Differences Between Economic Goods and Services
Browse articles:
Auto Beauty Business Culture Dieting DIY Events Fashion Finance Food Freelancing Gardening Health Hobbies Home Internet Jobs Law Local Media Men's Health Mobile Nutrition Parenting Pets Pregnancy Products Psychology Real Estate Relationships Science Seniors Sports Technology Travel Wellness Women's Health
Browse companies:
Automotive Crafts, Hobbies & Gifts Department Stores Electronics & Wearables Fashion Food & Drink Health & Beauty Home & Garden Online Services & Software Sports & Outdoors Subscription Boxes Toys, Kids & Baby Travel & Events

Differences Between Economic Goods and Services

There is a huge difference between service and goods. Service is a kind of activity or a set of activities of more or less intangible nature.

There is a huge difference between service and goods. Services are a kind of activity or a set of activities of more or less intangible nature. According to Bruhn (2008), service is a type of goods dedicated for the purposes of economics, which in contrast to the goods, is not the material production or the material value of an end product in the foreground but a natural person or legal entity provided at a time or in a time frame based on performance to cover demand. The provider of such services is called a service.

Economically, services are recorded and reported as part of the gross domestic product but only services can be assessed on market prices. In the three-sector hypothesis, the economy is divided into the primary sector of commodity production, the secondary sector of manufacturing industry and the tertiary sector of services. From a business perspective, we distinguish service and product from the benefit in kind. As per Malleri and Frietzsche (2008), the service is not storable, rarely transmissible and requires an external factor. Their production and consumption are usually coincided. In this paper, Broadway Infotech serves as an example of a service organization.

Waitress / Pixabay

Five Main Differences between a Service and a Good

1. A main difference between services and goods is that a service cannot be patented, while goods such as a product can be tested, refined and patented.

2. A service requires some sort of interaction with the customer in order to be a service. It might be a brief interaction or a prolonged interaction with the customer. Goods are products that are manufactured in a facility and don’t need any interactions with a customer.

3. Services, with a few exceptions, are usually diverse in character or content. They vary from day to day and even hour by hour. By contrast, goods can be produced to meet very tight specifications every day with essentially zero variability. In those cases where a defective good is produced, it can be reworked or scrapped.

4. For the most part, services are perishable, and cannot be stored. Goods can be stored.

5. Differences that differentiate services from goods are:

·        Supporting facility: Location, decoration, layout, supporting equipment, and architectural appropriateness

·        Facilitating goods: The goods that make a service work, like the food in the meal services area.

·        Explicit services: The training of service personnel, comprehensiveness of the service, and availability and access to the service.

·        Implicit services: Atmosphere, attitude of the servers, waiting time, status, and security, and convenience.

This can be confusing at times when it seems that a service also provides goods. The following chart can be helpful.

Pure Goods

Core Goods

Core Services

Pure Services

Food Products

Appliances

Airlines

Medical Advice

Book Publishing

Automobiles

Hotels

Teaching

Chemicals

Data Storage Systems

Internet Service Providers

Financial Consulting

Goods are a central element of every economics study. It is ultimately goods that determine economic well being from an economic perspective. Goods are primarily different from services in the fact that they are a type of physical product that is bought by the customers, such as soap, toothpaste, and electronic gadgets. As per Mario Miranda (2004), in a market system of compensation, the goods that are scarce demand generally far higher rates than the actual price. Nel (2005) states that economic goods are real goods and nominal assets are divided.

According to Lee, Chung, and Taylor (2003), it is in this respect that tangible goods and intangible property are distinguished. The latter can in turn be divided into services and ideational property. Also here the transition is smooth. Maleri and Frietzsche (2008) state that services are intangible in its result predominantly but can include physical components, such as a carrier medium on which the result of the service is passed.

The quality of the service is referred to as service quality. In addition to the performance outcome of a particular service, the power generation process and the performance potential are all of importance. All three so-called "performance dimensions" are included in the assessment of service quality, as stated by Richter and Souren (2008). Services vary in standard and custom. The latter is created, however, for a specific individual. One feature of standardized services is that they are created for a fictitious average customer. The degree of participation of the customer is higher for individual services. In Broadway InfoTech, the performance of the software and web developers is the biggest factor.

Conclusion

There has been a dramatic shift from goods producing to services since 1900. When looking at the different sectors we can invest in, and the employment numbers by category, we can see how the service sector has really overtaken the once strong goods sector.

References:

Bruhn, M., Stauss, B. & Wiesbaden, G. (2008). service marks. ISBN 3-8349-0609-3.

Lee, T. , Chung, W. & Taylor, R. (2003), A strategic response to the financial crisis: an empirical analysis of financial services advertising before and during the financial crisis. (pp. 150 - 164)

Maleri, R. & Frietzsche, U. (2008), Fundamentals of service production Springer, Berlin / Heidelberg. ISBN 978-3-540-74058-2.

Nel, D., van Heerden, G., & Chan, C. (2005), Eleven years of scholarly research in the Journal of Services Marketing.

Richter, M. & Souren, R. (2008), On the problem of defining a business service definition Technical University of Ilmenau,. ISBN 978-3-940882-09-7.

Operations and Supply Management

Additional resources:

Need an answer?
Get insightful answers from community-recommended
experts
in Customer Service on Knoji.
Would you recommend this author as an expert in Customer Service?
You have 0 recommendations remaining to grant today.
Comments (0)
ARTICLE DETAILS
RELATED ARTICLES
RELATED CATEGORIES
RECENT SEARCHES ON KNOJI SHOPPING