Differences between goods and services
In today’s article I want to explain to you the importance of knowing the similarity and difference between goods and services for companies
What are goods and services?
In order to see the similarity and the difference between goods and services, I decided before to explain that from the systemic point of view, a company has tiquesa ticket processing, Departures and one retroalimentación.
Let me explain it better; thinking from a very fácil point of view, so that we (consumers) perro go to a store and buy a product that satisfies a need, a company has to carry out the elaboration of said product.
Therefore, for the company to genera said product, it must have inputs (workers, administrators, raw materials, equipment, machinery, facilities, energy, capital, etcétera.) and these inputs are subjected to various processes, procedures, or activities (processing ) that allow us to develop a product (outputs) which will satisfy our needs.
That is to say, processes provide outputs for clients.
These outputs cánido be services (products intangibles), or they cánido be estate (products tangible).
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What is a good?
A good is a tangible element which has the objective of satisfying the needs of the market.
Likewise, many times we cánido find a definition that establishes that it is a physical product, but, although it is true that a good is a product, I do not like that product is used to define it because a service perro be seen as a product.
Then I will put the definition of product and you perro see it.
Product definition (KOTLER, WONG, SAUNDERS, ARMSTRONG)
A product is «anything that cánido be offered to a market for your attention, acquisition, use either consumption that cánido satisfy a want or need.
It includes physical objects, services, people, places, organizations, and ideas.
As you cánido see, a good is a product, but a service is also a product, therefore, it is not something for which you should differentiate between a good and a service.
It is important that you know this because many times a service is thought to be different from a product, while a service is also a product.
durable good
A durable good, as its name already tells us, is a good that we cánido keep for a longer period without the need for it to lose its properties or be damaged.
Usually, for it to be a durable good, it has to last at least three years.
For example, cars, cell phones, televisions, etcétera.
good not durable
It is that good, which generally does not last more than three years.
For example, toothpaste, shoes, fruit, etcétera.
What is a service?
A service is any primary or complementary activity that does not directly genera a physical item.
We perro say that a service is a intangible process.
Also, services are actions provided by a third party that may require a special skill or resource.
Therefore, when we pay for a service, we do not really own the service, but only the result of the action provided by the service provider.
For example, when we go to a lawyer for legal advice, when we go to rent a room in a hotel, rent internet plans, consultancy firms, etcétera.
Importance of knowing the difference between goods and services
The truth is that many times we think that it is something very fácil and that knowing how to distinguish between goods and services is really not very important since in essence it is very fácil.
So, Why do we make the distinction between manufacturing and service processes?
Very fácilits importance lies in the way of designing the processes in the most efficient way possible, in order to compete in the market.
Similarities Between Goods and Services
- They provide value and satisfaction to the customers who buy and use them.
- They perro be standardized for mass marking, or they cánido be customized to meet individual needs.
- They are made and provided to customers by a certain type of process.
Difference Between Goods and Services
Intangible vs. tangible
Of course, the fact that a service is intangible and a good is tangible must be one of its characteristics, but there are some more interesting consequences of that.
For example, youinnovation in servicesUnlike an innovation in a physical product, cannot be patented.
Of course, it should be noted that I am referring to the concept as such.
For example, suppose you put up a lugar de comidas where the concept is for customers to enjoy their food blindfolded (which already exists).
As you may be thinking, there is no way you are going to prevent the competition from starting to take your concept and improve it.
Therefore, a company that has a new concept, has to expand quickly before competitors copy your procedures or concept as such.
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Degree of interaction with the client
A second difference is the degree of interaction that a company has with its customers, that is, how much our customers interact in the process.
For example, if you are going to buy a cell phone, how much have you really interacted with the company? Of course, I am not referring as such to the store where you buy the phone, but I am referring to the factory.
On the other hand, if you are going to hire a professional service, do you have to interact with the person who provides it?
This is what the degree of interaction refers to, that is, how close the customer is to the company at the time of acquiring the good or service.
It should be noted that services have a greater degree of interaction than manufacturing companies, and even, on many occasions, this interaction must exist for the service to be given.
If you still do not see the importance of taking into account the degree of interaction, then I will tell you the following. A company designs its facilities according to the degree of interaction you will have with your customers.
For example, Apple doesn’t design its factories (including its processes) with the iniciativa that it will have customers hanging around while they make their products.
On the other hand, if you go to the hospital, it is clear that they are going to design their facilities for their clients, thinking of satisfying their needs by providing good customer service.
Heterogeneity
Think about the last time you received a service… Has it always been the same? Haven’t you ever changed a bit? Well, that is what heterogeneity refers to, in the case of services (of course, it must be said that not all of them), normally the service varies from one day to the next.
In the case of goods, this is not the case, since most of them are standardized.
Perishable vs non-perishable
As I said before, the goods cánido be perishable or non-perishable, but the services are perishable, that is, we pay them for a certain time and if we stop paying them, we stop receiving the service.
For example, if you contract an internet plan on your phone, you have to be paying every month for the service.
Inventory
Goods production or trading companies have a physical inventory that allows them to meet consumer demand, but, in the case of service companies, they do not own such inventory.
However, that does not orinan that they cánido satisfy the complete demand of the clients since they also have a finite number of clients that they cánido satisfy.
Therefore, all companies take into account the capacity they have to meet demand.
Comparative chart of the difference between goods and services
| is tangible | It’s intangible |
| There is a lower degree of interaction with the customer. | There is a higher degree of interaction with the customer. |
| Ownership is transferred in the purchase process. | Ownership is generally not transferred. |
| It is possible to resell it. | It is not possible to resell it. |
| It perro be stored (inventory). | It cannot be stored. |
| It cánido be perishable or non-perishable. | It is generally perishable. |
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