Difference between Product and Service
What is a Product?
A Product can be made from tangible and intangible elements. A product is something which meets a Customer’s needs and for which they are prepared to Pay.
Eg: Computer, Bank Loan and Music Album etc.
Products are divided into Core Product, Actual Product and Augmented Product.
Core Product: Core Product is the base product with no brand, packaging, E.g : TV
Actual Product: Actual Product is the Tangible product with Packaging, styling , branding and Quality: E.g Samsung Phone.
Augmented Product : Augmented Product is the actual tangible product with extra services and benefits
E.g :- A Samsung phone with one year guarantee or warrantee , 6 months interest free credit and technical support. Augmented Products differentiate you from competition and brings you sales.
What is a Service?
A Service can form part of a product and is intangible. Services are being commonly included as part of an augmented product.
Eg: Technical Support, Training
In Many cases products come to customers whereas customers come to services. Products are often transported to customers through distribution channels. Services are location based and in many cases customers need to travel to these service locations, or service personal has to come to the customer location.
Product can be pre-inspected whereas a service cannot be pre inspected in many cases. A service needs to be experienced and, when a customer is being serviced, it is natural for him to want it customized based on his feedback.
The products are tangible and can be inspected or sampled before buying. Service on the other hand is experiential and sometimes based on a belief.
The product business is scaled up by expanding the manufacturing capacity , distribution and sales reach, and access to more customers. On the other hand, the service business is not easy to scale up – it needs a supply of trained service providers and this involving either poaching people from the competitors or increased activity of recruitment, induction, training and motivation. Attrition of trained manpower is a danger to service business.
A product (Mobile Phone, flat, car, laptop) can be owned and can go into your balance sheet as an asset and is re-salable and you can accumulate it to build your wealth. A service (degree, surgery, haircut) cannot be owned as is always shown as an expense. It is not resalable and cannot be transferred to someone else. Products begin as materials and machines work on those materials to create improved / shaped / transformed materials which are called products. Services begin from service givers and improve / shape / transform objects (woodwork), bodies (surgery), and minds (education).
The quality of the products depends essentially on how materials are chosen and converted. The quality of the service depends on how the service providers are selected, trained and motivated.