What are products in Business?
A product consists of all the tangible and intangible characteristics provided in an exchange between a seller and a buyer.
People buy a product for the benefits and satisfaction it gives. A product’s characteristics include not only its physical aspects but also its function, brand name, image, packaging, warranty, and price, as well as the provider’s reputation and customer service policy.
A product can be a good (an actual physical entity), a service, or an idea. Sometimes a product is a blend of all three. Diner at a fine restaurant, for example, consists not only of tangible items- food and beverages – but also preparation, service, and the appeal of dining in that special setting.
Because different product is designed for different target markets, they require various pricing, distribution, and promotion decisions. Marketers generally divide products into two broad categories: consumer and industrial products.
Products used by individuals for personal and family consumption are consumer products. Marketers classify consumer products according to consumers buying behavior.
- Convenience Products
- Shopping Products
- Specialty Products
- Industrial Products
Inexpensive goods and services that consumers buy often, without much thought or effort, are Convenience Products. Milk, bread, magazines, and soft drinks. So are the routine services offered by dry cleaners and automatic teller machines. People make such purchases or go to such service providers because of habit and closeness of the outlet; they’ve always bought that brand; the store is nearby.
Consumers will expend time, effort, and energy to find and obtain some goods and services. Buyer’s comparison shop for these; thus they are known as shopping products. Consumer gather information about different brands and styles, visit different stores, note prices, read advertisement and consumer guides, and consults family. This category includes goods such as TV sets, appliances, and furniture and services such as dental care, legal advice etc.
Goods and services that have specific attributes desired by a particular group of consumers are known as specialty products. Buyers go to considerable trouble to obtain a specialty product, no matter what the price or location, and will rarely accept a substitute. Specialty products can be expensive and unique, such as Adolfo designer dress.
Products used by organizations in producing goods and services or in carrying out their operations are industrial products. Manufacturer, contractors, utilities, government agencies, wholesalers, retailers, hospital, and schools buy and use a great array of goods and services to carry out their operations and produce products of their own.
|Type of market|
|Degree of labor Intensiveness|
|Degree of customer contact|
|Low contact||Dry cleaning|
|Skill of the service provider|
|Goal of the service provider|
Marketers often find it useful to categorize service by degree of labor intensiveness. Service such as hair styling, education require a great amount of human labor while others, such as automatic car washes, rely heavily on machines and equipment.
Another way to classify services is by degree of customer contact. High contact services, such as real state agencies, involve frequent interactions with customers. The customer must be present for such services to be performed. Low contact service involves much less participant on the part of the customer.
A fourth way to classify services is by skill of the service provider. Some service require professionals, such as lawyers or accountants.
Finally, service can be classified by the goal of the service provider. Not all service organizations are profit oriented. University and Charities are few examples of nonprofit service organizations.
Often firms manufacture and sell goods or offer services that are similar in design, production, or use and are targeted to similar market segments. A group of related goods or services marketed by a firm is called a product line. So, product line is a group of related products that are considered a unit because of marketing, technical, or use similarities.
While many firms expand existing product lines by introducing new, similar items, others decide to add completely different product lines. The collection of items and services a firm offers for sale make up its product mix. Marketers refer to product mixes as narrow or wide, depending on how many product lines are carried. Product mix is the total group of products a firm offers for sale, or all of the firm’s product line.
The New Product Development Process:
New products are vital for a firm’s long term success. Products fail for many reasons, including lack of research, design problems, or poor timing in the product’s introduction. Firms cannot eliminate the risks inherent in introducing new products. But they can reduce risks through a well-planned, thorough product development process. They follow six step processes to develop new products.
Generating ideas: The road to a new product offering begins with finding ideas that fit with the organization’s goal and objective. Idea emerges from within the firm through engineers and researcher or from outside sources such as customers, competitors.
Screening Ideas: The main ideas born in the initial step must be screened to select the ones the firm will pursue. An idea may not match a firm’s objectives. Others may require resources and knowledge that the firm does not have and cannot easily obtain. Such ideas will be rejected, while others are evaluated further.
Business Analysis: The firm estimates the market potential of the product; what are expected costs, sales, and profits? If management believes the product will make enough profit to justify the costs, the idea will advance to the product development phase.
Product Development: Here firms develop a working model of the product. In this way, they can examine the feasibility of making and offering the product on a large scale.