We use transportation, health care and education services every day. We purchase agricultural, light industry and pharmaceutical goods. We ask our neighbor to provide a small service, and tell our friend that discounts have been announced for some products in your favorite store. At the same time, we never think about what such familiar words mean, and at the same time such incomprehensible economic terms as "product" or "service".
Service is some benefit that one a person renders to another. It is also important to understand that the provision of a service necessarily involves an action or the execution of a certain process.
Typically, services include:
- transport, trade, communications,
- finance, consulting,
- leisure activities, tourism, education, medicine, housing and communal services, and much more.
The sphere of service provision is especially widespread in developed countries. They account for about 70 percent of world exports and imports of services.
A good is a manufactured product intended for sale or exchange. The product must satisfy the needs of the person for which it was created.
Goods can be homogeneous (eg raw materials) and heterogeneous (there are several components); perishable (eg food, appliances) and non-perishable (luxury goods).
The product is tangible, it has a material shell. You can touch it, consider it. The company has the ability to store its goods.
Service is intangible. This is a kind of process that cannot be touched, felt and, naturally, cannot be put into a warehouse. Therefore, in order to interest the consumer to take advantage of the offer of this particular service provider, it is necessary to create comfortable conditions, an external sense of well-being, to provide a respectful reception to the client, to influence all his senses so that he not only wants to return, but also brings someone else with him....
The issue of pricing
The price of a product consists of the cost price, the percentage of profit of the manufacturer and the seller, salaries, packaging costs, taxes, transportation costs, etc. The manufacturer and the seller have no difficulty in calculating and justifying the price.
The formation of prices for a service is often difficult. The question arises: "where did this figure come from?" And, indeed, it is sometimes very difficult to justify it.
The product is manufactured according to certain technologies, has an established production procedure and, quite often, must comply with GOSTs. A product, in contrast to a service, can be patented, and the right of ownership can be established for it.
It is not possible to provide the service twice in the same way. Even if it is provided from time to time by the same company, the quality depends not only on the supplier, but also on the clarity of the formulation of the request, the presence of other customers at the same time, etc.
The ratio of production and consumption
The consumer, as a rule, is not present in the process of manufacturing the goods. The product is produced and offered to the buyer in different places and at different times.
The service involves the direct participation of the consumer in the process of "production" and the influence of his wishes and requirements on the final result. A service, unlike a product, has the property of simultaneous production and consumption.
- The product is material and tangible, the service is not.
- The quality and appearance of the goods are constant, the services are heterogeneous.
- Production of goods is separated from consumption. The service assumes the coincidence of these stages.
- The service cannot be stored. The goods can be stored.