Characteristics of Services

The main differences between products and services are:

1. Services are transitory by nature, products are not. Hence, services can not be easily held in stock.
2. Product delivery results in a transfer of ownership, service delivery does not.
3. The use of products can be separated from the production of products. Services are produced and consumed simultaneously.
4. Services are largely intangible, whereas products are largely tangible.

The difference between products and services is not clear-cut. Often, services are augmented with physical products to make them more tangible, for example, luggage tags provided with a travel insurance. In the same way, products are augmented with add-on services, for example a guarantee, to improve the quality perception of the buyer. Moreover, customers might even consider the quality of service more important than the characteristics of the product itself, e.g. [15]. Often, products and services are intertwined. An example is a newspaper subscription, in which case both the product – the newspaper itself – and the service – the daily delivery – are essential to the customer. This means that the quality of such a product-service mix will be judged on both product and service aspects: is the newspaper delivered on time, and does it contain the desired information. Like the newspaper, IT management and maintenance can very well be a mixture of product and service. For example, in a situation where a software maintainer analyzes change requests for a fixed price per period and implements change requests for a price per change request, software maintenance is a product-service mixture. Here, the service is the customer having the possibility to have change requests analyzed, and the product is the implemented change. "

The IT Service Capability Maturity Model
Frank Niessink, Viktor Clerc and Hans van Vliet
p. 10