157 Reading: Products and Services
Goods vs. Services
In marketing, are services considered products? Should products that are predominately goods be treated differently than products that are predominantly services? Whether or not there are substantial differences between goods, products, and service products has been the source of debate in marketing. One can assert that “products are products,” even though there are some characteristics associated with service products and other characteristic associated with goods products. These differenct characteristics do not mean that customized strategies are necessary for each. One can also assert that evidences exists to support that service products and goods products are different enough to require different marketing strategies.
You may have noticed that throughout this course we use the term “product” broadly to address the full product offering that is comprised of goods, services, and often a combination of both. We’ve given examples of service products (hotel stays, for instance) and goods products (sneakers and bread, for instance). Thinking inclusively about the tangible and intangible aspects of all products is useful because it creates a more complete view of the customer’s product needs and experience. Still, there are unique characteristics of services that set them apart from goods. It is important to understand the differences and to consider them in the development of strategies, tactics, and objectives.
Service products are reflected by a wide variety of industries: utilities, restaurants, educational institutions, consulting firms, hotels, medical care providers, and banking, to name but a few. Beyond these traditional industries, there is a growing sector of software as a service offered by companies that provide individuals and other companies with hosted and managed access to software systems. In 2021, software as a service was a $429.6 billion industry globally and projected to hit $476.6 billion in 2022.[1]In 2019, services accounted for77% percent of the U.S. Gross National Product (GNP)[2]Clearly, the service sector is large and is growing. While all products share certain common facets, service products tend to differ from goods products in a number of ways.
Characteristics of Service Products
As you can see from the examples above, service products are quite diverse. Nonetheless, they tend to have the following characteristics.
Intangible
Leonard Berry offers this useful differentiation: “A good is an object, a device, a thing; a service is a deed, a performance, an effort.”[3]With the purchase of a good, you have something tangible—an item that can be seen, touched, tasted, worn, or displayed. That’s not true of a service, which is intangible (quite literally, “not able to be touched”).
Although you pay your money and consume the service, there is nothing tangible to show for it. For example, if you attend a professional football game, you spend money on a ticket and spend