It is important to understand that the key difference between a service and a product lies in the tangibility of the latter. The product can be viewed, touched, held in hands, and transferred. Service is a process, and therefore, for its successful provision, it is necessary to create the mood of the client, provide comfortable conditions, and high quality of work. Only in this case, the consumer will wish to use the service again and recommend it to his friends, which will directly affect the supplier’s profit.
The major difference between a product and a service is the pricing process. The final price of a product is made up of raw materials, the manufacturer’s margin, seller’s percentage, packaging costs, promotions, shipping costs, taxes, and other specific items. The seller has clear reasons for setting the price, as opposed to the service provider. The formation of the cost of a service is more subjective and consists of such factors as the price of the resources or material expended. This also includes the qualifications and experience of the performer, the number of activities carried out within the service.
Another important difference between a product is standardization because any product is manufactured in compliance with certain technologies, often in accordance with established standards and norms. A unique good can be patented and the production rights sold. It is impossible to provide the same service twice because one and the same performer under identical conditions might not be able to repeat his or her own work thoroughly. That is, in this case, there is a factor of increased variability. It is also important that during the production of goods, the consumer rarely has the opportunity to observe the process, while the presence during the provision of services is often required. Thus, the same product may be offered by different sellers in different places, but the service is produced and sold simultaneously.
Due to the intrinsic differences between goods and services, marketing approaches can also vary on the basis of the described concepts. One of the key elements of the service sector is its more available customization because most products are primarily adherent to the standard. Thus, marketing techniques should mainly accentuate the uniqueness of the experience delivered by services, which is much more difficult to integrate into products. Another divergence can be observed in the link of the provider with its product or service. In the majority of cases, services are inseparable from the providers, which means that marketing usually revolves around both of them. In addition, the service itself cannot be shown directly due to its intangibility, and therefore, the company becomes the face of the service. However, products are mostly separate units, which are distanced from the manufacturers. The only connection can be seen in the brand logo and design, but the link is not as close as in the case of the services. In other words, the marketing of products focuses primarily on them rather than the provider.
In conclusion, services and goods possess a number of key inherent differences, which also affect the relevant marketing measures. Products are tangible, whereas services are intangible, which means that the pricing procedures will differ significantly. Standardization is another critical aspect of goods, which is mostly non-existent in the service provision sector. Therefore, the marketing approaches will be affected drastically in order to suit the inherent distinctions between goods and services.
Reference
Geissdoerfer, M., Vladimirova, D., Fossen, K. V., & Evans, S. (2018). Product, service, and business model innovation: A discussion.Procedia Manufacturing, 21, 165-172. Web.