An Elaboration on the Difference between Goods and Services

An Elaboration on the Difference between Goods and Services

Although there is a clear difference between goods and services but there are times it is very difficult to detach service from the tangible goods and the tangible goods from the service. This article focuses on explaining the issue and then clarifying the same. Like when one buys an refrigerator it is defined as a good but then the service angle is the part that starts after the sales of the good. Service is an important part of the entire package that one buys. It is more entwined when one buys a laptop. The laptop is a physical good but then the service in terms of soft wares/installations etc is a continuous process. It is difficult to detach the service from the physical good. Both are now part of the package.
In simple terms:
Goods - things you can touch - “tangible”
Services - things you can’t touch - but you can see their effect “intangible”
“… services are not physical, they are intangible
A Service is a type of a product.

“… a deed performed by one party for another…”
Discussions about the marketing of goods apply to services as well.
Services have special characteristics that make them different than products.
A product without physical characteristics; a bundle of performance and symbolic attributes designed to produce consumer want satisfaction
Tangible / Intangible Attributes
The tangibility is understood by the following attributes:
– touch
– see
– taste
– smell
The intangibility is understood by the following attributes:
– can’t see
– can’t touch
– can’t smell
– can’t taste
The products fulfilling the tangible attributes are goods and the products fulfilling the intangible attributes are services.
There are some sectors or type of firms that pure goods service providers and some that are pure service providers while some fall in between and need to balance both.
For example sectors where intangible elements are dominant is teaching, nursing, advertising agency, theatre, air travel etc, while the sectors where the tangible elements are dominant is salt, necktie, house, furniture, automobile etc.
Difference between physical goods and services
Physical goods Services
tangible intangible
homogeneous heterogeneous
Production and distribution are separated from consumption Production, distribution and consumption are simultaneous processes
A thing An activity or process
Core value processed in factory Core value produced in the buyer-seller interaction
Customers do not participate in the production process Customers participate in production
Can be kept in stock Cannot be kept in stock
Transfer of ownership No transfer of ownership
Managing Service quality
? Gap between management perceptions and consumer expectations
? Gap between management perceptions and service quality specifications
? Gap between service quality specifications and service delivery
? Gap between service delivery and external communication
? Gap between expected service and perceived service
Determinants of service quality
? Reliability – delivering on promises
? Responsiveness – willing to help
? Assurance – inspiring trust and confidence
? Empathy – individualising customers
? Tangibles- physical representation
Moments of truth
? It is the customer – service encounter
? Every positive or negative experience of the consumer would have fall-out on the overall service experience
In services, the last experience remains uppermost in your mind. Therefore, it is not enough to be good, you have to be consistently good


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