What are the characteristics of goods and services?

Quick answer:

Goods and services are outputs that businesses offer to customers.

Expert Answers

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Goods and services are business offerings, the things a business offers to its customers. In a sense, they are the answer to the customer questions "What's in it for me?" or "What do I get in exchange for my money?"

The reason this category is split into "goods" and "services" is that goods and services differ in some essential ways. To determine whether an offering is a good or a service, you can ask four questions:

1. "Is it tangible?" Goods are tangible products, or items we can touch. They include things like clothing, cars, machinery, and food. Services, by contrast, are not tangible. While you may be able to see or touch the effects of a carpet cleaning or a haircut, for example, you cannot pick up the work or process that achieved result and carry it around.

2. "Is it perishable?" Goods last beyond the moment of purchase. How long they last depends on the item, but all goods will last for some period of time. The "lifespan" of a service, on the other hand, exists only during the service itself. A box of apples might last a week before it spoils, for instance; a haircut lasts only as long as you sit in the chair to receive it.

3. "Can it be separated from the provider?" Because goods have a lifespan beyond the point of purchase, they can be carried away from the provider (such as a grocery store) and stored somewhere else. Services, however, are consumed as they are provided, so they cannot be separated from the provider.

4. "Can it be standardized?" Many goods can be standardized in the way they are made, especially if they are made by machine. Because services are provided by individuals, however, they always contain some unique features, even when those providing them follow the same set of steps each time.

Understanding the characteristics of goods and services is important for marketing, logistics, and other areas of business.

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