Classification Of Products: Meaning And Classification

Classification Of Products

Meaning Of Products

A marketing a product is anything that can be offered to a market that might satisfy a want or need. A product is good idea, method, information, object or service created as a result of a process and serves a need or satisfies a want. It has a combination of tangible and intangible attributes (benefits, features, functions, uses) that a seller offers a buyer for Purchase. For example a seller of a toothbrush not only offers the physical product but also the idea that the consumer will be improving the health of their teeth.
When a product is bought the buyer is not only buying the product but also buying the benefits and the satisfaction that the product will provide.

Classification Of Products

The competitive nature of the marketplace has therefore become a significant factor that producers can only ignore to their own peril. The purchasing power of the consumers is also affected by the economy of the nation. It is as a result of those factors that manufacturers must of necessity know the product category to which their products belong.
The hostility in the marketing environment suggests that the producer have no option other than to employ aggressive marketing drive in order to survive competition in the face of the declining purchasing power of the consumers. It is in the light of this that product classification becomes one of the most Potent technique for determining the survival or extension of products in the hand of the Producers.
Consumers at times may want to minimise the shopping time. This should be a signal to the producer on the retail outlets to adopt, that is, whether a doorstep delivery or supermarket sale is necessary. It is the responsibility of the producer to fashion out a channel of distribution that which makes the product accessible to the consumers.

This again presupposes that the buying behaviour of the consumers must be studied for appropriate channels selection. Goods that are bought infrequently are used up quiet slowly.
This explains why consumers can afford to a lot a considerable amount of time and effort to the buying decision so as to consider the gains and cost of the time and effort devoted to buying the products. The implication of the buying behaviour on the part of the producer is that the retail outlets should be minimised for the products.

There are other cases of product in which the consumer already has a brand in mind; the special purchasing effort is just to know where it is on sales. Producers will do well to ensure that such products return the quality the consumers want.

Since price of the items are secondary to the consumers, producers can afford to jack up the price so as to obtain some level of margin of profit.
The following are the various classifications of products:

Classification Of Products

1. Consumer Goods

Consumer goods are goods that are brought from retail stores for personal, family or household use. They are grouped into three subcategories on the basis of consumer buying habits: Convenience goods, shopping goods, and specialty goods.

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a. Convenience Products:

These refer to items that the consumer buys with minimum shopping effort. Essentially these are goods that are habitual with the consumers. They are bought frequently but not in large quantities because they are not durable goods. In other words they are ‘used up’ goods. They buying decision of the consumers for convenience goods is ignited by habit and he knows all the retail outlet. Under this category are biscuits, newspapers toilet soap, cigarettes etc.
Marketers of Convenience goods must therefore be sure that they have adequate Inventories of the convenience goods. This is because an adequate supply of such goods will create extra search time on the part of the consumers which they may not want to embark upon.
There are three types of convenience products; Staples, impulse and emergency products. These subcategorization of Convenience goods are based on how the consumer think about the product and not on the characteristics features of the product.

b. Shopping Products:

These are products consumers purchase and consume on a less frequent shedule compared to convenience products. Consumers are willing to spend more time locating these products since they are relatively more expensive than convenience products and because this may possess additional psychological benefits for the purchaser, such as raising their perceived status level within their social groups. Examples are Clothing products, personal services, electronic products, and household furnishings.
Because consumers are purchasing less frequently and are willing to shop to locate these products, the target market is much smaller than that of Convenience goods.
Consequently, marketers often are more selective when choosing distribution outlets to sell their products.

c. Specialty Products:

These are products that tend to carry a high price tag relative to convenience and shopping products. Consumption may occur at about the same rate as shopping product but consumers are much more selective. In fact, in many cases consumers know in advance which products they prefer and will not shop to compare products. But they may shop at retailers that provide the best value. Examples include high-end luxury automobiles, expensive champagne and celebrity hair care experts. The target markets are generally very small and outlets selling the products are very limited to the point of being exclusive.
The distinction among convenience, shopping, and specialty goods is not always clear. As noted earlier this classifications are based on consumers buying habits.

Classification Of Products

2. Industrial Goods

Industrial goods are products that companies purchased to make other products, which they then sell. Some are used directly in the production of the products for research and some are used indirectly. Under consumer goods, industrial goods are classified on the basis of their use rather than the customers buying habits. These goods are divided into five subcategories: installations, accessory equipment, raw materials, fabricated parts and materials, and industrial supplies.
Industrial goods also carry designations related to their durability. Durable industrial goods that cost large sums of money are referred to as capital items. Non-durable industrial goods that are used up within a year are called expense items.

a. Installations:

Installations are major capital items that are typically used directly in the production of goods. Some installations such as conveyor systems, robotic equipment, and machine tools are designed and built for specialised situations. Other installations such as stamping machines, large commercial ovens, and computerilized axial tomography (CAT) scan machines are built to a standard design but can be modified to meet individual requirements.
The purchase of installations requires extensive research and careful decision-making on the part of the buyer.

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b. Accessory Equipment:

Goods that fall into the sub-category of accessory equipment and capital items that are less expensive and have shorter lives than installations. Examples include hand tools, computers, desk calculators, and forklifts. While some types of accessory equipment, such as hand tools, are involved directly in the production process, most are only indirectly involved.
The relatively low unit value of accessory equipment combined with a market made up of buyers from several different types of businesses, dictates a broad marketing strategy. Sellers relay heavily on advertisements and trade publications and mailings to purchasing agents and other business buyers. When personal selling is needed it is usually done by intermediaries such as wholesalers.

c. Raw Materials:

Raw materials are products that are purchased in their raw state for the purpose of processing them into a consumer or industrial goods. Examples are iron ore, crude oil, diamonds copper, timber, wheat and leather. Some (e.g., Wheat) may be converted directly into another consumer product (cereal). Others (e.g., timber) may be converted into an intermediate product (lumber) to be resold for use in another industry (construction).
Most raw materials are graded according to quality so that there is some assurance of consistency within each grade. There is however, little difference between offerings within a grade. Consequently, sales negotiations focus on price, delivery, and credit terms. This negotiation plus the fact that raw materials are ordinarily sold in large quantities make personal selling the principal marketing approach for this goods.

d. Fabricated Parts And Materials:

Fabricated parts are items that are purchased to be placed in the final product without further processing. Fabricated materials, on the other hand require additional processing before being placed in the end product. Many Industries including the auto industry really heavily on fabricated parts. Automakers use such fabricated parts as batteries, sun roofs, windshields, and spark plugs. They also used several fabricated materials including steel and upholstery fabric. As a matter of fact, many industries actually buy more fabricated items than raw materials.
Buyers of fabricated parts and materials have well-defined specifications for their needs. They may work closely with a company in designing the components or materials they require, or they may invite bids from several companies. In either case, in order to be in a position to get the business, personal contact must be maintained with the buyers over time. Here again, personal selling is a key component in the marketing strategy.

e. Industrial Supplies:

Industrial supplies are frequently purchased expense items. They contributes indirectly to the production of final products or to the administration of the production process. Supplies include computer paper, lightbulbs, lubrication oil, cleaning supplies, and office supplies.
Buyers of industrial supplies do not spend a great deal of time on their purchasing decisions unless they are ordering large quantities. As a result company’s marketing supplies place their emphasis on advertising particularly in the form of catalogue for business buyers. When large orders are at stake sales representatives may be used.
It is not always clear whether a product is a consumer goods or an industrial goods. The key is differentiating them is to identify what the buyer intends to make of the goods.

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Classification Of Products

3. Goods And Services

Goods are something that you can use or consume like food or CDs or books or a car or a clothes. You buy goods with the idea that you will use it either just once or over and over again. Services are something that someone brought for you, like give you a haircut or fix you dinner or even teach you marketing. Services according to Kotler (1988) is any act or performance that one party can offer to another that is essentially intangible and does not result in ownership of anything. Its production may or may not be tied to a physical product.
Services are intangible products those that cannot be seen or touched that are provided to consumers or other companies. A physician provides health care to patients. Communication companies provide services such as internet access, television programming, and their ability to make local or long-distance telephone calls. Banks provide a range of financial services to customers such as checking accounts, and investment opportunities. Other companies provide services such as lawn care, plumbing, home repair, business consulting or transportation.
These are differences between services and goods. The first is that a service is an intangible process that cannot be weighed or measured, whereas a goods is a tangible output of a process that has physical dimensions. This distinction has important business implications since a service innovation, unlike a product innovation cannot be patented. Thus, a company with a new concept must expand rapidly before competitors copy its procedures. Service intangibility also presents a problem for customers since, unlike with a physical product they can not try it out and test it before purchase.
The second is that a service requires some degree of interaction with the customer for it to be a service. The interaction may be brief, but it must exist for the service to be complete. Where face-to-face service is required, the service facility must be designed to handle the customers presents. Goods, on the other hand are generally produced in a facility separate from the customer. They can be made according to a production schedule that is efficient for the company.
The third is that services, with the big exception of hard technologies such as ATMs and information technologies such as answering machines and automated internet exchanges, are inherently heterogeneous; they vary from day to day and even hour-by-hour as a function of the attitudes of the customer and the servers.
Thus, even highly scripted work such as that found in call centres can produce unpredictable outcomes. Goods, in contrast, can be produced to meet very tight specifications day in and day out with essentially zero variability. In those cases where a defective goods is produced, it can be reworked or scrapped.
The fourth is that services as a process are perishable and time-dependent, and unlike goods, they can’t be stored.
Both goods and services need not be driven by economic motives. Several times goods and services are linked closely and cannot be detached. For example on purchase of a car, the goods is the car but the processing, the provision of accessories, after sales activities are all services. It is essential to note that the difference between pure goods and pure services are in contrast but most goods and services exist in between with a mix of both. For instance, in a restaurant, food refers to goods while the service is the waiters offering the ambience, the setting of tables amongst others.

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