Intangible Products

What are intangible products?

Intangible products are goods sold by a company that are not physical in nature. The most popular are usually products that exist digitally, such as licenses and software. Despite not being a physical product, intangibles are still extremely valuable, though their value is a bit more difficult to sell. 

For example, when someone is shopping for a car, they can view the vehicle in person and even drive the car to see if they enjoy it. Customers can’t take an intangible product for a test drive, so marketing these goods is especially challenging. 

Companies use asset management solutions to organize and maintain their offerings. Asset management helps to track, monitor, categorize, and consolidate intangible and tangible assets among all stock locations. 

Examples of intangible products

While intangible products are not physical, they are assets that bring value to a company overall. They can bring value through monetary profits down the line, legal protection, or priceless knowledge. 

Categories of intangible products

There are a multitude of different types of intangible products. There are identifiable products that are easily seen as assets and unidentifiable products that are more subjective in their value. The most popular intangible asset groups include intellectual property, goodwill, business software, customer lists, and media.

Intellectual property is an identifiable intangible product that is usually a legally protected asset that cannot be transferred without proper documentation. Intellectual property can also have a selling price when agreed upon by the parties involved. Some examples of intellectual property include trademarks, copyrights, patents, franchises, trade secrets, and company ownership. Intellectual property cannot be included in accounting numbers as its monetary value isn’t a set number, but it can be considered in the company’s stock portfolio. 

Goodwill is an unidentifiable intangible product that doesn’t have a distinct monetary value but has value nonetheless. Some examples of goodwill include reputation, research, customer loyalty, and branding. Although it does not have a set price tag, goodwill is an accepted product because its benefits are widely recognized and considered indefinite. In some cases, goodwill may be included in a company’s valuation when a merger or acquisition occurs. 

Business software is a huge company asset, especially systems that were created by the company itself. The software likely resulted from research and development efforts and could have a price tag allocated if significant investments were made toward development. When licenses start to accumulate, companies utilize software asset management (SAM) tools to document and track all the pieces of software being used. 

Customer lists hold all the connections and contact information that a company has acquired. These lists, while intangible, are highly valuable. They can take a long time to build and are a huge resource to consider when researching and developing new product offerings. Putting a price on customer relationships can be very difficult. However, it is still considered a significant company asset and can be priced in an agreement.

Media is digital content that is also considered an intangible company asset. This includes music, websites, social platforms, photos, and virtual publishing. Digital asset management software can be used to optimize and maintain these media files. 

How to sell intangible products

Selling intangible goods is especially difficult as most of the selling points become more apparent as the product is used. Companies may not feel very comfortable handing over money in exchange for something they can’t see or touch. 

When it comes to marketing intangible products, ensuring that the most beneficial features of the product can be communicated successfully is essential. There are a few ways to establish credibility and value for intangible products.  

• Understand customer needs: Recognize the product’s intended audience and study what they need from it. The product could help them solve a common problem, bring peace of mind, or benefit them now and in the future. Conducting necessary research is fundamental when developing the products to communicate those benefits and predict market demand.
• Create trust: Humanize the intangible product by building trust between customers and the seller. This includes making sure the selling company’s brand and reputation are positive. Proper marketing and a positive public image can help prospective customers feel like they are in good hands.
• Offer knowledge: Some of the most valuable information to a potential customer is simply a deep understanding of the product. With an intangible product, a customer may have many questions regarding how it will serve them. Having the answers to those questions is the key to assuring that they see the bigger picture and feel confident in their perception of the product.
• Focus on tangible benefits: Use previous success stories to show the tangible advantages of utilizing the intangible product. Show potential buyers real testimonials from buyers that are satisfied with their experience. If possible, include data to back up the claims, like increased profit margins or time saved while using the product.
• Demonstrate how to use it: If the product can be easily used in a demonstration, leverage that to show precisely how it works. These demos should show off all major features and outline the potential positive outcomes. 
• Consider offering a trial: If the intangible product permits, consider providing interested customers with a free trial. This is a great way to help prospective buyers experience the product without investing too much time and money. 

Intangible products vs. tangible products

Intangible products hold their own benefits as items that are not physical in nature. Whether identifiable or unidentifiable, they are wholly recognized as assets that can be priced in the case of a company acquisition or merger. Selling an intangible isn’t easy as most of its appeal is more obvious as a customer uses the product. This is why companies need to rely on their overall brand reputation and success stories to get customers to trust their word. 

Intangibles and tangibles together make up a company’s comprehensive list of resources that add to the value of an organization.

Tangible products are physical assets that can be handed to a customer after purchase. Examples of tangible products:

• Real estate
• Machinery
• Clothing
• Furniture
• Vehicles
• Food

From a company’s perspective, selling a tangible product usually comes more naturally than an intangible product as customers can make opinions on purchasing by just looking at the item. However, tangibles still have their own challenges. 

Tangible products can be touched and seen, so marketing them heavily relies on visual and hands-on experiences. This includes the color, shape, texture, and size of the product. While tangibles may be more naturally marketed than intangibles, both are still challenging to sell and require a deep understanding of the target audience and positive reputation to back up the claims of success.