Goods and Services

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GOODS AND SERVICES

Goods and services are the outputs offered by businesses to satisfy the demands of consumer and industrial markets. They are differentiated on the basis of four characteristics:

Tangibility: Goods are tangible products such as cars, clothing, and machinery. They have shape and can be seen and touched. Services are intangible. Hair styling, pest control, and equipment repair, for example, do not have a physical presence.
Perishability: All goods have some degree of durability beyond the time of purchase. Services do not; they perish as they are delivered.
Separability: Goods can be stored for later use. Thus, production and consumption are typically separate. Because the production and consumption of services are simultaneous, services and the service provider cannot be separated.
Standardization: The quality of goods can be controlled through standardization and grading in the production process. The quality of services, however, is different each time they are delivered.

For the purpose of developing marketing strategies, particularly product planning and promotion, goods and services are categorized in two ways. One is to designate their position on a goods and services continuum. The second is to place them into a classification system.

The goods and services continuum enables marketers to see the relative goods/services composition of total products. A product's position on the continuum, in turn, enables marketers to spot opportunities. At the pure goods end of the continuum, goods that have no related services are positioned. At the pure services end are services that are not associated with physical products. Products that are a combination of goods and services fall between the two ends. For example, goods such as furnaces, which require accompanying services such as delivery and installation, are situated toward the pure goods end. Products that involve the sale of both goods and services, such as auto repair, are near the center. And products that are primarily services but rely on physical equipment, such as taxis, are located toward the pure services end.

The second approach to categorizing products is to classify them on the basis of their uses. This organization facilitates the identification of prospective users and the design of strategies to reach them. The major distinction in this system is between consumer and industrial products. Consumer goods and services are those that are purchased for personal, family, or household use. Industrial goods and services are products that companies buy to make the products they sell.

Two major changes have affected the marketing and production of goods and services since about 1950. The first was a shift in marketing philosophy from the belief that consumers could be convinced to buy whatever was produced to the marketing concept, in which consumer expectations became the driving force in determining what was to be produced and marketed. This change in orientation has resulted in increases in both lines of products and choices within the lines.

The second change was an increased demand for services. The growth in demand for services—and resulting production—continues to increase at a faster rate than the demand for manufactured goods.

see also Marketing