Product classification refers to the categorization of goods and services based on how they are bought, used, and the nature of their demand.
Products are generally classified into:
- Consumer Products – bought by individuals for personal use.
- Industrial Products – purchased for business or production use.
A.) Consumer Products:
Consumer products are goods and services purchased by final consumers for personal use and consumption. These are not used for production but for satisfying personal needs.
They are categorized as follows:
1.) Convenience Products:
- Convenience products are items that customers buy frequently, immediately, and with minimal effort or comparison.
- Examples: Snacks, soaps, soft drinks, newspapers.
Characteristics:
- Low cost
- Widely available
- Mass advertising
2.) Shopping Products:
- Shopping products are goods that consumers compare on quality, price, and style before purchasing. They involve more time and effort in the buying process.
- Examples: Clothes, shoes, electronics, furniture.
Characteristics:
- Higher price than convenience goods
- Purchased less frequently
- Available in fewer outlets
3.) Specialty Products:
- Specialty products have unique features or strong brand identity, and buyers are willing to make a special purchasing effort to obtain them.
- Examples: Luxury cars (e.g., Rolls Royce), designer watches, high-end technology.
Characteristics:
- High brand loyalty
- Limited availability
- Little concern for price comparison
4.) Unsought Products:
- Unsought products are those that consumers do not think about actively or do not normally seek out, often bought due to necessity or aggressive promotion.
- Examples: Life insurance, funeral services, emergency medical equipment.
Characteristics:
- Requires aggressive advertising
- Consumer may have little interest until a need arises
B. Industrial Products:
Industrial products are goods purchased for use in the production of other goods or for conducting business operations.
- They are not consumed directly by the end-user.
They fall into three main categories:
1.) Materials and Parts:
- These are raw materials and manufactured parts that become a physical part of another product.
Examples:
- Raw materials: cotton, timber, iron ore
- Components: car engines, computer chips
2.) Capital Items:
- Capital items are long-term assets used to produce other goods and services, but they do not become part of the final product.
- Examples: Machinery, buildings, tools, equipment.
3.) Supplies and Services:
- These are items used in the daily operation of a business, or services that support business activities.
Examples:
- Supplies: Lubricants, stationery, cleaning items.
- Services: Maintenance, legal services, IT support.
