Marketers classify products and services to understand the different types of products and how consumers approach buying them. This system groups products based on shared characteristics and consumer behaviors. This categorization provides a framework for developing targeted marketing plans, as the way a product is classified influences everything from its price to its placement in a store.
The Fundamental Reason for Classification
The primary reason marketers classify goods is to develop a tailored marketing strategy. This strategy, the “marketing mix,” consists of four elements: Product, Price, Place, and Promotion. By understanding a product’s classification, a company can better predict consumer behavior. For example, a product bought out of habit requires a different approach than one that people spend weeks researching. This allows businesses to align their marketing efforts with consumer perceptions for each product type.
Common Classifications for Consumer Goods
Consumer goods are categorized into four main types based on consumer buying habits. These classifications are not based on the physical characteristics of the products themselves, but on how consumers approach purchasing them.
Convenience Goods
Convenience goods are items that consumers purchase frequently, immediately, and with minimal effort. These are often low-priced and not highly differentiated from competing brands. Examples include staple items like milk, bread, and laundry detergent, as well as impulse buys like candy or magazines placed near checkout counters.
Shopping Goods
Shopping goods are items that consumers are willing to spend considerable time and effort gathering information and making comparisons. These products are more expensive and purchased less frequently than convenience goods. Consumers will compare attributes like quality, price, and style. Examples include furniture, clothing, airline tickets, and electronics.
Specialty Goods
Specialty goods have unique characteristics or brand identification for which a group of buyers is willing to make a special purchase effort. These products are often high-priced, and buyers are very brand loyal. Examples include luxury cars, high-end cameras, designer clothing, and the services of medical specialists. Consumers who seek specialty goods know what they want and will go out of their way to acquire it.
Unsought Goods
Unsought goods are products that the consumer either does not know about or knows about but does not normally consider buying. These are items that people don’t think about until they have a specific need for them. Examples include life insurance, pre-planned funeral services, and home security systems. These products require aggressive advertising and personal selling to attract customers.
How Classification Dictates Marketing Strategy
A product’s classification directly influences the marketing mix, with each category calling for a different approach to pricing, distribution, and promotion.
For convenience goods, the marketing strategy focuses on making the product available in as many locations as possible. Pricing is competitive, and promotion is geared toward mass-market brand awareness through advertising and sales promotions. The goal is to make the brand a familiar and easy choice.
With shopping goods, the marketing strategy shifts to differentiation. Promotion focuses on highlighting the product’s unique features and benefits compared to competitors. Distribution is more selective, with the products available in fewer outlets than convenience goods. Pricing is a point of comparison, so companies must ensure their products offer good value.
Specialty goods require a marketing strategy that emphasizes exclusivity and prestige. Distribution is very limited, often to a single or a few retailers in a specific area. Promotion is highly targeted to a small, specific audience, and pricing is high to reflect the product’s unique value and quality.
For unsought goods, the marketing challenge is to create awareness and persuade consumers of their need for the product. Promotion is aggressive and may rely heavily on personal selling. The marketing focus is on convincing consumers to consider a product they would otherwise ignore.
Distinguishing and Classifying Services
Services are distinct from physical goods. They are intangible, meaning they cannot be touched or seen before purchase. They are also inseparable, as they are produced and consumed at the same time. Finally, services are perishable, meaning they cannot be stored for later use.
Because of these characteristics, services are classified differently than goods. One common method is to distinguish between people-based and equipment-based services. People-based services rely on the skills of the provider, such as a doctor, a hairstylist, or a consultant. Equipment-based services are delivered through machinery, like ATMs, vending machines, and automatic car washes. Services can also be classified by their ownership structure, such as for-profit versus non-profit organizations.
The Strategic Business Advantages of Classification
Product classification offers several advantages that go beyond crafting the marketing mix. It serves as a tool for strategic business planning, helping a company use its resources more effectively.
One advantage is improved resource allocation. By understanding how different products are purchased, a company can decide where to best invest its marketing budget to achieve the highest return.
Classification also aids in competitive analysis. It helps a business understand how to position its products against those of competitors that fall into the same category. This can reveal opportunities for differentiation and innovation. Finally, product classification is a tool for market segmentation, allowing a company to identify the most likely buyers for each type of product and tailor its messaging accordingly.