Differences between Goods and Services
Important differences between Goods and Services in demand fluctuation, Sale through sample, Measurement of Service Quality and Establishment of Large Market Share are briefly explained as follows.
1. Fluctuating Demand – Goods vs Services
Services are of perishable nature. Like manufacturing, services cannot stock their output in a warehouse till demand materializes.
Matching of supply and demand is difficult in service marketing. When demand is less than capacity, then the cost of services will be more. As a result, profitability will come down and the provision of such a service will remain unproductive. On the other hand, if the demand far exceeds supply, it cannot be met satisfactorily by the service organizations. But the manufacturing organizations can store goods for a later sale. So, they can meet any excessive demand by supplying the goods from warehouse.
The variability of service output poses challenges to service providers. Brand building in service is very difficult when compared with tangible goods. It is relatively easy for the marketer of tangible products to incorporate quality control measures into production processes. In case of providing service on a one-to-one basis, such as hair dressing, standardization of output also becomes difficult.
2. Sale through sample – Goods vs Services
Sale through sample is not applicable in case of services. Tangible goods bought by one can be resold. The owners have a legal right to resell them. Products like groceries, grains, rice etc., are popular for sale by sample. But we cannot do the same with services. If we book a room in a hotel, we do not have the right of reselling it.
Goods are tangible economic products that are capable of being seen and touched, heard or smelt. By examining a small portion of the agricultural produce like grains, the characteristics of the whole lot can easily determined. This facilitates sale of tangible goods through sample.
3. Measurement of Service Quality – Goods vs Service
In case of tangible goods, their quality can be assessed by examining them. If products do not conform to specifications, they can be rejected. But services cannot be measured or verified before sale.
Since service is inseparable from the service provider, the delivery of service greatly influences its quality. The intangibility of most services do not allow assessment and evaluation of service quality. Moreover, setting standards is difficult as services vary from person to person.
4. Establishment of Large Market Share – Goods vs Services
Generally, goods are produced before they are sold while services are sold before they are produced. Further, services marketing has a limited influence on consumers before the purchase is made.
Normally, customers must experience the intangible services in order to have sufficient information about the service. So, service marketing starts with the critical needs identification in the market. But the entry into market for intangible services is comparatively easier when compared with tangible goods.
Service industries present fewer barriers to enter the market. Thus, competitors may easily gain an entry into the service market, being lured by the profitability of a particular kind of service. As a result, there will be a mushroom growth of service firms marketing similar services. The existence of a large number of fast food franchisers is an example of this fact. Moreover, service firms being small in size are not able to realize economies of scale by acquiring a large market share.