Question:In what ways, if any, are products different than services?

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Intuitively, products differ from services in several ways. But when you think about it, the implications for marketing mostly have to do with pricing, and many differences are not that significant.

The biggest difference is that unlike a product, customers don't own a service. Instead they typically rent the service. Since they don't own the service, they may care mostly about such benefits as low price and the convenience of delivery. This makes sense since why should they care about things they won't own?

Related to this is the pricing of services. In many ways, these are more difficult to price than products because services are intangible and possess many "experience" benefits (we have a good tutorial that explain more clearly the problems of pricing when experience is most important). Because services are more difficult to evaluate the marketing problems associated with evaluation are more complicated. For example, how can you help customers evaluate a service that they can't really experience until after they purchase it?

There are other things as well, including the absence of inventories for services as compared to products, and the obvious centrality of employees in the "service delivery process". But many of the ideas associated with products are very similar, like positioning, segmentation and competitive thinking.

So, in essence, while it seems that services are very different from products, it may be more of degree than kind.


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