We satisfy our needs and wants by buying goods and services. Goods are items you can see and touch, such as a book, a pen, a folder etc.; they are physical, having form and substance. Whereas, services are provided for you by other people, such as; doctor, dentist, haircut and eating out at restaurants, they are intangible. When you purchase a good you thus get physical ownership of it, whereas when you purchase a service you gain ownership of nothing.
However this split was traditionally based on an economics based view and such a dichotomy between physical goods and intangible services is not given too much credence within contemporary marketing. It is only when you get down to individual adaptation of the marketing mix elements that such a consideration is required
Firstly Wehave to note that these are not discrete categories, as figure8 suggests there is in fact a continuum with a pure service as one terminal point and a pure commodity good as the other.
It is thus better to actually think in terms of goods and services in terms of what actually makes them different form each other because it is these factors that impact on the marketing mix. The goods and services continuum enables marketers to see the relative goods/services composition of total products. By determining a product's position on the continuum marketers can spot opportunities.
Goods and services are the outputs offered by businesses to satisfy the demands of consumer and industrial markets. They are best differentiated on the basis of four characteristics:- Tangibility: Goods are tangible products such as cars, clothing and machinery. They have shape and can be seen and touched. Services are intangible; hair styling pest control, and equipment repair, for example, do not have a physical presence.
- Perishability. Allgoods have some degree of durability beyond the time of purchase. Services do not; they perish as they are delivered.
- Separability: Goods can be stored for later use. Thus, production and consumption are typically separate. Because the production and consumption of services are simultaneous, services and the service provider cannot be separated.
- Standardisation. The quality of goods can be controlled through standardisation and grading in the production process. The quality of services, however, is different each time they are delivered.
Secondly when one considers the real world such a split between goods and services is dearly tautologythey are both products. Marketers draw on the same set of principles and skills to market all products, whether they are apples, oranges or haircuts.
For example, a restaurant provides a physical good (prepared food), but also provides services in the form of ambiance, the setting and clearing of the table, waiting on table, etc. Indeed with the wider adoption of the marketing concept and the increasing competition in markets many products are now heavily reliant on services supplied as an integral element with a good - called an augmented productin order to be competitive.
This has led to some academics developing the Service Dominant Logic (SDL) approach to marketing. which focuses on this area as the substantive satisfier of needs.
To understand this concept of goods and services as products, let's take a look at how we define and examine products. Firstly we can describea"Product as abundle of attributes or characteristics. Let's take the humble staple of bread. Bread comes in many varieties, leavened and unleavened, white, wholemeal, brown, a mix of the two, sliced or unsliced, buns, baps or loaf, small, medium or large or it may be small - these are physical attributes of the bread.
These physical attributes all provide different benefits to the person who buys and/or eats the bread, e.g. a sliced loaf may be good value for money, good for your health or easy to use when making sandwiches. Note these physical attributes are aimed at satisfying people's needs. Bread primarily satisfies hunger - a physiological need in Maslow's Hierarchy, but can then be used to also satisfy secondary needs higher in the hierarchy - buying wholemeal bread for health benefits, or seeded bread for taste or aesthetics.
Indeed if we think about this a Product may have to satisfy many needs to be successful. Consider a diet soft drink. Primarily it has to quench thirst and taste good, but it is likely that it also has to below calorie, be convenient to drink and convey a suitable image. So the needs range from the simple, e.g. quench thirst, to the elaborate, e.g. convey suitable image. Some of these are fulfilled by basic product characteristics, but some needs require more than just productingredients, e.g. image is largely created by its advertising and the convenience of drinking is down to the size and design of the can or bottle.
Consumers considerall these factors simultaneously to reachajudgement on the value of what is termed The Total Product Offering (TPO) - this is the total package that makes up and surrounds the product including all supporting features such as branding packaging servicing and warranties, indeed the TPO includes all elements of the marketing mix so that marketers must design a complete, co-ordinated, cohesive and congruent package.
If you look at figure nine you will see that the TPO consists of four levels; the core, the basic product, the augmented product and the perceived product. The core benefit is the central reason for the product to exist, it is the simplest possible answer to an expressed need no frills, no branding or packaging, no warranties or service promises, just the most basic reason why the product is needed.