This document discusses products as goods and services, which are the central offering in a company's marketing exchange. It outlines key differences between goods and services, such as goods being more tangible and able to be stored while services are intangible, inseparable from the provider, perishable, and variable. The document also distinguishes between a product's core elements and value-added supplemental elements, noting core elements create expectations while value-adds are used for differentiation.

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2. Products: Goods and
Services
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Marketing Framework
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Discussion Questions
1. Is Arnold Schwarzenegger a product?
2. What is a product?
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Products
• A product can be either a good or a
service
• It is the most essential decision in the
4Ps because it is what the consumer is
receiving in the exchange
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Marketing Exchange
• Exchange
• The company offers something (product)
• The product can be designed to be more or
less attractive
– e.g., Increase/decrease quality, service, etc.
• The customer offers something in return
(payment)
• Customer can be more or less attractive
– e.g., High/low loyalty, high/low maintenance,
spreads positive word-of-mouth, etc.
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Marketing Exchange
• Marketers need to
1. Determine what the customers want in
order to increase the likelihood of
exchange
2. Determine what the company can
profitably offer
• The goal is to create mutually beneficial
exchanges which result in long-term
customer relationships
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Goods vs. Services
• Goods and services differ in terms of
• Intangibility
• Search, Experience, Credence
• Perishability
• Variability
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Goods vs. Services: Intangibility
• Intangibility:
• Extent to which you have something concrete
• Pure goods: e.g., Paper, phones, etc.
• Pure services: e.g., Massage, babysitting, etc.
• Hybrids: e.g., Restaurants
• Experience marketing
• Consumers are buying the experience
• e.g., “What happens in Vegas stays in Vegas”
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Goods vs. Services: Qualities
• Search Qualities
• May be evaluated prior to purchase
• Experience Qualities
• Need trial/consumption before evaluation
• Credence Qualities
• Difficult to judge even post-consumption
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Goods vs. Services: Qualities
• Goods are dominated by search and
experience qualities
• Services are dominated by experience
and credence qualities
• Professional service providers are beginning
to understand the value of marketing
• e.g., Sending quality signals to customers,
choosing locations, designing appealing
atmospheres, etc.
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Goods vs. Services: Perishability
• Perishability
• Services are simultaneously produced and
consumed; thus,
1.Services cannot be stored; goods can
• Marketers need to even out demand
1.Services cannot be separated from the
provider; goods can
• Customer/service provider interaction
becomes part of the service
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Goods vs. Services: Variability
• Variability
• Good are made by machines, services are
usually people intensive
• Services change across customers and
across time
• Marketers need to
• Try to reduce bad variability
– e.g., Errors in the system
• Try to improve good variability
– e.g., Customization
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Core vs. Value-Added
• Core is essential to the product offering
• Value-added is supplemental
• Can use to differentiate & improve satisfaction
• Can use to identify competition
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Core vs. Value-Added
• Core elements are expected by
customers
• If core elements are substandard,
dissatisfaction can be triggered
• e.g., Hampton Inn needs a bed and
bathroom because it is expected
• Marketers can compete/differentiate on
value-addeds
• e.g., Hampton Inn serves complimentary, hot
breakfasts
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Core vs. Value-Added
• Core businesses may change as
industries and firms change
• e.g., Victoria’s Secret was 70% apparel but is
now 70% beauty and fragrance
• It is key to continually ask
• What business are we really in?
• Who are our true competitors?
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Managerial Recap
• Products are goods and services
• Products are the central offering in the
marketing exchange
• Goods and services share similarities
and differences
• Services are relatively more intangible,
inseparable, perishable and variable
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Managerial Recap
• A firm’s market offering is comprised of
the “core” and the “value-addeds”
• Consider competition broadly
• Competition can evolve over time
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