Product Classes

Product classes are groupings of products into meaningfully different categories based on aspects of their marketing characteristics and/or characteristics of their purchasers. Products are normally classified as either consumer products (purchased by final household consumers for their own personal use and satisfaction) or organizational products (purchased by organizations for the production of other products and services). This distinction, for example, can make health insurance an organizational product (when it is purchased by the employer) and can make health care a consumer product (when it is purchased by the consumer). The marketing of the product “health insurance” is thus focused on benefits and features that are significant to the organizational purchaser, and the marketing of the product “health care” is focused on benefits and features that are significant to the final household consumer.

Consumer products are classified by how they are purchased (the amount and type of shopping effort), whereas organizational products are classified by how they are used in the production process. Consumer products are generally agreed to have four major categories. Convenience products are purchased with minimal shopping effort and include subcategories of staple, impulse, and emergency products. Shopping products are purchased with considerable shopping effort and include subcategories of homogeneous shopping products where the basis for shopping is price alone and heterogeneous shopping products where the basis for shopping is suitability (meaning that the purchaser endeavors to see, feel, try, or in some manner examine the product prior to purchase). Specialty products are purchased with the shopping effort having been expended in advance of purchase, because of brand insistence and inelastic demand for the particular item. Unsought products are divided into subcategories of regularly unsought products, purchased with reluctant shopping effort, because the purchaser does not wish to buy the product, and new unsought products, not purchased because the potential customer does not know about the product.

Organizational products are normally classified as being of six types, but they may be collapsed into three categories based on whether the product is used to make the product, to become the product, or to facilitate the production process. Installations and major equipment and items that are accessories and minor equipment are long-lived, depreciable assets used to manufacture the product. Raw materials along with finished and semifinished component parts and materials actually become the product. Business services such as accounting, legal, and personnel activities and supplies such as maintenance, repair, and operating supplies are necessary to facilitate the production process or the organization's purpose.

Some individuals believe that services generally (banking, travel, medical advice) should be classified and treated separately because some of their characteristics (intangibility, lack of being able to be stored in inventory, and inseparability from the service provider) make them differ in a material manner from tangible products. Other individuals acknowledge that although services have characteristics that make them different from tangible products, the difference is one without distinction in a marketing sense.