In the process of starting a business an individual or group of individuals have to decide on what they want to offer, a product, service or both. Businesses that decide to operate as a service orientated business have to operate differently from that of a product-based company. These four I's will tell some of the challenges service-based companies deal with;
Intangibility: The difference between a product and a service are often times challenging for some to understand the difference. Products can be touched, held and smelled in some cases. Services are the opposite; you can not touch or see a service. Services are generally more difficult to evaluate because they're performance based. One of the things marketers attempt to do is show the "benefit" of using the service this way the consumer has a "view" of what type of benefit they will receive from using the service.
Inconsistency: Services are generally performed by people and people, by nature, have on and off days. Tangible goods may be good or bad, which would be consistent, but if one of the products is good then generally that complete product line will be good also. Services on the other hand rise and fall on how well the service is performed which in turn determines how well the person is feeling performing the service. That's why basketball players have on and off days, the player (the product) we know is good but then their performance (service) is sometimes up and down.
Inseparability: It's hard for a service based company to separate itself from the services performed. Product based companies do not needlessly have this challenge. A while back and famous soda brand decided to change the taste of their product and market it. Consumers disliked the new product and the company lost millions. They've since filled the plug on that product, restored it to its original brand and sales sky rocketed. The company Imagine did not diminish, there were not picketers outside telling people to boycott the brand; it's almost as if it never happened. However, service companies have to uphold their business model "service" and if the service is not good then the company's name is not good.
Inventory: Service based companies generally do not have the same inventory challenges as product based companies do. For service based companies, there service is their inventor in a sense and how well they sell their "inventory" will be determined on how well the person performing the service is trained.