CLASSIFICATION OF PRODUCTS
THE MEANING OF PRODUCT
Evans and Herman, (1994) defined a product as an idea, a physical entity (a good) or a service, or any combination of the three. It exists for the purpose of exchange in the satisfaction of individual and organizational objectives.
Kotler and Armstrong (2001) said that a product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organizations, and ideas.
Let us look at the major components of these two definitions – Goods, Services, and ideas.
Goods – Something is considered a good if it is a tangible item. That is, it is something that is felt, tasted, heard, smelled or seen. For example, bicycles, cell phones, and donuts are all examples of tangible goods.
Services – Something is considered a service if it is an offering a customer obtains through the work or labour of someone else. Services can result in the creation of tangible goods (e.g., a publisher of business magazines hires a freelance writer to write an article) but the main solution being purchased is the service. Unlike goods, services are not stored, they are only available at the time of use (e.g., haircut in a salon) and the consistency of the benefit offered can vary from one purchaser to another (e.g., not exactly the same hair styling each time).
Ideas – Something falls into the category of an idea if the marketer attempts to convince the customer to alter their behaviour or their perception in some way. Marketing ideas may also be in form of recommendations made by a consultant to,an organization on how to render a particular type of service to customers. In this case, ideas and services could mean the same thing; the consultant is rendering the service .for a fee earned through his idea.
CLASSIFICATION OF PRODUCTS
Products are generally classified into consumer and industrial.
Consumer products are bought by final consumers for personal consumption. Consumer goods mostly do not need further processing or fabrication before consumption.
Industrial or business products are products bought by individuals or organizations for further processing or for use in conducting a business.
The distinction between a consumer product and an industrial product is based on the purpose for which the product is bought e.g. if a consumer buys a pressing iron for use in the house, it is a consumer product. But if a dry cleaner buys a pressing iron for his job, it is an industrial product.
Products bought by final consumers for personal consumption. Goods that do not need further processing or fabrication
Classification of Consumer Products
Convenience goods are consumer products that the customer usually buys frequently, immediately and with a minimum of comparison and buying effort.
• The consumer has adequate knowledge of the particular products wanted before going to buy it.
• The product is purchased with minimum effort.
• The advantage resulting from shopping around to compare prices is not worth the extra time and effort required.
• Have a lower unit price, not bulky and not greatly affected by fad and fashion.
• They are generally purchased frequently.
A convenience good must be readily available and accessible when customer demand arises, so the manufacturer must secure wide distribution.
Shopping goods are products for which customers wish to compare quality, price, suitability and style in several stores before purchasing. The searching continues only as long as the customers believe that the gain from comparing product off-sets the additional efforts required e.g. women apparel, furniture major appliances and most automobiles.
These are consumer products with unique characteristics or brand identification for which a significant group of buyers are willing to make special purchase effort. Customers have a strong brand preference. Examples are expensive cars gold bracelets, expensive Swiss watches, etc.
Unsought goods are consumer products that the consumer either does not know about or knows about but does not normally think of buying. For example: 1. new products that the consumer is not aware of. 2. Products that right now the consumer does not want. Examples are insurance life policies, ambulance etc.
BUSINESS OR INDUSTRIAL PRODUCTS
The amount spent on business purchasing in the opinion of Paul Christ (2012), far exceeds consumer purchasing. Products sold within industrial markets fall into one of the following categories:
These are products obtained through mining, harvesting, fishing, etc., that are key ingredients in the production of other products.
These are products created through the processing of basic raw materials. In some cases the processing refines original raw materials while in other cases the process combines different raw materials to create something new. For instance, several crops including corn and sugar cane can be processed to create ethanol which has many uses including as a fuel to power cars and truck engines.
These are products used to help with production or operations activities. Examples range from conveyor belts used on an assembly line to large buildings used to house the headquarters staff of a multi-national company.
Supplies and Services
These are industrial products that do not enter the finished products at all. Supplies include operating supplies (lubricants, coal, computers, and paper pencils) and repairs and maintenanceitems (paint, nails brooms, etc.).
Supplies are the convenient products of the industrial field because they are usually purchased with minimum effort or comparison.
Business services include maintenance and repair services (window cleaning, computer repairs) and business advisory services (legal, management consulting, advertising, etc.). These services are usually supplied under contract.
DISTINGUISHING GOODS AND SERVICES
1. Goods are tangible but services are intangible. For example, it is often not possible to taste, feel, see, hear or smell services before they are purchased. But you can taste, feel, see, hear, or smell goods before they are purchased.
2. The ownership rights of goods are transferable, but there is no ownership involved in services. For example, you can transfer the ownership of a book to another person but you cannot transfer a haircut.
3. Once goods are produced, their quality remains uniform, but the quality of service varies depending on the people involved, the environment, and the process of rendition. For example, two lawyers cannot offer the same quality of legal services.
4. Goods may be perishable or non-perishable, and can be stored for a long time. Services can’t be stored for a long time; they are perishable. For example, you can store a book in a drawer, but you cannot do same to a haircut.
5. Goods are produced using raw material, but services are not produced using raw material.
6. Goods are produced and later consumed separately. Services are produced and consumed simultaneously (inseparable). For example, you can buy oranges and consumed them later, but a barber has to be with you during haircut; no separation.
PRODUCT LIFE CYCLE
The concept of the product life cycle proposes that, like all life forms, products too have finite lives. Hence, once a product or service is introduced to the market it enters a ‘life cycle’ and will eventually fade from the market. In addition, the concept proposes that during its life cycle a product will pass through a number of different stages, where each stage has characteristics phenomena which, in turn, suggest specific and different marketing strategies. This notion, together with the suggested shape and stages of the ‘typical’ product life cycle.
The characteristics of each stage are as follows:
Stage 1 – Introduction
At this stage the product or service is new to the market. The risk of failure is high and any initial sales are likely to be slow. Purchasers at this stage are likely to be innovators who are willing and able to take risks. Profit margins are likely to be small or non – existent due to the low volume of sales and high initial launch and marketing costs.
Stage 2 – Growth
Provided the product or service meets customer need and there is a favourable market reaction, sales will begin to accelerate as news of the product permeates the market. Customers who like to take fewer risks than the initial innovator purchasers, but who welcome novelty, will begin to purchase the product. Attracted by the sales growth and potential profit, new competitors will enter the market, offering variations on the original product in order to attract brand loyalty.
Stage 3 – Maturity
Eventually, although still increasing, the rate of sales growth will begin to slow down and eventually cease. A number of factors may contribute to this process; for example: Approaching marketing saturation: Quite simply, there remain fewer and fewer potential customers left still to purchase the product as the product is diffused through the market. Eventually, only replacement sales are being made with comparatively few new customers left to purchase.
Stage 4 – Decline
Eventually, the forces and factors which contribute to the onset of maturity will erode the marketfor a product to such an extent that sales begin to diminish. The rate at which this will occur, and hence the length of time which the old product will remain viable in the market varies from product to product. Sometimes decline is extremely rapid, as in fashion markets, or when a major technological breakthrough occurs. In contrast, the rate of decline may take many years with, for example, a hard core of loyal customers who refuse, or cannot bring themselves, to switch brands.
A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organizations, and ideas.
The differences between goods and services are:
Goods are tangible, services are not.
The ownership rights of goods are transferable, but not in services.
Once goods are produced, their quality remains uniform, but not so with services.
Goods may be perishable or non-perishable, and can be stored for a long time. Services can’t be stored for a long time; they are perishable.
Goods are produced using raw material, but services are not.
Goods are produced and later consumed separately. Services are produced and consumed simultaneously (inseparable).
Products are generally divided into consumer and industrial. Consumer products are bought by final consumers for personal consumption. Consumer goods mostly do not need further processing or fabrication before consumption. Industrial or business products are products bought by individuals or organizations for further processing or for use in conducting a business.
The concept of the product life cycle proposes that, like all life forms, products too have finite lives. Hence, once a product or service is introduced to the market it enters a ‘life cycle’ and will eventually fade from the market.