Tutorial Five
Subway
Services
1. Is Subway a provider of goods or services? Explain. (20 marks, 200 words)
A good is something that is tangible; it has physical substance and usually in order to obtain a
good an exchange in ownership has to occur. A service however is intangible. And is usually
an act, performance or experience that one party offers to another. A service does not result
in the ownership of anything.
Subway is a service that provides a good. In the case of Subway, it’s a balanced product, this
is because there is an equal amount of tangible and intangible assets. The tangible asset being
the actual sandwich that the customer receives. The intangible asset being the experience of
ordering at subway. Subway itself is a service because the customer participates in the
experience of having a sandwich customized and made in front of them. However, in my
personal opinion Subway is a provider of goods. This is because the sandwich which is
provided by Subway is tangible and a change in ownership occurs. Also the sandwich itself is
separable from the service provider, the sandwich does not have to be consumed at Subway.
The sandwich also isn’t consumed and produced simultaneously.
2. Discuss the five special characteristics of services as related to the Subway case. (30
marks, 375 words)
There are five special characteristics that define a service. Intangibility, inseparability,
heterogeneity, perishability and lack of ownership.
Intangibility is the idea that the service cannot be comprehended easily. It’s not easy for the
consumer to identify exactly what the service will be like. The experience of ordering at
subway is intangible. It’s hard to perceive exactly what the person behind the counter will say
and be like. You also don’t know if Subway will be busy or what music will be playing.
Inseparability means that the service is both produced and consumed simultaneously. The
service Subway provides is inseparable because the customers sandwich is created by both the
staff member and the customer; it’s co-created. Also the quality of the service is totally
dependant on the staff members technical skills (such as using the toasting ovens, cutting bread
etc.), customer service skills and product knowledge of subways ingredients. Quality of service
cannot be separated from the staff member delivering the service.
Heterogeneity exists within a service because the provider cannot provide the exact same
service to every customer. A service adapts to please each individual. Also because a service
is generally face to face and each staff member is an individual there is slight variation in the
