Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

9. Elements of Product
   Planning for Goods and
   Services

Text © The McGraw−Hill

Companies, 2002

Elements of Product Planning for Goods and Services 251

consider most of the same elements in planning products and marketing mixes.

Given this, we usually won’t make a distinction between goods and services but will

call all of them Products.Sometimes, however, understanding the differences in

goods and services can help fine tune marketing strategy planning. So let’s look at

some of these differences next.

Because a good is a physical thing, it can be seen and touched. You can try on

a pair of Timberland shoes, thumb through the latest issue of Rolling Stonemaga-

zine, or smell Colombian coffee as it brews. A good is a tangibleitem. When you

buy it, you own it. And it’s usually pretty easy to see exactly what you’ll get.

On the other hand, a serviceis a deed performed by one party for another. When

you provide a customer with a service, the customer can’t keep it. Rather, a service

is experienced, used, or consumed. You go see a DreamWorks Pictures movie, but

afterward all you have is a memory. You ride on a ski lift in the Alps, but you don’t

own the equipment. Services are not physical—they are intangible.You can’t “hold”

a service. And it may be hard to know exactly what you’ll get when you buy it.

Most products are a combination of tangible and intangible elements. Shell gas and

the credit card to buy it are tangible—the credit the card grants is not. A Domino’s

pizza is tangible, but the fast home delivery is not.

Goods are usually produced in a factory and then sold. A Magnavox TV may be

stored in a warehouse or store waiting for a buyer. By contrast, services are often

sold first, then produced. And they’re produced and consumed in the same time

frame. Thus, goods producers may be far away from the customer, but service

providers often work in the customer’s presence.

A worker in a Magnavox TV factory can be in a bad mood—and customers will

never know. But a rude bank teller can drive customers away.

Services are perishable—they can’t be stored. This makes it harder to balance

supply and demand. An example explains the problem.

MCI sells long-distance telephone services. Even when demand is high—during

peak business hours or on Mother’s Day—customers expect the service to be avail-

able. They don’t want to hear “Sorry, all lines are busy.” So MCI must have enough

equipment and employees to deal with peak demand times. But when customers

aren’t making many calls, MCI’s facilities are idle. MCI might be able to save money

How tangible is

the Product?

Is the product

produced before

it’s sold?

Services can’t be

stored or transported

Providing consistent, high-quality

service is a challenge, so many

firms are using technology to

make it easier and quicker for

customers to get the services

they want by themselves.

Differences in Goods and Services