The main difference between product and service is that the exchange of the latter does not result in the ownership of a good, but in the mere benefit, as a result of having received the service.
Something is a term that can include anything offered for your attention, acquisition or consumption: ideas, goods, services, places, organizations, personalities. That it has value is an expression that means that what is offered can satisfy a need or desire, fulfill a requirement or provide a benefit. For someone it is a declaration that some people will be willing to get what is offered, that is, they will be willing to make an exchange.
This description does not recognize differences between products and services, so it might seem that distinguishing them does not have strategic implications for the company. In fact, Theodore Levitt states that:
There are no Service Industries; there are only industries whose service components are larger or smaller than those of other industries.
Service definition
The traditional definition of service seems to confirm this: a service is any act or performance that one person can offer to another, which is essentially intangible and does not entail any property. Its production may or may not be linked to a physical product.
Reasonably, we must think that it is very difficult for services, essentially intangible, to exist on their own. Some tangible elements are required to deliver the service and deliver the benefit to the customer. For example, the gypsy who reads the future uses a whole set of tangible elements to produce the desired effect.
Similarly, products, essentially tangible, carry service components that become very important: installation, warranty, customer service would be very obvious examples. A smile from the seller, ease of payment, or the brand image may not be so much.
The fact that product and service combine to offer something that has value for someone does not mean that there are no differences between the two. In fact, there are 5 characteristics of the services that have strategic implications of the utmost importance for their proper marketing.
The five characteristics of the services
Intangibility
The services are intangible because they cannot be seen, liked, touched, heard or smelled before they are purchased. This causes uncertainty in who intends to acquire them, and to reduce it, the client will seek evidence about the quality of the service depending on how they see the place, the people, the equipment, the written communication, the symbols, the price and other associated elements.
Therefore, the concern of the service provider should be to manage the evidence, in order to make the intangible tangible.
Inseparability
Services are generally produced and consumed at the same time. Rather, physical products are manufactured, inventoried, and distributed by multiple resellers and subsequently consumed.
If the service is provided by a person, then the person is part of the service.
Variability
Services are highly variable because they depend on who, when and where they are provided. The main risk derived from this characteristic is the irregularity in the quality of the service offered. The logical answer is to follow some steps towards quality control.
Some of them have to do with investing in a good selection and training of personnel; standardize the service execution process; monitor consumer satisfaction through complaint systems, surveys and purchase comparison so that poor service can be detected and corrected.
Perishability
The services cannot be stored or inventoried. If they are not used when offered, they are lost. Examples, an empty movie theater or an unused hospital bed represent an income that has been lost forever. And the strategic implication of this feature is that unpredictable demand can cause serious difficulties.
The best way to avoid the perishability of the service is to make a good balance between supply and demand, which can be accomplished in two ways, by adjusting supply, or by softening demand.
Adjusting supply requires actions such as hiring part-time employees or introducing efficiency routines for peak demands. For example, in a hospital, paramedics assist surgeons, or in a bank desk clerks temporarily become tellers.
Supply can also be adjusted by increasing consumer participation. For example, with the auto - filling of forms. With shared services or land for future expansion. There are schools that operate at night for extension courses, or restaurants that use adjoining office parking spaces at night.
Smoothing demand can be done by setting differential prices that tend to shift peak demands toward normal seasons. For example, to grow demand outside of the normal season, McDonald's launches the McMuffin Egg Breakfast; a movie theater doubles the price of tickets on Sunday afternoons.
Demand can also be smoothed through complementary peak-hour services that provide alternatives to customers on the waiting line. For example, having a cocktail in the lobby while vacating a table in the restaurant. And of course, there are the reservation systems.
Customer-supplier interaction
Because both the provider and the customer are present when the service is produced, it becomes essential in service marketing to care for the customer-provider relationship.
Beyond the steps towards quality control previously listed, a continuous monitoring system must be implemented that allows a supervisor to observe how the relationship occurs during an actual transaction.
In conclusion, we can say that the characteristics of the services have very important strategic and operational implications for their successful commercialization, even more so if we consider that in reality every offer made to customers is actually a combination of physical product and intangible service.
For my taste, the main difference between product and service is that the exchange of this does not result in the ownership of a good, but in the mere benefit that is the result of having received the service. That is, we do not carry a physical object with us at the end of the transaction, but we are left with the result of having received the service and the feeling of satisfaction according to the quality of care received.
