Differentiating Between Goods and Services

Differentiating Between Services and Goods

March 5, 2016

Differentiating Between Services and Goods

        In today’s society services and goods make up most of the economy.  There’s no where a person can go that they aren’t spending money on services or goods because people depend on goods and services to survive or satisfy needs.   According to Kerin, Hartley and Rodelius (2007), “a good has tangible attributes that a consumer’s five senses can perceive” and “a service are intangible activities or benefits that an organization provides to satisfy consumers’ needs in exchange for money or something else of value” (p. 214).  A prime example of the use of goods and services would be a grocery store because it offers both in one convenient location.  The grocery store offers the services to buy goods; food, in exchange for money through face-to-face interaction or nowadays through with the advancement of technology in customer service; self check out stands.  The fact is people depend on goods and services on a daily basis and with the advancement of technology, it is more convenient and accessible.  

        The difference between goods and services can be distinguished by the four I’s of services which are intangibility, inconsistency, inseparability, and inventory.  This means goods are tangible, they appeal to a persons’ senses whereas services are intangible and cannot relate to all of a persons’ senses.  Inconsistency of services depends on the people who provide them and is seen as more of a problem that it is with goods.  Inseparability is just like it sounds, it means that you cannot separate the services from the service provider such as a hotel room.  A person cannot consume a hotel room.  According to Kerin, Hartley and Rudelius (2007) “many goods have inventory handling costs that relate to their storage, perishability, and movement”, whereas with services, the costs are more intuitive and linked to idle production capacity, meaning the “service provider is available but there is no demand for the service” (p. 217) and that is the characterization for inventory of services.

        With the advancement of technology increasing in the services industry of customer service, there has been a lack of interpersonal exchanges between consumers and frontline service employees.  In a research study by Micheal Giebelhausen, Stacey G. Robinson, Nancy J. Sirianni, and Michael K. Brady (2011), it was conveyed that “in North America alone, self-service kiosk transactions have been forecast to surpass one trillion dollars per year by 2014” (p. 113).  This means that the face-to-face interaction between an employee of a service being offered and the consumer buying the products or services will hit an all time low.  In this same research study it was also stated that “the J.D. Power data demonstrate an interaction between employee rapport-building behaviors and frontline technology such that the use of technology erodes some of the positive effects of a pleasant encounter and, at the same time, offsets some of the negative effects of an unpleasant encounter on overall service evaluations” (Giebelhausen, Robinson, Sirianni, and Brady, 2011, p. 114).  This means it can be a good and bad thing in terms of how a customer wants to fulfill their customer service experience because some people may want to purchase goods from a service with no interpersonal communication due to negative experiences in the past or simply convenience or on the other hand it could mean that sometimes the face-to-face interaction is not always available and it only capable through a kiosk or some form of technology for the use of customer service.  Halton Small Business Centre Consultant (2010) also enlightened on how technology has changed customer service by saying that it can bring advantages such as “business owners can cost effectively deliver services faster and in a short amount of time; or customers have the choice of how they want to interact and contact the business, be it by phone, email, online chat or automated voice mail”.  The choice is ultimately left up to the customer on the preferred method of customer service they want to use.