The nature of all types of economic activities is based on the term services and goods. If any business organization is running then, for sure the product or products of that organization will come under one of the sectors from service or goods which they are providing. So, these are the basic and important concepts which we should know. also, we should know the difference between the term services and goods before starting our own business. You should know better that, your product will come under either in the service sector or goods. So, let’s understand these both important sectors and how they differ from each other.

The Term Services

Term Services and goods

The term services include those products which we can not be seen. Services don’t have any physical appearance and smell. So, it’s invisible and also we can say that it is intangible.

Services can get produced only by humans. In some cases, now it is possible to produce also by machinery. Because nowadays the technology is growing very fast and ultimately it’s contributing to automize the activities in the services sector industry.

The services cannot be stored or can’t maintain the inventory of services. e.g. suppose, If we want to travel from one place to another by plane, then we cannot store that flight anywhere for the next day.

We cannot maintain the same quality of services. The quality of a service totally depends upon the person who is providing. It depends upon the attitude, mood, interest of that person who is providing. And that is one of the challenges in the service sector industry.


  1. The economic activity which is intangible, invisible, heterogeneous and also which cannot be smelled, cannot be stored, cannot be felt is called Service.

Examples of the term services:

The Term Goods

The objects Which have a physical appearance. We can see, move from one place to another and also we can stock them. The goods can be produced in production premises by machinery or also by humans. We can maintain the same quality of goods while producing it, is called goods.

Examples Of Goods

  • A Book
  • A Computer
  • A Pen
  • A Mobile phone
  • A Car
  • A Chair

Characteristics Of Services

The characteristics of the term services are as follows:

  1. Inseparability
  2. Intangibility
  3. Quality Inconsistency
  4. Perishability
  5. Heterogeneity

Let’s understand these characteristics in detail,

1. Inseparability

The service cannot be separated by an individual or a person who is providing that service. Because without a personal service cannot be provided to the customers. e.g. If a tutor is not there in a classroom then obviously the lectures cannot be conducted and students will not learn anything.

I think, in this characteristic, there is a good lesson for all service providers which should be noted. In the service sector industry, the entire business is based and totally depended on the personals. So, every business owners must maintain good relations with their employees. Rather, every business owner should try to bring intelligent peoples in their company or organization. And must try to satisfy to every employee and make them feel like, it’s their own company and they are working for their own company.

Mr. Richard Branson (The Founder of  Virgin Group) says that: ” Train your employees enough, develop them so much. So that anybody can pay them the double salary. And at other hands, Treat them well enough so they never want to leave you ever.”

2. Intangibility

This is one of the important characteristics of services i.e. Intangibility. Because the services cannot be touched, sensed, tasted or felt before utilizing. So that, the services are intangible.

3. Quality Inconsistency

In the service sector business, the quality of a product cannot be maintained. Because it totally depends upon person to person. It can be depended upon the attitude, values, interest, mentality, mood etc. of that person. In a restaurant, the attitude and the quality of service of a waiter are depended upon how the customer is treating him.

4. Perishability

Services are highly perishable. If we do not use the service on time then, we will lose that service. Because, As we discussed before services cannot be stored anywhere for anyone.

5. Heterogeneity

The features of the services are very diverse. The quality of services cannot be standardized by the service provider. e.g. A lawyer can charger more fees from reach peoples and can be charge low from poor peoples.

Difference between Services and Goods

Basis Of Services Goods
Nature: Service is not an object it is an activity or a process. e.g To serve the bread and butter to the customers. Good Is an object and it’s not a process or activity. e.g. To buy a bread and a butter from a bakery.
Type: Services are heterogeneous. e.g. In a restaurant, the quality of service will depend upon the attitude, mood, interest of waiter who is serving the meal or snacks. Whereas Goods are homogeneous. e.g. In a restaurant, the quality of the food will be the same all the time.
Intangibility: Services are intangible. We cannot see, touch or smell to the service. e.g. If we taking a consultancy service from the lawyer at that time, we cannot see that service physically. Goods are objectives so that it’s a tangible thing.   e.g. If we buy a pen from a stationery then we can see touch that pen.
Insperatability:   Service cannot be separated from the person who is providing it. e.g. If there is no waiter then the food will not be served. Whereas goods can be produced at one time in large quantity and can be provided anytime by any person.
Inventory: In terms of services, we cannot stock the services anywhere or maintain the inventory of it. Goods can be stored or can maintain the stock of goods anywhere.
Involvement: In the term service, the consumer or service provider may be involved at the time of production. In terms of goods, consumers or customers does not involve in the production of goods.

So, these are some main and important differences between the term services and goods.


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Hitesh Karpe is a founder of and running his (Food manufacturing) family business as well. He is well acquainted with the knowledge of business fundamentals & management, business expansion & process, business finance & financial analysis, people management, sales & marketing, and Leadership. Also, he writes the articles on the above topics with the intent to help the people to succeed in their business and professional careers.

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