Product Characteristics and Classifications

Many people think a product is tangible, but technically a product is anything that can be offered to a market to satisfy
a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations,
information, and ideas.
PRODUCT LEVELS: THE CUSTOMER-VALUE HIERARCHY
In planning its market offering, the marketer needs to address five product levels Each level adds more customer value,
and together the five constitute a customer-value hierarchy.

1. The fundamental level is the core benefit: the service or benefit the customer is really buying. A hotel guest is
buying rest and sleep. The purchaser of a drill is buying holes. Marketers must see themselves as benefit providers.
2. At the second level, the marketer must turn the core benefit into a basic product. Thus a hotel room includes a
bed, bathroom, towels, desk, dresser, and closet.
3. At the third level, the marketer prepares an expected product, a set of attributes and conditions buyers normally
expect when they purchase this product. Hotel guests minimally expect a clean bed, fresh towels, working lamps, and a
relative degree of quiet.
4. At the fourth level, the marketer prepares an augmented product that exceeds customer expectations. In
developed countries, brand positioning and competition take place at this level. In developing and emerging markets such
as India and Brazil, however, competition takes place mostly at the expected product level.
5. At the fifth level stands the potential product, which encompasses all the possible augmentations and
transformations the product or offering might undergo in the future. Here companies search for new ways to satisfy
customers and distinguish their offering.
PRODUCT CLASSIFICATIONS
Marketers classify products on the basis of durability, tangibility, and use (consumer or industrial). Each type has an
appropriate marketing-mix strategy.

DURABILITY AND TANGIBILITY Products fall into three groups according to durability and tangibility:
1. Non durable goods are tangible goods normally consumed in one or a few uses, such as beer and shampoo. Because
these goods are purchased frequently, the appropriate strategy is to make them available in many locations, charge only a
small markup, and advertise heavily to induce trial and build preference.
2. Durable goods are tangible goods that normally survive many uses: refrigerators, machine tools, and clothing.
They normally require more personal selling and service, command a higher margin, and require more seller guarantees.
3. Services are intangible, inseparable, variable, and perishable products that normally require more quality
control,supplier credibility, and adaptability. Examples include haircuts, legal advice, and appliance repairs.
CONSUMER-GOODS CLASSIFICATION When we classify the vast array of consumer goods on the basis of
shopping habits, we distinguish among convenience, shopping, specialty,and unsought goods.
The consumer usually purchases convenience goods frequently, immediately, and with minimal effort. Examples
include soft drinks, soaps, and newspapers. Staples are convenience goods consumers purchase on a regular basis. A
buyer might routinely purchase Heinz ketchup,
Crest toothpaste, and Ritz crackers. Impulse goods are purchased without any planning or search effort, like candy
bars and magazines. Emergency goods are purchased when a need is urgent—
umbrellas during a rainstorm, boots and shovels during the first winter snow. Manufacturers of impulse and emergency
goods will place them where consumers are likely to experience an urge or compelling need to purchase.
Shopping goods are those the consumer characteristically compares on such bases as suitability, quality, price, and
style. Examples include furniture, clothing, and major appliances.
Homogeneous shopping goods are similar in quality but different enough in price to justify shopping comparisons.
Heterogeneous shopping goods differ in product features and services that may be more important than price. The
seller of heterogeneous shopping goods carries a wide assortment to satisfy individual tastes and trains salespeople to
inform and advise customers.
Specialty goods have unique characteristics or brand identification for which enough buyers are willing to make a
special purchasing effort. Examples include cars, audio-video components, and men’s suits. A Mercedes is a specialty
good because interested buyers will travel far to buy one. Specialty goods don’t require comparisons; buyers invest time
only to reach dealers carrying the wanted products. Dealers don’t need convenient locations, though they must let
prospective buyers know where to find them.
Unsought goods are those the consumer does not know about or normally think of buying, such as smoke detectors.
Other classic examples are life insurance, cemetery plots, and gravestones. Unsought goods require advertising and
personal-selling support.
INDUSTRIAL-GOODS CLASSIFICATION We classify industrial goods in terms of their relative cost and the
way they enter the production process: materials and parts, capital items, and supplies and business services.
Materials and parts are goods that enter the manufacturer’s product completely. They fall into two classes: raw
materials and manufactured materials and
parts. Raw materials in turn fall into two major groups: farm products (wheat, cotton, livestock,fruits, and vegetables)
and natural products (fish, lumber, crude petroleum, iron ore). Farm products are supplied by many producers, who
turn them over to marketing intermediaries, who provide assembly, grading, storage, transportation, and selling services.
The perishable and seasonal nature of farm products gives rise to special marketing practices, whereas their commodity
character results in relatively little advertising and promotional activity. At times, commodity groups will launch
campaigns to promote their product—potatoes, cheese, and beef. Some producers brand their products—Dole salads,
Mott’s apples, and Chiquita bananas. Natural products are limited in supply. They usually have great bulk and low unit
value and must be moved from producer to user. Fewer and larger producers often market them directly to industrial users.
Because users depend on these materials, long-term supply contracts are common. The homogeneity of natural materials
limits the amount of demand-creation activity. Price and reliable delivery are the major factors influencing the selection
of suppliers. Manufactured materials and parts fall into two categories: component materials (iron, yarn, cement,
wires) and component parts (small motors, tires, castings). Component materials are usually fabricated further—pig
iron is made into steel, and yarn is woven into cloth. The perishable and seasonal nature of farm products gives rise to
special marketing practices, whereas their commodity character results in relatively little advertising and promotional
activity. At times, commodity groups will launch campaigns to promote their product—potatoes, cheese, and beef. Some
producers brand their products—Dole salads, Mott’s apples, and Chiquita bananas. Natural products are limited in supply.
They usually have great bulk and low unit value and must be moved from producer to user. Fewer and larger producers
often market them directly to industrial users. Because users depend on these materials, long-term supply contracts are
common. The homogeneity of natural materials limits the amount of demand-creation activity. Price and reliable delivery
are the major factors influencing the selection of suppliers. Manufactured materials and parts fall into two
categories: component materials (iron, yarn, cement, wires) and component parts (small motors, tires, astings).
Component materials are usually fabricated further—pig iron is made into steel, and yarn is woven into cloth. The
standardized nature of component materials usually makes price and supplier reliability key purchase factors.
Component parts enter the finished product with no further change in form, as when small motors are put into
vacuum cleaners and tires are put on automobiles. Most manufactured materials and parts are sold directly to industrial
users. Price and service are major marketing considerations, with branding and dvertising less important.
Capital items are long-lasting goods that facilitate developing or managing the finished product. They fall into two
groups: installations and equipment. Installations consist of buildings (factories, offices) and heavy equipment
(generators, drill presses, mainframe computers, elevators). Installations are major purchases. They are usually bought
directly from the producer, whose sales force includes technical staff, and a long negotiation precedes the typical sale.
Producers must be willing to design to specification and to supply post sale services. Advertising is much less important
than personal selling. Equipment includes portable factory equipment and tools (hand tools, lift trucks) and office
equipment (desktop computers, desks). These types of equipment don’t become part of a finished product. They have a
shorter life than installations but a longer life than operating supplies. Although some equipment manufacturers sell direct,
more often they use intermediaries because the market is geographically dispersed, buyers are numerous, and orders are
small. Quality, features, price, and service are major considerations. The sales force tends to be more important than
advertising, though advertising can be used effectively.
Supplies and business services are short-term goods and services that facilitate developing or managing the
finished product. Supplies are of two kinds: maintenance and repair items (paint,nails, brooms) and operating
supplies (lubricants, coal, writing paper, pencils). Together, they go under the name of MRO goods. Supplies are the
equivalent of convenience goods; they are usually purchased with minimum effort on a straight-re buy basis. They are
normally marketed through intermediaries because of their low unit value and the great number and geographic dispersion
of customers. Price and service are important considerations because suppliers are standardized and brand preference is
often not [Link] services include maintenance and repair services (window cleaning, copier repair) and
business advisory services (legal, management consulting, advertising). Maintenance and repair services are
usually supplied under contract by small producers or from the manufacturers of the original equipment. Business
advisory services are usually purchased on the basis of the supplier’s reputation and staff. Differentiation To be branded,
products must be differentiated. At one extreme are products that allow little variation: chicken, aspirin, and steel. Yet
even here some differentiation is possible: Perdue chickens, Bayer aspirin, and India’s Tata Steel have carved out distinct
identities in their categories. Procter & Gamble makes Tide, Cheer, and Gain laundry detergents, each with a separate
brand identity. At the other extreme are products capable of high differentiation, such as automobiles, commercial
buildings, and furniture. Here the seller faces an abundance of differentiation possibilities. well-differentiated products
can create significant competitive advantages. Intuitive Surgical sells million-dollar robotic systems for operating rooms.
Watching a high-definition video feed from a camera inside the patient, surgeons use a joystick, pedals, and a robotic arm
with tiny scalpels and needles to perform minimally invasive cardiac and urological procedures. One analyst said of
Intuitive Surgical in 2010, "In our view, they’ve got a decade’s worth of technological lead. Means for differentiation
include form, features, performance quality, conformance quality, durability, reliability, repairability, and style. Design has
become an increasingly important differentiator, and we discuss it separately later in the chapter.
PRODUCT DIFFERENTIATION
FORM Many products can be differentiated in form—the size, shape, or physical structure of a product. Consider the
many possible forms of aspirin. Although essentially a commodity, it can be differentiated by dosage, size, shape, color,
coating, or action time.
FEATURES Most products can be offered with varying features that supplement their basic function. A company
can identify and select appropriate new features by surveying recent buyers and then calculating customer value
versus company cost for each potential feature. Marketers should consider how many people want each feature, how
long it would take to introduce it, and whether competitors could easily copy it.8To avoid "feature fatigue," the company
must prioritize features and tell consumers how to use and benefit from them. Marketers must also think in terms of
feature bundles or packages. Auto companies often manufacture cars at several "trim levels." This lowers manufacturing
and inventory costs. Each company must decide whether to offer feature customization at a higher
cost or a few standard packages at a lower cost.
PERFORMANCE QUALITY Most products occupy one of four performance levels: low, average, high, or superior.
Performance quality is the level at which the product’s primary characteristics operate. Quality is growing
increasingly important for differentiation as companies adopt a value model and provide higher quality for less money.
Firms should design a performance level appropriate to the target market and competition, however, not necessarily the
highest level possible. They must also manage performance quality through time. Continuously improving the product can
produce high returns and market share; failing to do so can have negative consequences.