Products and services: what is the difference between them for the day to day of the company?
Anyone who wants to start a business needs to know the nature of their business in depth to outline strategies and organize the company’s routine correctly. Therefore, understanding the difference between selling products and services is essential.
Although businesses in both sectors can be thriving, you should consider that the day-to-day of the company will be different depending on what is offered to the consumer. These differences involve both bureaucratic and strategic issues.
Do you know how the difference between products and services interferes with the dynamics of the enterprise? Read on and find out!
What is a product?
When we talk about products, it is common to think of items such as clothes, food, cars, toys, electronic equipment, etc. This is because the term “product” is understood as any item that is the result of a production process.
Thus, they are created from transformations – of lesser or greater complexity – of raw materials. The purpose of this process is to develop items to meet the needs of a person or organization.
It is worth noting that there are different types of products. For example, they can be classified as durable or non-durable. In addition, according to their characteristics, they may require specific storage, distribution and sale conditions.
What is a service?
Now that you know what a product is, you need to understand what a service means. In this sense, the services correspond to the activities carried out by the business and its employees. They also aim to satisfy a particular need of people or companies.
There are different types of services that are consumed daily. Education, health and transport, for example, are essential services for a dignified life in society. Furthermore, entertainment activities such as streaming also fall into this category.
Therefore, services are tasks and activities necessary to satisfy certain market demands. Unlike products, those who pay for services do not become the owner of the activity, but have the right to enjoy it and its results for a determined period of time.
What is the difference between products and services?
As you have seen, both products and services are generated from work processes, being marketed in the market in order to satisfy demands. But they are not the same.
Discover the main differences between products and services!
One of the simplest ways to differentiate products from services is to think about tangibility. In other words, which of them is possible to touch and perceive in a material way. Products tend to be material goods and therefore tangible.
Since they are produced from physical raw materials, they are often species of objects. Therefore, they allow consumers to touch and manipulate them by touch.
On the other hand, services are intangible goods. This means that they do not always involve a concrete item in material terms. Although several processes and materials are necessary for a certain service to be offered, the way in which it is consumed is intangible.
Think, for example, of a streaming service. Both productions and the storage and availability of titles need human and natural resources to happen. But consumption occurs instantly, without the need to touch or manipulate what is consumed.
Pricing and metrics
Another difference between products and services is in the way both are measured and priced. This is because the product is often measured based on aspects such as size, volume, weight, or material type.
Services, on the other hand, tend to be measured and priced according to the time or effort required for their execution. When someone hires a service, the amount to be paid is often linked to the hour of work or a fixed amount to enjoy it for a month or year.
Another striking aspect of the difference between services and products is the property relationship between those who produce and those who consume. In the case of consumption of a product, whoever acquires it becomes the owner. That is, ownership is transferred to the purchaser of the item.
In the case of services, this transfer does not happen. When you pay for a service, you are acquiring the right to use it for a certain period of time. But the property remains with whoever offers the solution.
How does this difference affect companies on a day-to-day basis?
After understanding the difference between products and services, it’s time to analyze how these different configurations interfere in the day to day of a company.
Check out the main aspects below!
The main difference between working with products and services is in the taxes that the company must pay . This is because the taxes levied on the sale of products are different from those charged for the provision of services.
Thus, the tax organization of the company may change according to what is offered. Fees such as the ISS (Service Tax), for example, are unique to the service sector. The IPI (Industrial Product Tax) is exclusive to industrially produced goods.
In general, the target audience of product and service companies tends to be different. After all, people who want to buy a product are looking for tangible and concrete items. Services, on the other hand, work differently.
There may also be differences in terms of purchase methods. Product companies often have the opportunity to sell and advertise nationwide, for example. Meanwhile, service businesses such as a beauty salon tend to rely on more specific and localized audiences.
However, digital possibilities have changed this dynamic a lot. Thus, there are stores of smaller or less technological products that are limited to the region, while certain services may have a wider audience – such as streaming, courses and online mentorships.
Marketing strategy is also often different between product and service companies. In this way, those who work with the sale of products seek to invest in brand awareness, in order to differentiate themselves from similar ventures.
Service businesses, on the other hand, tend to focus their marketing on direct strategies that can reach customers in a specific area. The intention is generally to focus on customer experience and satisfaction to retain consumers .
With this content, you understood the difference between products and services and that this knowledge is essential to organize your company properly. Thus, it is possible to pay attention to the strategic and administrative demands that each type of business requires.