Mark E. Buckley

Product and Service Segmentation

Before you start your business or after having a few months experience, it is a good idea to think strategically about the products and services you offer. Not all your products will sell equally well. Not all services are as easy to provide. Not all projects are easy to price. You will notice trends as you proceed with your business. Try to anticipate the future by thinking strategically about what you want to provide to your customers.

First, make a list of the products or services you provide. If your product list is extensive, you might want to use categories instead of listing each individual product. From there rate or grade the products and services on several criteria. In the day to day we often focus on doing things right instead of thinking about if we are doing the right things.

For a sub shop you might list subs, pizzas, drinks, deserts, side dishes, etc. down the left hand side. On the columns you might list

Sales – Is it easy to market this product?

Demand – do customers buy this product?

Pricing – is it easy to price this product to make a profit?

Materials – does this product require a large amount of ingredients?

Skills – do employees have the right training to properly prepare this product?

Product Sales Demand Pricing Materials Skills
Side Dishes          

A construction company might use the following

Product Marketing Demand Pricing Materials Tools Training

For each type of product or service, the construction company might consider

Marketing – Is it easy to market this type of product?

Demand – Do customers want this type of work done and how often?

Pricing – Is it easy to calculate the final cost? Is it easy to determine the amount of materials and the labor time it will take?

Materials – Does this product require many trips to the hardware store? Are the materials difficult to get?

Tools – Do I need to invest in tools and equipment for this type of job? Does this type of job wear out the tools I do have?

Training – Are my employees comfortable performing this type of work? Are they familiar with it from past experience or through my training efforts?

Once you have performed this analysis, you can then make the strategic decision to focus on products and services that

  • Generate sufficient sales and profit
  • Have sufficient customer demand and are easy to sell
  • Are easy to price so that a sufficient profit is obtained from the product or service
  • Are relatively easy for you and your employees to complete with a high quality