Product versus Offering: What’s the Difference?
And how that affects your roadmap & growth pathways
Part 1 in a series on Product Marketing
Challenge: Aligning Problem to Promise
Most of the time, founders sweat a lot on what’s inside their tech product. I have written here about how critical it is to get the right product insight that is anchored in tech differentiation. However, having a magical product is not enough. Tech founders must begin by identifying a burning problem their customers face. After all, the changes wrought by a new product are hard enough without a clear business problem that customers need to solve. That’s the very definition of a hungry customer. So, how do you tie your magical product to the problem? With a bold promise that can be delivered only through your product.
Therefore you need to align the problem the customer wants solved and the promise your product makes to solve it. For a B2B product especially, this alignment runs from the magical product to an offering which is delivered through a market pathway (“GTM) that reaches the customer.
The problem-to-promise chain can be visualized as below. I’ve written in my previous articles on different business customer types and the common growth pathways (“GTM”) to reach them. In this note, I want to focus on the core distinction between Product and Offering.
Even if you have identified a hungry customer with a burning problem, how does your product deliver on its promise? What exactly is the offering to your customer? This interplay between product and offering can affect your product roadmap and the growth pathways to the customer.
Another way to state the alignment challenge is:
Not all products lend themselves to all the growth pathways. So, what’s the optimal way to align your product to your customer and GTM?
Tech Product versus Offering
What is a tech product? The economist Brian Arthur explores this question in his seminal work on the nature of technology. Here is a definition based on his work:
A tech product harnesses a new phenomenon of a technology to achieve a commercial purpose.
According to Arthur, there are broadly three areas of new “phenomena” that a technology harnesses, with some that are a blend of these:
Digital or computational, such as software methods, algorithms, artifacts, and architectures. Examples include large language models in AI, virtualization in cloud computing, quantum computing.
Physical, such as new sensors, chips, devices, arrays, and materials that come from new ways to control physics or bio-chemical properties of nature. Examples include cameras, lithium batteries, and various nano-technologies.
Behavioral, based on human psychology at the individual, team, or societal level. Examples include most highly engaging applications from Instagram to Slack to Fortnite, which depend upon unlocking a personal or social behavior.
A tech product evolves over time as the underlying phenomenon is better understood, further developed, and gets embedded deeper in its environment. This tech trajectory has a path of its own, not necessarily tied to commercial purpose. For example, how the large language models improve, how the physics of sensors is better understood is only partly shaped through customer usage and feedback. So, a novel product that encapsulates the magic of technology may not be enough to deliver commercial value.
In short, an offering makes the tech product fit the commercial purpose.
Here is the core distinction between Product & Offering:
Thick versus Thin Tech Offerings
Not all new products can easily fit a commercial purpose and deliver the value from their core technology phenomenon. Some products are hard to implement while others may be easy to deploy and activate. So, we can make a simple distinction between thin and thick offerings.
Thin offerings are those where the tech products are easy to fit to the customer’s purpose. They are especially easy to adapt for early users.
In contrast, thick offerings are those where technology needs a high level of customization, integration and deployment services to realize customer value.
Loose versus Tight Tech Coupling
Typically, the product that captures a nascent tech phenomenon matures along a trajectory which requires constant updates to the product. Today this is the case with gen-AI and large language models. So, a key factor affecting the value of a product is the relative dependence or “coupling” between the changes to the core technology and the efforts to deploy it. This coupling can be either loose or tight.
A loose coupling is where the changes to the core product do not affect the offerings that have been built upon it to serve customers; whereas a tight coupling is when changes to the underlying tech break the offerings that have been previously built, requiring significant reformulation to deliver value.
Growth Pathway Tradeoffs
These two factors in turn affect the growth pathways (GTM) and product roadmaps you have to pursue in the market.
Broadly, for thin offerings, it is best to pursue product-led growth tied to users, while for thick offerings, it is best to grow through account-led pathways focused on buyers.
Also for thin offerings, it is best to pursue a product roadmap that maximizes user reach either directly or through product-led channel strategies of embedding in other products or through product partners.
For thick offerings, the product roadmap should focus on building the minimal catalog of offerings that maximize reach and retention with an account. And, it may be best to have service partners build and sell these offerings.
These four quadrants give you different GTM and roadmap strategies. Let’s look at two of these patterns to align the promise of the product to the customer problem.
Alignment Pattern: Product-Led Inside-Out Growth
If your offerings are thin and loosely coupled to the product, you have the freedom to create and try out multiple offerings directed at different user segments. Since product led growth (PLG) is lower in capital investment, it is the best GTM path to identify an early adopter user segment. The bold promise of the product roadmap should be anchored on the burning problem that the ideal users have to address in their job-to-be-done. This gives maximum optionality to a tech company to find paths to such users by testing multiple offerings. Other GTM paths like product-led channels are also interesting since it allows the thin offerings to be embedded in a product ecosystem, or even become a platform to be built upon by other product partners. [details]
Pros: Maximum tech value creation & optionality
Cons: Risk becoming commodity as tech trajectory matures
Most top products growing through PLG have this pattern. Slack, Calendly, Dropbox, Docusign, Figma etc.
Alignment Pattern: Account-Led Outside-In Growth
If your offerings are thick and tightly coupled to the product, you should follow an outside-in approach of first finding a buyer segment that is open to such offerings. Typically, an account-led approach can afford more service-heavy products and result in higher LTV. Product companies building thick offerings with new technologies like gen-AI, streaming data analytics etc. should begin with the burning problem for a buyer segment at key accounts. They can go deep in the account with offerings that are customized for delivering on a bold promise. The underlying trajectory of the fast moving tech becomes less important than the roadmap of the offering that remains anchored to customer value. Account led GTM followed by account led channels approach (sell to, through and with service partners) becomes key to expansion and retention.
Pros: Maximum customer value captured
Cons: Risk becoming services company or too tied to an early customer segment
Most complex technologies deployed in regulated industries or large enterprises have this pattern (cloud computing, analytics, security, AI/ML models) .
Implications for Product Market Fit
While exploring PMF, it is important to begin with a hypothesis of where your product offering and GTM tradeoff lies.
Be clear about the tech phenomenon your product harnesses
Understand the core tech trajectory of this phenomena
Explore the possible burning problems your tech product can solve
Determine how thick|thin and loose|tight your offerings will have to be, based on the problems you are trying to solve
Select the right pattern of GTM and roadmap based on your product-offering tradeoff.
Iterate in market until you have problem-to-promise alignment
Implications for Product Market Scale
Once you have PMF, you can use this framework to determine pathways to scale.
If you began on product-led alignment path,
Double down on your product roadmap to increase your tech trajectory and optionality
Deepen your product reach through product-led channel approaches
On top of your PLG, add an account-led GTM motion, orchestrating between the two. (This motion is also called product-led sales).
Over time, “offer-ize your product”: create a select few thick & tightly coupled higher service offerings for top accounts - either directly or through service partners.
If you began on account-led alignment path,
Double down on your top few offerings roadmap to increase customer value capture
Deepen your account reach through account-led service partnerships approaches
Inside your account-led GTM motion, add product led growth by targeting users within key accounts.
Over time, “productize your offerings”: create a thinner|loosely coupled tech product roadmap to enter new or adjacent customer segments - either directly or through tech partners.