Broadly speaking, four generic differences distinguish services from goods. These are Intangibility, Inseparability (simultaneity of production and consumption), Heterogeneity (Variability), and Perishability.
Marketing and managerial services vs goods differences
Arising from these differences are several important marketing and management implications which include:
- Greater involvement of customers in the production process
- People as part of the product
- Greater difficulties in maintaining quality control standards
- Greater sense of pre-purchase (and sometimes post-purchase) risk or uncertainty on the part of the customer
- Harder for customers to evaluate
- Absence of inventories
- Relative importance of the time factor
- Demand often more difficult to forecast and manage
Nominate five differences between goods and services.
It is to be expected that students will approach this question initially with reference to the characteristics of intangibility, inseparability, perishability, and heterogeneity/variability. This is a good start, but it also provides an opportunity to show students in what respects all or some of these characterize many goods.
(For example: the intangibility of a brand identity and personality; the perishability of fashion clothing, many toys and fad products; the variability in quality that is often perceived by consumers to differentiate brands within a particular category.)
For a fitness center, students may consider the difficulty in evaluating the quality of the service provided before it is consumed, and the methods that can be used to assist potential customers such as client testimonials and before/after photo shots of current clients.
For a professional accounting firm they might consider: stressing the people and giving profiles/pictures of the accountants (they ARE the service); stress the importance of the service encounters because in this case it is people who are providing the service (it is a medium-high contact service);
And question how an accounting firm can maintain quality control standards when each individual accountant has their own way of dealing with a client.
Other services vs goods differences
Other differences that can be discussed and used to answer the second part of the question include:
- the involvement of customers in the production process, and implications of this
- the greater sense of purchase risk (this issue can also be discussed with reference to the difference between convenience and shopping goods)
- the relative importance of the time factor
- the importance of the place and manner of service delivery
- the issue of demand forecasting, and maintaining a balance between demand and supply
- the importance of customer retention and word-of-mouth
It needs to be emphasized that the differences between goods and services are not universally generalizable to all services. Many of these distinctions will recur throughout the book in appropriate contexts, notably the notion of service as a performance that often involves encounters between customers and employees, the importance of time, the challenge of achieving service quality, customers’ involvement in the service operation, the need to manage demand and supply, and the opportunities presented by technology to distribute information-based service elements through electronic channels.
Most importantly we stress that in a service organization marketing cannot operate in isolation from other functional areas of management. Indeed, a marketing orientation, and the practice of marketing, must effectively permeate all functions of a service organization, how they are planned, managed, and delivered, if that organization is to be regarded favorably and patronized loyally by its customers.