Products may broadly be classified into two categories — (i) consumers’ products, and (ii) industrial products.
The consumer products may further detailed below:
Products, which are purchased by the ultimate consumers or users for satisfying their personal needs and desires are referred to as consumer products. For example, soap, edible oil, eatables, textiles, toothpaste, fans, etc. which we use for our personal and nonbusiness use are consumer goods. The consumer products have been classified on the basis of two important factors: (A) the extent of shopping efforts involved, and (B) durability of the product. These have been explained below:
A. Shopping Efforts Involved On the basis of the time and effort buyers are willing to spend in the purchase of a product, we can classify the consumer product into the following three categories as hereunder:
B. Durability of Products On the basis of their durability, the consumer products have been classified into three categories— Durable, Non-durable and Services.
Industrial products are those products, which are used as inputs in producing other products. The examples of such products are raw materials, engines, lubricants, machines, tools, etc. In other words, industrial products are meant for nonpersonal and business use for producing other products. The market for industrial products consists of manufacturers, transport agencies, banks and insurance companies, mining companies and public utilities. The important characteristics of industrial products are given below:
Classifications of Products in Marketing: Consumer and Industrial Products
Consumer products are the products purchased for ultimate consumption by the consumers for satisfying their needs. For example soaps, shoes, clothes, tooth pastes etc. They can further be divided on the basis of durability and shopping efforts involved.
The consumer goods can be classified into three parts on the basis of durability:
(a) Non Durable Products:
Non durable products are those consumer products which are consumed in one or few uses for example soap, toothpaste, shampoo, salt etc. These goods have a small profit margin, need heavy advertisement and should be easily available.
(b) Durable Products:
Durable products are the products with longer consumption period and uses. For example TV, refrigerator, coolers etc. These goods provide high profit margin, require greater personal selling efforts, after sales services etc.
Services are intangible in form and refer to those activities, benefits or satisfaction which are offered for sale. For example postal service, hair cutting, tailoring, transportation etc.
Consumer products can be categorized into following three parts on the basis of the time and efforts buyers are willing to spend for the purchase of a product:
(a) Convenience Products:
These products require minimum time and effort and are purchased frequently by the customers. For example bread, medicines, salt, sugar, jam etc.
(i) These products are easily available and require minimum time and effort.
ii) They are available at low prices.
(iii) These are essential goods; so their demand is regular and continuous.
(iv) They have standardized price.
(v) The supply of these goods is more than the demand; therefore competition for these products is very high.
vi) Sales promotion schemes such as discount, free offer, rebate etc. help in marketing of these products.
(b) Shopping Products:
These are the products that require considerable time and effort. For example clothes, jewellery, televisions etc. Before making final purchase, a consumer compares the quality, price, style etc. at several stores.
The products which are used as inputs to produce consumer products are known as industrial products. For example raw material, machinery, tools, lubricants etc. These products are used for non personal & business purposes. Manufacturers, transport agencies, banks & insurance companies, mining companies etc. are the main parties involved, in marketing of industrial products.
Following are the main features of Industrial products:
(i) Number of Buyers:
Industrial Products have limited number of buyers as compared to consumer goods.
(ii) Channel Levels:
Since the number of buyers is limited, the sales take place with the help of shorter channels of distribution.
(iii) Geographic Concentration:
The demand for industrial products is concentrated at certain fixed geographical locations.
(iv) Derived Demand:
The demand for industrial products depends upon the demand for consumer goods, therefore the demand for industrial products is known as derived demand. For example demand for cotton fibre increases when there is increased demand for cotton suits, bed sheets etc.
(v) Role of Technical Considerations:
Technical consideration plays an important role in the purchase of industrial goods because these products are purchased for use in business operations.
(vi) Reciprocal Buying:
A company may purchase some raw material from another company and also may sell its finished good to the same company. Such a practice is known as reciprocal buying. For example, Tata may buy tyres and tubes from Ceat which may in turn purchase Tata’s trucks.
(vii) Leasing Out:
The prices of the industrial products are very high; therefore the companies prefer to take them on lease instead of buying.