marketing goods or services

Differentiating Between Services and Goods Introduction For marketers, it is important to differentiate between a good and a service. The two are treated differently in marketing because certain key differences influence the timing of marketing efforts, the messaging, the need to build relationships with customers, and demand forecasting. Key Differences between Goods and Services There are significant differences between goods and services, and these differences result in many differences in terms of production, marketing, pricing – all aspects of business, really.

The first difference is that a service is not physical, where a good is. There might be supplies used in the service, but the service is inherently based on performance. Thus, services are intangible, there is no property to transfer from one party to another, there are no inventories, and time is very important (Bhasin, 2018). Furthermore, a customer must be involved with a service – a good can exist with no customer but a service without a customer is a service that is not even performed (Quickonomics.com, 2018).

The time factor is one of the most important of the distinguishing attributes between goods and services. One of the reasons for this is that time means a service is perishable. At any point, if the service is not being performed, that is a lost revenue opportunity. Think of it this way – if a plane flies the costs are incurred.

Any seats that are unsold and empty, that is revenue that cannot be earned later because once the flight takes off, that's it, no more opportunity to earn money on that particular service. This is not true with a good. Most goods have low perishability. A can of beans can go unsold today, and simply be sold tomorrow. Some goods have limited perishability, like fresh produce and meat. Those goods should be sold within a particular time frame but even they are not as perishable as a service.

There are instances where something is both a good and a service, and it is important to be able to distinguish between the two components. A restaurant meal is such a product. The good is the food. While food is perishable, most food will not spoil if it isn't sold today. But the service component – the opportunity to seat people at a table – that is a service because it is perishable.

You can fill that table tomorrow, but if you're open today and not filling a table, that is a revenue opportunity that will be permanently lost because of the principle of perishability. Perishability is a critical concept in services marketing. Perishability means that demand forecasting is critical, but so is the ability to market perpetually. The business must be designed in such a way that as much of the service capacity as possible is used up each and every day (Bhasin, 2018).

For marketers, the lack of a physical good is also different because the messaging and campaigns have to be built around the experiential aspects of the service. With a good, the messaging can focus on the attributes, many of which are easy to identify and measure. The client can understand these attributes and how they contribute to the client's goals. This is not necessarily the case with services. In general, service attributes are more difficult to measure.

For example, it is easy to measure how long a haircut takes, but the evaluation of a haircut is based on subjective evaluation almost entirely. This can have significant implications for markers because you have to find ways to convince potential customers of the positive attributes of the service without being able to actually prove them. Further, there are ways to market goods as services, and vice versa. Marketers learn from what other marketers in other fields do.

There are many products that are marketed almost entirely on lifestyle attributes, for example. The lifestyle attributes are not physical components of the goods, but a sort of a service that is provided by way of a good (i.e. how it makes you feel, establishing your status or group belonging, etc.). The vice versa can be found with services that are described only in terms of their measurable attributes.

Software is a good example of this – there is little physical with software – even when there is a physical "good", it is just a hard disc that runs the software. Almost everything you get from software is a service, regardless of how you get it. Code is one of the least tangible of tangible things. Kerin and Hartley (2016) note that whether something is a good or a service can influence the pricing decision as well.

Services need to take perishability into account when they are being priced – some of the capacity that will go unused has to be paid for as well. Further, services tend to be more recurring in nature, and that can mean promotions and pricing to entice somebody to use the service can have more value than for physical goods, where there is less likelihood of recurring purchase. Conclusions It is important for marketers to understand the distinctions between goods and services. There are several reasons for understanding these differences.

One is that it changes the messaging, because services need to be continually sold, and while that is important for products it is not essential by any means. Further, the buying cycle and buyer behavior are going to be different for services. A classic example is how time affects things – the buyer wants to consume the service at.