Topics: Service system, Marketing, Service Pages: 12 (4292 words) Published: October 29, 2014
Chapter 2

Goods, Products and Services
Glenn Parry, Linda Newnes, and Xiaoxi Huang

2.1 Introduction
Defining terminology is a useful starting point when reading or writing on the subject of service to prevent any confusion or assumptions that we all understand the terms to mean the same thing. So, what do we mean by goods, products and services? This is a book about service, but what is a ‘service’ and how is it different to ‘goods’ or ‘products’? Whilst most people intuitively know the difference between a product and service, actually defining this difference with clarity and accuracy of text is not straight forward. The terms ‘goods’ and ‘products’ appear to be used interchangeably in much of the literature, but even here we can find debate about meaning (Araujo and Spring 2006; Callon 1991, 2002). However, for the sake of brevity we will here accept that they both refer to the same thing and focus on attempts to differentiate goods and services. This quest is far from straightforward. Since the early eighteenth century academics and scholars from different domains have attempted to define these terms explicitly (Say 1803; Levitt 1981; Hill 1999; Gadrey 2000). In this chapter we will attempt to illustrate their findings in order to provide some background to the debate.

2.2 Goods
In the eighteenth century Adam Smith (1776) stated that goods have exchangeable value and so a characteristic of a good is that its ownership rights can be established and exchanged. Goods can be considered as embodying specialised

G. Parry (*)
Bristol Business School, University of the West of England, BS16 1QY e-mail:
M. Macintyre et al. (eds.), Service Design and Delivery, Service Science: Research and Innovations in the Service Economy, DOI 10.1007/978-1-4419-8321-3_2, © Springer Science+Business Media, LLC 2011



G. Parry et al.

knowledge in a way that is highly advantageous for promoting the division of labour (Smith 1776; Demsetz 1993). Nassau Senior (1863) described goods as material things, meaning that goods are tangible and have physical dimensions. These concepts were still accepted over 100 years later when The System of National Accounts (SNA) (1993) defined goods as physical objects for which a demand exists, over which ownership rights can be established and whose ownership can be transferred from one institutional unit to another by engaging in transactions on markets. Hill (1999) summed up the major characteristics of goods as an entity that exists independently of its owner and preserves its identity through time; his definition supporting of that of the SNA. Following these definitions we can outline a set of attributes for goods: •

Physical objects for which a demand exists
Their physical attributes are preserved over time
Ownership rights can be established
They exist independently of their owner
They are exchangeable
Unit ownership rights can be exchanged between institutions
They can be traded on markets
They embody specialised knowledge in a way that is highly advantageous for promoting the division of labour

These attributes are broadly accepted by academics and reflect 200 years of ongoing debate.

2.3 Services
Although we have found a long standing agreement over the definition of products/ goods and their characteristics, the definition of services has never reached consensus. Consequently it is hard to obtain full acceptance about the distinction between goods and services. Here we will present some of the different perspectives on service from the literature.

2.4 Intangible, Heterogeneous, Inseparable & Perishable
(IHIP) Characteristics
As marketers began to recognise and emphasise the importance of services (Fisk et al. 1993) they consequently called for services to form a separate part of a companies’ marketing strategy (Lovelock 1983). A major contribution to the services debate was a classification...

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