Production Management

Classification of Products and Its Importance

The imam and characteristics of the product affect to a large extent the marketing programme of the firm. Hence, the marketing executives should know their product very well. The products are broadly divided into two categories : Consumer goods and industrial goods. Consumer goods are again sub-divided into convenience goods, shopping goods and specialty goods.

Consumer Goods

“Consumer goods are the very products destined for the use by ultimate consumers or households and in such form that they can be used without commercial processing,” such as houses, automobiles, furniture, appliances, cigarettes, ice creams, shoes, and toys. However, many consumer goods may also be sold as industrial or government goods, depending on whether the final user will be a household, an industrial firm or a government agency.

Types of Consumer Goods:

Consumer goods are of three types : (1) Convenience Goods,(2) Shopping Goods, (3) Specialty Goods.

(1) Convenience Goods- Convenience goods are those “which the the mini customer usually purchases frequently, immediately, and with minimum of effort in comparison to buying,” such as cigarettes, newspapers, candy and many food products.

(2) Shopping Goods— Shopping goods are those “which the customer in the process of selection and purchase characteristically compares on such bases as suitability, quality, price and style,” such as furniture, shoes, major appliances and ready-made garments with unique characteristics.

(3) Specialty Goods—Specially goods are those characteristics and/or brand specification for which a significant group of buyers are habitually willing to make a special purchase efforts”, such as specific brands of fancy goods, cameras, men’s suits and new automobiles. The consumer goods industry is the most useful model for the exposition of marketing theory and is the richest in marketing experience.

Marketers have more freedom than any other industry to manipulate the five basic marketing tools—pricing, product determination and mix, distribution, promotion and marketing research. Marketing management dominates more firms and commands a greater portion of available resources. Product variation is more common in the consumer goods field than in other areas. The number of products and brands is the greatest here, as is the morality rate.

This phenomenon is caused by two factors:

(a) The consumer does not define his preferences until after he is confronted with the product. If it is well received, the manufacturers know they have made a correct production decision. If the consumer rejects the item, they know that their decision was wrong, but the information comes too late to prevent a loss by the firm. This is a major reason for the emergence of marketing research.

(b) The case of entry in many consumer-product lines, particularly where there is a mass market, attracts many marginal and usually short-lived producers, large numbers of whom base their hopes for success on a single product or product variation that they will attract a substantial number of buyers. The majority of these ventures end in disaster.

Industrial Goods

Industrial goods are goods which are destined to be sold primarily for producing other goods or rendering services as contrasted with goods destined to be sold primarily to the ultimate consumer. Raw materials, machine tools, fertilizers, computers, maintenance supplies, and semi-finished products are broad examples of industrial products. Some goods have common features of being consumer goods as well as industrial goods, such as tyres. Tyres when sold to motor vehicle company are by our classification, industrial goads but when sold to an owner of a private car become consumer goods.

Price is an important competitive instrument in the industrial goods sector specially where product characteristics are clearly specified by the buyer. Product variation is important in segments of industrial goods industries where technology is rapidly changing. Distribution channels vary in industrial goods industries, although the actual networks are generally simpler than in the consumer goods or service industries.

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