ideas are one of the most important elements of startups and businesses, as a whole. From an excellent idea, entrepreneurs can come up with unique products or services that can help launch their business from being a startup to a scaleup and beyond.
Because ideas serve as an integral part of any business, aspiring founders need to understand how ideas are categorized, especially in the context of startups. This can help in deciding the type of approach to take when formulating a business product and plan, as well as marketing and growth strategies.
In startups, there are two categories namely intangible and tangible products. This article tackles what exactly each category is, the types of products that fall under this class, and some examples of notable companies that offer them.
Understanding Intangible Products
When talking about the categories of products, one of the most popular types are intangible products. Intangible products or services are simply defined as those that are perceived indirectly. They are not experienced physically, but still have valuable offers to consumers.
In an article tackling the importance of business models and how it affects strategy and innovation, David J. Teece (2009) asserted that while intangible products are often overlooked, they “are in fact ubiquitous” (p. 175).
He added, “Two-sided markets are common, and customers don’t just want products; they want solutions to their perceived needs.”
Such products are everywhere in the modern world, thanks to technology. To get a clear idea of what intangible products are, it is useful to look no further than smartphones, which are tangible products. In order for these devices to work as intended, they need an operating system, as well as essential and optional mobile applications.
– Other types include media products, software, websites, platforms, and other similar goods and services. The following is a brief explanation of each type with examples.
- Mobile App
In the example given above, mobile applications are considered intangible products because they do not have a physical form, and are instead experienced through a material product, particularly mobile phones.
A good instance of this is the Facebook application, which allows mobile users to access the social networking platform on their smartphones and tablets.
- Website Platform
Businesses today need a website to serve as their physical presence’s virtual equivalent. Websites in themselves are intangible assets that are built on another intangible good called website platforms. These serve as the foundation where websites are built. WordPress is a popular example of a website platform.
- Downloadable Software
Computers operate with the use of the software. Simply put, the software is an umbrella term that refers to programs that make an electronic device run.
Operating software like Microsoft’s Windows for computers and Google’s Android for mobile phones are essential for these devices to run.
Other programs that run using computers and phones such as social networking apps (Facebook, Instagram, and Twitter), games (Call of Duty Mobile, Candy Crush, and Angry Birds), and tools (Calculator and Clock) also fall under this umbrella term.
- Technological Service Providers (TSPs)
Technological Service Providers are companies that offer services to industries or a particular market. Some TSP services include SMS delivery gateways, voice verification, and Service-as-a-Software (SaaS).
Companies that offer technology services include ClickSend (SMS delivery), Nuance Communications (voice biometrics), and Salesforce (SaaS).
- Enterprise & Technological Services
Enterprise & technological services refer to infrastructure and solutions that enable businesses to use tech to operate and benefit their customers.
Adobe Systems and Cognizant Technology are two examples of companies that offer enterprise and technology services.
- Consulting
Consulting companies are firms that provide professional and expert advice. They can specialize in different fields such as management, engineering, law, and information technology. IBM and Accenture are examples of such companies.
Understanding Tangible Products
Given the definition of intangible products, it is much easier to understand what tangible products are. They have material manifestations. While intangible goods deal with solutions and know-how, tangible ones are things that customers can touch, smell, see, feel, and/or hear, or literally consume.
– The following are types of tangible products complete with examples of goods and the companies that offer them.
- Technological Hardware
Technological hardware is the things that use the software to run. Some instances include gaming consoles like the Sony PlayStation line, computers like Apple iMacs, and mobile devices like Samsung’s smartphones.
- Biological Product
The Food and Drug Administration (n.d.) defines biological products as those that are “used to diagnose, prevent, treat, and cure diseases and medical conditions.” Drugmaker Pfizer is one of the best examples of companies that offer biological products.
- Pharmaceutical Product
Pharmaceutical products refer to medicines, drugs, and vitamin supplements. One of the top pharma companies is Johnson & Johnson.
- Chemical Product
Chemical products refer to items that are themselves chemical substances or contain a mixture of chemical substances. Examples include cleaning solutions, inks, and baking powder. A good example of companies offering such goods is Colgate-Palmolive Company.
- Food
Food items are any nutritious goods that are consumed to sustain life and growth. There are different types of such goods ranging from fresh produce like fruits and vegetables to packaged ones like canned goods and frozen products. Nestle is one of the top food and beverage companies.
- Handcrafts
Handicrafts are typically handmade, artisanal products that are often decorative. They can also be used for arts and crafts. Home décor, gift items, Christmas ornaments, and fashion jewelry by Asian Handicrafts Pvt. Ltd.
- Clothing
Clothing is a necessity, but some products count as luxury goods. Nike is one of the biggest apparel companies and Gucci is a top luxury fashion brand.
- Beauty Product
Beauty products refer to goods that are made to enhance and maintain the physical appearance, as well as take care of personal and skin health. L’Oreal is one of the largest beauty companies in the world.
Final Thoughts
Coming up with an idea for a startup is one thing, but being able to shape this idea into a feasible business requires a deeper understanding of what the aspirants have in mind. By knowing the categories of startup ideas, entrepreneurs can proceed to build a fruitful and successful business.
Ressources
- Food and Drug Administration. (2019). Biological products definitions. Retrieved from – https://www.fda.gov/files/drugs/published/Biological-Product-Definitions.pdf
- Teece, D.J. (2009). Business models, business strategy, and innovation. Long Range Planning, 43, 172-194 – http://www.bmcommunity.sitew.com/fs/Root/8jig8-businessmodelsbusinessstrategy.pdf
