Differences between a Product and a Service

Although a service may be viewed as a product and vice versa, the two are distinguished by several characteristics. Services are characterized by the following attributes (Johansson, 2009):

  • intangibility—You cannot easily touch a service. Services are difficult to monitor at borders and hard to assess for customs duty.
  • heterogeneity—A service is not exactly the same each time, especially personal services. Services are less standardized than products and quality varies.
  • inseparability—Services are produced when they are consumed. Service quality depends on situation and context.
  • perishability—You cannot store a service, unless the service is embodied in a product (e.g., a DVD or an ATM).

The entry barriers in global markets for services are greater than for products, but exit barriers are lower (Johansson, 2009):

  • Local regulations vary widely across countries.
  • Local service businesses are typically protected.
  • Cultural barriers tend to be higher.
  • Intangibility makes trade monitoring difficult.
  • Free-trade agreements are hard to complete and enforce.
  • Without trade agreements, governments have no incentive to make regulations more homogeneous.

Quality can be hard to define when it comes to global services (Johansson, 2009):

  • Since services are intangible, service quality is difficult to quantify.
  • Different cultures have different habits and preferences, and therefore have different definitions of service quality.
  • Culture strongly affects perceived service quality and customer satisfaction.
  • What is considered high service quality in one country may not necessarily be perceived as high in another.


Johansson, J. (2009). Global marketing (5th ed.). New York, NY: McGraw-Hill.