In this lesson, you will learn the difference between business and consumer products. We will also discuss the different ways they can be classified, which include the areas of convenience, shopping, specialty and unsought.
Did you know that a product is labeled according to the end user? A product can be a business product or a consumer product. If the end user of the product is the consumer, then the product is a consumer product. If the end user is a business, then it is categorized as a business product. For example, a stapler can be either, depending on who is using the product. A business product is used to manufacture other goods or services to resell, while a consumer product is purchased to satisfy individual wants or needs. We will only be discussing consumer products. Remember that a product includes all items, such as warranties, packaging, after-sales follow-up material, etc. Consumer products can also be further broken down into specific categories, such as convenience, shopping, specialty, and unsought.
A convenience product is a consumer product that takes little thought, is routine, purchased often, appeals to a large target market, and the consumer purchases with little planning. Our favorite Ninja decides that he is in need of a snack. He finds the closest convenience store and rushes in and picks up his favorite Ninja Energy Bar for one dollar. Other items that would fit a convenience product example would be if the Ninja purchases candy, soda, water, or a hairbrush. These types of products still have some brand loyalty to their consumers. After all, most consumers want a specific brand of soda or type of candy bar.
In order for these products to reach their target market, they have to have widespread availability. Convenience products usually are not associated with a large price so companies must sell a large volume in order to make a profit. Think of how many places you can buy a pack of gum – vending machines, drug stores, supermarkets, convenience stores, and warehouse clubs. Most of the time these products do not require much thought and are almost reflex reactions for the consumer to buy. Convenience products also do not require complicated information-based ads. Instead, the promotion is all about deals and reminding the consumer that the product is available.
A shopping product is a type of product that requires consumer research and comparison of brands. Homogeneous and heterogeneous are the two specific types of shopping products. Homogeneous products are perceived by consumers as very similar in nature and the final purchase is usually determined on the lowest price. If our farmer’s hay compactor needed replacement, he would look for the most affordable one. Other examples of this type of shopping product would be appliances, such as washers, dryers, or a fridge.
Heterogeneous products, however, are viewed very differently and consumers comparison shop, not just for the lowest price, but for the brand or image that works for them. Our farmer needs some new overalls and loves to look good for the other milking maids. He will shop for a specific brand of overalls that make him stand out in the hay field. Brands play an important role in heterogeneous products, as do the features, image, and quality of the product. In fact, shopping products usually have a social pressure to the purchase in a heterogeneous type of product, so consumers are willing to put the time in to receive a psychological benefit. Distribution does not need to be as wide as for convenience products because there is a smaller target market for the products.
Has there ever been a product where you would not accept any substitutes? Our Ninja will only use Ninja X Swords that are made from specific metal. This is an example of a specialty product. Specialty products are products where consumers are concerned with brand image and the quality of their purchases. Consumers really do not want substitutes and are brand loyal.
Although consumption rates of a specialty product can be similar to a shopping product, the price is usually higher and consumers are much more selective in their purchasing. The timing of the purchase might correspond to when they can actually get a fair price. For example, if all you want is a Harley-Davidson motorcycle, you’re not going to make any exceptions. Examples of specialty products would also be BMWs, Rolex watches, and Tiffany jewelry. Marketers promote these products to a small target market through limited distribution channels to add to the exclusiveness of the product.
This final consumer product deals with products that no one wants to even think about. Our Ninja does not want to think about getting life insurance in case one day he runs into trouble during a fight with a bad guy. This makes the job of the marketer even more difficult. How does a company effectively create a demand for products, such as life insurance or burial plots? Unsought products are products that the buyer does not actively seek out to purchase. Marketers must rely on aggressive sales techniques to reach consumers, such as direct mail, a sales force, or direct response advertising.
There are two different types of products: business and consumer. The difference in categorizing products is who the end user and the purpose will be for the product. Consumer products are defined as products that satisfy a consumer’s wants or needs. There are four types of consumer products, and they are convenience, shopping, specialty, and unsought. Convenience products are low cost, routine, low involvement, wide target market, and easily available. Shopping products are more expensive, require research, brand comparison, have a smaller target market, and more limited distribution. Specialty products have very limited distribution, a small target market, are more expensive and are status oriented. Lastly, unsought are products that the consumer really does not want to think about purchasing and require aggressive sales and marketing techniques.
After watching this lesson, you should be able to define consumer products and explain the four different categories of them.