Kenneth Trueman

@ktrueman

Products and solutions: do you know the difference ?

December 25th 2016

Though there is a tendency to use the terms interchangeably — unless of course, you are a product marketer who should know better — there is an important distinction to be made between a product and a solution that should be understood and respected. This distinction affects the ways that employees of all stripes think about the organisation, the work that it does and the outputs that it generates, as well as the ways that the organisation is perceived by its customers.

The Treachery of Images” (1928–29), René Magritte’s famous take on the difference between a product and a service

What’s a product ?

A product is a good or service that corresponds to a unique company offering (equipment, software package, consulting offering, etc.) that has typically gone through a formal process1 for development and market introduction and usually has a proprietary name (often with a trademark or ™ or ® symbol).

A product can be either a good or a service or a combination of the two. In fact, more and more of what were previously considered goods under a strict product definition are being enhanced with services, though ultimately they remain a product. For our purposes, we’ll use the catch-all term “product” to refer to goods and services, as well as offerings that combine the two.

There are formal rules, captured in corporate style guides, around the proper usage of a product name in all electronic and print communications. The use of a trademarked name as a verb or an adjective is the kind of thing that gives marketers nightmares.2 Where the possibility of a registered trademark for a product is not possible due to the use of a word or concept deemed too generic, a service mark (represented as “sm” beside a logo) may be used.

This screwdriver comes with multiple options. It could be part of multiple solutions.

Though it takes the form of a service that is provisioned and interacted with over the Internet, Amazon Elastic Compute Cloud™ (aka EC2) is an example of a product.

Characteristics of Products

  • A unique name: Typically trademarked in countries where the product is offered
  • A defined/standardised feature set: a) core product and b) pre-defined optional capabilities / characteristics
  • A published price: a manufacturer’s suggested retail price or a “street” price
  • A defined delivery model: there is low(er) risk since it was addressed during productization. The product can be delivered to multiple customers.
  • Repeatable: Providing it to one customer does not prevent another from also purchasing the same product 3
  • Documentation: The product’s core functionality is documented using generalized terms
  • Competitors: the product can be compared with competitor’s offerings using a range of variables, from basic info such as price per unit to complex info such as system requirements that may be a specific limitation of a product
  • Defined dependencies: requirements for using the product are clearly defined. The product has been tested with required dependencies in place and its proper functioning in such circumstances is generally assured by the vendor

What’s a solution ?

Whereas a product has the potential of doing something, a solution is the application of a product to solve a specific industry need or business problem. Note the word specific. The other key concepts here are application and solve, from which the word solution is derived.

When paired with a screw (another product) and a carpenter (a service), the screwdriver is part of a solution for building a home.

It is generally understood4 that a solution will provide ongoing value to a customer. While there may be one-time-only events involved in its delivery to the customer — such as installation and configuration — that are similar to what are observed with more traditional notions of a product, these events are in the service of an ongoing relationship between the customer and the organization. These activities may also be repeated in whole or in part as the customer’s business needs changes, as it adds employees that interact with the solution, as the product component of the solution wears out, etc., or as the organization produces revised versions of the product that require subsequent integration with and adaptation to the customer’s operations.

In order for a solution to support an ongoing relationship with the customer, it needs to be designed and built with an eye to the future, with the ability to grow, evolve, and meet changing needs. In return for this ongoing value creation for the customer, the organization will levy ongoing fees — recurring revenues from its perspective — and enter into a longer-term agreement, typically measured in years, formalized as a service contract.

Characteristics of Solutions

  • Based on a standard product: However standard product features used in a solution are turned on or off, and/or are modified relative to their standard functionality
  • One or more significant customizations. These customizations are a function of one or more of the following: Industry, market / geography, organization size, expressed in terms of employees or geographical coverage), business function, and/or customer’s unique characteristics and requirements
  • Optional characteristics: Possibly integrate third-party offerings, professional services component, project management component, implementation calendar
  • Non-standard pricing: can be based on a combination of volume, list price, and customization work
  • Revenue recognition is specific to the solution: revenue timing is different as well; delivery milestones come into play
  • Higher risk
  • Changes to documentation: New documentation is produced

From the perspective of marketing to prospective customers, ‘solutions’ are positioned at the level of the common challenges that are faced by organizations operating in a given industry or by the functional departments within them.

As a result, the Solutions sections of websites are divided up by the industry they target. As can be seen in many of the screenshots of company websites presented later in this document, industry-specific solutions may or may not include the word “solutions” in their descriptions.5

Solution categories

Solutions can be categorized in terms of the industry or industries that they target as well as the common business functions that are present irrespective of the underlying industry, market, or category of organization.

Examples of solutions categories include by type of:

  • Industry
  • Business function
  • Organization

Organization-type solutions are a means of slicing the needs of the market horizontally as a function of the size of an organization or the type of activities it performs (revenue generating, profit-seeking, or neither). There are also certain business challenges that are a function of an organisation’s size and not of the industry in which it operates.

A given product may be covered by more than one solution. For example, Oracle® Database 12c can be used in more than one industry. However, when it is delivered as a solution, it will come with certain industry-specific configuration decisions made in advance of its actual implementation with a specific customer. For example, it may come with certain features turned on for defence contractors that have their own realities in terms of sales cycles, information retention and other regulatory requirements, with others turned on for e-commerce companies.

These initial configuration decisions are informed by market research.

Best practices for marketing products and solutions

It’s a product

Buyers that search for products usually have a good handle on the nature of their business problem and how to solve it. They are looking for a specific piece of the puzzle to slot in and so they think in terms of products, even if what is ultimately delivered is a solution according to our usage here. Marketing language should provide clear descriptions of what the product can and cannot do. In the case of a technical product, the prospective buyer may want to see more technical information such as hardware and software requirements and other dependencies. The prospective buyer should be able to come away with a clear idea of how the product will solve the business problem in question.

It’s a solution

Buyers that search for solutions are typically at an earlier stage in the problem-solving process. They understand that they have a problem but may not properly understand where to start. They think in terms of possible solutions that can help them, though may not be specific in their understanding of possible solutions or their description of their business problem. It is, therefore, important to provide prospective buyers with language and usage examples that allow them to self-identify with an organization’s offerings and take appropriate action (e.g, download a document, request to be contacted, speak to a sales representative, etc.). Technical details, while important to share, may be less necessary earlier on as the marketer has an opportunity to sell the solution to the problem — the what — before explaining how it will go about doing so.

Evolving a solution

When deploying a solution with a customer, the marketer should be on the lookout for opportunities to enhance the core product (as we defined it earlier) based on the specific adaptations that were made to meet the customer’s needs. This is accomplished by means of capturing customer feedback and other items related to the process of deploying the product with the customer and supporting it over time. Data captured from multiple customer deployments will enable the marketer to determine if there is indeed an unmet market need or the adaptations are ultimately customer-specific.

In the case of the former, adaptations should be formalized and integrated into the core product.

Marketing a solution

When presenting to prospective customers via the Internet or in person, one should be careful when using the terms product (i.e., a good or service) and solution to help the prospect qualify his / her business need and self-identify. Business buyers have been conditioned to look for answers to their business needs in one or both of these approaches.

Positioning a solution

One should take into account whether or not the business problem to be solved is ultimately a pure expense or an input for generating revenue for the buyer and position the solution accordingly. Whereas price is most likely a strong consideration in the case of the former, when the solution can be demonstrated to enable the generation of incremental revenues, price — while still important — becomes less central to the discussion, which leaves room for vaunting the solution on the basis of other merits.

Examples of Products vs. Solutions

Let’s now turn our attention to how products and solutions are implemented in the real world. Each of the screenshots shown below was taken on December 16th, 2016, on each company’s main corporate website which facilitates comparisons. The screenshots for IBM use the Canadian (English) version of the site as IBM’s US website forgoes the traditional navigation bar on the homepage.

IBM

As IBM’s business model has moved towards recurring revenues in the form of services (code for outsourcing), it has folded Solutions into its Products menu for the purposes of its website. As the following screenshot of the main IBM website (taken December 16th, 2016) shows, Industry Solutions are a distinct menu item within the Product menu. This was most likely a design decision for the purposes of simplifying the website than any fundamental disagreement with the conceptual paradigm described here.

This screen shows a Services-focused approach where industry-specific service solutions are provided as a sub-menu item.

As we shall see with the examples from Amazon Web Services and Oracle, IBM’s approach is probably the exception to the norm. As we shall see immediately below, Microsoft’s consumer market requires a specific approach.

Microsoft

Whereas IBM is strictly focused on business customers, Microsoft faces the challenge of meeting the needs of consumers, businesses, and institutional customers as well as the developers and channel partners it relies upon to provide applications on its platforms and deliver integrated solutions to customers respectively. Microsoft’s website has in recent years put more of a focus on the needs of consumers. This may be because it knows the needs of its stakeholders well enough that it believes it can rely on them to navigate on their own to the appropriate sections of its website.

Oracle

In the case of Oracle, the distinction between products and solutions remains a fixture of its website.

The following screenshot of the main Oracle website shows the contents of the Products menu. The contents of the Products menu correspond to the actual names of Oracle products, most likely trademarked but with the (TM) symbol stripped from the menu for legibility. The major subsections correspond to groups of products by generally accepted category. E.g., applications, databases, storage, etc., as well as specifically named technologies such as Java, SPARC processors, etc.

The following screenshot of the Oracle website shows the contents of the Solutions menu. As you can see, there are a variety of Solutions categories available. Business Solutions and Industry Solutions are more typical of what you would see elsewhere.

Amazon Web Services

While Amazon Web Services is probably perceived in the minds of its customers as a service provider, it lists its various offerings first as products. They are provided as a fairly long list of text links, almost like a grocery list or Chinese menu.

A separate website section — and web experience — is provided for visitors in search of solutions specifically designed for their organizations’ industry, business problem, functional group or size (in employees, according to standard practice).

United Parcel Service (UPS)

The scope of our discussion to date regarding the distinction between products and solutions is admittedly very much focused on technology companies. In the case of United Parcel Service (aka UPS), the company breaks the model by focussing on solutions and industries, as opposed to products and solutions, the latter of which implies an industry.

UPS confuses the visitor further with a section (in light blue) labelled Product Insights, when there is no notion of a product provided in the basic site navigation.

We would recommend that UPS organize its site according to its services (a type of product according to our definition) and its solutions to meet the needs of visitors as we describe below in best practices.

Conclusion

Understanding the differences between a product — whether it is a good or a service — and a solution enables the product marketer to properly communicate with prospective business buyers, putting the focus on the right mix of information about how and claims about what the product or solution can do. This distinction also has value for the employees of the organization that produces the products or solutions as it causes them to better appreciate the nature of the organization’s business, particularly in the case of a business model that is focused on delivering solutions with recurring results.

With justifiable exceptions, most large organizations that think in terms of being providers of solutions present their products and solutions in distinct ways, even if the underlying product is the same. Business buyers have been trained to expect as much from large corporations so it makes sense to align with an existing, accepted pattern of presenting information, so as to limit distractions as buyers build up their understandings of solutions to their problem. That is a process fraught with enough distractions and reasons for buyers to say ‘no’ as it is.

  1. The complexity and/or formalness of the process depend on the organization. The important point is that a product is the result of a conscious decision to make something available for purchase. ↩︎
  2. One does not xerox — note the lower case ‘x’ — a document, one photocopies a document. The process by which that is achieved is xerography, a term that does not belong to the company named Xerox. ↩︎
  3. For economics nerds such as the author, a product can be considered a non-rivalrous good in that its use — and not purchase — by one individual does not reduce availability to others (with the exception of manufactured goods where other circumstances may apply). See Wikipedia for more) ↩︎
  4. With the exception of those who are learning for the first time that there is a difference between a product and a solution. Thank you, dear Reader. :-) ↩︎
  5. It is more a question of style than anything else. ↩︎

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