Difference Between Goods and Services

• Categorized under Business | Difference Between Goods and Services

There are obvious differences between goods and services that are analyzed based on characteristics of each. A good is a tangible object used either once or repeatedly. A service is intangible. The tangibility differentiator indicates the ability to touch, smell, taste and see which is absent in services. This can be a deterrent to the service receiver to gauge the quality and dependant on the service company reputation. In the case of goods the ownership of the product is transferable from sellers to buyers, whereas in services there is no ownership involved.

On the quality front, with goods it is homogeneous, once produced the quality is uniform across all line of products. They can be separated from the seller/ provider and not dependant on the source for its delivery to the purchaser. With regard to service it is inseparable from the service provider and heterogeneous, where each time the service is offered it may vary in quality, output, and delivery. It cannot be controlled and is dependant on the human effort in achieving that quality hence is variable from producer, customer and daily basis.

Another key distinction is perishability of services and the non perishability of goods. Goods will have a long storage life and are mostly non perishable. Whereas services are delivered at that moment and do not have a long life or cannot be stored for repeat use. They do not bear the advantage of shelf life as in the case of goods like empty seats in airlines. With the production and consumption taking place simultaneously in services, it differs from goods on simultaneity and the provisions for quality control in the process.

Both goods and services need not be driven by economic motives. Several times goods and services are linked closely and cannot be detached. For example on purchase of a car, the good is the car but the processing, the provision of accessories, after sales activities are all services. It is essential to note that the difference between pure goods and pure services are in contrast but most goods and services exist

in between with a mix of both. For instance, in a restaurant, food refers to goods while the service is the waiters offering, the ambience, the setting of tables amongst others.

Summary:

1. Goods are tangible, and transferable while the services are intangible and non transferable.

2. Goods are separable, and non ‘“ perishable while services are inseparable.

3. Goods are homogeneous while services are heterogeneous.

services marketing mix  

DefinitionSave to Favorites

A selection of services developed to offer customers a choice within a particular range.

The elements of a services marketing mix are sometimes called the seven Ps: the four

Ps of the marketing mix, plus three Ps of services: participants, physical evidence,

and process (of service assembly).

Read more: http://www.businessdictionary.com/definition/services-marketing-mix.html#ixzz2PEvItdDP

The service marketing mix is also known as an extended marketing mix and

is an integral part of a service blueprint design. The service marketing mix

consists of 7 P’s as compared to the 4 P’s of a product marketing mix.

Simply said, the service marketing mix assumes the service as a product

itself. However it adds 3 more P’s which are required for optimum service

delivery.

The product marketing mix consists of the 4 P’s which are Product, Pricing,

Promotions and Placement. These are discussed in my article on product

marketing mix – the 4 P’s.

The extended service marketing mix places 3 further P’s which include

People, Process and Physical evidence. All of these factors are necessary for

optimum service delivery. Let us discuss the same in further detail.

Product – The product in service marketing mix is intangible in nature.

Like physical products such as a soap or a detergent, service products

cannot be measured. Tourism industry or the education industry can be an

excellent example. At the same time service products

are heterogenous, perishable and cannot beowned. The service product

thus has to be designed with care. Generally service blue printing is done to

define the service product. For example – a restaurant blue print will be

prepared before establishing a restaurant business. This service blue print

defines exactly how the product (in this case the restaurant) is going to be.

Place - Place in case of services determine where is the service product

going to be located. The best place to open up a petrol pump is on the

highway or in the city. A place where there is minimum traffic is a wrong

location to start a petrol pump. Similarly a software company will be better

placed in a business hub with a lot of companies nearby rather than being

placed in a town or rural area.

Promotion – Promotions have become a critical factor in the service

marketing mix. Services are easy to be duplicated and hence it is generally

the brand which sets a service apart from its counterpart. You will find a lot

of banks and telecom companies promoting themselves rigorously. Why is

that? It is because competition in this service sector is generally high and

promotions is necessary to survive. Thus banks, IT companies, and dotcoms

place themselves above the rest by advertising or promotions.

Pricing – Pricing in case of services is rather more difficult than in case of

products. If you were a restaurant owner, you can price people only for the

food you are serving. But then who will pay for the nice ambience you have

built up for your customers? Who will pay for the band you have for music?

Thus these elements have to be taken into consideration while costing.

Generally service pricing involves taking into consideration labor, material

cost and overhead costs. By adding a profit mark up you get your final

service pricing. You can also read about pricing strategies.

Here on we start towards the extended service marketing mix.

People – People is one of the elements of service marketing mix. People

define a service. If you have an IT company, your software engineers define

you. If you have a restaurant, your chef and service staff defines you. If you

are into banking, employees in your branch and their behavior towards

customers defines you. In case of service marketing, people can make or

break an organization. Thus many companies nowadays are involved into

specially getting their staff trained in interpersonal skills and customer

service with a focus towards customer satisfaction. In fact many companies

have to undergo accreditation to show that their staff is better than the rest.

Definitely a USP in case of services.

Process – Service process is the way in which a service is delivered to the

end customer. Lets take the example of two very good companies –

Mcdonalds and Fedex. Both the companies thrive on their quick service and

the reason they can do that is their confidence on their processes. On top of

it, the demand of these services is such that they have to deliver optimally

without a loss in quality. Thus the process of a service company in

delivering its product is of utmost importance. It is also a critical component

in the service blueprint, wherein before establishing the service, the

company defines exactly what should be the process of the service product

reaching the end customer.

Physical Evidence – The last element in the service marketing mix is a

very important element. As said before, services are intangible in nature.

However, to create a better customer experience tangible elements are also

delivered with the service. Take an example of a restaurant which has only

chairs and tables and good food, or a restaurant which has ambient lighting,

nice music along with good seating arrangement and this also serves good

food. Which one will you prefer? The one with the nice ambience. That’s

physical evidence. Several times, physical evidence is used as a

differentiator in service marketing. Imagine a private hospital and a

government hospital. A private hospital will have plush offices and well

dressed staff. Same cannot be said for a government hospital. Thus physical

evidence acts as a differentiator.

This is the service marketing mix (7p) which is also known as the extended

marketing mix.

How to manage

Customers, clients, consumers, call them what you will but without them, you don't have a business, writes Jason Nash, product solutions marketing manager, Microsoft Dynamics CRM. So surely it's not rocket science to try and understand a bit about them: what they like, which ones need a bit more love, which ones are more trouble than they're worth and which ones are the best. After all, happy customers are good customers and usually profitable. There's nothing revolutionary about this idea, but it's still surprising how few SMBs are adopting this sort of approach to customer relations.

At a basic level, it can be hugely beneficial to understand more about the makeup of your customers. An understanding of things like purchase and payment history as well as specific preferences and business needs can significantly enhance their experience of doing business with you. Customer satisfaction comes from great customer service, so being able to 'add value' by having all the customer knowledge at your finger tips can only be a good thing.

But beyond this, there is a lot of analysis that can be done to find out more about individual customer profitability. I often ask at customer events how many in the audience can tell me who their most profitable customers are and it's always surprising how few hands go up.

Pareto's age old law says 20% of them bring you 80% of revenue, so knowing which ones they are is important on many levels - especially now, in times of economic uncertainty.

When attracting new customers and striving to retain existing ones, there are many offers and incentives that businesses employ to sweeten the deal. There's nothing wrong with this, but it is important to understand the impact of these on customer profitability - as mentioned, the ultimate goal should be profitable customers.

However, despite these 'deals', there is often a lack of focus on customer service which is severely impacting this. The proliferation of the internet has changed the playing field and made customer satisfaction all the more important. Blogs, social networking sites and the like, have made it much easier for customers to express their dissatisfaction which can have a negative impact on future profits and brand value.

The problem comes in assessing the profitability of individual customers and using this analysis in a meaningful way. Naturally, technology, and CRM systems in particular, play a big part in solving this. However, the trick is to adopt a more sophisticated approach to CRM than is normally considered in order to get this level of analysis around customer profitability.

The first stage is to bring all your data into one place and have trust in its integrity. Multiple spreadsheets, databases or systems are a familiar feature for many SMBs but it's impossible to do any profitability analysis until you have a single version of the truth.

Making sure all the details in your system are accurate and up-to-date relies on a high level of user adoption and that has to be a central consideration when any new system is implemented. However, once you have these foundations laid then you can start to make use of analysis tools and get some real insight into customer behaviour.

It's only when you're equipped with this level of information then can you really start to assess the success of marketing programmes and pricing offers or judge the strength of a relationship by something more tangible than whether customers come along to corporate hospitality days. This is vital for customer retention, but also for identifying which ones the low margin or un-profitable accounts are and, more importantly, understanding why.

9 Steps to Building a Profitable Customer Relationship

Relationships - Relationships

Written by Colleen Francis

Success in sales depends directly on your ability to make yourself likeable, and create a positive experience for your customers. The following 9 Tips are some of the best - and easiest - ways I know to help you create a more positive customer experience:

1. Love what you sell, the company you work for and the customers you serve.

If you are truly passionate about these three things, your willingness to help your customers solve their problems will shine through. Customers will believe your sincerity and be captivated by your excitement. In short - you will be fun to work with. Our studies show that customers prefer to buy from sales people who overtly show that they believe in the products they sell, and the companies they work for. Choose to be honest, open and empathetic to your customers' needs, and you will experience consistent sales growth, build an excellent reputation and become one of the top performers in your field.

2. Be empathetic and compassionate.

Truly care about your customers, and remember that no matter how good an actor you are, faking it simply won't work. Ask questions, take notes and lean in to show that you're engaged in their answers. When you take an interest in people, they remember you - and when people remember you, it's good for business.

3. Add value and give first.

Share your network of contacts with your customers, and don't expect them to give you their business without you giving them something first. I don't mean give away free product in the hopes they will buy more. Instead, give away things that increase your value - like a referral to a partner of yours, a solution to a business problem that you read about or heard from someone else, or even help finding a new dentist!

4. Make eye contact.

This is especially important when you walk into a room full of people. Eye contact is also essential after we get to know people, because it cements our existing relationships and lets them know that we're still interested in their well being. Very few sales people ever look their prospects directly in the eye. By simply smiling and making eye contact, you'll be surprised how much you will set yourself apart.

5. Express your true intent.

Tell customers upfront: "I don't know if there's a fit between what you need and what I have right now, but I'm hoping we can explore that in more detail during this meeting." Or: "I only have your best interests at heart, and I promise to be honest with you throughout our conversation. In the end, I hope that we can mutually decide if there is a reason to move forward. If not, that's fine too, and I hope you'll feel comfortable telling me so." This advice runs counter to 90% of the approaches I see being used in the field today. But then again, maybe that's why only 10% of sales people are top performers. Try it yourself a few times, and you'll be amazed at the response you get.

6. Don't go for the big decision all at once.

In our personal lives, we don't propose to someone on a first date (at least, not usually!). The same is true in our business relationships. So get approval from the customer to move ahead in increasing increments. The first approval might be just to agree to speak openly with each other, as outlined in Tip #5 above. The second could be an agreement on a follow-up call time or meeting date. The third might be gaining agreement on the decision making criteria or a commitment to have the "big boss" present at the demo, followed by an agreement to a "go/no go" decision date. All too often, I see sales people

jumping way ahead of their prospect's buying curve. This puts the buyer and seller out of synch. When the sales person is trying to close while the prospect is still evaluating options or determining risk, trust is broken, the prospect feels pushed and the sale comes dangerously close to disappearing.

7. Use friendly, warm words.

When you use simple language instead of formal "business speak," people respond better and trust you more. So limit your words to three syllables max. And don't try to impress prospects with your extensive vocabulary, or you may end up just sounding fake.

8. Use people's names.

When it comes to using names, there are just two rules to follow: first, be aware of whether they're more comfortable with first name only or title + last name; second, never overuse their name - this only sounds corny and false. Dale Carnegie once said, "nothing is so beautiful to a person as the sound of their own name." Just use your discretion.

9. Ask the right questions.

Successfully building agreement with your prospects depends on your ability to ask the right questions. What are the right questions? Those that move the prospect from an intellectual position of knowing they have a problem that needs to be solved, to an emotional state of trusting you to solve that problem in a way that will satisfy them.

In short, the right questions are those that reveal true buying motivations. Mastering the right questions will ensure that you and your client build a strong relationship, wherein you can both succeed - and profit!

Service strategy

Service Strategy provides guidance on developing service-based business models and strategies. It defines the value creating context and principles of service management that shape decisions, policies and processes across the ITIL Service Lifecycle. Service Strategy defines the objectives, resources, and constraints within which services and the relationships they define with customers are to be managed.

The core process in Service Strategy involves defining the market, developing the offerings, developing strategic assets and preparing the organisation for execution through the Service Lifecycle. This process is driven by functions such as Financial Management, Service Portfolio Management, Demand Management, Organisation Development

and Sourcing Management. The title introduces the role of Product Manager as a counterpart to Business Relationship Managers.

The guidance in Service Strategy is relevant to service providers in the public and private sectors. It is useful for developing strategic perspectives, distinctive positions in customers' minds, and effective execution through the Service Lifecycle. The title helps managers set up the potential of Service Management as a strategic asset. It also helps them make the business case for investments in the Lifecycle phases of Service Design, Service Transition, and Service Operation, and in the ongoing activity of Continual Service Improvement.

Diff serv rec

Service recovery is a critical -- yet all too often missing—element in providing customer service that will attract and retain customers and have a positive impact on the bottom line of any business -- no matter where it is located or what product or service it provides. In his latest book -- Loyal for Life: How to Take Unhappy Customers from Hell to Heaven in 60 Seconds or Less -- John Tschohl defines service recovery, details its importance to the bottom line, identifies role models, and describes the elements of service recovery.“Service recovery builds customer loyalty that brings a customer back from the brink of defection,” says Tschohl, founder and president of the Service Quality Institute in Minneapolis, Minnesota. “Simply put, it is putting a smile on a customer’s face after you’ve screwed up. It’s solving a customer’s problem or complaint and sending him out the door feeling as if he’s just done business with the greatest company on earth -- and it’s doing so in 60 seconds or less.”Service recovery involves a series of steps that must be taken in order to attract -- and retain— -- customers. In his 128-page book, Loyal for Life, Tschohl identifies and describes those steps. They include:Apologize. “You must apologize and take responsibility for the error,” Tschohl says. “For service recovery to work, it has to happen with the first person the customer tells about the problem. Unfortunately, many employees don’t want to admit that they or their company screwed up, so they lie or make excuses, which irritates the customer even more. You must apologize sincerely on behalf of the company.”Solve the problem. Once made aware of the situation, the employee must do whatever is necessary -- as quickly as possible -- to solve the problem. That means, Tschohl says, that employees must be empowered. They must be given the authority to bend and break the rules in order to satisfy the customer.“Empowerment is the backbone of service recovery,” Tschohl says. “It’s impossible to be a service leader, to be customer centric and focus on a service strategy without empowering employees. My definition of empowerment is giving employees the authority to do whatever it takes, on the spot, to take care of a customer to that customer’s satisfaction—not to the organization’s satisfaction.”Give the customer something of value as compensation. “To simply say you’re sorry is nice, but it’s not very powerful,” Tschohl says. “You must give the customer something that has value in his eyes, something so powerful that he not only will continue to patronize your business but will tell everyone he knows about the wonderful service you provided to him. Every company has something of value it can give to a customer who has experienced a problem. It can cost the company from nothing to a few dollars but, as long as it has value in the customer’s eyes, it will be effective.”Tschohl was on the receiving end of exceptional service recovery while skiing in Vail. The chair lift stopped, stranding dozens of skiers for an hour. Three times members of the ski patrol came by to provide updates on the situation. When the skiers finally reached the top of the mountain, three Vail employees greeted them, apologized for the inconvenience, and gave them each two free lift tickets -- worth $70 each -- and a ticket for a free drink.“That was great service recovery,” Tschohl says. “It cost the resort next to nothing but it resulted in unbelievable word-of-mouth advertising. For the rest of that day and the next, we told everyone who would listen about the wonderful treatment we had received. If they had merely given us a free drink ticket, that would have been nice, but we certainly wouldn’t have raved about it to others.”Create a service recovery process. It is important to develop a process that allows employees some latitude in serving the customer but that also includes specifically defined steps that must be followed in providing service recovery. “Put in place at least five examples of service recovery with strict instructions to employees to meet or exceed them,” Tschohl says. “That might include pre-printed coupons for free services for customers who experience service issues, a free dessert or round of drinks for members of a party that waited until 7:45 p.m. to be seated for their 7 p.m. dinner reservations, or a first-class upgrade for an airline passenger whose luggage was delayed two days.”Train employees. “Too many executives think employees are born with good customer service skills,” Tschohl says. “If you want your employees to provide service so awesome that it wows your customers, they must combine the fundamentals of customer service with flawless execution. Employees must be knowledgeable about your products

and services, but they also must be trained to provide the best service possible in order to keep your customers coming back to you.”Service recovery not only builds customer loyalty, it draws more customers to a business and can drastically reduce a company’s advertising budget. “Advertising will bring a customer to you—once,” Tschohl says. “The customer experience is what will bring him back to you time and time again.”