, or information technology. Products that are tailored to meet the needs of a specific industry are called vertical market products. An example of a vertical market product is a healthcare application for managing patient data. When a product is present in multiple industries, it is described as a horizontal market product and can support a wide range of customer needs. For example, a general accounting platform can be used by all business types.

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Complete Product Experience

A product is more than just the physical or virtual item that is sold. Of course, the features and benefits a product provides are important. Value is based on whether your product provides the essential features and benefits a customer expects, value-added features and benefits that exceed expectations, and future enhancements.

You need to consider and optimize every way a customer interacts with your product and company. This concept is called the Complete Product Experience (CPE). Brian de Haaff, Aha! co-founder and CEO, defines the CPE in Lovability — the #1 Amazon bestselling book for company and product builders. The following is an excerpt from Lovability:

"In the world of software and technology, the Complete Product Experience (CPE) has seven main components, presented here in a rough order that shows the typical product adoption process. However, the reality is that customers tend to adopt products unpredictably, according to their own tastes and priorities. An organization must be flexible enough to handle multiple adoption paths while staying focused on delivering a high-quality, lovable CPE."

1. Marketing is how potential customers learn about your product and determine if it might be a fit to help them solve their problem. This is taking on new forms as people grow increasingly connected: social platforms, online reviews, and company-published content.

2. Sales is the process of prospects learning more about the product from a company representative and possibly using it in a trial. They educate themselves about the product and get the information they need to determine if the solution is right for them.

3. Technology refers to the core set of features that customers pay for. In our case, that is the online software that they log into our servers to use. For others, it could be the actual phone, credit card, or even an insurance policy that is purchased. However, technology should represent not the end of a transaction but the beginning of a transparent, interactive relationship.

4. Supporting systems make it possible to deliver the product. These are internal systems that the customer rarely sees but which can have a huge impact on their overall happiness: billing, provisioning, analytics, and more. For example, if you call customer support and the representative always seems to have a comprehensive history of your purchases and support issues at their fingertips, you can thank supporting systems.

5. Third-party integrations enable new products to fit into how the customer already lives and works. All products exist in an ecosystem, so they have to play nice with the other products the customer is already using and the way that customer already works.

6. Support is everything from answering customer questions to training and even helping customers integrate your product with their existing systems. Support describes all activity that helps the customer achieve something meaningful with a product.

7. Policies are the rules that companies set to govern how they do business. At their best, they provide a framework for employees to be their best. At their worst, they create unresolvable frustration that drives customers to ask “to speak with the manager.”

Ultimately, the product is the summation of all touchpoints that form the relationship between your company and the customer. It is important to consider how the components described above interact with each other. Creating a seamless experience requires bringing together product, marketing, sales, and support teams to optimize each step of the customer’s journey and create lasting joy.

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Product development dictionary