Product (business)

MyWikiBiz, Author Your Legacy — Tuesday July 23, 2024
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In marketing, a product is anything that can be offered to a market that might satisfy a want or need. It is of two types: Tangible (physical) and Intangible (non-physical). Since services have been at the forefront of all modern marketing strategies, some intangibility has become essential part of marketing offers. It is therefore the complete bundle of benefits or satisfactions that buyers perceive they will obtain if they purchase the product. It is the sum of all physical, psychological, symbolic, and service attributes, not just the physical merchandise. All products offered in a market can be placed between Tangible (Pure Product) and Intangible (Pure Service) spectrum.

A product is similar to goods. In accounting, goods are physical objects that are available in the marketplace. This differentiates them from a service, which is a non-material product. The term goods is used primarily by those that wish to abstract from the details of a given product. As such it is useful in accounting and economic models. The term product is used primarily by those that wish to examine the details and richness of a specific market offering. As such it is useful to marketers, managers, and quality control specialists.

A service is a non-material or intangible product - such as professional consultancy, waitressing, or an entertainment experience.

Three aspects

There are three aspects to any product or service:

  1. Core Benefit
    • In-use benefits
    • Psychological benefits (e.g., self-image enhancement, hope, status, self worth)
    • Problem reduction benefits (e.g., safety, convenience)
  2. Tangible Product or Service
    • Product attributes and features
    • benefits and usability of market
  3. Intangible Product or Service
    • ...

Classifying products

Product management involves developing strategies and tactics that will increase product demand (referred to as primary demand) over the product's life cycle. One useful technique in understanding a product is the Aspinwall Classification System. It classifies and rates products based on five variables:

  1. Replacement rate (how frequently is the product repurchased?)
  2. Gross margin (how much profit is obtained from each product?)
  3. Buyer goal adjustment (how flexible are the buyers' purchasing habits with regard to this product?)
  4. Duration of product satisfaction (how long will the product produce benefits for the user?)
  5. Duration of buyer search behaviour (how long will they shop for the product?)

Types of products

There are several types of products:

  • Specialty goods: extensive comparisons with other goods and a lengthy information search. Specialty goods are generally items that would fall into another category, but the seller of these goods has chosen a specific niche market and is extremely narrowly focused. An example would be a cigarette and tobacco shop, or a shop that only sold items with owl pictures on, or a shop that only sells books and magazines.
  • Unsought goods: e.g., cemetery plots, insurance. These are products that we need but which we do not actively seek out to buy. They usually require a hard sell approach by the seller. Example "what will happen to your family if you die and do not have life insurance?". The fear of leaving the family destitute makes us buy almost against our will, even though we know that it is the intelligent thing to do. Certain legal services such as drawing up a will, will also fall into this category.
  • Perishable goods: goods that will deteriorate quickly even without use
  • Durable goods: goods that survive multiple use occasions, often further subdivided into `white goods'

(refrigerators and cookers, for example) and `brown goods' (such as furniture, as well as electrical/electronic devices)[[1]]

  • Non-durable/consumption/consumable goods: goods that are used up in one occasion
  • Capital goods: installations, equipment, and buildings
  • Parts and materials: goods that go into a finished product
  • Supplies and services: goods that facilitate production
  • Commodities: undifferentiated goods (e.g., wheat, gold, sugar)
  • By-products: a product that results from the manufacture of another product