Introduction

We all feel the effect of business activity every day, often without noticing that some purchases give us a good while others give us a service. Compare a few familiar pairs:

• Buying a tub of ice cream from a store vs. eating an ice cream served in a restaurant.
• Buying a movie ticket vs. actually watching the film in the cinema hall.
• Buying a bus vs. hiring (leasing) a bus from a transporter.

In each pair, one side is purchasing an item and the other is experiencing a service. That is the core difference between a good and a service.

What a service is

• To an ordinary person, services are essentially intangible — buying one does not leave you owning anything physical. You can take a doctor's advice, but you cannot "buy" the doctor.
• Services are all those economic activities that are intangible and that require an interaction between the service provider and the consumer for the benefit to be realised.
• More precisely, services are separately identifiable, essentially intangible activities that satisfy wants and are not necessarily linked to the sale of a product or of another service.

What a good is

• A good is a physical product that can be delivered to a buyer and whose purchase transfers ownership from the seller to the customer.
• "Goods" is also used generally for commodities or items of every kind (except services) that are involved in trade or commerce.

Why business services matter — the petrol pump example

A single business such as running a petrol pump is actually the combined outcome of many business services:

• Transport services — petrol and diesel move from oil refineries to the pump by train and tankers.
• Warehousing services — they are stored at oil-company depots in major towns across India.
• Communication services — the owner uses postal, mail and telephone facilities to stay in touch with customers, banks and depots.
• Banking services — because oil companies sell on advance payment, the owner takes loans and advances from banks to fund purchases.
• Insurance services — petrol and diesel are highly risky, so the business, the products and the lives of the workers are insured.

Thus the whole journey of fuel from the refinery to the point of sale, spread across the length and breadth of India, rests on a web of business services.