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Goods and services A Comparison on the Criteria of Marketing Mix

1. Introduction
Differences and similarities between goods and services have been discussed ever since, beside the conventional attributes that make services differ from goods: intangibility, inseparability, heterogeneity and perishability, there are many more factors that can dintinguish goods and services. They carry an important significance in maketers decision on the marketing mix for products. This essay provides a general concept and further insight of goods and services marketing strategies based on the norm of marketing mix (product, price, distribution and promotion): how they are similar or different from each other in the marketing mix on consumer perception and some more criteria. The comparison of services as oposed to goods on the marketing mix will be elucidated through some illustrations and the arguments will be referenced to journal articles and books that reflect many contemporary scholars theories about the discussed topic.

2. The Similarities and Differences between Goods and Services in the Marketing Mix

2.1 Goods and Services: Theory and Customer Perception on Product Quality
The process of trading and bringing goods to customers occasionally includes service as more and more firms today tries to bundle services with goods to increase customer satisfaction and raise the profit. For instance, a restaurant can increase the price of its tangible product (food) by improving the intangible product (quality of service) by providing personnel training, motivating employees by offering bonuses so that they have the incentive to work harder, thus improving customer satisfaction. In accordance with Rushton & Carson (1985), the boundary of distinction between goods and service is vague because virtually all products have tangible or intangible characteristics. Although the fundamental differences between goods and service (intangibilility,

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inseparability, heterogeneity and perishability) have been stated early, yet maketers also need to yield a further insight from the customers view of product quality. Juran, et al. (1988) claimed that quality is the extent to which a product meets the requirement and expectation of consumer. There are two distinctive factors from which customer perception of product derived: product performance and freedom from deficiencies. Product performance is the level to which the products designs are tailored according to the customers requirements. Freedom from deficiencies is generally how reliably the product attains its designs (Johnson & Nilsson 2003) On the other hand, since the production of service is partially performed in interaction with customer where the customer contributes to the quality as much as the provider does (1) (Gummesson 1991), there are some different standards that may vary when a customer evaluate goods as opposed to services. When purchasing goods, the consumer uses many tangible components to assess quality: style, material, color, brand, design. When purchasing services, there are more criteria comprised in the evaluation. In fact, Bebko (2000) emphasized that customers assess quality of service through five features: Tangibility: The appearance of physical facilities, equipment, personnel and communications material. Reliability: The ability to perform the promised service dependably and accurately. Responsiveness: The willingness to help customers and provide prompt service. Assurance: The knowledge and courtesy of employees and their ability to convey trust and confidence. Empathy: The caring, individualized attention the firm provides its customers.

Customers assess quality of service more complicatedly than they do with goods. With service, customers compare their expectation of the service with its actual performance. Nevertheless, as the degree to which goods and service bundling changes over time, customer satisfaction on products may fluctuate as well. Therefore, like a plant that grows towards the sun, successful companies respond to changing customer demands (Silvester & Ahmed, 2008)

2.2 Pricing: Customers Perception on the Tangibility of Product

The element of the marketing mix with the greatest degree of missed opportunity for customization is price The basic idea of price customization is simple: Have people pay prices

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based on the value they place on the product (price customization). According to Zeithaml (1988) and Zeithaml, Parasuraman & Berry (1985a), price has been supposed to become a critical indicator of quality when other information is not accessible. A study reveals that the consumers do not always remember the exact price of the product; instead they will encode the product in the ways that are meaningful to them, such as cheap or expensive. However, customer may perceive a stronger relationship between price and quality of services than for goods (Rushton & Carson 1985). It is easier for customer to compare the tangibility such as material, designs or capability of this good with another, but with services, there is rarely any proof of tangible attribute for customer to grasp or to examine physically, as a result there is no specific standard for services. For example, a Prada fur coat is conventionally considered more expensive than a Prada cotton coat due to their material, and a Prada cotton coat is obviously more expensive than an American Eagle one; but which phone package from Optus provides cheaper calls for a specific customer can hardly be determined promptly. Hence, it is important to set the price of services appropriately because it is very risky for companies to play with price when providing a service (Rushton & Carson 1985). Futhermore, due to the heterogeneity of service, standardizing service quality in terms of pricing has become a challenge. Firms should estimate costs to make sure that service price are covered, but maketers also have to be aware that the higher price of the service is, the more expectation consumer will put on the service performance, which is difficult to standardize thus the customer risk perceived will be higher.

2.3 Place/ Distribution: Variability of Service Distribution in Comparison with Goods Distribution
The place of producing goods is the factory or workshop where the manufacturer can perform significant control. Yet as stated in (1), the production of service is conducted in interaction with customers; therefore the place of service production is diverse. It can be: The providers place where customer can come in and lounge around (eg. A restaurant) The customers place where the provider has restricted control (eg. Plumbing service) A third place where neither the customer nor the provider has direct control (eg. A conference room in a hotel)

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Distant (eg. Mailing service, ATMs, freight service) Non-interactive: most customers benefits indirectly from a service and are not present (eg. police, insurance). (Gummesson, 1991)

Rushton & Carson (1985) suggested that service providers basically do not have a physical distribution system since they do not have tangible products to stock or to distribute. There can only be proof of purchase such as tickets or membership cards that can be distributed but it is more on the administrative respect than on physical distribution. Besides, facilities location of the service is important to marketing, compared to manufacturing location of goods which has less vitality on the marketing aspect.

2.4 Promotion of Goods and Services: Personnel Impact and Advertising Methods
Executives recognize that a service company's employees have strong impact on the customers perception on service quality; they are the representatives through whom the service is delivered. In Lovelock & Gummesson (2004), although the heterogeneity of service emphasizes on the variability between one workers performances to another, the same employees interactions can also varies from customers to customers and from days to days. Furthermore, no two customers are exactly similar, as a result, they will have unique demands or involve in the service in an original way. Customer behavior during service fluctuates according to external environment such as temperature, density, and service locations. Accordingly, the performance of service varies more vastly than with goods and it depends more on personnel of the firm. Therefore, employment of a service company should be conducted carefully and the employees should be well trained and motivated. When the performances of people are what customers buy, the advertiser needs to be concerned, not only with encouraging customers to buy, but also with encouraging employees to perform (George & Berry 1981) Not only the place, but the way of service distribution is also different from the distribution of goods. While goods dominant products can be transported from A to B with less of the customers conciousness of the service, service dominant providers such as hospitality and banking have to convey a message of empathy, assurance and reliability so that the value that customers perceived can be added up to the core specifications of that service and can as well

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boost the customers contribution to the quality of service. Gummesson (1991) claims that the emotional ties stemmed from the heart are highlighted rather than the technical skills in service provision and he called this concept the love factor. As suggested by George & Berry (1981), goods are tangible therefore they can be evaluated easier than services, consequently consumer will perceive higher risk thus reduce the pleasure of shopping experience. Consumers have a tendency to pay more attention to tangible features to obtain knowledge, or more generally, to have a clue about the service. Therefore maketers should make intangiblity tangible to convey the appropriate image about the service, help customers reduce the buying uncertainty and make the service more easily understood. An illustration of this is Prudential - an insurance company, whose slogan is expertise for hire with the image of well-dressed business people to emphasize on the professionalism in every insurance package that the company offers. Promotion of products can be conducted through many methods of advertisement, among them, word-of-mouth communication is encouraged in advertising both goods and services. It is a means to mitigate risk because it is an exchange of experience from customer to customer. Yet television's advertising strengths - which is highly illustrative with animation and sound - can be less effective for services since they are intangible. (Zeithaml, Parasuraman & Berry 1985b)

3. Conclusion
In spite of the basic differences in key characteristics of services and goods, they still have the identical attributes which sometimes might be overlapping. Hence, maketers have to be cautious and flexible to drive the marketing strategies of the operation on the right track. In terms of marketing mix, contemporary marketing has to adapt not only to attain the operational goals but also has to adjust and customize to meet the emerging demands of customers. Looking at customers perception based on the marketing researches is the crucial criterion for firms, regardless service-dominant or goods-dominant. Many studies have found that goods and services today are difficult to distinguish due to the bundling and accumulation of tangibility and intangibility in their essences which leads to the variability in product promotion and delivery process. Because services, in general, are more diverse, more severe to standardize and more alterable than goods, risk perceived level of the consumers when purchasing is higher; therefore,

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pricing services should be considered carefully. Distribution of services most of the times takes place simultaneously with the interactions between employees and customers, and contributions of customers at the time when service delivery happens is a important factor to the success of service as well as the performance of the employees, thus employees need to be well trained, motivated and empowered to not only deliver the service faultlessly but also convey the message of reliability, empathy and responsiveness from their sincerity.

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