Classification of Product

Content

1. Meaning of product

2. Classification of product

3. Industrial goods

4. Consumer goods

5. Differences between goods and services

Meaning of Product

A product could be defined or described as anything that can be offered to a market for attention, acquisition, use or consumption. It includes physical objects, services, personalities, places, organisations and ideas. Generally, a product refers to anything that can be offered to a market to satisfy a need or want.

Kotler (1994) says the term product covers physical goods, service and a variety of other items that can satisfy human requirements.

● A product could also be described as a bundle of physical service, and symbolic attributes designed to enhance consumer’s want satisfaction.

● A product could be viewed as a set of features, functions and benefits that customers purchase. Products may consist primarily of tangible (tangible) attributes or tangible such as those associated with services or some combination of tangible and intangible.

Characteristics of Product

1. Perishability of product

This feature connotes that some consumable products are prone to rot if not preserved, e.g. agricultural / farm products such as tomatoes, vegetables, fruits etc.

2. Durability

Some products are durable whether preserved or not and can last longer though may require maintenance. Examples include industrial products, machinery, computer products etc.

3. Bulk of the product

This requires a channel arrangement that minimizes the number of handlings in the movement from producer to the ultimate consumer.

4. Unit value of the product

Most product of high unit is often sold or disposed of via an organisation or producer’s sales force rather than through the middlemen/intermediary.

Product Life Cycle

  Product life cycle connotes the stage that a product passes through from the idea generation(birth) to the time when the product ceases to exist(decline/death).

i. Cycle 1

Birth/Introduction stage: This is when an organization brings to fore or gives birth to a business idea or introduce and produces a product into the market. E.g. the time a school proprietor opens premises for schooling or for enrolment of students.

ii. Cycle 2

Growth stage: This is the stage when a business or product is getting a kind of stability or recognition by the customers or clients. At this stage, many people are getting to know about the products. E.g. the time when the student enrolment population of the school begins to rise steadily due to recognition and stability.

iii. Cycle 3

Maturity stage: This is the stage of “explosion” I.e. when the product or service has become a household item or product. At this stage, the business has expanded and everybody wants to associate with their product or service. E.g the time every parent wants their child or children to be enrolled in that school.

iv. Cycle 4

Decline stage: This is the stage when awareness, fame and popularity of a business, product or services begin to come down or reduce gradually and if care and caution are not taken may eventually cease to exist. E.g enrolment figures begin to reduce and staff turnover begins to increase.

Classification of Products

Products can be classified into these:

(a) Consumer products/goods and

(b) Industrial products/goods

1. Industrial Products: Industrial/Organisational products are those which contribute directly or indirectly to the production of other products. These types of products are procured by organisations to be used in producing other products. It is also known as business-to-business products.

Types of Industrial Products

i. Installation: These products are known as major capital goods. Ordinarily, installations are customized, expensive and purchased infrequently. They are speciality products. E.g buildings, laboratories etc., their selling process is typically complex, highly technical and challenging requires professionalism and expertise.

ii. Accessories: These are shorter-lived than installations. They are standardized products which are procured more frequently than installations. Examples include products such as portable drills, handsets, computer, photocopier. These products are considered capital intensive and customers depreciate their cost over several years. Buyers do not need special technical expertise intervention during the procurement process.

iii. Raw materials: These products are synonymous to component parts and materials(as would be seen later) in that they actually become part of the buyer’s final products.  Examples include farm products such as beef, cotton, eggs, natural products such as coal, copper, iron ore etc. they are unprocessed products which become part of a company’s finished products.

iv. Component parts/materials: These are already processed products or those that need slight processing to be ready for assembly within the finished products. They represent finished business products of a producer A, which became part of the final product of another producer B. Examples include textiles, paper pulp, chemicals, onions, tyres etc. and many other products are component parts/materials used in the production of other products.

v. These are products that are used in support of business operations but are not part of the finished products. They are frequently purchased, inexpensive, need no technical expertise, standardized. They are regular expenses that a business establishment requires daily. Supplies are sometimes known as MRO products because they are further sub-divided into three units:

a) maintenance items e.g brooms  filter;

b) repair items e.g nuts and bolts used in repairing equipment;

c) operating supplies e.g fax paper and pencils.

vi. Business to business: This category includes the physical or tangible products that organisations procure to facilitate and enhance their production and operating processes. Examples include financial services, leasing and renting, insurance, security, legal advice etc. price is a fundamental factor which determines decision making of business-to-business products.

2. Consumer Products

Consumer products can be grouped as follows

i.  Convenience products: Convenience products are goods and services that consumer purchase conveniently, frequently, immediately and with minimal efforts. Consumers rarely go to competing or expensive stores or compare price and quality when procuring convenience products. They can easily be purchased in the open market or the street. E.g. milk, butter, toothpaste, bread, soap etc..

ii. Shopping products: These are more expensive than convenience products and the decision is important. Consumers spend more time and extra effort in collating vital data that could aid and assist them in buying decision. Information on brand, prices, features, place of manufacturing, durability etc. Examples are home appliances, furniture, expensive/designer shoes and clothes, jewellery and gold, perfume etc. these products are not commonly patronised as convenient products, they are expensive in term of the brand, quality and price to convenience products.

iii. Specialty products: Here, consumers favour a particular brand or attach great importance to a particular brand that it would not buy a competing brand except the favourite one. The products invariably form part of consumers image and personality and identity and the distribution of speciality products is very limited. E.g Italian shoes and belt, Saudi/Rolex watches, Nike products, Samsung products etc..

iv. Unsought products: These are unknown product/accidental products which consumers do not prepare to purchase but only come across to fulfil one of the reasons for holding money (speculative motive). Consumers do not seek out for unsought products until they come across them through advertising, sales promotion, exhibitions and trade fairs etc. Examples are smoke detectors, agro-allied products, snake killer etc.

v. Emergency products: These are products that are procured when there is an urgent need for them either as a result of natural occurrence such as a cold, hot, change in weather climate etc. E.g. raining boots, cardigans, warmer, umbrella, raincoat etc. vi. Impulse products: They are products that consumers procure without any planning or search effort. They are often found in places because consumers rarely seek out for them. Examples include newspaper and magazines, popcorn, roasted groundnuts etc.