Branding in Service-Based vs. Product-Based Businesses

Service-Based Businesses

‍For services, branding is often centred on trust, credibility, and relationships. Customers can’t see or test a service beforehand, so the brand’s reputation is the proxy for quality. When markets are crowded with similar offerings, a company’s brand becomes its most important asset to differentiate itself and drive customer demand. Nowhere is this more true than in services. Trustworthiness is fundamental in service branding – 64% of customers are willing to pay more to companies they trust.  

Service brands therefore emphasise values like reliability, expertise, and customer-centricity. In fact, 82% of consumers say they are more likely to trust an organisation that provides consistently better service.

Because services often involve ongoing relationships, brand loyalty is key to retention. As noted in one analysis, service businesses – unlike product businesses – rely heavily on relationships and trust to maintain long-term loyalty. A misstep in service quality can damage the brand quickly.

A service brand’s strategy usually doubles down on customer experience, responsiveness, and clear communication of values to reassure customers.

Product-Based Businesses

For product companies, branding still greatly matters, but consumers also weigh the product’s features and quality.

Here, branding often highlights innovation, performance, and lifestyle image. Visual identity is crucial to stand out on crowded shelves or showrooms.

Product brands can create emotional connections by appealing to the consumer’s identity or aspirations. A running shoe isn’t just a shoe if it’s Nike, it can be a symbol of athletic empowerment. This allows strong product brands to command premium pricing beyond the functional value of the item.

As one expert summary puts it, brand identity directly drives financial performance by enabling companies to charge premium prices and retain loyalty even during downturns. Apple leverages its brand’s identity of quality and innovation to price its products higher than competitors while keeping a devoted customer base. The brand is so powerful that its name and logo alone are valued at over $408 billion. That intangible brand asset is more valuable than many companies’ entire businesses, highlighting how a product’s brand story and design can create immense added value.

‍The emphasis shifts:

• Service brands win or lose on trust and experience (strategy-heavy elements).
• Product brands often leverage design and image (visual-heavy elements) to influence choice.
• However, the lines are blurred – product companies also need trust, and service firms also need strong visual branding. Both types benefit from holistic branding.  
• Ultimately, branding is slightly more vital for services because the brand promise is the product until delivered, but even for products, branding greatly influences consumer preference.
• A survey found 77% of consumers choose products based on brand name, not just product features, underlining that whether buying a service or a gadget, people often buy the brand image and reputation behind it.