Marketers consider goods primarily in terms of whom they are being targeted. They classify goods based on whether they are consumer goods or industrial goods.
Generally, products are classified into two types;
- Consumer Products (convenience products, shopping products, specialty products, unsought products).
- Industrial Products (capital goods, raw materials, component parts, major equipment, accessory equipment, operating supplies, and services).
Consumer products are those which are bought by consumers for ultimate consumption and not for resale. These goods can be further classified based on how consumers buy them. Consumer products include (1) convenience products, (2) shopping products, (3) specialty products, and (4) unsought products.
Industrial products are those intended for use in making other products or operating a business or institution. Thus, industrial products are differentiated from consumer products based on their ultimate use. The types of Industrial goods are raw materials, component parts, major equipment, accessory equipment, operating supplies, and services.
Let’s understand the main two types of product and their subcategories one by one.
1. Consumer Products
Consumer products are those designed to satisfy the needs and want of the ultimate consumer.
But, this is not an adequate definition for marketing purposes. The consumer goods category is far too broad and diverse to be meaningful when developing product strategies.
Consumer goods include everything from fresh corn to advanced electronic games and home video recorders, from sweaters and jeans to books and pens.
As a result of this variation, marketing executives must further classify these goods, focusing on the buying processes consumers use.
The four subgroups of consumer products are;
- Convenience Products.
- Shopping Products.
- Specialty Products.
- Unsought Products.
The marketing methods of these products varies because the way the consumers buy them differ. Marketing consideration for various consumer products are shown below:
|Type of Consumer Product|
|Customer buying behavior||Frequent purchase, little planning, little comparison or shopping effort, low customer involvement||Less frequent purchase, much planning, and shopping effort, comparison of brands on price, quality, style||Strong brand preference and loyalty, special purchase effort, little comparison of brands, low price sensitivity||Little product awareness, knowledge (or if a little or even negative interest)|
|Price||Low price||Higher price||High price||Varies|
|Distribution||Widespread distribution, convenient locations||Selective distribution in fewer outlets||Exclusive distribution in only one or a few outlets per market area||Varies|
|Promotion||Mass promotion by the producer||Advertising and personal selling by both producer and resellers||More carefully targeted promotion by both producers and resellers.||Aggressive advertising and personal selling by producers resellers|
|Examples||Toothpaste, magazines, laundry detergent||Major appliances, televisions, furniture, clothing||Luxury goods, such as Rolex watches or fine crystal|
Red Cross blood donations
Let us now have a brief idea on each of the different types of product:
1. Convenience Goods
These are products that consumers want to buy with as little difficulty and physical effort as possible. Consumers know what they want., usually have purchased the product before, and perhaps above all, do not want to spend considerable time making the purchase.
Goods falling into this group are known as convenience goods – they are the goods that the customer usually purchases frequently, immediately, and with a minimum of effort in comparison and buying.
A large number of products, of course, fall into this group. Milk, soap, candies, and various other low-cost goods for which consumers are not totally brand loyal are examples of convenience goods.
Marketing executives are especially careful to make sure that this type of product is readily available. These goods, therefore, receive widespread distribution.
Marketing executives recognize that consumers do not view all of the convenience products alike.
Or example, bread is a convenience item for some people who do not demand only one brand. If a store does not carry a particular brand, another will be readily substituted.
Other consumers, however, are very loyal to a specific brand and will go out of their way to find it. Marketers have identified four subgroups of convenience goods: staple, impulse, emergency.
Those goods that the consumer buys on a very regular basis plans for the purchase, and tends to be somewhat brand loyal. Ballpoint-pens soft drinks, pickles, tobacco products, etc., are usually considered as staple goods. Brand loyalty for these particular products stems from the desire to simplify the buying process by automatically selecting one brand and minimizing purchasing time.
Impulse goods are purchased without conscious forethought – they are the result of a sudden but strongly felt need. Magazines, street foods, ice cream, are examples of impulse items. One of the most common misconceptions about impulse goods is that they are bought irrationally. Though such purchases are not preplanned, they satisfy consumer needs, and therefore cannot be viewed as wasteful.
These goods are closely related in some respects to impulse items because they are not preplanned purchases. Emergency goods differ from impulse goods because they may be planned for on short notice, but more importantly, are purchased to satisfy an immediate and pressing situation. Candles, matches, antiseptics are certainly emergency goods.
2. Shopping Products
Shopping goods are those consumer goods which the customer in the process of selection and purchase characteristically compares on such bases as suitability, quality, price, and style. Shopping products are infrequently purchased products that customers plan and compare carefully on brands, price, quality, and style.
Consumers devote much time and effort in obtaining information and making comparisons in case of buying shopping products.
For example, refrigerators, air coolers, televisions, washing machines, and clothing are shopping products.
In this category, marketing executives generally distinguish the shopping products into two types;
- Homogeneous shopping goods.
- Heterogeneous shopping goods.
Homogeneous Shopping Goods
Shopping goods that consumers believe to be essentially the same in terms of quality, price, styling and suitability for their needs are called homogeneous shopping goods.
The buyer considers homogeneous products similar in quality, such as refrigerators, but they think that prices are different for which they tend to make comparisons.
Heterogeneous Shopping Goods
Heterogeneous shopping goods are products in which consumers perceive some discernible differences in suitability, quality, price, or styling. Whether real or imagined, the differences are important enough to cause consumers to evaluate the trade-offs between them.
Reversibly, in heterogeneous products such as clothing, consumers consider product features more important than price.
So a trader of heterogeneous shopping products must carry varied assortment to cater to individual tastes and should employ well-trained salespeople to provide information and advice to buyers.
3. Specialty Products
Specialty products are characterized by strong brand preferred and loyalty, special purchase effort, little comparison of brands, and/or price sensitivity. These goods include those consumer goods with unique characteristics and/or brand identification for which a significant group of buyers is habitually willing to make a special purchasing effort.
The most important factors distinguishing specialty items from other goods are their high brand recognition and the degree to which consumers will actively seek them.
Here consumers have particular preferences and will make concerted efforts to find them.
Examples include expensive men’s suits, fancy groceries, health foods, hi-fi components, and photographic equipment.
The unique feature of specialty products is that the buyer will look for only a specific brand. The consumer does not care for substitutes but tries to procure the wanted brand, which may require considerable time and effort.
Most specialty goods are relatively expensive, carry high-profit margins for the seller, and are available in a limited number of outlets. They are sold in a few outlets because consumers are unwilling to accept substitutes and will seek out stores carrying the brands of their choice.
4. Unsought Products
Unsought products are those consumer products of who’s existence the consumers are not aware of. If they know about these products, they may not think of buying. “Unsought goods are goods that potential customers do not yet want or know they can buy. Therefore, they don’t search for them at all.
Consumers probably wouldn’t buy these goods if they saw them – unless promotion could show their value”.
Consumers do not consciously want or actively seek out unsought goods. Consumers have no intention of buying the product in the first place.
Examples include life insurance and eye donations to the Eye Banks. As their characteristics indicate, unsought products need aggressive advertising and personal selling by producers and resellers.
The challenge involved in selling unsought products has led to developing some of the most advanced personal selling methods. Costly personal selling is often required since people often avoid these products.
2. Industrial Products
Industrial goods are those purchased by organizations for use either in other products or in their operations. Manufacturers, commercial businesses, non-profit institutions, and government agencies buy industrial goods. Industrial goods can be classified into raw materials, component parts, major equipment, accessory equipment, operating supplies, and services
If a consumer buys an air conditioner for use at home, the air conditioner is a consumer product. If the same consumer buys the same air conditioner for use in his factory, it is an industrial product.
Industrial goods can be classified into;
- Capital goods.
- Raw materials.
- Component parts.
- Major equipment.
- Accessory equipment.
- Operating supplies.
A brief discussion of these different types of industrial product can be presented as under;
Capital goods are industrial products that are directly used in production. Capital goods consist of installations and accessory equipment. Buildings, plants, and machinery are examples of installations.
Installations are usually bought directly from the producer. Accessory equipment includes workman’s tools and office equipment like calculators, fax machines, etc.
Accessory equipment is marketed through intermediaries because the buyers of those products are scattered over a large geographic area, and individual purchase volume is small.
These are industrial goods that will be used in the making of other products. Included in this category are natural resources such as forest products, minerals, water, oceanic products, and agricultural products and livestock. In most instances, raw materials lose their individual identities when used in the final product.
Materials and parts become a part of the buyer’s product through further processing. They include raw materials and manufactured materials and parts. Raw materials include farm products and natural products such as jute, cotton, wheat, fruits, crude petroleum, coal, iron ore, and natural gas.
Farm products are supplied by many small producers who sell them to intermediaries. These intermediaries then process and sell them. Natural products are of big bulk and low unit value and to be transported from producer to user.
Producers of natural products are few in number and large. They market their products directly to industrial users.
Manufactured materials and parts include component matters such as iron, yarn, cement, and wires, and component parts such as small motors, tires, and casting. Component materials usually are processed further.
For example, the pulp is made into paper. Component parts enter into the finished product wholely. For example, amplifiers are fixed in CD players.
Generally, manufactured materials and parts are sold directly to industrial users. In marketing manufactured materials and parts, more emphasis is given on price, and service is given more attention than branding and advertising.
Unlike raw materials, parts usually have been processed before being used in the finished product. Although they may not be visible, parts are left intact and assembled into the total product.
This category comprises industrial products used to make, process, or sell other goods. These include machinery, typewriters, computers, automobiles, tractors, engines, and so on.
Normally, they are relatively expensive and have a useful life over one year. Major equipment is not limited solely to the production process. It is found in wholesale (e.g., forklifts) and retail (e.g., cash registers) operations.
This equipment includes industrial products used to facilitate the production process or middleman sales. It does not become part of the finished product but aids in the overall production or selling effort.
Accessory equipment would include tools, shelving, and many other products that tend to have a lower cost and shorter life than major equipment.
Supplies include operating supplies like office stationery, repair, and maintenance items. Supplies can be treated as convenience products of the industrial market as they are purchased with minimal effort.
These are products that are incidental to the production or selling functions. Included in this category are low cost and quickly (within one year) used up in the company’s operations. Pencils, papers, lubricating oils, cash register, tape, and maintenance and repair items are included in this category.
Business services include maintenance and repair services, factory premise cleaning, office equipment repair, and business consultancy services. These services are generally provided through contracts by small producers and manufacturers of the original equipment.
Services normally should not be considered as a separate product classification. Depending on the particular service, they are either consumer or industrial goods. They are activities, benefits, or satisfactions offered for sale or are provided in connection with the sale of goods.
Industrial services are purchased for use in producing the buyer’s products or, more frequently, general operations. Like consumer services, industrial services are not as standardized as goods, nor are they as tangible or as durable.
As the complexities of business increase, so does the need for a specialized service. Professional services like accounting, advertising, marketing research, legal advice, and management consulting rely on more and more.
Final Words: Product Classification Requires for Developing Effective Marketing Strategies
Marketers begin with developing product classification schemes to formulate effective marketing strategies. They classify products and services into two broad categories based on the types of consumers that use them.
Let’s analyze the difference in marketing strategies that require for the consumer and industrial products.
Industrial products are usually standardized then consumer products that require frequent changes in fashion and style.
Advertising is an important promotional tool for consumer products, but may not be so in the case of industrial products.
Personal selling and after-sales service are generally more important for industrial products.
Industrial products generally involve high-value purchases, and this involves competitive bidding based on price competition. Selling is done based on quality or tangible attributes. However, consumer products are very often sold for psychological satisfaction.
For example, the Fair & Lovely offers you fair skin complexion like a film star. (Presumption that film stars do have lovely complexions, as they appear to have on the screen.) But they are facing a backlash as they are marginalizing the people of color, and promoting fairer skin is better.
So consumer products need very microscopic to board analysis before making a marketing decision.
Consumer products require elaborate channels of distribution, but industrial products are sold through fewer outlets and often directed by the organization.
These are some of the salient features of the marketing of consumer products against industrial products. A more detailed treatment will follow in subsequent units on promotion and physical distribution.
Once understanding the types of products is necessary to understand the definition of the product. To understand what product the consumer wants and design a product that full fills that want analyzing the levels of the product are important.