A product is an object or system made available for consumer use; it is anything that can be offered to a market to satisfy the desire or need of a customer. In retailing, products are often referred to as merchandise, and in manufacturing, products are bought as raw materials and then sold as finished goods. A service is also regarded as a type of product. A product can be physical or virtual, or include both virtual and physical elements. Physical products include durable goods, such as cars, furniture, or computers, and nondurable goods, such as food or beverages. Virtual products include services or experiences, including education, software, and other digital products.
Different classes of products that can go into a single product.
A product can also be an input into another product. For example, cars use computer chips to control engine functions, dashboard panels, and related electric features. While the car itself is a product, so too are the various parts that have developed the product. Again, a mechanic who offers repair services sells a related product that a new car owner will want to take advantage of. Another example is the printer. While the product feels like the printer itself, the product has become the ink cartridges, which with consistent replacement have made companies more money than a single sale of a printer unit. This is especially the case as the price of printers has come down.
Classic view of a product lifecycle.
Products often have a lifecycle, which is the time a product can exist in the market before it needs to be replaced, re-invented, or reintroduced. Attempts are made to maintain a product's relevance, which refers to the immediate use a consumer will have for it. To help consumers understand this relevance, part of a product's lifecycle is the developer or company communicating to the potential user why they need a product, what benefits they can derive from a product, or what a product offers that its related products do not. The standard pattern of a product lifecycle consists of four stages: market development, growth, maturity, and decline. This concept is used by management and marketing professionals when deciding if it is appropriate to increase advertising, reduce prices, expand to new markets, or redesign packaging.
As part of this lifecycle, market development is defined as a new product is brought to market, and demand for it has to be proven. This initial stage typically sees low sales and involves heavy advertising or marketing to help make consumers aware of a product and its benefits. The growth stage occurs when a product is successful and has growing demand in the market, which requires an increase in production and expansion of its availability. Maturity of a product is the most profitable stage, when the costs of production and marketing decline. The final, decline stage occurs when a product experiences increased competition from other companies emulating the success of the product, and the original product beings to lose market share.
The original Apple MacBook Pro was released in 2006 and continues to be annually refreshed.
Many of the most successful products remain in the mature stage for a more extended period. In this stage, the product can undergo minor updates or redesigns to stay differentiated. Good examples of this are Apple computers, iPhones, Starbucks coffee, and Ford trucks. Each of these products experiences minor changes and refreshes accompanied by renewed marketing efforts to keep the products feeling unique and new for the consumers.
There are various types of products, with almost as many ways of categorizing them. Most methods of organizing products include the categories of consumer products, industrial products, services, and digital products. They can also be defined as tangible or intangible products. The definition of products as either consumer or industrial can capture both tangible or intangible products, and those tend to be the most common categories.
Both consumer and industrial products are defined by the people who are intended to purchase the products, and therefore for whom the products are marketed. In the case of consumer products, these are any convenience, shopping, specialty, or unsought products that are produced to satisfy the needs and wants of consumers.
Convenience goods are any products that consumers purchase repeatedly, and often without much thought. These are frequently goods that, once a consumer has chosen a brand, do not see much change in purchasing unless there is a reason for the consumer to switch. Such a reason is noted by advertising or sales that compels the consumer to try a new product over a preferred brand. Common examples of convenience goods include gum, toilet paper, soap, toothpaste, shampoo, milk, and other necessities.
Example of a convenience product with strong brand recognition
When trying to get a consumer to change their purchasing habits of convenience goods, sales or discounting are often not seen as the most efficient way to get customers to change, as many of these products are already priced low and cost will not be a major deciding factor. Often convenience, such as placing a product near a checkout or on a big display, will often induce change in consumer purchasing habits more reliably.
For convenience goods, a major key to a successful product will be brand recognition. This requires a company bringing a convenience good to market to use widespread marketing campaigns to create awareness of a company and recognition for that brand.
Example of a shopping good that has enjoyed a long maturity stage in the product lifecycle.
These are any goods or products that consumers will spend more time researching and comparing before purchasing. A shopping good can include any product in a range from affordable items, like clothes or home décor, to more expensive products, such as cars and houses. These products tend to be one-off purchases with a higher economic impact on the consumer. To market a shopping good, a company will have to develop content that persuades a buyer of the product's value. This can require marketing materials that demonstrate how the product differs from the competition and its unique values to consumers. Price is also important to this product category, and promotions or discounts can be very effective in attracting consumers in this category.
Shopping goods can be further broken down into two types: homogenous shopping goods and heterogenous shopping goods. Homogenous shopping goods are ones that consumers believe to be essentially the same in terms of quality, price, styling, and suitability for their needs. For example, a consumer may find all refrigerators the same or similar in quality, and price differences will be what the consumer uses for comparison.
Heterogenous shopping goods, on the other hand, are products in which the consumer perceives a discernible difference. This difference could be based on suitability, quality, price, or styling. Regardless of whether these differences are real or only imagined by the consumer, they are important enough to cause consumers to evaluate the trade-offs among them. Individual taste plays a large part in a consumer's purchase of heterogeneous products.
Example of high-price specialty goods.
A specialty good is thought of as a product that is in some way unique, be it features or characteristics, that are typically expensive and distributed in select areas while targeting a particular set of consumers. For example, specialty products could include designer clothes, sports cars, and other expensive items. Often consumers do not need to compare or deliberate as much on these purchases as they would with shopping products, and as such, the product should already be differentiated from competitors. These products are often improved upon and innovated constantly to reinforce the uniqueness of the product, while marketing efforts for these products aim to keep customers loyal to the brand.
Unsought goods are not typically exciting to buy, but are often purchased out of fear, to ensure safety, or for utility purposes and not bought often enough to be considered convenience goods. Examples of unsought goods are fire extinguishers, batteries, and life insurance. When marketing an unsought good, companies will focus on reminding the consumer of the existence of a product and work to convince the consumer that the purchase of that product will leave them with a better sense of security than if they did not have it.
Industrial products are purchased for further processing in a manufacturing or business process. The difference often stems from the usage for which it is bought. For example, if someone buys a computer for personal use, then it is a consumer product. If the same computer is bought for an accounting business, it is a business product. Industrial products are further classified into capital goods, raw materials, component parts, operating supplies, and services.
Capital goods are any goods used in the production of another product. Capital goods can consist of installations and accessory equipment, such as buildings, plants, and machinery. Installations as a product will be bought directly from a producer, while accessory equipment are those needed for the production of other products. Often accessory equipment is involved in the overall production or selling of a product. Accessory equipment can include anything such as tools, shelving, or seating.
Capital goods can include major equipment, which refers to any industrial product used to make, process, or sell other goods. They can include specialized machinery, computers, automobiles, or tractors, to name a few examples. These are usually expensive with a limited lifecycle.
Raw materials include any goods that are used in the process of making other products. This can include natural resources such as forest products, minerals, water, oceanic products, and agricultural products or livestock. Often raw materials lose their individual identities in the final product. These products are processed to become a part of the buyers' products. Generally, these materials are sold directly to industrial users, with an emphasis on selling on price and service rather than on branding or advertising.
Similar to raw materials, and sometimes classified as raw materials, component parts are often parts that have been processed and are sold to a manufacturer who uses the parts to assemble a finished product. Although these parts are often not visible, they are part of the assembly and cost of the final product. Examples of component parts could include the door handles or locking mechanisms of an automobile, with the automobile being the finished product, or it could be memory modules or the processor of a computer, with the computer being the finished product.
Operating supplies include products like office stationery, repair, and maintenance items. Supplies are often treated as convenience products of the industrial market, as they are often purchased with minimal effort, and often are low cost. These materials tend to be incidental to the production or selling functions and are usually quickly used up in the company's operations.
Services can include any business services such as maintenance or repair, factory premise cleaning, office equipment repair, and business consultancy services. These are often provided through contracts with small producers and manufacturers of the original equipment. Industrial services are purchased for use in producing a buyer's products, or for more general operations.
A service tends to be any intangible part of a product, generally defined as an action or effort to fulfill a demand or satisfy a customer's needs. Services are unable to be owned and are consumed at the point of sale—for example, visiting a doctor is a service that cannot be taken outside of the moment the service is rendered.
Digital products are created in a digital format that may or may not be for sale. Whether these are considered tangible or intangible products will depend in part on the digital product, and on who is viewing or consuming the digital product. Any digital product may include audio, video, ebook, desktop applications, mobile applications, downloadable templates graphics, fonts, and PSD files.
Tangible products are, to a degree, products that can be directly experienced, or they can be seen, touched, smelled, tasted, and tested. This experience can be done in advance of buying in the case of tangible products. For example, a car can be test driven and a perfume can be smelled, while industrial machines can be handled and pre-tested before purchase. Despite this tangibility, even these tangible products cannot be reliably tested or experienced, as different details can change the experience. As well, there are probably more tangible products that cannot be pre-tested, such as food items or detergents, which then rely on advertisements and labelling to provide reassurance.
Unlike tangible products, intangible products can seldom be pre-tested, inspected, or given a try before they are purchased. Instead, many of these products require surrogates to assess what the product is like. Intangible products can include travel, freight, insurance, repair, consulting, computer software, investment banking, brokerage, education, health care, and accounting. To market intangible products, sellers can offer glossy pictures while consumers can consult current or past users on whether to trust an intangible product, or which firm or service provider to trust.
