Report

3/26/2020 Differences between a Product and a Service

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Differences between a Product and a Service

Although a service may be viewed as a product and vice versa, the two are

distinguished by several characteristics. Services are characterized by the

following attributes (Johansson, 2009):

intangibility—You cannot easily touch a service. Services are difficult to

monitor at borders and hard to assess for customs duty.

heterogeneity—A service is not exactly the same each time, especially

personal services. Services are less standardized than products and quality

varies.

inseparability—Services are produced when they are consumed. Service

quality depends on situation and context.

perishability—You cannot store a service, unless the service is embodied in a

product (e.g., a DVD or an ATM).

The entry barriers in global markets for services are greater than for products,

but exit barriers are lower (Johansson, 2009):

Local regulations vary widely across countries.

Local service businesses are typically protected.

Cultural barriers tend to be higher.

Intangibility makes trade monitoring difficult.

Free-trade agreements are hard to complete and enforce.

Without trade agreements, governments have no incentive to make

regulations more homogeneous.

Quality can be hard to define when it comes to global services (Johansson,

2009):

Since services are intangible, service quality is difficult to quantify.

Different cultures have different habits and preferences, and therefore have

different definitions of service quality.

Culture strongly affects perceived service quality and customer satisfaction.

What is considered high service quality in one country may not necessarily

be perceived as high in another.

Learning Topic

3/26/2020 Differences between a Product and a Service

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References

Johansson, J. (2009). Global marketing (5th ed.). New York, NY: McGraw-Hill.

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