Product classification helps businesses understand how different products are purchased and used by consumers. It allows marketers to develop better strategies based on consumer behavior and buying patterns.
Before exploring the types, it is important to understand what product classification actually means.
What is Product Classification?
Product classification is the process of dividing products into different categories based on consumer buying behavior.
Each product can be purchased either by industrial consumers or final consumers. Final consumers buy products for personal use and consumption.
Business-to-business products, on the other hand, are purchased by individuals or organizations for use in production or administrative operations. Industrial products are usually used as inputs, such as raw materials or small items like paper clips that are later transformed into finished goods.
Types of Product Classification
1. Consumer Products
Consumer products are purchased by final consumers for personal use. These products are classified based on how consumers buy them and the level of effort involved in the purchasing process.
Consumer products are divided into four main types.
1.1 Convenience Products
Convenience products are those that consumers purchase frequently, immediately, and with minimal effort or comparison.
These products are usually low-priced and widely available so that consumers can easily access them whenever needed. Examples include newspapers, soap, candy, and fast food.
1.2 Shopping Products
Shopping products are purchased less frequently, and consumers spend more time comparing them based on price, quality, style, and suitability.
Consumers invest more effort in gathering information before making a purchase decision. Examples include appliances, clothing, furniture, used cars, and hotel or motel services.
These products are usually distributed through fewer outlets and often require personal selling support to assist customers in making comparisons.
1.3 Specialty Products
Specialty products are those that have unique characteristics or strong brand identification. Consumers are willing to make a special effort to purchase them.
Examples include luxury cars, high-end cameras, designer clothing, and specialized professional services such as legal or medical services.
Consumers do not usually compare specialty products with alternatives. Instead, they are willing to invest time and effort to obtain the specific product they want.
1.4 Unsought Products
Unsought products are products that consumers either do not know about or do not normally consider buying.
Many new innovations fall into this category until consumers become aware of them through advertising. Examples include life insurance and blood donation services.
Because of their nature, unsought products require strong advertising, promotion, and personal selling efforts.
2. Industrial Products
Industrial products are those purchased for use in business operations or for further processing.
The key difference between consumer and industrial products lies in the purpose of purchase. For example, a lawn mower is a consumer product when bought for personal use, but it becomes an industrial product when purchased for business use.
Industrial products are divided into three main categories.
2.1 Materials and Parts
This category includes raw materials and manufactured materials or parts.
Raw materials may come from natural or agricultural sources, while manufactured materials include component parts used in production. These are usually purchased directly by industrial users.
In this category, price and service are the main marketing factors, while advertising and branding play a smaller role. Demand for these products is derived from the demand for consumer products.
2.2 Capital Items
Capital items are products that support production and operations. These include installations such as buildings and heavy equipment, as well as accessory equipment like office tools and portable machinery.
These items have a longer life span and are essential for business operations.
2.3 Supplies and Services
This category includes operating supplies and maintenance or repair items used in daily operations.
These products are often purchased with minimal effort, similar to convenience products in the consumer market.
It also includes business services such as maintenance, repair, and consulting services, which are often provided through contracts.
3. Organizations, Persons, Ideas, and Places
In recent years, the concept of products has expanded to include other marketable entities such as organizations, people, ideas, and places.
Organizations engage in marketing activities to build and maintain a positive image among their target audience. This is known as organizational marketing and is practiced by both profit and non-profit organizations.
People can also be marketed. Person marketing involves activities aimed at influencing public attitudes and behavior toward specific individuals, such as celebrities or public figures.
Similarly, ideas and places can also be marketed to influence public perception and behavior.
Conclusion
Product classification is essential for understanding how different products are bought and used. It helps businesses design effective marketing strategies based on consumer behavior and product usage.
By categorizing products into consumer products, industrial products, and other marketable entities, organizations can better position their offerings and meet the needs of their target audience.
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