Q. Define a Product and discuss the various classifications that you are familiar with.
A product is anything that can be offered to a market to
satisfy a need or want. It is the heart of marketing and forms the basis of a
business’s offering. A product can be tangible, such as a physical item, or
intangible, such as a service, experience, or digital content. It represents
the solution a company provides to its customers and is the most visible part
of the marketing mix, alongside price, place, and promotion. Products are
central to business success, as they help companies distinguish themselves from
competitors and offer value to consumers.
In marketing, understanding the classification of
products is crucial because it helps businesses to develop, position, and
manage their product offerings effectively. The classification of products
guides companies in determining how to market them, which consumer segments to
target, and how to meet various consumer needs. Products can be classified
based on different criteria, such as their nature, durability, tangibility, and
the way they are consumed. These classifications provide insights into product
management, lifecycle management, and how to formulate the best strategies for
customer engagement.
Defining a Product
A product refers to
a tangible or intangible item that satisfies a need or want. It is not merely
the physical object or service but includes all attributes and benefits that a
consumer derives from it. The product can be as simple as a pen or as complex
as an enterprise software solution. A product can fulfill a functional
requirement, such as transportation or communication, or it can serve emotional
or psychological needs, such as status or self-expression.
Products are designed to solve specific problems or
make life easier for consumers. They are marketed based on their ability to
meet customer demands and offer value propositions. In the context of business,
a product typically goes through a life cycle that starts with its development,
moves into growth and maturity, and eventually faces decline.
A product offering consists of both core product and augmented product:
- Core product: The
fundamental benefit or service that the customer is buying. For example,
the core product of a smartphone is communication and connectivity.
- Augmented product: The
additional features or services that enhance the core product. This could
include the brand name, warranty, after-sales services, and customer
support.
Classifications of Products
Products can be classified in numerous ways, each
providing different insights into how a product is used, its market
positioning, and how it fits into the larger context of consumer behavior.
These classifications generally fall under several broad categories, including
consumer products, industrial products, durable goods, and non-durable goods.
Below, we will explore some common ways to classify products in detail.
1.
Consumer Products
Consumer products are products that are purchased by
individuals for personal use. These products are meant for end consumers, and
the purchasing decisions are primarily driven by individual preferences, needs,
or wants. Consumer products can be classified into several subcategories based
on the frequency of purchase, the effort required in making the purchase decision,
and the nature of the purchase.
a. Convenience
Products
Convenience products are low-priced items that are
frequently purchased with minimal effort or time spent on decision-making.
These products are typically bought on impulse, without much thought or
planning. Convenience products are easily available, often at supermarkets or
convenience stores, and are typically low in cost.
Examples: Toothpaste, soft drinks, bread, snacks, and
toiletries.
Characteristics of convenience products include:
- Frequent and low-cost purchases
- Minimal effort in purchase decisions
- Low involvement in consumer
decision-making
- Widely available in retail stores
b. Shopping
Products
Shopping products are more expensive than convenience
products and involve more time and effort in the purchasing decision. Consumers
compare different options based on quality, price, and features before making a
purchase. Shopping products are not as frequently bought as convenience
products, and they often require more thoughtful consideration.
Examples: Clothing, electronics, appliances, and
furniture.
Characteristics of shopping products include:
- Moderate to high cost
- Comparisons between alternatives before
purchase
- Longer purchase cycles
- Higher involvement in decision-making
c. Specialty
Products
Specialty products are unique items that have a very
specific appeal to a particular segment of consumers. Consumers who purchase
specialty products are often willing to invest considerable time, money, and
effort into finding the product that best fits their needs. These products are
often differentiated by brand, features, and quality.
Examples: Luxury cars, high-end watches, designer
clothing, and exclusive jewelry.
Characteristics of specialty products include:
- High price and unique attributes
- Infrequent purchase
- Strong brand loyalty
- Often purchased for emotional,
symbolic, or status-related reasons
d. Unsought
Products
Unsought products are those that consumers do not
think about frequently or may not even realize they need. These products are
often bought in response to sudden needs, emergencies, or situations that
require immediate attention. Marketing for unsought products typically involves
high levels of promotion and urgency.
Examples: Life insurance, emergency medical services,
and funeral services.
Characteristics of unsought products include:
- Low consumer awareness
- Typically purchased out of necessity
or urgency
- Significant marketing efforts
required to make consumers aware
2.
Industrial Products
Industrial products are goods that are purchased by
businesses for use in production or manufacturing processes. These products are
not directly for personal consumption but are essential for companies to
operate, produce, or provide services. Industrial products can be classified
into three primary categories:
a. Raw Materials
Raw materials are basic materials that are processed
further or used in the production of other products. They are the essential
inputs in the production process.
Examples: Wood, steel, cotton, crude oil, and
minerals.
b. Capital Items
Capital items are large, durable items that are used
in the production of other products or services. These items are typically high
in value and are essential for the business to operate. They may require
significant investment, and their purchase is usually planned well in advance.
Examples: Machinery, factory buildings, and office
equipment.
c. Supplies and
Services
Supplies and services are products that businesses
need on an ongoing basis to run their operations. These products are often
purchased regularly and are not part of the manufacturing process. They tend to
be low-cost items, although there may be some that are more expensive and
require long-term contracts.
Examples: Office supplies, cleaning services, repair
services, and packaging materials.
3.
Durable and Non-Durable Goods
Another way to classify products is by their
durability. This distinction helps businesses understand how often customers
need to replace or repurchase items, as well as the pricing and marketing
strategies that may apply.
a. Durable Goods
Durable goods are products that have a long lifespan
and are used repeatedly over time. These goods are typically more expensive and
require a significant initial investment, but they provide long-term value to
the consumer. As a result, they are often considered to be investments.
Examples: Cars, appliances, furniture, and
electronics.
Characteristics of durable goods include:
- Long-lasting and reusable
- Higher initial cost
- Fewer repurchases over time
b. Non-Durable
Goods
Non-durable goods are products that have a short
lifespan and are consumed or used up quickly. These goods are typically low in
cost and are purchased more frequently.
Examples: Food, beverages, cleaning supplies, and
toiletries.
Characteristics of non-durable goods include:
- Short shelf life
- Low cost
- Frequent repurchases
4.
Services
While many products are tangible goods, some are
intangible, such as services. Services are actions, performances, or efforts
that provide value to customers. Unlike goods, services cannot be touched,
stored, or owned. They are delivered in real time and often involve human
interaction.
Examples: Banking services, consulting, healthcare,
and education.
Services can also be classified based on their nature
and delivery:
- Consumer Services: Services
directly consumed by individuals (e.g., restaurants, personal care,
entertainment).
- Business Services: Services
provided to businesses (e.g., IT services, consulting, logistics).
5.
Product Classification Based on Product Life Cycle
Products can also be classified based on their life
cycle stage. The Product Life Cycle (PLC) is the course that a product's sales and profits take from its
introduction to its decline. The stages include:
- Introduction: The product
is introduced to the market. Sales growth is slow, and profits may be low
due to development and marketing costs.
- Growth: Sales begin
to rise rapidly as the product gains acceptance. Competition may increase,
but profits start to grow.
- Maturity: The product
reaches peak sales. Competition is intense, and profit margins may decline
as the market becomes saturated.
- Decline: Sales
decline as consumer preferences change, or new products are introduced.
Companies may phase out the product or attempt to rejuvenate it.
Understanding the product life cycle helps businesses
make decisions about pricing, marketing, and product innovation.
6.
Classifying Products by Market Segmentation
Some products are classified based on the target
market segment. Market segmentation is the process of dividing a broad consumer
or business market, normally consisting of existing and potential customers,
into sub-groups of consumers based on some type of shared characteristics.
Products can be tailored to meet the specific needs of various market segments.
Common segmentation criteria include:
- Demographic Segmentation: Age,
income, education, and occupation.
- Geographic Segmentation:
Location-based targeting (e.g., regional products).
- Psychographic Segmentation: Lifestyle,
interests, and values.
Conclusion
Classifying products is essential for businesses to
understand consumer needs, market dynamics, and how best to position products.
By classifying products into categories such as consumer products, industrial
products, durable goods, non-durable goods, and services, businesses can target
the right audience and develop strategies for product development, marketing,
and sales. Moreover, recognizing the product life cycle and market segmentation
helps companies stay relevant and competitive in a constantly evolving market.
In
marketing, classification provides businesses with valuable insights that guide
decision-making processes. By identifying the right category for a product and
aligning it with the correct marketing and sales strategies, businesses can
create successful offerings that resonate with their target consumers. Whether
a company is launching a new convenience product or introducing a high-end
specialty product, understanding these classifications is essential for
ensuring long-term growth and success.
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