All products are largely service (intangible value) based

It seems logical that services are not something different or separate from a product or a different class of products.  Customers do not buy products or services – (goods or services); they buy the entire value offer the (mostly intangible) benefits all products provide them with.’ They buy offerings consisting of goods, services, information, image, personal attention and other components. Such offerings provide benefits by way of services to them.  It is this customer-perceived benefit/service of an offering that creates value for buyers and users.   In the final analysis organisations always offer a service to customers, regardless of what they produce. (Gronroos [1])

The value of goods and services to customers is produced both in factories and in the back offices of service organisations, in service delivery encounters as well as when users make use of the product they have purchased.

It is essentially impossible to provide or receive something of value without some tangible element involved, eg labor, packaging, equipment. Consider an advice based service, financial planning, legal advice, insurance quote, no physical object changes hands. For financial and legal advice the service provider had to undergo training to gain the necessary qualification, then had to research the specific needs of the consumer (labour), and may even provide the consumer with a typed report. Often when consulting an expert for advice a consumer would visit the firms premises (capital/land/building), sit on a chair in a meeting or waiting room (equipment).

No tangible product changes hands between the producer and consumer, however tangible factors of production, land, labor, equipment are involved and used by the consumer.

What do you think?


[1]  Gronroos C., Service Management and Marketing.  Wiley 2000

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