Lesson Note
Subject: Marketing
Topic: Types of Products
Lesson Objective: by the end of the lesson, the learners should be able to:
1. Define product;
2. State the difference between
industrial goods and consumer goods;
3. Distinguish between goods and services.
Lesson Summary/Discussion
MEANING OF PRODUCTS
In marketing, a product is anything that can be offered to a market that might satisfy a want or need. A product is good, idea, method, information, object or service
created as a result of a process and serves a need or satisfies a want. It has a combination of tangible and intangible attributes (benefits, features, functions, uses) that a seller offers a buyer for purchase. For example a seller of a toothbrush not only offers the physical product but also the idea that the consumer
will be improving the health of their teeth.
CLASSIFICATION OF PRODUCTS
The following are the various
classifications of products:
1. CONSUMER GOODS
Consumer goods are goods that are bought from retail stores for personal, family, or household use. They are grouped into three subcategories on the basis of consumer buying habits: convenience goods, shopping goods, and specialty goods.
(a) Convinience Products: these refer to items that the consumer buys with minimum shopping effort. Essentially these are goods that are habitual with the consumers. They are bought frequently but not in large quantities because they are non-durable good. In other words they are used up” goods. The buying decision of the consumers for convenience goods is ignited by habit and he knows all the retail outlets. Under this category are biscuits, newspaper, toilet soap, cigarettes etc.
Consumers want to minimise the time and effort devoted to buying convenience goods, therefore the consumers are not interested in comparing the prices and quality of convenience goods with other related products in the market place. This is
because the gain of such exercise is not high enough to justify the cost involved in the exercise. But in case, the price of a convenience good like bread is abnormally higher than competing brands, consumers tend to change their buying decision
b. Staple products: These are products that are bought often in a routine
manner without much thought on regular basis. A typical example is with paste or milk for breakfast. Staple products are usually sold in convenient location like food stores and supermarkets. Branding is
important with staple products.
c. Impulse Products: These are
products that are purchased without any planning or search effort. They are usually purchased because of a strongly felt need.
They are products that consumers had not planned to buy but decide to buy on the spot. An example is an ice-cream seller who rings a bell, if the children do not buy the ice cream as the seller is sighted, the need goes away and the purchase will not
be later. This implies that if the buyer does not see an impulse product on time the sale may be lost. This explains why retailers display impulse products conspicuously where they will be seen and bought.
d. Emergency products: These are
products that are circumstantially
purchased when the need is great. For
example, the price of ambulance service will not matter if an accident occurs. So also is the price of umbrella during a rainstorm. Different marketing mix are required to meet customers emergency needs.
(b) Shopping Products: These are
products consumers purchase and
consume on a less frequent schedule
compared to convenience products. Consumers are willing to spend more time locating these products since they are relatively more expensive than convenience products and because these may possess additional psychological benefits for the purchaser, such as raising their perceived status level within their
social group. Examples are clothing products, personal services, electronic products, and household furnishings.
Because consumers are purchasing less frequently and are willing to shop to locate these products, the target market is much smaller than that of convenience goods.
Consequently, marketers often are more selective when choosing distribution outlets to sell their products.
2. INDUSTRIAL GOODS
Industrial goods are products that
companies purchase to make other
productS, which they then sell. Some are used directly in the production of the products for resale, and some are used indirectly. Unlike consumer goods, industrial goods are classified on the basis of their use rather than the customer’s buying habits.
Industrial goods are divided into five subcategories: installations, accessory equipment, raw materials, fabricated parts and materials, and industrial supplies.
Industrial goods also carry designations related to their durability. Durable industrial goods that cost large sums of money are referred to as capital items. Non-durable industrial goods that are used up within a year are called expense items.
a. Installations: Installations are major capital items that are typically used directly in the production of goods. Some installations, such as conveyor systems, robotic equipment, and machine tools, are designed and built for specialized situations. Other installations, such as stamping machines, large commercial ovens, and computerized axial tomography (CAT) scan machines are built to a standard design but can be modified to meet individual requirements.
b. Accessory Equipment: Goods that
fall into the subcategory of accessory
equipment are capital items that are less expensive and have shorter lives than installations. Examples include hand tools, computers, desk calculators, and forklifts. While some types of accessory equipment, such as hand tools, are involved directly in
the production process, most are only
indirectly involved.
The relatively low unit value of accessory equipment, combined with a market made up of buyers from several different types of businesses, dictates a broad marketing strategy. Sellers rely heavily on advertisements in trade publications and mailings to purchasing agents and other business buyers. When personal selling is
needed, it is usually done by intermediaries, such as wholesalers.
c. Raw Materials: Raw materials are
products that are purchased in their raw state for the purpose of processing them into consumer or industrial goods.
Examples are iron ore, crude oil,
diamonds, copper, timber, wheat, and
leather. Some (e.g., wheat) may be
converted directly into another consumer product (cereal). Others (e.g., timber) may be converted into an intermediate product (lumber) to be resold for use in another industry (construction).
d. Fabricated Parts and Materials:
Fabricated parts are items that are
purchased to be placed in the final product without further processing. Fabricated materials, on the other hand, require additional processing before being placed in the end product. Many industries, including the auto industry rely heavily on
fabricated parts. Automakers use such
fabricated parts as batteries, sun roofs, windshields, and spark plugs. They also use several fabricated materials, including steel and upholstery fabric. As a matter of
fact, many industries actually buy more fabricated items than raw materials.
Buyers of fabricated parts and materials have well-defined specifications for their needs. They may work closely with a company in designing the components or materials they require, or they may invite bids from several companies. In either case, in order to be in a position to get the business, personal contact must be maintained with the buyers over time. Here again, personal selling is a key component in the marketing strategy.
e. Industrial Supplies: Industrial
supplies are frequently purchased expense items. They contribute indirectly to the production of final products or to the administration of the production process. Supplies include computer paper, light bulbs, lubrication oil, cleaning supplies, and office supplies.
Buyers of industrial supplies do not spend a great deal of time on their purchasing decisions unless they are ordering large quantities. As a result, companies marketing supplies place their emphasis on advertising particularly in the form of catalogue for business buyers. When large
orders are at stake, sales representatives may be used.
GOODS AND SERVICES
Goods are something that you can use or consume, like food or CDs or books or a car or clothes. You buy goods with the idea that you will use it, either just once or over and over again. Services are something that
someone does for you, like give youa
haircut or fix you dinner or even teach you marketing. Services according to Kotler (1988) is any act or performance that one party can offer to another that is essentially intangible and does not result in ownership of anything. Its production may or may not be tied to a physical product. Services are intangible products those that cannot be seen or touched that are provided to consumers or other companies.
A physician provides healthcare to
patients. Communication companies provide serVices such as Internet access, television programming and the ability to make local or long-distance telephone calls. Banks provide a range of financial services to customers, such as checking accounts and investment
opportunities. Other companies provide services such as lawn care, plumbing, home repair, businesS Consulting or transportation.
DIFFERENCES BETWEEN SERVICES AND GOODS.
1. Service is an intangible process that cannot be weighed or measured, whereas a good is a tangible output of a process that has physical dimensions. This distinction has important business implications since a service innovation, unlike a product innovation, cannot be patented. Thus, a company with a new concept must expand rapidly before competitors copy its procedures. Service intangibility also presents a problem for customers since, unlike with a physical product, they cannot try it out and test it before purchase.
2. Service requires some degree of interaction with the customer for it to be a service. The interaction may be brief, but it must exist for the service to be complete. Where face-to-face service is required, the service facility must be designed to handle the customer’s presence. Goods, on the other hand, are generally produced in a facility separate from the customer. They can be made according to a production schedule that is efficient for the company.
3. Services, with the big exception of hard technologies such as ATMs and information technologies such as answering machines and automated Internet exchanges, are inherently heterogeneous – they vary from day to day and even hour by hour as a function of the attitudes of the customer and the servers.
Thus, even highly scripted work such as that found in call centers can produce unpredictable outcomes. Goods, in contrast, can be produced to meet very tight specifications day-in and day-out with essentially zero variability. In those cases where a defective good is produced, it can be reworked or scrapped.
4. Services as a process are perishable and time dependent, and unlike goods, they can’t be stored. Both goods and services need not be driven by economic motives. Several times goods and services are linked closely and cannot be detached. For example on purchase of a car, the good is the car but the processing, the provision of accessories, after sales activities are all services. It is essential to note that the difference between pure goods and pure services are in contrast but most goods and services exist in between with a mix of both. For instance, in a restaurant, food refers to goods while the service is the waiters offering the ambience, the setting of tables amongst others.
Lesson Evaluation/Test
1. What is a product?
2. Write a short note on each of the types of consumer goods with examples.
3. What is service?
4. Differentiate between goods and services.
Questions answered correctly? Bravo😍
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