Goods vs. Services

Both goods and services are firm's outputs which are produced in order to meet customers' needs.

Goods are tangible company's products. They are objects, which means that they can be seen, felt, tasted and touched.

Goods are first produced, then sold and finally consumed. It means that they are separable of production, so the producer and seller may or may not be the same entity.

Goods do not require consumers to be present during the production process (i.e. the customer does not need to present in the process of shoes production). Goods are less heterogeneous than services because the quality standard among different producers may be similar.

Apart from the above, goods are not perishable because they can be saved and stored. It means that goods can be reclaimed.

Services are intangible products. They are performances, thus they cannot be seen, felt, tasted, or touched in the same manner in which goods can be sensed.

Services are inseparable of production and consumption. It means that services are first sold, then produced and consumed simultaneously. Inseparability also means that the producer and the seller are the same entity.

The main characteristic of service, is that it connects buyer with the production process, because the customer must be present during the production of many services ( i.e. haircuts, medical examination).

Services are highly heterogenous because its quality and essence various among producers. Apart from the above, services are perishable because they cannot be saved - for example hotel free rooms, not purchased airline seats cannot be reclaimed.

In summary:

Both goods and services are companies' products which aim at satisfying customers' needs. They differ in terms of intangibility, inseparability of production and consumption, heterogeneity, and perishability.