2 How products are defined and classified
In the first activity in this course you will learn about definitions and classifications of products. You will also be introduced to the different levels of a product, the product line and the product mix.
Activity 1 How products are defined and classified
Read, by Sally Dibb and Lyndon Simkin, and then answer the questions that follow.
Is a roll of carpet in a shop a consumer product or a business product? Defend your answer.
If the roll of carpet is purchased by a consumer to use in their home it will be classified as a consumer product. On the other hand, if the carpet is bought by a business (either to sell on to others, to be used in the manufacture of other goods, or for the business premises) then it is classified as a business product. In practice, large firms are unlikely to visit a carpet shop to purchase their floor coverings, but small businesses may well do so. In your answer you should point out that when a roll of carpet is first produced, it can be regarded as a business product. This is because the customers at this stage will be either very large end-users (businesses) or resellers, such as the carpet shop. Carpet manufacturers are unlikely to deal directly with consumers because of the quantities and order values they are interested in selling.
However, sales of various business products direct to consumers are not totally out of the question. For example, the Airbus A380 aircraft, which costs millions of dollars, is obviously being purchased by airlines, but at least two have been sold to very wealthy individuals for their own personal use. Conversely, a manufacturer of nursery school furniture agreed to sell individual items to a parent enquirer.
Would a music system that sells for £500 be a convenience product, shopping product or speciality product?
The best place to start with a question like this is to ascertain how these different terms are defined. Once you have located the relevant definitions for convenience, shopping and speciality products, the answer to the question should become clear. You need to think about the key characteristics of the consumer buying process for these types of products, and make a comparison with the buying process for the music system.
Convenience products are relatively cheap, bought frequently and rapidly consumed. Little attention is paid to their price or features, or to alternative offerings. They are typically associated with low levels of involvement from customers. Although customers may have a preferred brand, they will normally be prepared to choose an alternative if their usual brand is not available. Shopping products are bought less frequently. They are associated with higher levels of involvement on the part of customers, who generally engage in information search prior to purchase. Appliances and furniture are listed in Dibb and Simkin as shopping products.
Speciality products have one or more unique characteristic and are so important to customers that they are willing to make a special effort in order to find and buy the product that they are looking for.
The question here asks what type of consumer behaviour you would associate with a £500 music system. There are, of course, music systems that are available for a few hundred pounds and those which are sold for thousands. This price seems to fall towards the cheaper end of the scale, but this may depend on your perspective. For most people this would not be a convenience purchase, but neither would it be a speciality purchase. The latter category is likely to apply to a very high-end brand which makes use of handmade components. Therefore the music system would be classified as a shopping product.
Why is the augmented product increasingly important when determining a differential advantage?
This question refers to ‘The three levels of product’ on p. 251 of the Dibb and Simkin reading. The augmented product is defined as ‘[s]upport aspects of a product, including customer service, warranty, delivery and credit, personnel, installation and after-sales support’.
Product augmentation concerns additional aspects over and above the core benefit or service and the actual product (including branding, features and so on) being offered to customers. Augmenting the product is important when offering the core product alone may not be enough to fully satisfy customers’ needs.
For example, computer users need much more than just hardware and software components. They also expect that their machine will be fully functioning, and they will need access to online service and support in case it fails. Another issue to consider is that some products which are designed to address a core benefit may be generic to many manufacturers.
For example, most PC manufacturers use microchips made by Intel. Because the technology is the same, it is more difficult for these manufacturers to differentiate their offerings from each other. Using the augmented product is one solution. Thus some firms will offer customers the opportunity to have their machines set up by an engineer. This may be attractive to customers who are worried that installing a computer might be complicated or problematic.