1.0 INTRODUCTION
Businesses are set up to produce products or goods and services.
These products are sold to members of the society for money. Goods consist of
items with attributes that have the ability to satisfy
people’s needs and wants.
Goods are normally tangible items. Services are intangible items that can
provide value and satisfaction and are also classified as products. This note
introduces you to various definitions of a product, classification of products
and their characteristics.
2.0 OBJECTIVES
At the end of this note, you should be able to:
define a product
classify products into either consumer or industrial products
explain the characteristics of industrial products.
3.0 MAIN CONTENT
3.1 What is a Product?
In order to be
effective at selling or marketing, it is necessary to have a proper perspective
of the meaning of a product or how it should be viewed from a marketing angle.
You may like to think a little deeply on what is meant by the word ‘product’.
Let us understand this with the aid of an illustration – While conducting
seminar for operational salesmen who had been on the field for 10 to 12 years,
the salesmen were asked a question, ‘What are you selling?’
Different answers were received from different groups. One group answered,
‘Soaps’. When asked, ‘What? What did you say?’ the salesmen would immediately
answer back, ‘soaps, soaps, soaps’. They even tried to help the seminar leader
by putting forward their right hand with the first finger and the thumb holding
something rectangular, thereby assisting him to visualize soap – others claimed
they sold ‘bulbs, drills, etc.’
A product is the key marketing mix variable on which all the other
marketing mix variables revolve. It cannot be divested from other marketing mix
variables because all of them contribute to form the images of the product from
the point of view of the buyers. These images determine the values and
satisfaction expected from a given product and how much the buyers will offer
for it. It is therefore important for the manufacturers and marketers to
understand what a product means to consumers and their expectations from that
product.
Hence, a product can be
described as goods, services, ideas, people, places, and even organizations
that are offered for exchange. Or, a product is the bundle of benefits or
satisfaction offered to a customer. Also, a product is defined as anything
offered or sold for the purpose of satisfying a need or want on both sides of
the exchange process. It includes a tangible object that marketers refers to as
a good, as well as an intangible service (such as ideas, a place, an event, an
organization), or any combination of tangible objects and intangible services.
However, Stanton (1981:161) defines a product as a set of tangible
and intangible attributes including packaging, color, price, manufacturer’s prestige,
retailer’s prestige, and manufacturer’s and retailer’s services, which the
buyer may accept as offering want-satisfaction.
It should however be noted that the consumer is not interested in
your goods. He/she is interested in himself or herself and what ‘benefits’ he/she
will get, and not in you or your organization.
3.2 Product Levels This can be illustrated with the aid of a diagram as shown below: 
Levels of a Product Potential Augment Expected Basic Product Core Product
(a) The Core
Benefits: i.e. the fundamental service or benefit that the customer is
really buying. For instance, the core benefit enjoyed by a guest in a hotel is
rest and sleep.
(b) The Basic Product: Here, marketers have to turn the core benefit into a basic
product. For example, in the case of the hotel, such things as a bed, table,
chair, bathroom, and dresser are the basic products enjoyed by a guest in the
hotel.
(c) The Expected Product: Here, marketers prepare an expected product,
i.e. a set of attributes and conditions buyers normally expect when they
purchase a product. For example, in a hotel, guests expect a clean bed, fresh
towels, constant power supply, and a relatively quiet environment.
(d) Augment Product: Marketers are
concerned with preparing augmented products that exceed customers’
expectations. For example, a hotel may have a remote controlled TV set, remote controlled
air conditioner, fresh flowers, etc.
(e) Potential Product: This consists of all the possible augmentations and
transformations the product might undergo in the future, just as we have new
products in our markets daily due to modifications and diversifications
undertaken by manufacturers.
3.3 Classification of Products
Generally, products are classified into two types namely: consumer
products and industrial products.
3.4 Consumer Products
Consumer goods are those which are used by ultimate consumers or households
and in such form that they can be used without further commercial processing.
Consumer goods can further be classified according to the amount of efforts
consumers are willing to expend for purchases and the extent of their
preferences for such products and services. Thus, consumer goods can be divided into:
convenience goods
shopping goods
specialty goods
unsought goods.
The functions of marketing can be classified into three, namely merchandising
function, physical distribution, and auxiliary function as discussed in note
one.
3.4.1 Convenience
Products/Goods
These are standardized products and services usually of low note
values that consumers wish to buy immediately as needs arise and with little buying
efforts. That is, goods which consumers generally purchase frequently with little
effort. The purchase is almost spontaneous and the person has already, a
predetermined brand in mind. These convenience goods include soaps, newspapers,
toothpastes, cigarettes, etc. Often, convenience goods are bought impulsively
or spontaneously. For example, when a person goes for shopping and sees a
product which attracts his eyes, he buys it on impulse. Such goods are not
purchased on a regular basis.
3.4.2 Shopping Goods
These are goods which are purchased after going around shops and comparing
the different alternatives offered by different manufacturers and retailers. In
other words, these are durable items with differentiated product attributes
that consumers wish to compare in order to be able to find the most suitable
for their needs before buying. In this case, the emphasis is on quality, price,
fashion, style, etc. They therefore have to be marketed differently. Examples
of such goods are clothing, household appliances, and furniture.
3.4.3 Specialty Goods
These are products that consumers insist on having. The buyers are
willing to wait until the right products are available before they buy them.
Consumers have either developed special taste or liking for such goods.
Specialty products are usually specific branded items rather than product
categories. They are specific products which have passed the brand preference
stage and reached the brand insistence stage. Examples of these are cars, jewelry,
fashion clothing, photocopy machines, and cameras. They are usually very costly
items and include luxury items.
3.4.4 Unsought Goods
These are goods that people do not seek, either because they did
not plan ahead to buy them or they did not know about their existence before they
saw them on displays at the point of purchase. Most new and recently introduced
products will fall into this class. Therefore, aggressive and continuous
promotion is necessary for them. Examples of unsought products include life
insurance, encyclopedia, and blood donation to the Red Cross Society.
3.5 Industrial Products
These are products that are used by producers who convert them
into consumables or consume them in their processes of conversion or production
of their goods. Industrial products are those purchased for further processing
or for use in conducting a business. The distinction between consumer and
industrial goods is based on the purpose for which the particular product was
bought. The classification of industrial goods is based on how they are used by
industries. Akanbi (2002) classifies industrial products into five namely:
Installation
Equipment, Tools and Accessories
Raw Materials
Semi-Processed Components and Parts
Consumables and Operating
Supplies.
3.5.1 Installation
These are major capital items that form the main assets of
production firms. They are very costly items that need major decisions before
they are purchased. They include product items as buildings, heavy manufacturing
machines, computers, etc. These are usually custom made items that will require
direct negotiations between the buyers and the sellers.
3.5.2 Equipment, Tools
and Accessories
These are usually standardized items that are used by a wide range
of industrial users. They are products like typewriters, hand tools, filing cabinets,
and air conditioners. They are production operating items.
3.5.3 Raw Materials
They form the major parts of the finished items. They are the
materials that go through the production line to make up the finished items.
They include the raw materials of agricultural products, mining products, forestry
products, sea and water products. They are usually standardized items that are
sold on the basis of quality and their reliability of supply.
3.5.4 Semi-Processed Components and Parts
These types of industrial goods also form part of the finished
items, although some of them are finished items already like buttons for
shirts, radio and batteries for cars. Parts can be used by themselves or can be
used to form components of the final items.
3.5.5 Consumables and Operating Supplies
These are the convenience items of industrial products. They are
used to aid the running and maintenance of the organization’s equipment and for
keeping the organizations and their machines in proper shape. They are usually standardized
items and of low prices. Examples are stationery, fuel, water, grease, etc.
3.6 Characteristics of Industrial Products
(i) The demand for industrial goods is derived from the demand for
the final goods which they are used to produce. The higher the demand for the
final item, the higher will be the demand for the industrial goods and vice
versa.
(ii) The demand for
industrial goods is mostly inelastic. The amount of items bought of an
industrial product remains essentially the same regardless of the price. This
is because most items are not made of one single product, but a combination of
products. For example, a car is made of the body, tyres, radio, air
conditioners, lights and so on. If the price of the items is increased, they
will still need the same number for each car. Although if the price falls, they
may buy more to stock in anticipation of a rise in price in future.
(iii) Most industrial goods have joint demands with other
industrial items. As in (ii) above, most finished goods are a combination of very
many products and an increase in the demand for one item will lead to an
increase in the demand for the other product.
(iv) The industrial goods markets are usually concentrated and few
in number than the consumer goods markets. Most of the users of industrial
goods are usually concentrated in industrial estates. Government, parastatals
and other institutions that use industrial goods are usually concentrated in
few locations. The typical industrial buyer is very well informed about what
they want to buy. They also know the alternative sources of these items.
(v) The industrial buying process is usually more rational or the decisions
to buy them are more economically based than in the consumer buying process.
3.6 Marketing Strategies
for Consumer and Industrial Products
Industrial products are generally subject to greater
standardization, as against certain consumer products which require frequent
changes in fashion and style. Advertising normally 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 on the basis of quality or tangible attributes.
As against this, consumer products are very often sold for psychological
satisfaction. For example, in case of soaps, Lux soap is said to offer you a
complexion like that of a film star! Consumer products require elaborate
channels of distribution, but industrial products are sold through fewer
outlets and often directly by the organization itself. These are some of the
salient features of marketing of consumer products as against industrial
products.
4.0 CONCLUSION A product is the key marketing mix variable on which all the other
marketing mix variables revolve. It cannot be diverted from other marketing mix
variables, because all of them contribute to form the images of the product
from the point of view of the buyers. These images determine the values and
satisfaction expected from a given product and how much the buyers will offer
for it. It is therefore important for the manufacturers and marketers to
understand what a product means to consumers and their expectations from that
product.
5.0 SUMMARY In this note, you learnt what a product means, various
classifications of products and necessary strategies adopted for consumer and
industrial products.
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