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Intangibility in business refers to services, which are not physical and require payment before quality can be determined. Tangible products also have a degree of intangibility, and intangible assets like brand names and customer service are difficult to price and sell. Service providers can reduce consumer anxiety through reputation and standardization.
Intangibility in business refers to services, as purchasing them does not result in actual ownership of something physical. Services are the fulfillment of desires and as such are not something that can be touched. The intangibility of the service means that the consumer often has to pay for something before the quality of that item can be determined. Often, production and consumption are simultaneous, which in business terms is called inseparability.
Intangibles include travel, insurance, consulting, education and accounting. It is rarely possible to try these products before purchase and the consumer is often dependent on brochures, advertising, reputation or hearsay. Services are intangible and goods are considered tangible in the business world, but from a marketing point of view there is a degree of intangibility even when selling tangibles. This is very important since a consumer’s trust is lost and most of the time the supplier loses the customer.
Tangible products can usually be seen, smelled, tasted, touched or tested and these actions are usually performed prior to purchasing the product. Until the physical product has been installed, used, consumed, or consumed in myriad ways, however, there is still a degree of faith involved in its purchase. This is the inherent intangibility of tangible things.
Defining intangibility is quite complicated as there are some business assets that are highly valued but difficult to measure. These assets include brand names, patents, customer service and business processes. Some of them, like patents, can be identified and sold separately, but the brand or business process is difficult or impossible to price and therefore selling them is also difficult. Competitiveness generally depends on the quality of intangible assets and services, and yet their management is not easy because of the above-mentioned reasons.
Intangibility also makes life difficult for the consumer, as there is more uncertainty in pre-purchase. The available information is less than that of a tangible product and therefore the amount of perceived risk is greater. One way service providers can reduce consumer anxiety is to work on their reputation for reliability through strategic marketing and word-of-mouth recommendations from satisfied customers. Variability in services needs to be replaced by standardization as much as possible. It has been proposed that this is essential, as consumer dissatisfaction can rarely be adequately mitigated by a makeup measure.
Asset Smart.
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