Part 6: Service or Product Line

Service or Product Line

What are you selling? In this section, describe your service or product, emphasizing the benefits to potential and current customers. For example, don’t tell your readers which 89 foods you carry in your “Gourmet to Go” shop. Tell them why busy, two-career couples will prefer shopping in a service-oriented store that records clients’ food preferences and caters to even the smallest parties on short notice.

Focus on the areas where you have a distinct advantage. Identify the problem in your target market for which your service or product provides a solution.

Give the reader hard evidence that people are, or will be, willing to pay for your solution. List your company’s services and products and attach any marketing/promotional materials. Provide details regarding suppliers, availability of products/services, and service or product costs. Also include information addressing new services or products which will soon be added to the company’s line.

Overall, this section should include:

Service/Product Description

A detailed description of your product or service (from your customer’s perspective). Here, you would need to include information about the specific benefits of your product or service. You would also want to talk about your product/service’s ability to meet consumer needs, any advantages your product has over that of the competition, and the present development stage your product is in (i.e., idea, prototype, etc.).

Lifecycle

Information related to your product’s life cycle. Be sure to include information about where your product or service is in its life cycle, as well as any factors that may influence its cycle in the future.

Legal

Any copyright, patent, and trade secret information that may be relevant. Here, you need to include information related to existing, pending or anticipated copyright and patent filings along with any key characteristics of your products/services that you cannot obtain a copyright or patent for. This is where you should also incorporate key aspects of your products/services that may be classified as trade secrets. Last, but not least, be sure to add any information pertaining to existing legal agreements, such as nondisclosure or non-compete agreements.

Research and Development

Research and development activities you are involved in or are planning to be involved in. R&D activities would include any in-process or future activities related to the development of new products/services. This section would also include information about what you expect the results of future R&D activities to be. Be sure to analyze the R&D efforts of not only your own business but also that of others in your industry.

Pricing

Both internal and external factors must be considered by business owners when initially developing a comprehensive pricing strategy.

Internal Pricing Variables

Internal variables include the total cost of production and distribution and the overall profit goals of the company. It includes expenses for research and development, manufacturing, distribution, capital, labor and overhead.

All expenses involved with initially creating the product or service fall under research and development. Costs directly associated with raw materials used in the production of the product are manufacturing costs. Distribution costs include everything related to direct distribution and marketing, specifically sales commissions, advertising, packaging, promotional materials, trade shows, business travel, etc. All long-term or fixed assets are capital expenses. Labor costs are those costs associated with the time spent making the product. A business owner must include his or her time as part of the labor costs. Overhead expenses that are not directly related to production also need to be included. Examples of these costs are rent, utilities, telephone, insurance, supplies, etc.

External Pricing Variables

External pricing determinants are more related to the market situation and the competition. Pricing strategy will be influenced by the market size, growth rate, lifecycle issues/stages, and barriers to entry or exiting. Industry trends and fluctuations also impact your pricing decisions.