The Financial System and Basel Accords
In the previous articles, we have already read about how banks are the main pillars of the financial system. It is obvious that since banks are so important to the economy as a whole, the government must create a system to protect these banks from collapsing in case a negative economic event occurs. Governments all […]
Leaders Do Things Differently
AT&T Universal Card Services entered the credit card market at a time when the market was mature and there were numerous retail banking companies dealing with credit cards. In such a situation, the company chose to introduce their credit card with a competitive edge over competition. Against a market where in customers were paying huge […]
Benefits and Drawbacks of Indexation Clause in Reinsurance
In the previous article, we have already seen what an indexation clause in reinsurance contracts is. We are now aware of the purpose behind having indexation clauses in reinsurance contracts. We also know the various variations of the indexation clause which are common in the marketplace. However, before taking a final decision on whether or […]
Solution Based Approach for Profits and Revenue
Sustaining success in business is a big challenge for organizations. In order to continue to be successful and sustain leadership position, the organizations have got to keep re-inventing their service offer and the value proposition to their customers. This calls for continuous investments into R&D, creating new products and services, increasing the value proposition of […]
Challenges Faced by Commercial Banks
Commercial banking has been around for a very long time. Ever since the birth of corporations more than three centuries ago, banks have been providing services to large corporations in one form or the other. Over the years, the commercial banking model has been relatively stable. Of course, with the passage of time, newer and […]
The world economy nowadays is increasingly characterized as a service economy. This is primarily due to the increasing importance and share of the service sector in the economies of most developed and developing countries.
In fact, the growth of the service sector has long been considered as indicative of a country’s economic progress.
Economic history tells us that all developing nations have invariably experienced a shift from agriculture to industry and then to the service sector as the main stay of the economy.
This shift has also brought about a change in the definition of goods and services themselves. No longer are goods considered separate from services. Rather, services now increasingly represent an integral part of the product and this interconnectedness of goods and services is represented on a goods-services continuum.
The American Marketing Association defines services as - “Activities, benefits and satisfactions which are offered for sale or are provided in connection with the sale of goods.”
The defining characteristics of a service are:
Intangibility: Services are intangible and do not have a physical existence. Hence services cannot be touched, held, tasted or smelt. This is most defining feature of a service and that which primarily differentiates it from a product.
Also, it poses a unique challenge to those engaged in marketing a service as they need to attach tangible attributes to an otherwise intangible offering.
While products can be mass produced and be homogenous the same is not true of services. eg: All burgers of a particular flavor at McDonalds are almost identical. However, the same is not true of the service rendered by the same counter staff consecutively to two customers.
Moreover, it is very difficult to separate a service from the service provider. Eg: the barber is necessarily a part of the service of a haircut that he is delivering to his customer.
Given below are the fundamental differences between physical goods and services:
| Goods | Services |
| A physical commodity | A process or activity |
| Tangible | Intangible |
| Homogenous | Heterogeneous |
| Production and distribution are separation from their consumption | Production, distribution and consumption are simultaneous processes |
| Can be stored | Cannot be stored |
| Transfer of ownership is possible | Transfer of ownership is not possible |
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