Meaning

Anything of value offered by an organisation to the market for satisfying their want or need is known as a Product. The concept of product not only relates to the physical product, but also the benefits offered by the product. For example, while purchasing a washing machine, a consumer does not only look for its physical qualities but also some intangible factors such as its brand name, guarantee offered, company’s image, status symbol, etc. Hence, it can be said that a product is a mixture of tangible and intangible features, a consumer can exchange for a value in return to satisfy their needs. 

The three types of benefits provided by a product to the customers are; namely, Psychological benefits, Functional benefits, and Social benefits. For instance, Sayeba purchased a wall painting from an art gallery arranged by an NGO. After making the purchase the functional benefits gained by her will be the decoration of her living room. Similarly, she will get psychological benefits in the form of satisfaction with her interest in art and creativity. However, as she has purchased the painting from an NGO’s art gallery, the money will be used as a donation which provides her social benefits in the form of acceptance and a good image in the eyes of people.  

Classification of Products

Products can be classified into two categories; viz., Consumer Products and Industrial Products. 

1. Consumer Products

The products which directly satisfy the wants and needs of a consumer are known as Consumer Products. For instance, soap, clothes, bread, jam, butter, etc. Consumer products are used by consumers for their personal needs. These products can be further classified into two categories: On the Basis of Durability and On the Basis of Shopping Efforts. 

a. On the Basis of Durability

Based on Durability there are three types of consumer products; namely, Non-Durable Products, Durable Products, and Services. 

i. Durable Products

The goods that can be used for a long period of time are known as Durable Products. For example, sewing machines, washing machines, refrigerators, air conditioners, etc. The durable goods include higher profit margins for the producer and needs greater personal selling efforts and various after-sales service by the organisation. 

ii. Non-durable Products

The goods that can be consumed for a short period of time (one or few uses only) are known as Non-durable Products. For example, soap, shampoo, toothpaste, biscuits, etc. These products need heavy advertising and have less profit margin. 

iii. Services

The activities, satisfaction, or benefits offered by an organisation for sale are known as Services. For example, services offered by a CA, teacher, doctor, etc.  Services are intangible in nature, which means that we cannot see, touch, or feel them. They are also inseparable from their source and cannot be stored because of their perishability. Another feature of services is that they are highly variable because the quality and experience gained by a consumer vary with the person providing them. 

b. On the Basis of Shopping Efforts

Based on Shopping Efforts there are three types of products; namely, Convenience Products, Shopping Products, and Speciality Products. 

i. Convenience Products

The products which are purchased immediately, frequently, and with the least effort and time are known as Convenience Products. Convenience goods require minimum shopping effort. For example, newspapers, salt, matchbox, medicines, etc. 

Some of the features of Convenience Products are as follows:

• Convenience goods are purchased in small numbers. 

• Generally, they are of low price.

• These products are usually purchased at convenient locations with the least time and effort. 

• The price of convenient products is standardised, as they are branded products. 

• As these are essential products, they have regular and continuous demand. 

• Different sales promotion schemes, such as discounts, contests, cashback, etc., also help in the marketing of convenience products. 

• However, convenience products face stiff competition; therefore, need heavy advertisement. 

ii. Shopping Products

The products in which consumers devote considerable effort and time in shopping are known as Shopping Products. For these products, the buyer first compares the price, style, quality, etc., of different brands at different stores before making the final decision of purchase. For example, shoes, clothes, mobile phones, jewellery, etc. 

Some of the features of Shopping Products are as follows:

• Shopping products are usually durable. 

• The unit price as well the profit margin of the shopping products are high. 

• Consumers usually plan in advance to purchase these products. 

• Before making the final decision of the purchase, the consumers first compare products of different companies and at different stores. 

• The retailers help the manufacturer in the sale of shopping products, as they play a crucial role in persuading the consumers in buying the product. 

iii. Speciality Products

The products with some special features for which the consumers make special efforts, while purchasing them are known as Speciality Products. Demand for speciality products is relatively inelastic. It means that even though the price of speciality products rises, their demand does not reduce. For example, antique paintings, exotic perfumes, expensive watches, branded sneakers, etc. 

Some of the features of Speciality Products are as follows

• Speciality products are usually expensive and are available at a few selected places. 

• Because of their high cost, only a few people purchase these products which make their demand limited. 

• An organisation need to perform aggressive promotion activities for these products. 

• The job of the marketer of speciality products does not end with the sales. They have to provide after-sales services to the consumers also. 

2. Industrial Products

The products used by the organisations as inputs for the production of other products are known as Industrial Products. For example, lubricants, tools, equipment, machines, etc.

Features of Industrial Products

1. Number of Buyers

The number of buyers of industrial products is limited as compared to the buyers of consumer products. For example, buyers of wheat are less as compared to flour. 

2. Channels Level

The channel of distribution for industrial products is usually shorter, as the number of buyers is limited for these products. 

3. Geographic Concentration

As industries are usually located in specific regions, the demand for industrial products is concentrated in one geographical location. 

4. Derived Demand

The demand for industrial products is derived from the demand for consumer products. For example, industries will have a demand for fur, if people demand fur jackets or other products. 

5. Reciprocal Purchasing

A common case of industrial product purchasers, in which one organisation buys from another company, on one condition that the latter will buy from the former is known as Reciprocal Purchasing. For example, a shoe company purchases leather from a leather company, only if it buys the manufactured shoes from the shoe company. 

6. Role of Technical Considerations

Industrial Products are complex in nature; therefore, they require higher technical considerations in their purchase. 

7. Leasing Out

As the cost of industrial products is high, organisations usually lease out these products instead of purchasing them. For example, a road construction company may hire or lease out a road-roller instead of purchasing it. 

Classification of Industrial Products

Industrial Products can be classified into three categories; namely, Materials and Parts, Capital Items, and Supplies and Business Services.

a. Materials and Parts

The goods which enter the products of a manufacturer completely are known as Materials and Parts. These goods are of two types; namely, Raw Material and Manufactured Material and Parts. 

• Raw Material: It consists of farm products such as sugarcane, cotton, etc. 

• Manufactured Material and Parts: It consists of component materials such as iron, glass, etc., and other components parts, such as batteries, tyres, etc. 

b. Capital Items

The fixed assets which are used by an organisation for the production of finished goods are known as Capital Items. For example, fax machines, laptops, etc.

c. Supplies and Business Services

The goods and services which are used by organisations to facilitate the development and management of the finished products are known as Supplies and Business Services. For example, maintenance items such as paint, nails, etc., and operating supplies, such as writing paper, lubricants, etc.