Difference between Goods and Service (Service Marketing 19.04.2021)

Difference between Goods and Service

Based on the nature and features of services, the following differences can be identified between goods which have greater tangible elements and services which have greater intangible elements.

 

1. Greater Intangibility:

Through services have many tangible components like airplanes for air services, uniform dealers for people serving in a hotel, and packaging for fast food in restaurant, there is an element of service which is intangible. Services are merely experiences which cannot be displayed like products on exhibition by sellers or markers. They cannot be carried by the customers as they carry physical products. They are intangible, they cannot be touched, they cannot be seen and they cannot be displayed like products.

 

2. Perishable Nature – Services are Essentially Perishable:

Services are perishable whereas goods are not so. Services cannot be carried over packed or transferred like goods. If seats are vacant in a theatre, or a plane service or bus service the revenue is lost forever. If doctors or lawyers fail to attend their clients, their revenue is lost forever. But this is not so in the case of goods. Tangible goods not sold on any given day or after they are produced, they can be stored and sold after some time.

 

3. Variability:

Services are variable whereas products which are standardised are not so variable. Therefore, no two services rendered by some person but at different times are uniform. Even the service rendered by a single individual at different times cannot be the same. But products provide uniformity and the same quality taste etc. For example, or the Mysore Sandal soaps produced at different times possess the same quality in all respects as they are standardised whereas services of the same person or the same category of employees cannot be standardised.

 

 

4. Difficulty in Quality Control:

Many services are offered only at the point of sale and hence quality control or standardisation of service is very difficult to achieve. But it is very easy to control the quality of the products and their quality can be made uniform and standardised.

A related problem in this connection is the difficulty of the consumers in judging correctly the quality of the service provided by the service provider. For example, how does a consumer decide which lawyer is efficient or which doctor is very useful or which teacher is the best and so on?

 

5. Labour Intensity:

Labour intensity is more in services but it is not so in the case of goods. The labour-intensive nature is more in. the services of individuals and also in the case of service organisations and economies of scale cannot be enjoyed in the case of services. For example, the output of a lawyer or a doctor cannot be easily increased like the output of a product. This is so because the services are to be produced personally and tailored to the needs of each individual clients.

 

6. Legal and Ethical Barriers:

There are some professional codes of ethics which prohibit professional practitioners from engaging in certain kinds of marketing and advertising activities. Peer pressures often limit the extent to which those professional service persons like doctors, dentist’s attorneys etc. should developed their marketing programmes. For example, doctors & architects are not permitted to undertake any type of advertising or marketing their expertise. Similarly, some state legislatures do not permit public utilities to advertise their services. However, the producers of goods are freely permitted to advertise their products in any way they like through various media of advertising and publicity.

 

7. Unpredictability of Demand:

It is easy to predict the nature of demand for tangible goods but it is very difficult to predict the nature of demand for services. Demand for some services can fluctuate strongly from time to time or from season to season. During the period of some epidemics, demand for certain kinds of services is most likely to rise. But demand for certain products like flowers, coconuts, new clothing etc. may be estimated easily during the period of festivals like Diwali, Dussehra etc. but not at other times.

 

8. Difficulty for Entering Foreign Markets:

Demand for physical goods like automobiles, computers etc. can be easily estimated in foreign markets through various media of advertising but it is not possible to do so in the case of services because there are many barriers complicating the selling of services across the national boundaries.

 

9. Limited Applicability of Portfolio Theory:

It is very difficult to apply portfolio theory to the management of services whereas it is not so in the case of tangible goods. Without a portfolio of services, the life cycle concept bears very little relevance for many services. It is also more elusive to establish appropriate growth strategies for service firms than for tangible goods firms.

 

10. Difficulties in Establishing Large Market Shares:

There are usually very few barriers for service industries to make an entry into the most physical markets. Therefore, the competitors can quickly and easily enter service markets which keep any one firm from establishing a dominant market share. This fact is proved by the large number of successful fast-food franchises. However, the service firms are not able to experience economies of scale because of the negative effect on their services to acquire a large market share.

 

Given below are the fundamental differences between physical goods and services:

Goods	Services
A physical commodity	A process or activity
Tangible	Intangible
Homogenous	Heterogeneous
Production and distribution are separation from their consumption	Production, distribution and consumption are simultaneous processes
Can be stored	Cannot be stored
Transfer of ownership is possible	Transfer of ownership is not possible