Distinguishing between companies according to whether they market services or goods has only limited utility. A more useful way to make the same distinction is to change the words we use. Instead of speaking of services and goods, we should speak of intangibles and tangibles. Everybody sells intangibles in the marketplace, no matter what is produced in the factory.
The intangibility of All Products
Intangible products—travel, freight forwarding, insurance, repair, consulting, computer software, investment banking, brokerage, education, health care, accounting—can seldom be tried out, inspected, or tested in advance. Prospective buyers are generally forced to depend on surrogates to assess what they’re likely to get.
Tangible products differ in that they can usually, or to some degree, be directly experienced—seen, touched, smelled, or tasted, as well as tested. Often this can be done in advance of buying. You can test-drive a car, smell the perfume, work the numerical controls of a milling machine, inspect the seller’s steam-generating installation, pretest an extruding machine.
In practice, though, even the most tangible of products can’t be reliably tested or experienced in advance. To inspect a vendor’s steam-generating plant or computer installation in advance at another location and to have thoroughly studied detailed proposals and designs are not enough. A great deal more is involved than product features and physical installation alone.
Importance of Impressions
Common sense tells us, and research confirms, that people use appearances to make judgments about realities. It matters little whether the products are high priced or low priced, whether they are technically complex or simple, whether the buyers are supremely sophisticated in the technology of what’s being considered or just plain ignorant, or whether they buy for themselves or for their employers. Everybody always depends to some extent on both appearances and external impressions.