Differences between Tangibles Goods and Intangibles (Financial) Services

First and foremost, services have been long seen as different from physical goods. Quite often, services are easy to identify but difficult to define. In the earliest literature, ‘a good’ refer to a noun, while ‘service’ refer to a verb. This means goods are things while services are acts. Service can be categories into three types, namely (i) People Processing Services (such as healthcare and fitness sector), (ii) Possession Processing Services (such as equipment repair maintenance and dry cleaning sector), and (iii) Information Processing Services (such as telecommunication and most of the financial services sector).

Fundamentally services are processes or experiences. Thus, ever there an apparent signs of ownership, financial services themselves are not possessions in any conventional sense. The investment account details for retirement and insurance coverage from uncertainty, in effect, merely individual ‘certificates of entitlement’ to a particular experience or process. Thus, this lead to this article, whereby we explore the characteristics of services in more depth and consider specifically their implications in the financial services context.


Commonly, intangibility always highlighted as the key distinguishes services from goods. Practically, it refers services are impalpable. That means services are lack a substantive physical form and cannot be seen, touched, displayed, felt or tried in advance or purchase. For example, an individual can open an investment account, but typically has nothing physical to display as a result of the purchase. In an extreme, services have been described as mental intangibility, whereby they are complex and difficult to understand. From the customer perspective, these impalpability and mental intangibility elements have essential implications, in which lead to predominance of experience and credence quality.


Due to the nature of process and experience elements, services are inseparable. This means services are produced and consumed simultaneously. For goods, they are produced first, then sold and consumed. On the other hand, services are sold first and then produced and consumed at the same time. For example, financial advice will only provide once specific request has been made. That means, until the request is made, the advice does not exist. Thus, the provision of a financial services will frequently also require involvement of the consumer to a greater degree as compare with physical goods.


Due to the fact that services would be produce without request or demand, thus service providers cannot ‘manufacture’ surplus services for sale. It means services are perishable and cannot be inventoried. For example, if a financial planner’s time is not taken up on one particular day, it cannot be saved to provide extra capacity the next day. With that, the perishability characteristics presents marketing with the task of managing demand and supply in order to make best use of available capacity.


Heterogeneity is refers to the variability and can be interpret in two concepts. First, variability is that the services are unstandardized, where different individuals will want and will experience a different services. This source of variability arises from the fact that individuals are different and have different needs. Second, variability is that the service experienced may vary from individual to individual, or may vary from time-to-time for a particular individual. This variability not arises due to changing of individual needs but consequence from interaction between individual and service provider.

Fiduciary Responsibility

Fiduciary responsibility refers to implicit responsibility for both individual and service provider. For example, financial planner have a relation to the management of the funds and the financial advice they supply to their customer. Although goods-based business has also has a responsibility to its customer in terms of quality and safety of the products, however this responsibility is much greater in the context of financial services business.

Contingent Consumption

In financial services, the money spent might not yield direct consumption. For example, fund investment in unit trust will only be withdraw after some times or premium pay for coverage would not have claim until accident happen. It means it only create consumption opportunities in the future or may never result in tangible consumption for the individual who make the purchase. Contingent consumption presents major challenges to marketer as they seek to market an intangible service that reduce current consumption of consumer goods but services for benefits that they may never experience.

Duration of consumption

Quite often financial services are long term in nature. This is either because they are entail a continuing relationship with a customer such as saving account and credit card, or because there is a time lag before the benefits are realized such as long-term investments. Thus, this may provide the financial services providers provides with information about those customers and subsequent create opportunity to build bonds with customers that will discourage switching between providers. This long-term relationship creates potential of cross-selling or up-selling situation, where depend on the amount of information that providers acquire about their customers. Marketing financial services is an external-focus approach to business in which focuses on improving financial services provider performance by satisfying customer needs. However, a good marketer should not only focus on consumer itself but also be aware of the competitor’s activities. Furthermore, to deliver superior value to customer, the provider also requires to understand resources and capabilities it possesses and the way it which they can be deployed to satisfy their customers. In general, conventional marketing activities for goods are relevant to all tangible-based firm, however it is also argue that there are some distinctive features of services-based firm particularly financial services where subsequently affect the way in which marketing principles are implemented.

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