Goods vs Services

Goods and services aims at fulfilling customer needs.  Examples of goods are books, foods, clothes and so on. Examples for services would be hair dressing, banking, hospitality services and so on. The difference between goods and services can be analyzed as follows:

Goods are tangible in tangible in nature where as services are intangible. As an example a book is a good where it is a tangible product and the lecture delivered by a lecturer is service which is intangible.

  • Output of the goods can be stored and consumed sometime after the production. Output of the service can not be stored and has to be consumed during the process of production. As an example if food (a good) is manufactured by a supplier it can be stored and consumed/sold sometime later. But a lecture (a service) delivered by a lecturer can not be stored and consumed later. Student has to be present at the lecture hall and grab the knowledge while the service is delivered.
  • Production of goods involved low contacts with the customer where production of services involves high contacts with customers. As an example when a book (a good)is manufactured the student who uses the book is not involved in the production process. But during the teaching process (a service) the student actively participates.
  • The location of a good manufacturer can be anywhere in the world and the location of the customer does not matter as long as the goods can be transported. As an example a garment can be manufactured in Sri Lanka and consumed by a USA customer. But in service industry the location has to be close to the customer as the customer has to participate in the service process. As an example hair dresser catering to local market has establish the shop in local premises.
  • Goods Manufacturing firms can be large scaled as economies of scales can be experienced through large scaled manufacturing. But service manufacturing firms tend to be small in scale as customization is needed.
  • The good manufacturing is more capital intensive and uses many machineries. As an example a vehicle manufacturer would use more machines in production process. Service manufacturing is more labour intensive and uses more human resources in the production process. A beauty parlour would use more human labour than machines it uses.
  • Measurement of quality in good is fairly easy as goods are quantitative and standardized in nature. When comes to measurement of quality in a service is impossible/hard task as services are intangible and qualitative in nature.

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