Services as Products
Services represent an integral part of many products and the correlation of goods and services is represented on a goods-services continuum.
LEARNING OBJECTIVE
Describe the characteristics of service products
KEY TAKEAWAYS
Key Points
- Services can be products that are both tangible and intangible. Typically, the dominant form will classify the product as a good or as a service.
- Many theorists see a continuum with pure services on one end and pure commodity goods on the other. Most products fall between these two extremes.
- Service products are often difficult to identify, because they come into existence at the same time that they are bought and consumed.
Key Terms
tangible: Touchable; able to be touched or felt; perceptible by the sense of touch; palpable.
intangible: Incapable of being perceived by the senses.
EXAMPLE
A taxi service is a service that is tangible. Taxi drivers, such as the one in the image, provide both the good (a car), which provides the means of travel, as well as the act of driving to a place – which is measurable and essentially a service. Therefore a taxi cab driver provides both a good and a service, so he is providing a product.
Services As Products
The increasing importance of the service market in the economy has brought about a change in the definition of goods and services. No longer are goods considered separate from services. Rather, services now increasingly represent an integral part of the product. It is this interconnectedness between goods and services that is represented on a goods-services continuum.
Services can be alternatively defined as products, such as a bank loan or a home security, that are to some extent intangible. If totally intangible, they are exchanged directly from the producer to the user, cannot be transported or stored, and are almost instantly perishable.
Service products are often difficult to identify, because they come into existence at the same time that they are bought and consumed. They comprise intangible elements that are inseparable; they usually involve customer participation in some important way; they cannot be sold in the sense of ownership transfer; and they have no title. Today, however, most products are partly tangible and partly intangible, so the dominant form is to classify them as either goods or services (all are products).
Taxi Services: A taxi cab driver provides both a good and a service, so he provides a product.
The dichotomy between physical goods and intangible services should not be given too much credence. These are not discrete categories. Most business theorists see a continuum with pure services on one terminal point and pure commodity goods on the other terminal point. Most products fall between these two extremes. For example, a restaurant provides a physical good (the food), but also provides service in the form of ambiance, the cooking and the serving of the food, and the setting and the clearing of the table. And although some utilities actually deliver physical goods — like water utilities which actually deliver water — utilities are usually treated as services.