What is the Definition of Product?
Ask a few people that question, and their specific answers will vary, but they’ll all probably describe it as a physical item you find in a store or order through Amazon. In reality, the term product refers to a much broader range of goods and services.
A useful definition for a product would be:
Anything a business sells that solves a market problem or addresses a customer’s need or desire.
When you view a product through this broad lens, you can see why it can include many things we pay for that we wouldn’t normally describe as products. We’ll review some interesting examples below. We’ll then discuss why it’s so important for Product Managers (PMs) to understand the product they’re selling truly—and why there isn’t always a clear answer.
A product can be physical, virtual, or even a service.
If we try to imagine a generic “product,” most of us will think immediately about something tangible. Basketballs, ice cream cones, shoes, refrigerators—these are the types of products that come to mind.
But if we refer to our definition above, it’s clear that this list is far too narrow. Products can be digital. They can also take the form of services. A few examples:
- Mortgages and other types of loans
- Mobile apps
- Food delivery services
Another interesting example would be home security packages. These include several different categories of product in a single solution:
- Physical (for example, a Ring doorbell camera)
- Digital (the recording and online storage of your Ring camera)
- Ongoing service (Ring automatically connecting your service to local police)
A product can be an input in another product.
Think of a modern car. Controlling its engine, dashboard panel, and other electronic features are dozens—sometimes hundreds—of computer chips.
To the car buyer, the car itself is the product. But to the automaker that built the car and the mechanic who maintains and repairs it, these computer chips are also products, even though most car buyers will never realize they’re there.
You can also think of it this way. In many cases, a B2B product serves as an input in what will become a B2C product. Here’s one example.
Starbucks buys large quantities of products from B2B companies, including:
- Artificial sweeteners
But Starbucks is a B2C company, selling to end-user consumers. For those consumers, the products above are simply inputs in the final product sold to them:
- A cup of coffee
We can also use ProductPlan ourselves as an example. We’re a B2B company selling roadmap software that helps businesses more effectively prioritize and build their products. And in case you’re curious, our app looks like this:
A product can be an add-on to the item you thought was the real product.
A great example of this phenomenon is the inkjet printer. Years ago, many manufacturers began selling their printers for meager prices. Some even gave them away for free.
The catch? Every few hundred pages, or every couple of months, these printers ran out of ink. That meant the owners had to reorder ink cartridges many times each year.
As consumers, we thought the product we were buying was the printer itself. But to the company that built and sold it, the printer was more of a marketing tool. The real products were ink cartridges.
A product can even be… you.
As a Forbes article put it several years ago: “If you’re not paying for it, you are the product.”
Social media sites like Facebook and YouTube generally do not charge users to browse or post content on their platforms. But if access to their platform isn’t the product, then what is? What are these tech giants selling?
The answer is an audience. Social media companies build high-engagement digital platforms, aggregate millions of users, and sell those users’ attention to advertisers and marketers.
Going back to that Forbes quote above, we’re not paying to post a status update on Facebook. And that means we’re the product. Facebook is selling us—more specifically, our attention—to its real customer, the advertiser.
In the pre-cable era, this was also the model for broadcast television. The major networks aired shows that audiences could watch for free. Assuming we already had a TV, the only costs our ability to watch these network shows were regular interruptions by advertisers. The broadcast network was selling us (the products) to their advertisers (the buyers).
Why PMs Need a Strong Understanding of What Makes a Product
Let’s return to social media platforms. As we noted above, some of the most successful companies—notably Facebook—have chosen to make their main services (for example, posting and browsing) available to all users for free. Remember, this means that users themselves are the product: Facebook sells space on its platform to advertisers hoping to gain some of these users’ attention while they’re browsing their Facebook feed.
But Facebook could also decide to take the approach chosen by LinkedIn. That social media firm created paid versions of its service, allowing users to:
- Connect directly with anyone on the LinkedIn platform
- View more details in other users’ profiles
- See the full profile of anyone who has viewed your profile.
LinkedIn also offers a paid version for recruiters, giving them more sophisticated search filters to find job candidates and connect directly with those users.
Product managers at both companies need to understand what products they’re selling and what future products they might be selling. This information will play an important role in how they build out their platforms.
If a social media company wants to keep the platform free for users forever, then the company will need to devise ways to monetize those users (the product).
In this case, the free social media platform’s buyer persona is an advertiser. The PM needs to learn what this persona needs (access to the right prospects), what challenges they’re facing (difficulty finding a large enough group of these people in one place), and their goals (a more efficient way to reach a highly targeted audience with their marketing message).
A more advanced version of the free service:
Now let’s imagine that the company plans to create a paid version of its core social media experience, the way LinkedIn has.
In this case, the buyer persona will be the subset of “power users” on the social media platform willing to pay for more sophisticated features not available with the free service. For LinkedIn, this segment could include people recently laid off from their jobs, eager to connect with potential employers, and willing to pay for that access. It could also include recruiting firms, who will be willing to buy licenses to help their sales reps more efficiently connect job candidates with open positions.
The PM’s major task in this scenario will be to determine what new tools and functionality to build to attract customers to the paid service while keeping the free version appealing enough that the platform doesn’t lose users.
It’s not always clear exactly what product a business is selling. For a business to be successful, the PM needs a thorough understanding of its value proposition and the buyer for that product.