Business services are the activities or actions that help companies without delivering tangible goods. Large firms rely on these services for production, cost, and marketing, and they cover a wide range of aspects that goods or products can’t.
Goods, on the other hand, have a physical form and can be bought by paying a price. They cannot be stored for future use and can only be consumed when they are demanded.
Typically, goods have four characteristics that make them desirable in the market place: inventory, supply, demand, and quality. The latter can be defined as the extent to which the service meets a customer’s expectations and demands.
Product differentiation is a key element in product-oriented companies, where they try to differentiate themselves from their competitors by developing brand names that convey specific benefits. This is particularly important for more abstract and complex services that have a high potential to develop a strong reputation that can serve as a barrier to entry in the marketplace.
In contrast, service businesses tend to focus on one of two client markets: individual consumers or other businesses/organizations. In these cases, they do not waste money promoting their products to businesses or organizations that may not want them; instead, they spend their marketing dollars on clients who can benefit from their service.
This distinction can lead to major opportunities for innovation and development in the service industry, which accounts for 11% of EU GDP. It is therefore important that European governments continue to foster growth in this sector and remove obstacles that limit its development.