Products can be of different types. We would like to categorise them on the basis of user, on the basis of consumer behaviour (effort made) and on the basis of accompanying service.
1. On the basis of type of user:
The products may be consumer products and industrial products. Consumer products are used by the ultimate users, but industrial products are used by intermediate users.
Industrial Products may also be known as Business Products. Business products may be subdivided into seven classes – Installations (a boiler or power generation machine for a hydro-electric power plant); Accessory equipment (hand tools for a motor garage); Raw materials (Fortis Escort buying wheat flour, rice, milk, fish, vegetables, etc for the patients’ kitchen); component parts (used in assembling of automobiles – Tata Motors buys spark plug, tires, brakes, clutch plates, switches, etc for its automobiles); Process Materials (not readily identifiable – like vinegar or salad oil used for dressing of salad); Maintenance, Repair, and Operating items (only facilitate, not part of finished product – cotton, old dhotties, oil, Greece, paints, pen, paper, etc); and Business Services (financial, outsourcing, marketing, legal, marketing research, logistics – Blur Dart, First Flight provide overnight delivery of documents).
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2. On the Basis of Visibility (Washing Soap V. Printing Press):
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Products may be tangible or intangible and thus can be classified as goods and services. Consumer product may be goods or services. Though ‘marketing is marketing’, whether we market goods or services. But the two differ as well.
3. On the basis of Durability (Washing machine versus shampoo):
On the basis of how long a product lasts consumer products can be classified as Consumer Durable Goods and Fast Moving Consumer Goods (FMCG). Consumer durable goods, also known as white goods, are the ones which function for a longer time, usually require more personal selling; and consumers take longer time to decide to purchase durable products, have greater concern for their suitability and therefore, require greater after-sale-service.
Examples include refrigerators, washing machine, dish washer, water purifier, simple or steam press, micro-wave oven, Mixer-cum-grinder, juicer, cameras, cars, photocopiers and computers. FMCG goods are the ones which are fastly consumed. FMCG goods include toilet soap, washing soap, washing powder, face cream, shampoos, body lotions, conditioners, hair colour solutions, cleaning powder, cleaning liquid, dairy products, bread, petrol, engine oil, etc.
4. On the basis of Shopping Habits:
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It was Melvin T. Copeland in 1924, who classified the consumer goods in three categories, viz., Convenience, Shopping, and Speciality Products. Of late, one more category has been added, i.e., unsought goods. Please note that the distinction is more in the minds of buyers and the involvement with the product. Toothpaste is a convenience good when a buyer mindlessly buys it; is a shopping product when the buyer sees a new offering and considers it worth trial; and a speciality good, if he sees an expensive brand which promises whiter teeth.
Convenience Products:
These products are less expensive, purchased on a regular basis with minimum of comparison and efforts or thought and bought from convenient locations. For purchase of salt, if the grocer in your street does not have Tata Salt, you don’t mind buying Saboo salt. Thus, one brand can be substituted with another of its type.
The examples of convenience goods include Bread, milk, soft drinks, toffees, tea leaves, ball-point pen, shoelaces, Pan masala, Gutka, etc. Convenience items like chocolate bar, toffees, etc are available in chemist shop, panwala shop, bakery shop, grocery store of your street.
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On the part of marketer he must make available the product in every possible place, through all types of channels. Thus distribution is the major marketing mix factor. Extensive advertising is to be used. And within the store it must be visible. Location of store is very important for convenience goods visibility.
Shopping Products:
These are the goods when the customers are purchasing produces after comparison with available offerings in terms of quality, price and warranty, with latest features. These products are normally priced higher than the shopping goods; these products belong to shopping products. Decisions are based on thought, efforts and involvement.
Such products do not belong to the category of impulsive purchase, last for long and are not purchased frequently and involve monetary and social risks. These products include stereo, camera, furniture, shoes, personal computer, washing machine, microwave oven, etc. Brand loyalty may be found but the buyers are not very loyal to a particular brand.
Shopping products can be of two types – homogeneous shopping products (objective being to procure quality product at the lowest price – like undergarments, etc.) and heterogeneous shopping products (have identifiable differences, buyers are willing to search for styles, quality and brand names; fashion affects purchases; and family and friends appreciate such purchases – examples of such goods include clothing, shoes, furniture, crockery, table cover, cutlery, etc). For heterogeneous goods, distribution strategy of selective distribution is adopted.
Since these products are not purchased every day, the marketer has to offer higher gross margin to sellers. Such products are not placed upfront in the retail store. The buyer has to go inside to see the variety. Nowadays the hyper stores have both the convenience goods and shopping goods in one store.
On the part of marketer he goes on for selective distribution because consumers will seek products in less visible locations. Quality is important and product differentiation is possible.
Speciality Goods:
When the customers have decided in advance by spending considerable time for extensive search what brand to buy or from which store to buy, the goods belong to speciality products. At the time of purchase no comparisons are made. Examples include, jewellery (say Gitanjali brand), an expensive car (say Ferrari or Mercedes or Audi), Armani suit, Tag Heuer wrist watch, Gucci’s wallet for women, Wedding Lahnga-choli, Mont Blanc pen, etc. Such items are purchased only on some important occasion.
Speciality services include financial advice, legal counselling, cosmetic surgery, etc. Speciality products are sold through exclusive distribution points. For a long time Marks & Spencer had only one store in Ansal Plaza in South Delhi. Since such products are not purchased as frequently as convenience goods, the manufacturer has to offer a higher gross margin to the retailer.
Substitutes are not accepted. Such goods are purchased infrequently and brand loyalty may be strong. To buy such products consumers may travel great distances to acquire such products. Loyalty to retailer may be as important as brand selection.
Unsought Products:
Unsought goods are those goods which are unknown to the consumer now, or, if known, customer does not initially want. The products required for solving a sudden problem come under the category of unsought goods. But one has to buy when the problem arises and at that moment price and other features are less material.
Sometimes emergency goods are put into another category. But we would like to include them in unsought goods category, as they are also unplanned. Emergency medical services, buying a hose pipe for the car (which has broken on way to Jaipur from Delhi), encyclopaedia, insurance policy, a toy on the crossing where your child has started crying, etc. However, relatively few products fall into unsought category.
5. On the Basis of Drucker’s Prescription:
Peter F. Drucker has classified goods as (i) Today’s breadwinners, (ii) Tomorrow’s breadwinners (showing promise), (iii) Specialties have limited and distinctive market share), (iv) Products under development, (v) Failures, (vi) Yesterday’s breadwinners, ‘ (vii) Repair jobs (in need of major overhauling), (viii) Unnecessary and Unjustified specialties, and (ix) Sleeping Beauties (whose time has not yet come).
6. On the Basis of Maslow’s Hierarchy:
Physiological Products (Limited in India): Health foods, Herbal medicine, medicines, low- cholesterol foods, and excise equipment. Campbell’s soup – “Soup is good food.”
Safety Products:
Smoke detectors, preventive medicines, insurance, social security, retirement investments, seat belts, burglar alarms, and safes.
Social Products:
Personal grooming, foods, entertainment, and clothing. Atari (Brings the computer age home), Oil of Olay-“when was the last time you and your husband met for lunch.”
Esteem Products:
Clothing, furniture, liquor, hobbies, and cars. St Pauli Girl -“People who know the difference in fine things know the difference between imported beer and St Pauli Girl.”
Self Actualisation Products:
Education, hobbies, sports, vacations, gourmet foods, and museums. US Home “make the rest of your life the best of your life.