8.2. Classifying Products
Marketers need to be aware of the ways in which the needs and wants of consumers are changing, so that the benefits offered by the product range can be tailored to fit those needs and wants. This is the function of market research but it is important to make good use of the information gathered to see which new products might be developed, or which old products might be adapted, and also to see which products are nearing the end of their useful lives.
Products bought to satisfy personal and family needs are consumer products; products bought for the purposes of resale or to be used to make other products are industrial products. In the case of consumer goods, the classification will be as follows -
- Convenience products - Cheap, frequently purchased items that do not require much thought or planning. The consumer typically buys the same brand or goes to the same shop. Examples are newspapers, basic groceries and soft drinks. Normally convenience products would be distributed through many retail outlets, and the onus is on the producer to promote the products, because the retailer will not expend much effort on such low-priced items.
- Shopping products - The products consumers shop around for. Usually infrequently purchased items such as computers, cars, hi-fi systems or household appliances. From the manufacturer’s viewpoint, such products require few retail outlets, but will require much more personal selling on the part of the retailer: so there is usually a high degree of co-operation between manufacturer and retailer in marketing the products.
- Speciality products - Consumers plan the purchase of these products with great care, know exactly what they want, and will accept no substitutes. Here the consumer’s efforts bend towards finding an outlet that can supply exactly the item needed: this accentuates the exclusivity of the product, so some marketers deliberately limit the number of outlets that are franchised to sell the products.
- Unsought products - These products are not bought; they are sold. Examples are life insurance, fitted kitchens and encyclopaedias. While most people would recognise the need for these items, it is rare for consumers to go out looking for them; far more commonly the products are sold either through an aggressive sales programme, or through a sudden change of circumstances which forces the consumer to buy.
Likewise, industrial products can be categorized according to the use the purchasers intend to make of them.
- Raw materials Basic products that will be transformed entirely into something else. These are usually bought in large quantities, and usually have a standardized quality range and prices: this makes it hard for the producer to differentiate the product from those of the competitors.
- Major equipment The capital machinery and tools used for running the buyer’s business. These are equivalent to shopping goods: the purchasers spend considerable time and effort in choosing which to buy, and therefore there is considerable emphasis on personal selling and on product differentiation. After-sales service is also crucial to success in this market.
- Accessory equipment Equipment used for the peripheral needs of the firm. Examples are office equipment and health and safety equipment. Often these are distributed through many outlets, and are more standardized than the major equipment items. This means there is more competition, but also a bigger market for such items as fire extinguishers or PCs.
- Component parts Finished items to be assembled into the finished product. These are usually bought by negotiation or tender; often the purchaser has the most power in the relationship, as with car manufacturers.
- Process materials Rather more advanced than raw materials, process materials might be the special alloys used in aircraft construction, or specially tailored plastics. From a marketing viewpoint, process materials are similar to component parts, but with more opportunity for differentiation.
- Consumable supplies Materials that are used by the purchasers but that do not become part of the finished product: for example, industrial cleansing products. Consumable supplies are used for maintenance, repair and operation, so they are sometimes called MRO items.
- Industrial services The intangible products used by firms: for example, industrial cleaning services, accountancy and legal services, and some maintenance services. Some firms provide these for themselves; for others it is cheaper to buy in the services as needed.
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