Types of Products

Consumer Products

A consumer product is any tangible product for sale that is used by a person or household for non-business purposes.

Learning Objectives

Describe the characteristics of consumer products

Key Takeaways

Key Points

  • Consumer products are defined on a case-by-case basis, under guidelines defined by the US CPSA.
  • The production and sale of consumer products is an important component of US GDP and employment.
  • The Consumer Product Safety Act, enacted in 1972, established the United States Consumer Product Safety Commission (CPSC) as an independent agency of the United States Federal Government and defined its basic authority.

Key Terms

  • Consumer Product Safety Act: Act enacted by US Congress in 1972, establishing the Consumer Product Safety Commission as an independent agency of the US Federal Government.
  • durability: Permanence by virtue of the power to resist stress or force.
  • consumer product: Any tangible product used for personal, family, and household non-business purposes.

A consumer product is generally any tangible product for sale that is used for personal, family, household or non-business purposes. To determine whether an item is a consumer product requires a factual finding, on a case-by-case basis. This will vary from one jurisdiction to another.

As an example, The United States Consumer Product Safety Act (CPSA), enacted in 1972 by Congress, has an extensive definition of consumer product: “any article, or component part thereof, produced or distributed (i) for sale to a consumer for use in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, or (ii) for the personal use, consumption or enjoyment of a consumer in or around a permanent or temporary household or residence, a school, in recreation, or otherwise; but such term does not include— (A) any article which is not customarily produced or distributed for sale to, or use or consumption by, or enjoyment of, a consumer”. It then goes on to list eight additional specific exclusions and some further miscellaneous details.

The act also established the United States Consumer Product Safety Commission (CPSC) as an independent agency of the US Federal Government and defined its basic authority. The act gives the CPSC the power to develop safety standards and pursue recalls for products that present unreasonable or substantial risks of injury or death to consumers. It also allows the CPSC to ban a product if there is no feasible alternative.

The CPSC has jurisdiction over more than 15,000 different products; however, the CPSA excludes from the CPSC’s jurisdiction those products that expressly lie in another federal agency’s jurisdiction, for example food, drugs, cosmetics, medical devices, tobacco products, firearms and ammunition, motor vehicles, pesticides, aircraft, and boats. These products may fall under the purview of agencies such as the US Food and Drug Administration, the US Bureau of Alcohol, Tobacco, Firearms and Explosives, the US Department of Agriculture, the US Department of Transportation, the US Environment Protection Agency, the US Federal Aviation Administration, and the US Coast Guard.

Another type of consumer products can be classified as products you don’t need, like candy, luxury goods, and toys. Following WWI, America went into a recession after manufacturing many war products and having to pay off all of its debts to factories and the common people. Under the Coolidge presidency, America started manufacturing consumer products to create more jobs and get people to start spending so the government could raise money.

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iPod Classic: The iPod Classic is an example of a consumer product.

Thus, while consumer products may be seen as those not essential to life, they are nonetheless a large and crucial component of the US economy. The production and sale of consumer goods is an important sector of US GDP and creating employment.

Consumer products will generally be less expensive than professional-grade goods, but will lack the durability of the latter product class, and will reach obsolescence quicker.

Shopping Products

Convenience goods are those that require little effort on the part of the buyer, while shopping goods require research and comparison.

Learning Objectives

Discuss the characteristics of shopping products as a specific type of product

Key Takeaways

Key Points

  • Since little planning or effort goes into buying convenience goods, markets need to establish a high level of brand awareness and recognition.
  • Since shopping goods are highly researched, and product information is evaluated by buyers, a retailer ‘s ability to differentiate themselves becomes important.
  • With shopping goods, retailers attempt to provide strong promotions to sway the buyer. They also expect strong support from manufacturers.

Key Terms

  • shopping good: goods that consumers will want to be able to compare and contrast with others before they make a purchasing decision.
  • convenience good: a good that requires a minimum amount of effort on the part of the consumer.

Classification of Consumer Goods: Convenience, Shopping and Specialty goods

A classification long used in marketing separates products targeted at consumers into three groups: convenience, shopping, and specialty. In this section, we will differentiate between convenience and shopping goods. Specialty goods will be discussed in the next section.

A convenience good is one that requires a minimum amount of effort on the part of the consumer. Extensive distribution is the primary marketing strategy. The product must be available in every conceivable outlet and must be easily accessible in these outlets. Vending machines typically dispense convenience goods. These products are usually of low unit value, are highly standardized, and are frequently nationally advertised. Yet, the key is to convince resellers, i.e. wholesalers and retailers, to carry the product. If the product is not available when, where, and in a form desirable by the consumer, the convenience product will fail.

From the consumer’s perspective, little time, planning, or effort go into buying convenience goods. Consequently, marketers must establish a high level of brand awareness and recognition. This is accomplished through extensive mass advertising, sales promotion devices such as coupons and point-of-purchase displays, and effective packaging. The fact that many of our product purchases are often on impulse is evidence that these strategies work.

Availability is also important. Consumers expect a wide spectrum of products to be conveniently located at their local supermarkets, ranging from packaged goods used daily, such as bread and soft drinks, to products purchased rarely or in an emergency such as snow shovels, carpet cleaners, and flowers.

In contrast, shopping goods are items that consumers want to be able to compare and contrast with others before they make a purchasing decision. Automobiles, appliances, furniture, and homes are in this group. Shoppers are willing to go to some lengths to compare quality by setting an criteria to judge the product’s specifications, usage, price, and value. Shopping goods do not necessarily have to be distributed widely. Although many shopping goods are nationally advertised, often it is the ability of the retailer to differentiate itself that creates the sale. The differentiation could be equated with a strong brand name, such as Sears Roebuck or Marshall Field, effective merchandising, aggressive personal selling, or the availability of credit.

Discounting, or promotional price-cutting, is a characteristic of many shopping goods because of retailers’ desire to provide attractive shopping values. In the end, product turnover is slower, and retailers have a great deal of their capital tied-up in inventory. This, combined with the necessity to price discount and provide exceptional service means that retailers expect strong support from manufacturers with shopping goods.

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Buying a Car: Most buyers invest a lot of time and effort into choosing the right car for them.

An example of a shopping good is a car. Many buyers conduct extensive research into buying a car. Examples of questions that the buyer will ask themselves include: do I want to buy a new or a used car? What is my maximum budget? Do I want an SUV or not? What brand has the best safety features? Which car is fastest? Which has the most storage space? Which has the best service? Which car looks best? There is an entire industry built around helping buyers decide what car is best for them.

Specialty Products

Specialty goods are those considered unique by the buyer, who will go to great lengths to get them.

Learning Objectives

Illustrate the characteristics and consumer motivation connected to specialty products

Key Takeaways

Key Points

  • Price is almost never a determining factor in choosing between specialty goods. Consumers instead choose specialty goods primarily based on quality, style, scarcity, or personal preference.
  • Sellers of specialty goods need not be conveniently located, because buyers will seek them out, even if it involves considerable effort.
  • Some goods may be considered shopping goods by some buyers, and specialty goods by other buyers.

Key Terms

  • specialty good: Products that are considered so unique by the consumer that they will go to any length to seek out and purchase them.
  • specialty store: small retailers which offer a specific range of merchandise and related items

Speciality Products

Specialty goods represent the third product classification (after convenience and shopping goods). This classification system is based on the definition that convenience and speciality goods are both purchased with a predetermined pattern in mind.

In the case of the convenience good, the pattern is that the most accessible brand will be purchased. In the case of a speciality good, the pattern is that only a specific brand will be purchased. For example, if the customer utilizes an outlet because it is the most accessible, it would be considered, for that customer at least, a convenience store. If consumers shop at a store even if they have to go considerably out of their way to get there, it would be considered a speciality store that sells specialty goods.

From the perspective of consumers, specialty goods are so unique that they will go to great lengths to seek out and purchase them. Almost without exception, price is not a principle factor affecting the sales of specialty goods. Although these products may be custom-made (e.g. a hairpiece) or one-of-a-kind (e.g. a statue), it is also possible that the marketer has been very successful in differentiating the product in the mind of the consumer.

For instance, consumers who favor merchandise produced by a certain bag manufacturer will, if necessary, travel considerable distances to purchase that particular brand. Examples of speciality goods include designer clothes, high-end cars, exotic perfumes, famous paintings, fancy foods, hi-fi components, sporting equipment, photographic equipment, and men’s suits. Another example might be the strong attachment some people feel toward a particular hairstylist or barber. A person may wait a long time for that individual and might even move with that person to another hair salon.

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Louis Vuiton Flagship Store in Paris, France: People will travel miles to buy a Louis Vuiton bag even though there are plenty of options in their local department store.

In general, it is desirable for marketers to lift their product from the shopping to the specialty class and keep it there. With the exception of price-cutting, the entire range of marketing activities are required to accomplish this goal.

Pricing

Price is not usually the primary factor in consumer choice of speciality goods. Their prices are often higher than those of other articles serving the same basic need, but that lack their special characteristics.

Whether a good is a shopping or a speciality good depends on the consumer’s socioeconomic background. For a daily wage earner at a construction site, a pack of cigarettes might be a speciality good.

A product is a speciality good if customers know what brand they will purchase prior to feeling the need for it. Since a speciality good entails a high degree of customer loyalty, the shopping effort does not involve comparing one brand against another, but finding a store that carries the item in question.

Speciality goods have higher profit margins and higher prices relative to convenience or shopping goods. For the most part, manufacturers of speciality goods sell their products on the basis of product quality, reliability, and image, rather than on the basis of price.

Usually, the person who purchases an expensive speciality item is not as concerned about price as the average consumer. In markets for speciality goods, sellers do not encourage comparisons between options. Additionally, since buyers invest time to reach the stores carrying their desired product, the dealers do not necessarily need to be conveniently located.

Unsought Products

An unsought good is one that is not actively sought out by a consumer, but is instead purchased due to fear, precaution, need, etc.

Learning Objectives

Discuss the concept of unsought goods as a type of product

Key Takeaways

Key Points

  • As opposed to convenience, shopping, and luxury goods, consumers do not actively seek out unsought goods.
  • Marketers must actively and aggressively market such goods in order to arouse interest in them.
  • There are many examples of unsought goods becoming sought goods, either due to increased awareness of their positive aspects by consumers, or by marketers who have successfully changed the consumer psyche.

Key Terms

  • Unsought good: Goods that a consumer does not seek out, but purchases out of fear, precaution, or need.

Unsought Goods are goods that the consumer does not know about or does not normally think of buying. Purchases of unsought goods may arise due to danger or the fear of danger.

The classic examples of known but unsought goods are funeral services, encyclopedias, fire extinguishers, and reference books. In some cases, even airplanes and helicopters can be cited as examples of unsought goods.

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Fire extinguisher: This is a classic example of an unsought good.

The purchase of these goods may not be immediate and can be deferred. Hence, unsought goods require advertising and personal-selling support, and extensive marketing in other areas as well. Marketers have classified products on the basis of durability, tangibility, and use (consumer or industrial).

Converting Unsought Goods to Sought Goods

In the past, new products such as frozen food items were unsought—why buy frozen when you can buy fresh?—until they were advertised extensively in innovative ways. Once the consumer is well-educated about the product, the good goes on to become a sought good.

For example: A new smartphone with exclusive features is an unsought good until the consumer hears about it. Once the smartphone is widely known among customers, it becomes a sought good. A classic example here is the Apple iPhone. Consumers are unaware that they want it unless they are told about it. Another example to note would be life insurance. Even though it is a classic example of an unsought good, it is quickly growing into a sought good. With the conversion of life insurance from just insurance to an investment idea for your future, this good has shifted paradigms.

Sauerkraut, or cabbage prepared in a particular way, was common as food given to American solders during Word War I. However, due to concerns the American public would reject a product with a German name, American sauerkraut makers relabeled their product as “Liberty cabbage” for the duration of the war. This was to prevent the good from becoming an unsought good. A similar case was that of organ meats during World War II: the American public initially rejected hearts, livers, etc., which were required due to food shortages. However, marketers successfully changed the perception of such organ meats, so that they became desirable.

Business Products

Business products are sold to other businesses, as opposed to convenience, shopping, and specialty products, which are sold to consumers.

Learning Objectives

Distinguish between the different types of business products

Key Takeaways

Key Points

  • Business products are marketed differently than convenience, shopping and specialty products, due to their different nature as well as the different nature of the prospective buyers.
  • A useful way to divide business products is into farm products and manufactured products, as they are marketed differently.
  • There are different types of manufactured products, such as semi-manufactured products, parts, raw materials, and machinery.

Key Terms

  • business products: Products that are sold to other businesses as opposed to end consumers, and used to produce other products.

Business products represent a very important product category, and in the case of some manufacturers, they are the only product sold. These are goods that are sold to other businesses, and used to produce other goods. Industrial products can either be categorized from the perspective of the producer and how they shop for the product, or from the perspective of the manufacturer, how they are produced and how much they cost. The latter criterium offers a more insightful classification for industrial products.

Manufactured products are those that have undergone some processing. The demands for manufactured industrial goods are usually derived from the demands for ultimate consumer goods. There are a number of specific types of manufactured industrial goods. Semi-manufactured goods are raw materials that have received some processing but require some more before they are useful to the purchaser. Lumber and crude oil are examples of these types of products. Since these products tend to be standardized, there is a strong emphasis on price and vendor reliability.

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Business Product: Lumber is an example of a business product.

Parts are manufactured items that are ready to be incorporated into other products. For instance, the motors that go into lawn mowers and steering wheels on new cars are carefully assembled when they arrive at the manufacturing plant. Since products such as these are usually ordered well in advance and in large quantities, price and service are the two most important marketing considerations.

Process machinery (sometimes called “installations”) refers to major pieces of equipment used in the manufacture of other goods. This category would include boilers, lathes, blast furnaces, elevators, and conveyor systems. The marketing process incorporates the efforts of a professional sales force, supported by engineers, technicians, and personalized service.

Equipment is made up of portable factory equipment and office equipment (e.g., computers, copier machines). Although these products do not contribute directly to the physical product, they do aid in the production process. These products may be sold directly from the manufacturer to the user, or a middleman can be used in geographically dispersed markets. The marketing strategy employs a wide range of activities, including product quality and features, price, service vendor deals, and promotion.

Supplies and service are consumed in conjunction with making the product. Supplies include paper, pencils, fuel, oil, brooms, soap, etc. These products are normally purchased as convenience products with a minimum of effort and evaluation. Business services include maintenance, repairs, and advisory. Because the need for services tends to be unpredictable, they are often contracted for a relatively long period of time.