What is a Product?

A product is a 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. [1]
Law: A commercially distributed good that is (1) tangible personal property, (2) output or the result of a fabrication, manufacturing, or production process, and (3) passes through a distribution channel before being consumed or used.
Marketing: A good or service that most closely meets the requirements of a particular market and yields enough profit to justify its continued existence. As long as cars are manufactured, companies such as Michelin that produce tires fill the market need and continue to be profitable.

  • A product needs to be relevant: the users must have an immediate use for it. A product needs to be functionally able to do what it is supposed to and do it with good quality.
  • A product needs to be communicated: Users and potential users must know why they need to use it, what benefits they can derive from it, and what it does difference does to their lives. Advertising and 'brand building' best do this.
  • A product needs a name: a name that people remember and relate to. A product with a name becomes a brand. It helps it stand out from the clutter of products and names.
  • A product should be adaptable: with trends, time, and changes in segments, the product should lend itself to adaptation to make it more relevant and maintain its revenue stream.[2]

Products Can Be Defined Recursively[3]

  • A product can exist within another product. A pen, for example, may have replaceable ink cartridges. The pen is a product. But so are the ink cartridges within the pen.
  • There are even subproducts within a chair. The company manufacturing and selling the chair may have purchased fully milled legs from another company. Chair legs would then be a product.
  • Products can be defined recursively. A lumber company harvested trees to make wood—a product in its own right. Next, a milling company used that wood to make chair legs. Another company then took those pre-milled chair legs and used them to assemble chairs of their own design. So products can exist inside other products.

The Four Levels of the Product[4]

The four levels of a product include: core, tangible, augmented, and promised. Core, tangible, augmented and promised products feature characteristics (i.e., the total product concept or offer), which include everything a consumer evaluates before making a purchase. These factors can include:

  • Price
  • Store environment and/or surroundings
  • Brand promise/value
  • Advertising and marketing activities
  • Buyer’s past experience
  • Accessibility or convenience
  • Brand Reputation
  • Packaging

The Four Levels of the Product
source: Lumen Learning

  • We begin with the notion of core product which identifies what the consumers feel they are getting when they purchase the product. The core benefits derived when an overweight 45-year-old male purchases a $250 ten-speed bicycle is not transportation–it is the hope for better health and conditioning. In a similar vein, that same individual may install a $16,000 swimming pool in his backyard, not to obtain exercise, but to reflect the status he so desperately desires. Both are legitimate product cores. Because the core product is so individualized and oftentimes vague, a full-time task of the marketer is to accurately identify the core product for a particular target market.
  • Once the core product has been indicated, the tangible product becomes important. This tangibility is reflected primarily in its quality level, features, brand name, styling, and packaging. Literally, every product contains these components to a greater or lesser degree. Unless the product is one-of-a-kind (e.g. oil painting), the consumer will use at least some of these tangible characteristics to evaluate alternatives and make choices. In addition, the importance of each will vary across products, situations, and individuals. For example, for a 25-year-old man, the selection of a particular brand of new automobile (core product = transportation) was based on tangible elements such as styling and brand name (choice = Corvette). In contrast, at age 45, the core product remains the same, but tangible components such as quality level and features become more important (choice = Mercedes).
  • The next level is the augmented product. Every product is backed up by a host of supporting services. Buyer often expects such services, so they will reject the core-tangible product if these are not available. Examples include restrooms, escalators, and elevators in the case of a department store, and warranties and return policies in the case of a lawn mower. For example, Dow Chemical has earned a reputation as a company that will go the distance to service an account. It means that a Dow sales representative will visit a troubled farmer after-hours in order to solve a serious problem. This extra service is an integral part of the augmented product and a key to their success. In a world with many strong competitors and few unique products, the role of augmented products is clearly increasing.
  • The outer ring of the product is referred to as the promised product. Every product has an implied promise. An implied promise is a characteristic that is attached to the product over time. The car industry rates brands by their trade-in value. There is no definite promise that a Mercedes-Benz holds its value better than a BMW. There will always be exceptions. How many parents have installed a swimming pool based on the implied promise that their two teenagers will stay home more or that they will entertain friends more often?

Classification of Products[5]

Types of classification of products include convenience goods, shopping goods, specialty products, or unsought goods. Although these classifications are named as types of products, focusing on how your customers buy these goods is equally important as you classify products and develop your marketing campaigns.

  • Goods for Convenience: Those products your customers buy often and without much thought or planning are classified as convenience goods. Soap, condiments, and toothpaste are common examples of convenience goods. Consumers typically make a choice once on their brand preference for these products and repeat that choice over many purchases. Making convenience goods available for impulse or emergency purchases can be particularly effective. You will see this marketing tactic in the placement of candy near the cash register of your grocery store for impulse buys. Another version is to place umbrellas, boots, or snow shovels near a store exit when sudden weather changes call for them.
  • Shopping Goods: Buying decisions are detailed considerations of price, quality, and value for products classified as shopping goods. Think about the amount of time you put into picking out a clothing purchase, a car, or appliances. Compared to the other classifications of consumer products, shopping products are successfully marketed when they are presented as a better buy than your competitors — like presenting better value with higher quality for the price or vice versa. Products in the shopping goods classification tend to rely on heavy advertising and even trained salespeople to influence consumer choices.
  • Products Classified as Specialties: Goods in the specialty products classification tend to promote very strong brand identities, often resulting in strong brand loyalty among consumers. Examples include stereos, computers, cameras, and the most high-end brands of cars and clothing. While used cars are classified as shopping goods, a brand-new Mercedes is classified as a specialty good. Buyers of specialty goods generally spend more time seeking the product they want than comparing brands or products to make a value decision. Your marketing of specialty goods can be successful by promoting what you have on hand and where your customers can find it.
  • Goods Often Unsought" The products classified as unsought goods are those that your consumers do not put much thought into and generally do not have the compelling impulse to buy. Examples include batteries or life insurance. Your consumers essentially buy unsought goods when they have to, almost as an inconvenience — rather than the newest, latest, greatest product they can not wait to purchase. Marketing unsought goods will likely be most effective with lots of advertising and salespeople promoting the idea of the unresolved need for your unsought products.

Validity of the Product Classification Model[6]

There are certain issues or uncertainties within the product classification model that need to be taken into consideration. One problem is that certain goods can potentially fall under multiple categories. For example, certain customers may see diamonds as a shopping good and compare prices extensively between brands before making a purchase. Other consumers may have chosen one brand as the best (ie Tiffany & Co.) and they buy that brand for the quality and status it brings. Sometimes product classification can vary depending on the individual customer that is buying the good. Additionally, convenience goods and shopping goods can have some overlap. There are customers that may have bought Dove soap for their entire life but will switch to Ivory if they look on the shelf and notice that it’s cheaper. Sometimes the social responsibility of the company producing the good can play a factor in the consumer’s choice as well. If it gets out that one toothpaste maker mistreats their workers, there are a lot of people that would make a conscious decision to switch to a different brand. While there are certainly some concerns with the product classification model and some external factors to keep in mind, it remains a useful general tool to help in planning marketing strategy.

National and International Product Classifications[7]

Various classification systems for products have been developed for economic statistical purposes. The NAFTA signatories are working on a system that classifies products called NAPCS as a companion to North American Industry Classification System (NAICS). The European Union uses a "Classification of Products by Activity" among other product classifications. The United Nations also classifies products for international economic activity reporting.

The Aspinwall Classification System classifies and rates products based on five variables:

  • Replacement rate (How frequently is the product repurchased?)
  • Gross margin (How much profit is obtained from each product?)
  • Buyer goal adjustment (How flexible are the buyers' purchasing habits with regard to this product?)
  • Duration of product satisfaction (How long will the product produce benefits for the user?)
  • Duration of buyer search behavior (How long will consumers shop for the product?)

The National Institute of Governmental Purchasing (NIGP) developed a commodity and services classification system for use by state and local governments, the NIGP Code. The NIGP Code is used by 33 states within the United States as well as thousands of cities, counties, and political subdivisions. The NIGP Code is a hierarchical schema consisting of a 3-digit class, a 5-digit class-item, a 7-digit class-item-group, and an 11-digit class-item-group-detail. Applications of the NIGP Code include vendor registration, inventory item identification, contract item management, spend analysis, and strategic sourcing.

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