Product Classification Class 12
Need of Product Classification:
Product Classification helps in proper segmentation, targeting and positioning.
It can be done on the basis of durability, tangibility and user type.
Durability means the average life of the product available for consumption.
Tangibility means the physical attributes of the product.
User Type means goods are consumer products and/or industrial products.
Classification of Products:
- On the basis of Durability and Tangibility:
(a) Non- durable goods
(b) Durable goods
(c) Services
- Consumer goods:
(a) Convenience goods
(b) Shopping goods
(c) specialty goods
(d) Unsought goods
- Industrial Goods:
(a) Material and parts
(b) Capital items
(c) Supplies and business services
Product Classification Class 12
Classification on the basis of Durability and Tangibility
On the basis of durability: Durable goods and non-durable goods.
On the basis of tangibility: Physical goods and services.
Durable goods:
Durable goods are tangible goods normally used for many years.
These goods need more personal selling, after sales service like guarantee and warranty programs e.g. LCD TVs, mobile phones, washing machines and microwaves.
Non-durable goods
Non-durable goods are tangible goods normally consumed in one or a few uses.
These are purchased regularly and consumed frequently. Smooth distribution and easy availability are the main attractions. Heavy dose of advertising is required to increase sales. Most of these are FMCG (fast moving consumer goods) products e.g. food items and toiletries.
Services
Services are intangible, inseparable and inconsistent products.
Services need quality control, credibility of the supplier and adaptability e.g. hospitality service, airlines services, insurance and banking services.
Product Classification Class 12
Classification of Consumer Goods
On the basis of the time and effort for purchase:
- Convenience Products:
Meaning: These are goods purchased frequently, with minimum effort and time to make a buying decision e.g. Â soft drinks, soaps, bread, milk etc.
Convenience Products are classified into three categories:
(a) Staple Goods:
These goods are purchased on regular basis. The decision to buy the product is inbuilt gradually e.g. Example bread, milk, eggs.
(b) Impulse Goods:
These goods do not require any planning or search efforts. The desire to buy emerges on shopping trip only. Impulse goods are located where they can be easily noticed e.g. chocolates, toys, stationery items etc.
(c) Emergency Goods:
These goods are purchased to fulfill urgent need. Most of the time the consumer has to pay more e.g. water bottle at tourist destinations.
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Main Features of Convenience Products:
- Easily available and require minimum time and effort.
- Obtainable at low prices.
- Continuous and regular demand for such products.
- Both demand and competition are high.
- Easily substitutable.
- Require heavy advertising and sales promotion schemes.
Marketing Strategy of Convenience Goods:
(a) Price: Usually low priced and widely available.
(b) Promotion: Mass promotion by producer.
(c) Place: Widely distributed at convenient locations.
- Shopping Products:
Meaning: The customer makes due comparisons on the bases of quality, price, style and suitability, while selecting the product for purchase.
Shopping products can be homogenous or heterogeneous.
(a) Homogeneous Products:
Products which are alike.
Sellers just compete on price basis. Manufacturers distinguish their product on the bases of design, services offered or other services/ schemes.
(b) Heterogeneous Products:
These are products considered unlike or non-standardized.
The consumers want best quality. Mostly style or quality is preferred to price.
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Main Features of Shopping Goods:
- Durable in nature.
- High unit price and profit margin.
- Require adequate time and effort for purchase.
- Prior planning required for purchase.
- Important role of retailer in the sale.
Marketing Strategy of Shopping Goods:
(a) Price: Available at moderate prices. Information of price is must.
(b) Promotion: Heavy advertising and personal selling by producers and middlemen.
(c) Place: Sold near similar stores in active shopping areas.
(d) Products: Furniture, clothes, used cars, etc.
- Specialty Products:
Meaning: Goods that require uniqueness or brand identification for making special purchase effort by a sufficient number of buyers are called speciality goods. Consumers are very particular with brand, style, or type they purchase e.g. Cars, Mobile phones, Jewellery etc.
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Main Features of Specialty Products:
Less frequent demand.
High priced.
Limited sale outlets.
Aggressive requirement.
After sales service indispensable.
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Marketing Strategy of Specialty Goods:
(a) Price: Usually high priced as demand for these goods are low and supply is also low.
(b) Promotion: Targeted promotion by producer and reseller. High level of advertising.
(c) Place: Exclusively sold and are exclusively distributed.
(d) Product: Jewelry, Cars, etc.
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- Unsought Products
Meaning: These are products available in the market but the potential buyers do not know about their existence or they do not want to purchase them.
Unsought Products can be of two types:
(a) Regularly Unsought Products:
The products which exist but the consumers do not want to purchase them for the time being but might eventually purchase them e.g. Life Insurance or Doctor’s services.
(b) New Unsought Products:
The marketers inform target consumers about the existence of the product, stimulate demand and persuade them to buy the product e.g. Oral Polio Vaccine – unsought earlier, heavy promotion and persuasion by the government led to eradication of polio.
Marketing Strategy of Unsought Goods:
(a) Price: Varies from product to product.
(b) Promotion: Personal selling and aggressive advertising by producer and seller.
(c) Place: Depends upon the product.
(d) Product: Life insurance, Red Cross Blood Donations, etc.
Product Classification Class 12
Industrial Products:
Meaning: Industrial products are the products used to produce consumer products and are used for non-personal and business purposes e.g. raw materials, tools, machinery, lubricants etc.
Feature of Industrial products:
- Limited number of buyers.
- Short length of Channel for distribution.
- Concentrated demand in certain geographical locations
- Demand derived from consumer goods.
- Technical consultation required for purchase.
- Reciprocal buying possible.
- Leasing facilities possible.
Industrial Products are of three types:
- Materials and Parts:
These are goods used for manufacturing the product.
These are further of two types:
Raw Material:
The raw materials could be either agriculture based products like sugar cane, rubber, wheat etc or  natural products like iron ore, crude petroleum etc.
Agro products are renewable a but natural products are very often limited and often available in great bulk and low unit value. There are a few but large producers and marketers of natural products. Long term supply contracts are common in this case.
Manufactured Materials and Parts:
These include component materials like glass, iron, plastic or components like battery, bulbs or steering etc.
The component materials are further fabricated for using in finished product e.g. cloth from yarn. Components are used for the final product as it is.
In this case price, quality and services are important factors while making a decision.
- Capital Items:
Capital items are the goods used in producing the finished goods like tools, machines, computers etc. These are categorized into:
Installations like lifts, mainframe computers etc. These are major purchase for the organization.
Equipment like fax machines, EPBX machines. Equipment includes hand tools and office equipment like personal computers, laptops. The equipment is not everlasting and needs to be refilled at different periods of time.
- Supplies and Business Services:
They are goods which are required for developing or managing the finished products.
Supplies can be of two kinds:
Maintenance and repair items like painting, nailing etc.
Operating supplies like writing papers, consumables for computer, lubricants and coal.
Business services can be classified as:
Maintenance service like copier repair, window and glass cleaning.
Business advisory services like consultancy, advertising and legal services.