Classification Of Product

Amity Business School

Product, Classification of Products, Product Line and Product Mix


What is a Product?• A product is any tangible, intangible offering

that might satisfy the needs or aspirations of a consumer.

• A product has 3 basic levels Core Product: This answers WHY the

buyer should have it. It is also called as Generic Requirement.


“Purchasing agents do not buy drills, they actually buy its ability to make same size holes”

Theodre Levit

Amity Business SchoolCore Benefit

• The generic product concept has two key issues:

1.Its consumers view of what a given product represents.

2.The aspiration of consumer differ from place to place and time to time.

Eg. For someone Washing Machine would be: comfort in washing the cloths, some, tough wash, some complete dryer…

Amity Business SchoolTangible Specifications

• Tangibility is added to the core product in the form of features, style, color, design, efficiency etc.

Eg. The Color of the machine

The Electricity consumption

Detergent Consumption

Capacity

Quality ….

Amity Business SchoolAugmented Features

• This fulfill more of psychological or esteem needs.

Eg. Brand Name

Services provided

Warranty

Credit Terms

etc….

Amity Business SchoolClassification of Products

• The classification of the product depends upon the TANGIBILITY and DURABILITY found in an offering.

• Typical classification of Product: Service Durable Non Durable

Amity Business SchoolNon Durable Products

• Products that are consumed fast and are purchased on a regular basis. The consumer here spends minimum time and effort in comparing and buying the item.

• Consumer Products are further classified according to its use: Personal, Family and Household as Convenience, Shopping and Specialty.

Amity Business SchoolFMCG

• Fast Moving Consumer Goods are the Non Durable Goods. Eg. Sot Drinks, Chips, Ice Creams etc…. The consumer shows minimum effort in buying these articles.

• FMCG is further sub divided into 3 Classes…


• Staples

These are goods purchased on a regular basis. Eg. Soap, Pulses, Toothpaste etc…

Whenever the stock is about to end the consumer buys these products again.


• Impulse GoodsThese are the goods which are purchased without planning or search… Our external stimuli provokes us to buy these products. Eg. Cold drinks, Chocolates, Chips….Most of the time the consumers aim is not buying the product solely but when spots them, feels, attracted and ends up in buying them.


• Emergency GoodsThese goods are purchased when the need arises. Eg. Umbrellas in rainy season, Pullovers in winters etc..The marketers tries for a very good distribution chain, as the sales is not the same throughout and whenever the need arises, the product should be available at maximum places…

Amity Business SchoolCharacteristics of FMCGConsumers Point

• FMCG has a very low shelf life1. Frequent Purchases: Salt, Rice, Chocolates2. Low Involvement: The consumer will buy an alternative if the brand ask for is not available….

Exceptions to the rule: Products like Cigarettes, Personal Hygiene Products, Brand Loyalty.

Amity Business SchoolCharacteristics of FMCG Marketers Point

• High VolumesThe volume of the product required is very high.

Eg. An average family may require 3-4 Soaps a month… Imagine No. of family using it in the whole country???If the organization cannot ensure high sales volume, they will have difficulties in surviving.


• Low Margins

As the product is required in high volume, there is an intense competition which makes the marketer sell the product with very less margin.

They earn through high volume sales to maximize their turnover.

The Key Becomes High Volumes Low Margins.


• Extensive Distribution Networks Consumer preference in FMCG

products are not that rigid. Recall plays a very important role. Brand Loyalty is not very high. Consumer allows shopkeeper to decide

for him.Due to all this it becomes very important for the marketer to make its product available at maximum place possible.


• High Stock Turnover

It is a characteristic feature of FMCG. It is because these products are bought frequently or on a regular basis.

Which in turn allows the marketer to rotate the capital invested.

Amity Business SchoolProduct Mix

• It is the set of product lines and items that a particular company offers to buyers.

• The Width of product mix refers to how many different product lines a company carries.

Product Line: It is a group of products that is closely related because they perform a similar function, targeted at the same customer groups, marketed through same channel.


• Eg. Products line of P & G :DetergentsBathing SoapsShampoosDisposable Diapers etc.

If, Pantene comes in 4 variants in 3 different sizes, the depth of the product mix becomes 4 X 3 = 12. This can also be referred as Stock Keeping Units (SKU’s)


• Consistency of a product mix refers to how closely related the various product lines are to the end user.

• The Width, Depth and consistency of product mix enables the company to define the Product Portfolio.

Amity Business SchoolProduct Line

• Line Stretching Downward Stretch : It takes place when

the company finds a particular segment (Lower) which is un-attended by the existing product. And introduces a product to cater that lower segment.

Upward Stretch : It is when company a company enters Upper market through Line Extension.


• Line Filling : A product line can be extended by adding more items to the existing range.

Reasons: Reaching for more profits Trying to satisfy dealers who complain about lost

sales due to missing items in the line Trying to utilize excess capacity Trying to offer a full line of the production Trying to plug holes in the positioning map.


• Line Modernization : Modernization is carried out continuously as competitors are constantly growing and coming out with new products and ideas.

• In this process an Organization should not be too early, if so, It can harm the existing product or late so that competitors already have a hold in the market.


• Line Featuring

Its about featuring a particular product of the product line, so as to increase foot falls and then making the consumer exposed to other products too.

Amity Business SchoolGrowth Strategies for FMCG

• Multi-brand StrategyWhen a company nurtures number of brands in a single category.

Strategy: To capture as much market share as possible by trying to cater as much possible segments.

Eg. HUL Bathing Soaps: Names??????

P&G Shampoos?Names?????


• Product Flanking

Basically offering same product in different and price combinations to tap diverse market opportunities.


• Brand Extensions

This enables the company to enter new product categories more easily.

Eg. Lifebuoy: Lifebuoy Plus, Lifebuoy Liquid, Lifebuoy Gold.

Eg. Amul: Amul Butter, Amul Ghee, Amul cheese, Amul Milk, Amul Chocolates


• Building Product Lines

Companies add related new product line to the existing Line.

Eg. Britannia: It has all Baked food items which are increasing. Have also added milk products to its kitty.


• New Product Development

Its due to ever increasing Competition in the market


• Innovations in Core Product

The life of a FMCG product is short. The marketer continuously tries to introduce new products and a consumer is also open to try new products.


• Long Term Outlook

Eg. Kelloggs


• Extending the PLC

• Expanding Markets by Usage

a.Increase the Number of Customers

b.Encouraging more consumption.

• Wide distribution Network


• Advertising and Media Coverage

• Sales Promotion

Sales Pomotions offer a direct incentive to buy more in the short term.


Thank You

Classification Of Product

Business

product available

existing product

given product

product portfolio

product line line

consistency of product

width of product mix

different product lines