“What is a product?” This question can be found in every business or economics book from elementary school onward. The answer seems obvious, but the truth, as often happens, is a good deal more complex.

Ask yourself the question once more of “what is a product?” This is not a question of petty semantics, but one that prompts us to examine the roots of a word we throw around all the time.

What is a product?

The Many Answers to “What is a Product?”

First things first, let’s give the straightest possible answer we can to the initial question of “what is a product?” Upon careful analysis of the question, we found seven sometimes agreeing, sometimes conflicting definitions of product.

  1. The simplest definition of product is “an item offered for sale, physical or virtual.” (India Times).
  2. Product is also often used as a synonym for merchandise, which is nearly the same as the above definition, but is worth mentioning because “merchandise” is often used in conjunction with the word “retail.” (Wikipedia).
  3. For manufacturers, product can be used to describe finished goods, which is anything that is ready to be sold to another business. (Wikipedia).
  4. Products can also be used to refer to sub-products which are ready for another step of processing before being sent somewhere else. (Wikipedia).
  5. When providing a service that can be broken down into distinct stages, you can refer to project deliverables as products. (Wikipedia).
  6. “A tangible product is a physical object that can be perceived by touch such as a building, vehicle, or gadget. Most goods are tangible products. For example, a soccer ball is a tangible product.” (Lumen Learning).
  7. “An intangible product is a product that can only be perceived indirectly such as an insurance policy. Intangible data products can further be classified into virtual digital goods (‘VDG’), which are virtually located on a computer OS and accessible to users as conventional file types, such as JPG and MP3 files.” (Lumen Learning).
What is a product and what is a service?
This is how people typically think of product vs. service. This is only partly right.

Products & Services Aren’t As Different As You Think

So far, we’ve learned that products can be tangible or intangible, finished or unfinished, and can even be used to describe specific sets of tasks completed in service-driven industries. That makes things incredibly confusing, and leaves us searching for a new understanding of what exactly a product is in an increasingly digital world.

Take for example video games. In 1997, when you bought a game for the Nintendo 64, the game in the cartridge was sold as-is and would never change. There were no servers to connect to and, indeed, no online capabilities at all.

If you play a modern video game, though, you know that even if you buy a physical copy of the game, it will be patched repeatedly over time. You bought a product, sure, but again you must ask, “what is a product?” Are the patches and bugfixes a service or an extension of the original product itself?

Even When Products Don’t Change, Our Relationships With Them Do

And then you have to consider the following situation. Let’s say you buy a Lexus ES300. The only meaningful difference between that car and a fully loaded Toyota Avalon is the name. The luxury name of “Lexus” gives its user psychological and social benefits.

But why exactly is Lexus considered fancier than Toyota? We’ve discussed this before and have concluded that it’s purely about branding. Branding can change over time as companies tweak their strategies. That means the associations the general public at large makes when they hear the name “Lexus” changes over time. Does that mean the product, whose benefits derive mainly from branding, changes over time because of marketing activities?

To reiterate: products often change over time. Even when the products themselves don’t change, social perceptions often do. People purchase based on how they perceive value. When social perceptions change on a large scale, does the nature of a product itself change?

We think so.

Levels of Product

After such a heady philosophical argument, we want to bring things back down to earth by using what Lumen Learning refers to as the four levels of a product:

  • Core product
  • Tangible product
  • Augmented product
  • Promised product

The core product is the feeling that customers are buying. A wealthy man buying a Lexus may actually be buying status. A hungry woman buying a meal is buying freedom from hunger. The core product is different for every person and every product. Marketers spend an enormous amount of time, money, and energy figuring out what people are actually buying.

The tangible product is exactly what you think it is. If you buy a bike, the bike is the product. The tangible product covers features, quality, style, and packaging. It’s everything that can be touched, seen, or heard.

The augmented product includes any after-sale service, delivery, or installation. This is your Fitbit’s software updates or your video game’s patches. When Home Depot installs your brand new washer and dryer, that’s a good example, too.

Lastly, you have the promised product, which includes potential trade-in value, dependability, and status. Lumen Learning says it best in this quote:

There is no definite promise that a Mercedes-Benz holds its value better than a BMW. There will always be exceptions. How many parents have installed a swimming pool based on the implied promise that their two teenagers will stay home more or that they will entertain friends more often?

Do airlines sell products?

I found a wonderful example on Mountain Goat Software that goes into detail about how airlines provide products. Seriously! I’ll give you a basic overview here, but I also encourage you to read the original article.

Airlines are typically thought of as a service. They move people from Point A to Point B. Simple as that.

But what about the website where you check a flight’s status? What about the system for scheduling aircraft maintenance? What about the system that allows crew members to set their schedules and request time off? Many of these systems are created in-house, so in this sense, the service industry is augmenting their service with products. One clearly faces customers, another indirectly serves customers, and the last one is purely internal.

They then go on to say that all of these systems can be thought of as products, even the last one that appears purely internal. After all, all of these directly or indirectly affect the quality of the service provided to customers.

I personally think this definition of product runs the risk of being too broad, but the detailed analysis allows us to pick points that we’re not so sure about and ask questions. That’s precisely what business owners should be doing when making products perfect for their customers. Analyze what you’re selling from every conceivable angle so that you can do your absolute best.

Is experience a product?

As if the waters were not muddy enough, I want to introduce yet another definition of product. This one comes from the field of user experience design (or UX, for short). To greatly oversimplify, UX designers think of a product as basically anything that is created. The definition of a product, therefore, arises out of a conscious design process and is tailored to match particular business needs.

Remember the concept of “core product” which we introduced a few paragraphs above? UX design helps teams to create tangible products and experiences that meet people’s underlying needs.

Thinking about product creation from a UX perspective helps you to make a tangible product that meets the basic needs of the customer. It also helps you make sure the augmented product (which you can control directly) and promised product (which you can influence through marketing) also meet your customers’ basic needs.

Why The Definition of Product Matters

It’s tough to get your head around the flexible definition of product, but it is nevertheless important. Companies that understand that marketing is literally the product succeed. Companies that don’t understand this run out of steam and fail.

This concept is not just postmodern schlock either. That’s why the old business cliche of “customers want 1/4-inch holes, not 1/4-inch drills” lives on even today. Benefits and features are not the same thing. Your customers want the benefits of your product, which you provide through features. In our increasingly technologically-driven world, these features are often intangible and never-ending.

Final Thoughts

Ultimately, your success in business will hinge upon providing customers with what they want. Oftentimes, this comes in unexpected forms since customers purchase solutions and not just products. Since we solve customers’ problems through products, the definition of product must necessarily evolve as customers’ problems do.

Don’t just think about products as goods you can touch and feel! Think about the context and the experience, too. Consider the ongoing responsibilities you will need to take on. And above all, consider what your customers actually need!