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PatrickE. Murphy& Ben M.


Products Classifying


This article proposes an integrated product classification scheme. It is argued that, in view of the 1985 definition of marketing, one classification for all products-goods, sufficient. This services, and ideas-is classification adds "preference" products to the conventional convenience, shopping, and specialty categories. These categories are defined in terms of the effort and risk dimensions of price-as perceived by both organizational and ultimate consumers.

THE new official

AMA definition of marketing is:

is the processof planningand executing Marketing the conception,pricing,promotion,and distribution of ideas, goods, andservicesto createexchangesthat individual andorganizational ("AMA satisfy objectives
Board" 1985).

There are four major differences between this definition and the previous AMA definition developed in 1960. First, this definition stresses, via planning and executing, the strategic nature of marketing. Second, it identifies products as goods, services, and ideas. Third, the definition takes a broadened view (Kotler and Levy 1969), i.e., by not limiting marketing to business activities. Fourth, it recognizes the central role of exchanges that provide satisfaction for both parties (Bagozzi 1974, 1975, 1978; Kotler 1972a). Marketing, therefore, involves exchanges of products (for payment) that result in mutual satisfaction of the differing objectives of the seller and buyer. Mar-

of of Marketing, Professor E.Murphy is anAssociate Patrick University of Southof Marketing, is Professor BenM.Enis Dame. Notre University Michael Mark G.Dunn, like to thank would Theauthors ernCalifornia. B. Kent P. Mokwa, Michael GeneR.Laczniak, L.Frazier, J. Etzel, Gary on comments fortheir JMreviewers andanonymous helpful Monroe, of thisarticle. drafts earlier

keting strategy, then, is the set of organizational activities that (1) determines the benefits which will satisfy the consumer in a given situation and (2) offers the product which provides those benefits. The exchange must be mutually beneficial: benefits expected must be equal to or greater than the price paid by the consumer, and vice versa for the marketer. Products can be seen as a bundle of benefits and costs-two sides of the same exchange transaction. The purpose of this article is to present the marketing discipline with a unified product taxonomy. That is, the article contains an argument for a single classification which covers services and ideas in addition to tangible goods. Based on the new definition of marketing, this taxonomy offers strategic guidelines for managers and researchers by relating products to prices paid by consumers. Price is expanded here to include nonmonetary as well as monetary elements (Berry 1979; Guiltinan 1976; Jacoby, Szybillo, and Bering 1976; Peter and Tarpey 1975). The article is organized into four parts. First, the classification is outlined. Then the rationale for the classification is explained via a literature review and synthesis in the two areas that constitute an exchange: product taxonomies and price dimensions. We conclude with managerial and academic research implications.

24 / Journal of Marketing, July1986

Journal of Marketing Vol. 50 (July 1986), 24-42.

The Proposed Product Classification

Following Levitt (1975, 1980) and Kotler (1984), any productis perceivedby the buyer to be a combination or bundle of utilities-qualities, processes, and/or capabilities (goods, services, and ideas) that is ex(Enis and Roering 1980). pectedto providesatisfaction Forexample, Americansteel companiessell theircustomers rolled steel, advice on the properapplications for it, and the philosophy of "Buy American." Similarly, organizedreligions offer the idea of salvation, regularprayer services, and religious books and artifacts. The consumer assesses satisfaction in terms of benefits expected minus costs incurred. These costs should be conceptualizedon two independentdimensions-effort and risk. Effortis the amountof money, time, and energy the buyer is willing to expend to acquirea given product. It is an objective measureof the value the consumer places on the product. In the buyer's mind, this is an expectation of future value. Therefore,effort must be multipliedby the likelihood of buying error.There is risk, in other words, that the productwill not deliver the benefits sought. The subsequent detailed discussion recognizes five types of possible risk:financial, psychological, physical, functional, and social. This definitionof productbenefits and the two dimensions of price permit a four-categoryclassification of products. It is not necessary to have different classificationsfor goods, services, or ideas. From the buyer's perspective, it is benefits, not product features, that the individualor organizationdesires. For example, the need for a good night's sleep could be satisfiedby a sleeping pill (good), exercise class (service), or meditation (idea). Moreover, from a competitive standpoint,the marketerof a good, such as an automobile,may be trying to sell to the same consumeras is a services marketer,e.g., an auto leasing firm. In view of the new AMA definition of marketto develop one producttaxing, it seems appropriate onomy for all types of products (consumer and industrial,profit and nonprofit). Figure 1 illustratesour approach.Four categories of products-convenience, preference,shopping, and specialty-are defined in terms of the buyer's evaluationof price. In explainingthese products,two points shown in the figure should be stressed. First, increasing price permits the marketerto broaden the scope of marketingstrategy(shown by the widening arrow). That is, a wider variety of marketingmix combinations can be used to gain a differentialadvantagefor shoppingand specialty productsthan for convenience and preferenceones. For example, in marketingpreference products, the marketer is usually limited to

1 FIGURE A Strategic Classification of Products




Widening arrow indicates mix differentiating factors



of marketing

Shaded area indicates low buyer involvement with these types of products

branding,packaging, and promotionalchanges, while for the productshigher on the strategyarrow, channel and pricing modificationsmay be used of distribution in additionto productand promotionalterations.Second, the concept of high and low productinvolvement (Krugman 1965) is incorporatedinto this classification, depictedby the shaded area representinglow involvement.Rothschild (1975, 1979a)andAssael (1984) have shown that differentmarketingstrategiesare requiredfor low involvement products. Convenience Products As shown in Figure 1, convenience productsare defined as lowest in terms of both effort and risk. That is, the consumerwill not spend much money or time in purchasingthese products, nor does he/she perceive significant levels of risk in making a selection. They are commonly illustratedby commodities, "unsought" (emergency) items, and impulse products. Examples of consumer goods that fall into the convenience category include fresh produce and grocery staples, umbrellas, gum, and batteries. Supplies (Fern and Brown 1984) and raw materialswhich are commoditiescould be classified as convenience items for industrialbuyers. In fact, some firms like DuPont label their new chemicals as commodity products (Billon and Robinson 1970). Commoditiespurchased in bulk (e.g., a trainloadof chemicals) become shop-

Products / 25 Strategically Classifying

ping goods, however, and are often the subject of intense buyer/seller negotiation,particularly over price. Convenience services may encompass taxi or mass transitfor end consumers and garbage pickup for organizationalconsumers. Convenience ideas would be antilittercampaignsor police/security protection. Preference Products The second category shown in Figure 1 is termed preference products (Holbrook and Howard 1977). These products are slightly higher on the effort dimension and much higher on risk. In fact, the distinctionbetween convenience and preferenceproducts is primarilyone of buyer perceived risk. The reason that the consumer perceives this higher level of risk is often throughthe efforts of the marketer,particularly brandingand advertising.Some companies have been successful in convincing consumers that their brandsof low priced productsconvey greaterbenefits (e.g., Bayer aspirin)than competing ones. The most prominentexamples of preferenceproducts are in the consumerpackagegoods industry(e.g., beer, soft drinks, toothpaste, etc.). Consumers may "prefer"the taste and image of Diet Coke, based on advertising appealsor brandpreference.However, they are likely to substitute Diet Pepsi or perhaps a low calorie brandof iced tea or even beer if the monetary or time effort is too large. Industrial preference goods would be business magazines(some executivespreferBusiness Weekover brandsof typewriterribbonsor Fortune) or particular work gloves. Such things as television networks/programs, hair styling, and appliancerepairalso fall into this category, where consumers have preferences for

specific providers but are willing to make substitutions, if necessary. In the industrialfield, travel provides the best services examples of preference products: airlines, hotels, and rental cars are preference productsfor most buyers. Preferenceideas might be patronizingthe arts for consumers and the choice of a computerizeddata base used by business firms. More corporationsappearto be developing a conscious strategyof moving their productsinto the preference category. Clorox (bleach, Kingsfordcharcoal, and salad dressings) and Hyponex (lawn and garden care) corporationshave taken a numberof presumed convenienceproductsand differentiated them, thereby moving them into the preferencegroup. The following statementsreflect their strategy:
Take a relatively low priced commodity product and, by deft packaging and marketing, sell it at a premium price under well-advertised brand names ("Clorox" 1984, p. 113). We're changing from a commodity to a consumer packaged-goods company by stressing branding, packaging, distribution capability through inventory control and customer service ("Firm Adopts" 1985, p. 12).

Shopping Products Copeland's(1923) original conceptualization(see full description in Table 1) clearly explains shopping products. The name implies much about the characteristicsof these products.Buyers are willing to spend a significantamountof time and money in searching for and evaluatingthese products. Increasedlevels of risk are also perceived by consumers for these high involvementproducts. Examples of shopping goods are automobiles,

1 TABLE Products to Classifying Approaches

Authorand Year Goods Copeland1923 Classification Dimensions Generalizability Buyer or Benefit Seller Orientationa Useb Sector' Typed Bundle' Buyer C P G no

Conveniencegoods are those cus- Traveleffort, brandcomparison eftomarilypurchasedat easily acces- fort, degree of brand insistence sible stores; examples are canned soup, tobacco products,electric light bulbs, safety razorblades, . . .The unit price for most articles in this class is too small to justify the consumer's going far out of his the expense of a way or incurring streetcarfare in orderto procurea special brand (p. 282). Shopping goods are those for which the consumer desires to compare prices, quality,and style at the time of purchase.Usuallythe consumer wishes to make this comparisonin several stores. Typical shopping goods are gingham cloth, women's gloves, chinaware, and novelty articles (p. 283). Specialtygoods are those which attractionfor have some particular
shoe polish, . . . and toothpaste.

of Marketing, 26 / Journal July1986

1 (continued) TABLE Approachesto ClassifyingProducts

Author and Year Classification the consumer, other than price, which induces him to put forth special effort to visit the store in which they are sold and to make the purchase without shopping. . . . Examples of specialty goods are men's clothing, men's shoes, high grade furniture, vacuum cleaners, and phonographs (p. 284). Copeland 1924 Uses to which goods are put, Installations are major equipment of a plant. Accessory equipment is whether they become part of the finished product auxiliary or supplemental equipment of a plant. Operating supplies are materials that facilitate the operation of a plant. Fabricating materials and parts are manufactured products that are used for further manufacture by becoming parts of the final product. Primary materials are crude, new materials. Product-plus, brand-minus (instant coffee); product-minus, brand-plus (clothes); product-minus, brand-minus (soup) (reference group influence) Convenience, shopping Degree of social and brand conspicuousness Seller I P G no Dimensions Generalizability Buyer or Benefit Seller Orientation' Useb Sectorc Typed Bundle"

Bourne 1956



Holton 1958

Distinction between convenience & shopping, gain resulting from price and quality comparisons relative to searching costs of individual consumer Necessity of making special purchase effort due to limited market demand Article directed at Holton (1958) and specialty good argument, consumer is willing to make special purchase effort for special brand Replacement rate, gross margin, adjustment, time of consumption, searching time Degree of shopping effort, degree of prepurchase preference formation Allows detection of differences within product classifications Product characteristics: unit value; significance of each individual purchase to consumer; time and effort spent purchasing by consumer; rate of technological change; technical complexity; consumer need for services; frequency of purchase; extent of usage Two types of effort identified: physical and mental Locational convenience, merchandise suitability, value for price, sales effort and store service, congenialty of store, post-transaction satisfaction How they enter the production process, cost structure of the producers




Luck 1959

Convenience, shopping, specialty



Aspinwall 1961

Red goods, orange goods, yellow goods (continuous scale) Convenience, shopping, specialty (shopping-nonshopping) Number of retail outlets shopped, number of brands examined (shopping matrix) Group I-candy bars Group II-groceries Group Ill-TVs Group IV--cars Group V-electronic office equipment



Bucklin 1963



Dommermuth 1965 Miracle 1965





Kaish 1967 Mayer, Mason, and Gee 1971

Convenience, shopping, specialty Convenience store-convenience goods, convenience store-shopping goods, convenience store-specialty goods, shopping store-shopping goods, specialty store-specialty goods Goods entering product completely -raw materials-farm and natural products -manufactured materials and parts

Buyer Buyer




no no

Kotler 1972b




Products / 27 Strategically Classifying

1 (continued) TABLE
Author and Year Classification Goods entering the product partly -installations-buildings and land rights, and fixed equipment -accessory equipment-portable factory equipment and office equipment Goods not entering the product -supplies-operating and maintenance and repair supplies -business services-maintenance and repair and business advisory services (p. 141). Raymond and Assael 1974 Psychophysical Number of rewards product provides, our knowledge of how to deliver these rewards Buyer C P G no Dimensions Buyer or Generalizability Benefit Seller Orientationa Useb Sectorc Typed Bundlee

Distributive velocity, mental velocity Consumer: stimulus, intervening variables, response. Product: market, distributive Bucklin 1976 Convenience, specialty, shopping (low intensity), shopping (high intensity) Degree of brand similarity, degree of consumer uncertainty in making a choice Related to consumer's product awareness, comprehension, product importance, standard of taste Uniqueness of the good, whether it is part of finished product Product characteristics (magnitude of purchase and clarity of characteristics), consumer characteristics (ego involvement and specific selfconfidence), consumer responses (physical shopping and mental effort) Product is "total bundle of benefits" as seen by the buyer, marketer's strategy matches marketing mix decisions to buyer's perception of desired benefits People-things, tangibility Formal-informal, continuous-discrete delivery High-low Wide-narrow fluctuations, constraints on supply Multiple-single site, interaction Tangibility, profit-nonprofit Tangibility, marketer characteristics, customer characteristics Buyer C P G no

Jolson and Proia (Searching behavior continuum)classification of a good subjectively 1976 tied to consumer's "comparative shopping" 1977 Proprietary and catalog items, cusShapiro tom-built items, custom-designed items, industrial services Holbrook and Howard 1977 Convenience, preference, shopping, specialty








Enis and Roering Convenience, preference, shopping, 1980 specialty




Services Lovelock 1983f

Nature of service act Customer relationships Customization and judgment Demand relative to supply Service delivery method



Ideas Fine 1981b Lovelock and Weinberg 1984

Tangible product, service, idea, issue (cause) Physical goods, services, social behaviors

Buyer Buyer



no no

aMeasures whether the product classification focuses on buyer needs (buyer orientation) or product characteristics (seller orientation). bThe use of the classification refers to whether consumer (C), industrial (I) or both (B) applications of the product are emphasized. CPertainsto whether the product is offered by profit (P) or nonprofit (N) organizations. dGoods (G), services (S) or ideas (I). eRecognizes that buyers purchase a bundle of benefits in the selection of a product. fFor a summary of previous services classification typologies, see Lovelock (1983, p.11).

clothing, and furniturefor end consumers, and equipment and componentsparts for industrialusers. Consumerservices thatcould be classified in the shopping category are insurance, medical and dental care, and

rental. Industrialshopping services include apartment the accountingaudit. Shoppingideas are educationfor individualsand conductingmarketingresearchstudies for industrialbuyers.

28 / Journal of Marketing, July1986

Specialty Products As the arrowheadin Figure 1 shows, marketingmanagerscan attemptto move their shoppingproductsinto the specialtycategory.This means that consumerswill no longer "shop"for alternativesbut accept only one brand.For example, Maytag, the Boston Celtics, and StanfordUniversity are organizations whose brands now seem to be specialty productsfor many buyers. Those productsthat are defined to be highest on both the risk and effort dimensions of Figure 1 are called specialty products. The major distinction between shoppingand specialty productsis on the basis of effort,not risk. The monetary priceis usuallyhigher, as is the time. Comments such as, [I would] "search high and low," "wait for weeks," and "not settle for anythingless" are good indicatorsof the time effort that distinguishesspecialty products. At the limit, the buyer will accept no substitutes. Examples of specialty goods include vintage importedwines, expensive sports cars, and paintingsby well-known artists. Specialty services for consumers mightbe those offered by the noted heartsurgeon, Dr. Peter De Vries, or the best trial attorneyin any community. A specialty idea would be to join a select donor club for a charity or museum. In the industrial productsector, installations(buildings)would be specialty productsbecause their location, cost, and furnishings require great organizationaleffort and risk. A consultantlike McKinsey Company would be an illustration of a specialtyservice for organizations, and the type of basic research supportedby the firm is a specialty idea. Reachingthe specialty productcategory is a major objective of many marketingmanagers. Therefore, it appearsat the end of the marketingstrategyarrow in Figure 1. This position is often difficult if not impossible to reach. Few specialty productsretain their status over time. Value of Proposed Classification The value of this refinement to the commonly acceptedclassificationof productsis its universalityand integration.It can account for goods, services, and ideas products. The industrialand consumer dichotomy that is sometimes overemphasizedin marketing (cf. Fern and Brown 1984) is also minimized using this typology. Further,nonprofitproductscan be classified, since marketingin this sector is not "uniquely different"from business firms (Lovelock and Weinberg 1984, p. 31). Most importantly,it anchorsmarketing strategyin the buyer's evaluation of the price of the exchange. The fact that this is a general classification of productsneeds to be recognized. Exceptions do exist. For instance, a millionairemay not perceive that certainproductsare specialtybecause of his/her financial

it is possible for a few products status. Furthermore, to become specialty ones even though they are not extremelyhigh in risk and effort. The strengthof the brandloyalty to Coca-Cola Classic is a recent illustrative case (Fisher 1985). However, marketing is predicatedon finding and filling the needs of significant segments of buyers and this classification is intended to achieve that goal. Subsequentsections of the articledevelop this taxonomy in detail. Earlierproductclassificationsare exthe value of one aminedand evaluatedto demonstrate synthesis. The dimensions of price are reviewed, and differences in the four categories of products along these dimensionsare explored in more depth. Finally, managerialand researchimplicationsare discussed.

Product Classification Approaches

Table I depicts the majorpast researchin classifying consumerand industrialproducts.Each of these classification systems is evaluated on the following criteria:(1) buyervs. sellerorientation; (2) generalizability across users (consumer-industrial),sectors (profitnonprofit),and types (goods, services, and ideas); and (3) the recognition that consumers purchase bundles of benefits when selecting products.These criteriaappear in the three right columns of the table. Classifying Goods Every treatmentof goods classifications must begin with Copeland's (1923) widely acclaimed article dividing goods into convenience, shopping, and specialty categories. The definitions for each are given in the table. Copeland(1924) also coined the standard classificationof industrialgoods. Bucklin (1963) clarified the original Copeland consumergoods conceptualizationby suggesting that the underlyingdimensions were shopping effort and preferenceformation.In an updegreeof prepurchase divided Bucklin date, (1976) shoppinggoods into low and high intensity categories. Kaish (1967) noted the distinction between physical (shopping) and mental (brandinsistence) effort. Holbrookand Howard (1977) made a major contributionto the study of goods classification by proposing a fourthcategory, preferencegoods, which is adoptedhere. They statedthatthese goods involve low but high brand effortand low ego involvement shopping
preference. Hence, they used the term preference to

describethis situationand gave TV dinnersand readyto-heat pies as examples. Holbrook and Howard argued that:
It appearsthat an increasingly large numberof conare falling into this categoryand sumernondurables effort is invested in that a great deal of advertising to move a good fromone side of this prefattempting erencedistinctionto another(p. 214).

Products / 29 Strategically Classifying

Classifying Services
The greatestadvancestowardclassifyingservices have been made by Lovelock (1979, 1980, 1983, 1984). His first articleproposedthe approachtakenhere, and by AMA, of categorizingproductsas physical goods, services,and social behaviors(ideas). He used a threedimensional framework to classify these offerings (Lovelock's alternativeto the termproduct) according to marketer(business, government, or nonprofit sector) or consumer (individual and household or organizational) characteristics.The 1980 article detailed 12 approaches to classifyingservicesdividedinto three groups-basic demand characteristics, service content and benefit, and service delivery procedures. Lovelock (1983) refined his 1980 conceptualizations and proposedclassifying services in five different ways (see Table 1). His stated purpose in developing this taxonomy was "helping managers in service businesses do a better job of developing and marketingtheir products"(p. 19). A final classification scheme (Lovelock 1984) dealt with understandof the services product, that is, ing the characteristics the extent to which equipment/facility-based vs. people-based attributesform the product. Since the bulk of other conceptual development in services marketing (Berry 1980; Shostack 1977; Zeithaml, Parasuraman,and Berry 1985) has been concentratedin the last several years, the services classificationliterature is not as well developed. However, considerablerecent energy has been expended in gaining a better understandingof classifying service products(Ahtola 1985; Gilly and Dean 1985; Silpakit and Fisk 1985). With one exception (Davis, Guiltinan,and Jones, 1979), the tendencyhas been to create new conceptualclasses for services. In fact, almost no work has attemptedto classify industrial services. The texts in the field lump all business services into one category (Haas 1986; Hill, Alexander, and Cross 1975; Hutt and Speh 1985). Kotler (1972b, see Table 1) did differentiateamong services but listed them under goods.

mote or advocate ideas and social causes" (p. 283), and customercharacteristics as earlier by the marketer proposedby Lovelock (1979). These social behaviors are recognizedas being difficult to define but a major growtharea for marketing.Marketingof ideas by industrial finns, such as those popularized by Mobil Oil's is being practicedbut is more likely to "advertorials," be discussedin an advertising (Heathand Nelson 1985; Sethi 1979) ratherthan a productcontext.

The goods, services, and ideas classification schema shown in Table 1 all meet some of the criteriaset out at the beginning of this section. For example, consumer goods classification approachesare buyer oriented and partially generalizable. However, they do not recognize the benefit bundle criterion. Industrial goods and Lovelock's services classificationsare seller orientedand also only somewhat generalizable. Past ideas classifications tended to concentrate primarily on nonprofitconsumers, while ideas are increasingly being marketedby both for-profitand nonprofitmarketers. The productclassificationsystem proposedhere is superiorto those above for four reasons. First, and perhapsmost important,it is buyer oriented. Second, it is generalizableacross all users, sectors, and product types. Third, the new classificationrecognizes the centralrole of the benefit/cost bundle. Finally, it has the advantageof using familiarterminology, building on the work of Copelandand of Holbrook and Howard. Products can be classified in many ways. The most useful classification for developing marketing strategyfocuses on benefits demandedby buyers. A key to the new taxonomy is explicit recognition that its categories are defined by the buyer's evaluain orderto consume tion of the price to be surrendered a given product. As the following section demonstrates, price is conceptualizedin two dimensions.

Dimensions of Price
The literature reviewed above on classifying products uses a numberof dimensions. Among the most prevalent is effort, usually interpretedas being shopping effort. Holbrook and Howard (1977) introducedthe of risk in theirclassificationtypology (Taimportance ble 1). In addition, Lovelock (1980) identified both time and risk as elements in his classification of services.

Classifying Ideas
Of the three types of products, ideas have received the least attention from a classification standpoint. Fine's book (1981b) is the only one devoted entirely of ideas. He proposeda "broadened" to the marketing of typology productsusing tangibility(good, service, idea, and issue or cause) and profit/nonprofitas the dimensions(pp. 28-29). In Fine's view, causes or issues are differentfrom and more intangiblethan ideas. For example, family planning is an idea, while populationcontrol is a cause. Lovelock and Weinberg (1984) classify social behaviors, "the end product of organizationsthat pro-

Table 2 shows the two dimensionsof price-effort and risk-divided by monetaryand nonmonetaryaspects. Recognition that price includes nonmonetary elements has come from a number of sources supKotlerand view of marketing. portingthe "broadened" Zaltman (1971) statedthat "Priceincludesmoney costs,

of Marketing, 30 / Journal July1986

opportunity costs, energy costs, and psychic costs" (p. 9). Shapiro (1973) also indicated that consumers of nonprofit products expend resources beyond cash. Furthermore, Fine (198 1a) used "social price"-made up of time, effort, psyche, and lifestyle-to describe exchange transactions. Effort is defined as the objective amount of money and time it takes to purchase a product. That is, effort can be measured in quantifiable terms-dollars and units of time. There is growing support for the view that time is a relevant price in purchasing commercial products (Berry 1979; Venkatesan and Anderson 1985; Voss and Blackwell 1979) and possibly most important for many nonprofit products (Rothschild 1979b). Risk is the buyer's subjective feeling about the monetary and nonmonetary price of the product; more precisely, risk is the buyer's subjective assessment of

the consequences of making a purchasing mistake. The various types of risk are defined in Table 2 and explained below. Perceived risk has been mentioned in the context of prices that end and industrial consumers pay (Bettman 1973; Guiltinan 1976; Lambert 1972). Monetary Effort A substantial amount of academic marketing research has been devoted to the study of pricing. Most of it has emphasized the cash or equivalent price (credit, countertrade, etc.) paid by consumers (Table 2). Topics examined in the pricing field include the pricequality relationship, reference pricing, contextual influences, and price consciousness. The general conclusion of the majority of such research is that perception of product quality is positively related to price (for reviews, see Monroe 1973;


TABLE 2 and Definitions of Price Dimensions Effort Financial cash credit countertrade Time travel shopping waiting performance Definitions Risk Financial personal organizational Consequences social psychological physical functional



Effort Financial price cash credit countertrade Travel timea Shopping timeb Waiting timec Performance timed Monitoring timed Risk Financial riske Psychological riske Physical riske Functional riske Social riske

Currency, checks, drafts, debit cards Credit cards, charge accounts, line of credit, accounts payable Barter, swap, or trade products The time it takes to physically get to the store (seller's location) The time it takes buyer to search for and evaluate a product The time it takes a buyer to get checked out of a store, waited on by a salesperson, waited on in a service firm, or to wait for ordered products The time it takes to use a product or carry out a certain action The time it takes to remember to carry out a certain action The risk that the product will not be worth the financial price The risk that a poor product choice will harm a consumer's ego The risk to the buyer's or others' safety in using products The risk that the product will not perform as expected The risk that a product choice may result in embarrassment before one's friends/family/ work group

"Cherlow (1981) (1979) bBerry 'Jacoby,Szybillo,and Berning(1976) (1972) eJacobyand Kaplan

dFox (1980)

Products / 31 Strategically Classifying

Monroeand Krishnan1984; Olson 1977) and thathigh quality and commensuratehigh prices is an excellent marketingstrategy (Hatten 1982; Peters and Austin 1985). Work by Reisz (1979, 1980) and Gerstner (1985), however, has called into question the strength of the price-qualityrelationshipfor inexpensive products. Reference pricing has been studied by Monroe (1973) andothers(Emery1970;JacobyandOlson 1977; Kamenand Toman 1970). This means that consumers have in memorysome price level thatserves as a point of referencefor any price cue. Monroeand Petroshius (1981) state that the referenceprice is not necessarily an exact price but a range of prices for similar products. Reference pricing has recently been applied to the pricing of professional services (Zeithaml 1982; Zeithamland Graham 1983). Contextual or situational influences also affect consumers' views of the price. Monroe (1977) examinedobjective and subjectivecontextualinfluences by applying the psychological concepts of adaptation level and assimilation contrast effects to pricing. Monroe, Della Bitta, and Downey (1977) empirically verified that intendeduse or purpose of the purchase affects how individualsevaluate prices. Zeithaml(1984) In a majorreview of the literature, concluded that the domain of price consciousness is not clearly specified. Whetherprice consciousness is an overall hypotheticalconstructor a single response

is unclear.The pragmaticfact is that marketersknow certainconsumersare more price conscious than others. Moreover, price conscious buyers appearto be a growing marketsegment, evidenced by the popularity of discount shopping malls and off-price chains. The other two subcategoriesof monetaryeffortcreditandcountertrade-havereceivedmuch less study by marketers.The use of credit by many U.S. consumershas been on the rise. The price a consumer is willing to pay is sometimes dictated more by credit or VISA) than income or a prod(e.g., MasterCard is also growing in uct's monetaryprice. Countertrade use as a tool in internationalmarketing. Companies are increasinglyswappingproductsratherthan money because of exchange rate problemsand lack of liquid assets (Dizard 1983; Kaikati 1982; Martinand Ricks 1985; Weigand 1977).

Nonmonetary Effort (Time)

Recognition of time as a price that consumers must pay for productshas recently received serious attention by scholars and practitioners.The quotes listed in Table 3(a) stress the importanceof time prices. Attempting to classify goods, some earlier researchers also mentionedtime as part of the "effort"expended by consumers(see Aspinwall 1961 and Miracle 1965 in Table 1). Time was identified over 20 years ago as a cost of consumption (Bender 1964; Downs 1961). Fur-

TABLE 3 Importance of Time and Risk Prices (a) Time Prices

Time is both an antecedent to and a consequence of purchase. Consumers not only spend time and money to acquire products and services but also often use time as a substitute for money and vice versa (Jacoby, Szybillo, and Berning 1976, p. 320). Consumption requires an expenditure of both money and time (Berry 1979, p. 65). Time, unlike money, vanishes automatically, involuntarily, constantly, sequentially, and irreversibly. It cannot be stockpiled and is generally pooled through precise and intricate timing, often requiring direct personal cooperation . . .one can never stop the clock, turn it back, or change its pace. Finally, an hour in the morning may have to be used completely differently from an hour in the afternoon (Felson 1979, pp. 40-41). Consumer behavior has been enriched in the 1970s by a significant conceptual advance. It is now recognized that consumers seek satisfactions through spending both money and time resources. Similarly, goods and services are seen as having time and money prices (Voss and Blackwell 1979, p. 297). (b) Risk Prices When it comes to the purchase of large ticket items, the perception of risk can become traumatic (Bauer 1960, p. 290). These findings suggest that perceived risk is a product-specific phenomenon, and that the content and composition of perceived risk can best be understood in terms of the specific product category involved (Cunningham 1967, p. 108). The products are ordered in terms of mean overall perceived risk value. The ranking tends to be consistent with what would be expected if the products were ordered simply by price alone .... It would seem that similar types of products have similar risk component hierarchies (Jacoby and Kaplan 1972, p. 384).

of Marketing, 32 / Journal July1986

thermore,Schary (1971) stated that the value of time could be ascertainedfrom a study of opportunity costs and that marketersshould recognize consumers' time limitations in product MorerecentlyBerry development. the "time-buying consumer" who lacks (1979)examined adequatediscretionarytime and, therefore, is interested in minimizingthe time spent in purchasingproducts. Blackwell and Talarzyk(1983) stated that there is a lifestyle of "time poverty" for two-income families. Thus, demandfor time-savingproductsis growing.

Time has been studiedfrom a numberof otherperspectives besides marketing-economics, sociology, home economics, psychology, and cultural anthropology (Becker 1965; Graham1981; Jacoby, Szybillo, and Bering 1976). Consumerresearchershave also expendedmuch energy in gaining a betterunderstanding of the time variablein recent years (Hawes 1979, 1980-relationship between time and consumer behavior/theories;Feldmanand Horik 1981-conceptual model of time use; Hendrix and his colleagues 1980, 1981, 1983, 1985-time use and expendithe statusof research tures). Settle (1980) summarized on time as being in the "interest"stage of the hierarchy of effects model. The types of time prices used to make up the nonmonetarypart of effort are listed in Table 2. There are five-travel, shopping,waiting, performance,and monitoring-that have been developed from the literature.Most of the past researchhas tended to view time as a single construct. It is defined here as multidimensionaland objectively measurable.As Gronau (1975) states, there is no unique value placed on time by all consumers:
The value of time varies amongindividualsaccording to theirincome, wage rate, age, education,and family composition.Even for the same individual, the valueof time may vary with the purposeand urgency of the trip, the time of day, and the season (P. 5).

This statement parallelsthe notion that consumersalso place different values on objectively measured monetary prices. Traveltime has been the subjectof much research in the transportation field. Cherlow (1981) examined possible methodsto estimatevalues of traveltime savings. Consumersdo make trade-offsbetween location of marketersand cost savings. Convenience of location is crucial for retailers and many services marketers.On the otherhand, discounthouses and catalog showrooms, because of their inconvenient locations, have appealedto consumerswilling to tradeoff travel time with monetaryprice savings. Shoppingtime tends to concentrateon the search and evaluation of alternativestages in the decisionmakingprocess(Engel, Blackwell, and Miniard1986).

Within the marketingliterature, Amdt and Gronmo (1977), Berry (1979), and Holmanand Wilson (1980) have specifically identified shopping time as having implications for consumers. Product rating sources, such as ConsumerReportsand consultationwith family and friends, are mechanismsused to reduce shopping time. Waiting time is defined in four ways (see Table 2). Three relate to on-premisespurchasing,while the last is relevantfor direct marketingand for industrial products.The general finding regardingwaiting time is that consumers usually overestimatethe time they will have to wait (Cottle 1976; Horik 1984). Offering consumersfast service (e.g., fast food chains) or expresscheck-in by airlinesis recognitionthatwaiting time is importantto large segments of consumers. The last two types of time in Table 2, performance and monitoring,were suggested by Fox (1980) as esto social marketers. Performance time peciallypertinent can be equatedto consumptiontime, which has been recognizedby other writers (Becker 1965; Crompton and Lamb 1986). Regarding monitoring time, individuals often "forget"to buy a product, such as makwith the dentistor physician.These ing an appointment time prices seem equally relevant for commercial marketers.For example, time-saving productsand reminderadvertisingdirectlyappealto performanceand monitoringtimes. Time as a dimension of price is also crucial for industrialand organizationalmarketers,even though it has rarely been mentioned by researchers (Sheth 1973). For example, travel time may inhibit dealing with certainsuppliers.Furthermore, shoppingtime may take many monthsfor certainindustrialproductsif the needed specifications cannot be met. The search for low cost suppliersto compete with Japaneseand other has requiredU.S. firms to shop foreignmanufacturers the world. The introductionof the just-inthroughout time inventory method illustrates that reduction in waiting time is critical for many companies. Likewise, finding products and processes to reduce performance time has always been an organizational to orderinexpensive supobjective, and remembering plies continuallyplagues firms. Risk Prices The second majordimensionof price is perceivedrisk. In fact, risk is not based on objective criteria, but, rather, what the consumer feels or perceives. Since Bauer's(1960) seminalarticle,much attention has been devoted to this construct.The importanceof risk as a useful discriminator of consumers' evaluation of productsis stressed in the quotationsshown in Table 3(b). Although perceived risk has been investigated by a numberof researchers(Bettman 1973; Horton 1979;

Products / 33 Strategically Classifying

Locanderand Hermann 1979; Sheth and Venkatesan studiesof the types of risk listed 1968), comprehensive in Table2 were made by relativelyfew scholars.Bauer (1960) only mentioned in passing the types of risk. (1967) identified the risk resulting from Cunningham poor performance,danger, health hazards, and costs. Roselius (1971) defined four types of losses that relatedto the types of risk:time, hazard,ego, and money; Perry and Hamm (1969) looked at "socioeconomic" aspectsof risk; and Peter and Tarpey(1975) specified several types of risk related to comparisons of automobile brands. Jacoby and Kaplan (1972) were the first to examine the five types of risk listed in Table 2. They foundthatoverall,perceivedrisk can be predicted from the various types. In a validation study, Kaplan, Szybillo, and Jacoby (1974) confirmed "that similar types of products possess similar risk-consequences hierarchies"(p. 290). The five risk types-financial, psychological, physical, functional, and social-encompass the subjective view of buyers concerning the price of any product. Financial risk is not the same as financial price. Certainconsumers' perceptionsof the price of a productdo not have as strong a relationshipto the dollar price as one may think. Financial risk is accountedfor by paying more for a productthan is necessary to achieve an equivalent amount of utility. Alternately, consumers lower their financial risk by engaging in comparison shopping or by relying on known brandsor sources (vendors). Psychologicaland social risk relate to the individual's ego and reference group influence. Many products must overcome perpetualbiases consumers have about them. For instance, Peter and Tarpey (1975) concludedthatthe congruenceof an automobilebrand with a buyer's self-image and reference group image is crucial. Brandingand positioning of productsfrom brokerageservices to stereo components appear intendedto minimize these two types of perceived risk. Functional(performance)and physical risk are the final types of risk listed in Table 2. Virtuallyall studies of perceivedrisk indicatethat functionalrisk ranks as the most important.This finding is not surprising because how a productfunctions is usually the major reasonfor purchase. Physicalrisk was generallythought to be of greatestconcern for complex products. However, the additives and nutritionalcharacteristicsof relatively low cost food products is of growing imto a largergroupof consumers(Morris1985). portance Relationship of Product Categories with Price Dimensions Now that the monetary and nonmonetaryaspects of the effort and risk dimensions in Table 2 have been

reviewed, a more complete explanationof the product classificationcategoriesshown in Figure 1 is possible. Since convenience and preferenceproductsare low in involvement, and shoppingand specialty productsare high in involvement, similarities and differences between the pairs are provided. Supportfor making the high and low involvement distinction is provided by a recent empirical investigation (Park, Assael, and Chaiy 1984) that found autos highest and salt lowest in involvementof 15 productsstudied. The difference between convenience and preference productsis largely one of risk. The types of risk thattendto be higherare social or psychological.There are usually not appreciabledifferences in financial, functional, or physical risk, but the risk to one's ego or to one's peer group or family status is higher for these products. For example, ordering a low priced regionalbrandof beer in a social setting may lead to ridiculeby the group. Similarly, the purchasingagent may prefer a certain type of office supplies because of the complimentsreceived from othercompany personnel. Both effort and risk are much higher for shopping productsthan convenience and preference(see Figure 1). The monetaryprice for these productsis substantially greater. Shopping and travel times, especially, delineate these productsfrom low involvement ones. This point has been supported in the literature (Dommermuth1965; Kleimenhagen 1966-67). Because of the monetary and time stake in shopping products, financial, functional, and physical risk are often much more importantconsiderations. For example,consumersperceivemuch higherlevels of these risks in purchasingan automobile than a laundryderiskis often tergent.Moreover,social andpsychological heightenedbecause of the conspicuousnatureof many shoppingproducts. Bettman (1973) called this higher risk. "inherent" The risk dimension is slightly more importantfor consumers of specialty products than shopping ones in Figure 1. However, there is not any one type of risk that is consistently more critical. Effort, on the other hand, is what distinguishesshopping from specialty products. Since the buyer is almost completely brandloyal to a particularproduct, travel, shopping, times are likely to be much waiting, and performance or organizational buyer. for individual the higher be an time exceptionbecausethe buyer may Monitoring will probably remember to purchase this preferred the financial price is often anproduct.Furthermore, other differentiatorbetween shopping and specialty price-qualityreproductsbecause the aforementioned for is buyers. many lationship strong Thereare many sophisticatedtools availableto the managerfor determiningthe financial price of products (see Gould and Sen 1984; Rao 1984). However,

of Marketing, 34 / Journal July1986

the time and risk aspects are not as well understood. This more complete view of price which is built on buyers' objective and subjective evaluation of products further complicates the managerial task. The use of perceived risk and time categories enriches the concept of price. As the literature reviewed here shows, these nonmonetary elements of price have been examined by researchers and implicitly taken into account by marketing managers. We now turn our attention to marketing strategies that can be utilized for convenience, preference, shopping, and specialty products.

One purpose of any product classification scheme is to guide managerial decision making. A comprehensive and consistent marketing strategy should be based upon product characteristics as perceived by buyers. The product classification suggested here provides a managerial road map for strategy development: buyers' perceptions, marketers' objectives and basic strategy, and specific strategies for each element of the marketing mix. Table 4 outlines the discussion of each of these managerial implications. Buyers' Perceptions A buyer views a given product as a "bundle of satisfactions" to be obtained in return for certain price

considerations-classified as effort and risk. Thus, for convenience products, the buyer perceives the product as being worth only low effort and is subject to only low risk, so his/her behavior evolves into largely habitor impulse-driven (for industrial buyers-automatic reorder). For preference products, the buyer perceives low effort but medium risk, so the behavior becomes "routine" or "straight rebuy" with brand loyalty for industrial products. Shopping products are perceived to be worthy of moderate to high levels of effort and risk. The resulting behavior is thus "limited problem solving" for consumers or an industrial "modified rebuy." Finally, specialty products are high in both effort and risk, so the behavior is "extensive problem solving" or an industrial "new task." Marketers' Objectives and Basic Strategy The convenience product marketer is in an unenviable position. His/her product is difficult to differentiate: buyer loyalty is virtually nonexistent because these products are perceived to be homogeneous, and competitors will quickly copy any significant improvement in the product or other mix element. The preferred objective is to move the product to another categoryto preference via brand loyalty development for most consumer products, or to shopping via source loyalty for industrial distribution or retail store assortment.

TABLE 4 of Classifying Products Strategically Implications Managerial Product Cateqory Sthopping Preference Convenience focus Managerial effc low effort, medium ort, medium high Buyer's perception of low effort, low risk risk risk price limited (modified routine (straight impulse or habit Buyer behavior rebuy) (auto reorder) rebuy) source or store brand loyalty Marketer'sobjective move to pref. or loyalty shop., or dominate via low cost Marketer'sbasic high volume or high high volume, brand high volume, cost minimization, or margin, segmentation identity, strategy differentiation move product standard grades and standard grades and standard base, many Product strategy options, much R&D, quantities, quality quantities, quality warranties control, some R&D control, innovations copied quickly bundled or market market Price strategy negotiated monetary accommodate time, minimize time, minimize time and nonmonetary warrant risk warrant risk risk saturation distribution intensive distribution selective distribution Place strategy Promotion strategy point-of purchase, some sales promotion mass advertising, personal selling, some advertising sales promotion, some personal selling

Specialty high effort, high risk extensive (new task) absolute (source and brand) loyalty high margin, limited volume, market "niche" custom design, much R&D,warranties, personalized service negotiated pamper for time and risk exclusive distribution publicity, personal selling, testimony

Products / 35 Strategically Classifying

Totes umbrellas,Mortonsalt, Duracellbatteries, Yellow taxis, 3M abrasives, and, most recently, the brandingof tomatoes and other produce using biotechnology (Ecklund 1985; Hall 1985) represent illustrationsof this strategy. The alternativeobjective is marketdominancevia low cost (Porter1980, 1985). This objective generally downplays the importanceof marketingstrategy relativeto operations strategy,and, therefore,is less likely to be favored by the marketingmanager. The marketer'sobjective for preference products is to develop buyer brandloyalty. The basic strategy is brandidentificationof high volume, low cost standardizedproducts.The consumerwill express a preference for a given brand but will not expend much effort to acquire that brand if it is not conveniently available. For food, Chiquita, Sunkist, and Dole are trying to develop retailer as well as consumer brand loyalty. For shopping products, the marketerstrives for loyalty to source or store; that is, the buyer's perceived bundle encompasses more than simply the basic product.Loyalty can be based upon tangible and/ or intangibleproductcharacteristicsand any number of other factors, e.g., upon a superior value-to-cost ratio, better service, a location advantage, more advantageouspaymentterms, etc. In reality, source (or store) loyalty is usually based upon a combinationof factors. The basic strategy, therefore, can take many forms, generally involving some form of marketsegmentation.For example, IBM offers many bundles of hardwareconfigurations, software packages, and ancillary supportsystems to segments ranging from individualusers to the largest corporations. One ideal for marketersis attainmentof specialty status. Here, buyer loyalty is absolute; the marketer in effect has monopoly, at least with respect to this one consumer. If enough buyers perceive the product as a specialty, the marketeris well on the way to achieving his/her organization's overall goals. The basic strategy is one of careful segmentation, or "niching,"and pamperingbuyers in that niche. Managers should consider stressing the risk dimension. In fact, the following quote emphasizes the elite and risky natureof specialty products.
has a high price, he may wish Hence,if the marketer to emphasizethe riskinessof the productclass by and a small numberof acceptstressingimportance able brands,while at the same time promotingthe qualityof his own brand(Bettman1973, p. 189).

Product strategy. For convenience products, the emphasismust be on high volume productionof standardized products. Quality control is essential for emergencyand impulse items. If the firm is unable to differentiate its product, research and development rarely pays off because innovations can be quickly copied. Thus, little advantage results from superior productstrategy, but inferior productioncan lead to buyer dissatisfaction. Since loyalty is nonexistent, dissatisfactionquickly results in lost sales. For preferenceproductstrategy,R&D, which produces a slight differentiable factor that can be exploited via mass advertising, can be quite valuable. oftenhingeson a strong, Developinga strongpreference distinctive, and benefit-orientedname (i.e., L'eggs, LectricShave, and Watchman protectiveservices). The range of differentiatingfactors is considerably wider for shopping products, since the higher unit cost affor productdifferentiation. fords greateropportunities In additionto many models (variations)of the product, warranties,service contracts,and financingpackages are especially popular differentiators.For specialty products, the name of the game in product strategy is customization-tailoring each product to the needs of a particularsegment or even individual buyer. Pricing strategy. As noted above, price must be consideredin terms of both effort and risk. For convenience products,both must be minimized;the buyer simply will not be willing to expend much effort nor expect to perceive much risk. He/she does not have to, since other marketersoffer essentially the same bundle of benefits. Thus, the marketplace sets the monetaryprice and dictates the other mix decisions. Preferenceproductsalso face a market-determined monetary pricebut are perceivedto be somewhatrisky. This perceivedrisk is handledvia mass advertisedassurancethat many other buyers are satisfied with the productand/or by emphasizing the reputationof the well-known brandname. In other words, the pricing strategyfor preferenceproductsinvolves acknowledgand then assuringthe buyer ing a riskwhen purchasing, thatthe risk can be minimizedby purchasingthis particularbrand. Pricing is particularly important for shopping products.Both dimensions must be carefully considered. The buyer's effort can be accommodated by combining all aspects of the benefit bundle into one monetary price-buying an existing home, for example. Conversely, each aspect can be negotiated separately,e.g., in building a new home, or different benefit bundles can be packaged and the buyer can negotiate for a given bundle, as in a new equipment The value the buyerplaces upon time is also purchase. a significantdeterminant.

Strategy Guidelines for Each Mix Element Specific strategies for product management, pricing, channelsand distribution,and promotionderive from the objectivesand basic marketingstrategy.The product classification frameworksuggested here can help to coordinatethese often disparatedecisions.

36 / Journal of Marketing, July1986

The risk aspect of shoppingproductpricing is also complex. Because there are many productoptions and many monetarypricing alternatives,the risk of making a wrong purchasingdecision is not trivial. This risk is often handled via warrantyand other assurances that this source (store) is reliable and trustworthy. Pricing for specialty productsis individualizednegotiationis the rule for monetaryprices, and pampering, literally, is requiredfor the nonmonetaryaspects. The latteris more importantthan the former in many cases. Since specialty buyers expect to spend considerablemoney and perceive high levels of risk, they expect to be well treated. Place strategy. The channels literature(Bucklin 1963; Stern and El Ansary 1982) has developed very specific strategiesfor each type of product:complete saturationfor convenience products, intensive distriof butionof preferenceproducts,selective distribution of distribution and exclusive speshoppingproducts, cialty products.Rarely does it make strategicsense to deviate from this generalization. Promotion strategy. Here is perhaps the greatest variancein strategiesamong productsand the greatest need for coordinationwith other mix strategies. For convenienceproducts, point-of-purchase (POP) is the most often used promotion device, along with sales promotions, such as cents-off coupons and rebates. Only the market leader can usually afford mass advertising. Preferenceproducts are created and nurturedby promotion;the basic product, its price, and its distributiondo not differ too much from convenience products. Mass advertisingis the hallmarkof the preferresources ence product 1965), and significant (Krugman and POP. sales Also, are also devoted to promotion personal selling to wholesalers and retailers in the channel, often overlooked in academic discussions of consumerpreferenceproducts, is essential to preference product promotion. For example, the beer industryeffectively uses all these types of promotionin promotingtheir preference products, and the recent promotionof the Beatrice corporatename is probably intendedto influence consumers, retailers, and investors. Shopping products, which fall into the high involvement category, rely much more heavily on personal selling in the promotion mix than do convenience or preference products. This situation holds whetherthe productis a good (furniture),service (ad agency selection), or an idea (college education). Furthermore,both consumer and industrialproductsutilize personal selling as the focal point of their promotional strategy. Advertising generally emphasizes because of the shoppingstatusand loyalty information

to store (retailer)or source (manufacturer). Because the buyer's loyalty to specialty products is nearly absolute, the promotionmix requires a different emphasis. The most unique productscan often rely on publicity. For instance, the idea of artificial heartsurgeryneeds the services of a well-known and respected surgeon and the artificial heart itself. The these events and subsequenttespublicitysurrounding is excellent example of the bunan timonyby patients of dle satisfactionsprovided by a specialty product. Some personalselling may be required,but it is secondary to the others. Advertising should reinforce consumerchoice and attemptto reducethe high levels of risk associated with specialty products. In summary, the productclassification offered in this articleprovides a frameworkto guide managerial decision making. The key points are (1) recognizing that having such a frameworkis not a substitutefor careful analysis of a given strategic situation;(2) deriving the marketing objective, basic strategy, and marketing strategy for each mix element from the buyer's perceptionof the product'sexpected benefits and costs; and (3) coordinatingstrategicdecisions so that all elements contributeto the basic strategy and overall objectives.

Academic Research Implications

For academicresearch,taxonomies are useful in summarizingexisting knowledge and in providing directions for further investigation. General taxonomies advance the discipline. Two classic examples are Kotler's (1972a) generic concept of marketing and model of the domain Hunt's (1976) three-dichotomies of marketing.For marketingpracticewe subscribeto the view that there is nothing so practical as a good theory. For marketing managers to utilize the product classification taxonomy to the fullest extent, additional conceptual and empirical research needs to be researchwould prove done. Five areaswhereadditional are: fruitful operationalizationof the diespecially mensions, determining the relative importance of monetary and nonmonetarysubcategories, examination of the marketsfor which these products are intended, empiricalstudy of the proposedproductclassification system, and furtherinvestigation of buyer involvement.

The dimensions of risk and effort need to be quantified so that researchersand managerscan better unthem. The work of Jacobyand Kaplan(1972) derstand and Peter and Tarpey (1975) provides good measurement tools for the types of risk shown in Table 2. Futureresearchshould expand to a broaderselection

Products / 37 Strategically Classifying

of productsthat appear to fall into each of the four the student samples used in categories. Furthermore, for the products these earlierstudies were appropriate examined but would not be they especially useful for a broad-scaletest. The effort dimension has also been operationalized in a number of price elasticity and price consciousnessstudies(Zeithaml1984). Certaintime prices have been quantified (Cherlow 1981), but Jacoby, Szybillo, and Bering (1976, p. 332) accuratelypoint out thatthereis a need "fora time-relatedterminology suitable for studying consumer behavior." The definitions listed in Table 2 and explained here represent of relevanttime an initialattemptat operationalization In there be other equally important prices. fact, may time prices. For example, choice time (Berlyne 1957) may be an additionaltime price that is separate and distinct from shopping time. Furthermore,the researchof Hendrixandhis coauthors (1980, 1981, 1983) in time use is also pertinentto a fuller understanding of time prices.

erence products?In fact, is risk quantifiedby the purchasing agent or organizationalconsumer? How do consumersquantifythe high time prices often nonprofit associated with these products? Products This product to have face classificationscheme appears of More validity. investigation goods, services, and ideas that possess the characteristicsassociated with the four categoriesof productsis necessary.One study (Guseman1981) foundthatconsumers perceivedhigher levels of risk for services than goods. Whether this holds for goods and services both in prefrelationship erence or any other category is not clear. Recent researchconductedfor an airline found that consumers perceive relatively high levels of risk with airline choice. Surprisingly, physical risk was perceived to be lower than social and psychological risk (Jamieson 1985). If services and ideas can be integratedusing this well-known and accepted classification (with the addition of preference),researcherscan study buyer behaviorand productselectionprocessesthatcan be used of these products.Large-scaleempirical by marketers investigation,possibly jointly conductedby academia and the business sector, would help to gain more insight into the generalizabilityof productconcepts. Buyer Involvement Level The type of productclassification system posed here has potential value in integratingthe notion of consumerlearningand involvement level with marketing strategy. Furthermore,the notion of product importance developed by Bloch and Richins (1983) seems analogouswith involvement level. If the strategicrelationshipproposedin Figure 1 holds, implicationsrelate to the type of researchconductedon productsand the strategiesthatcompanies may find useful. For example, certain organizations may want to actively pursuethe low cost and commodity approach(Porter 1985) and keep their productsin the convenience or shopping categories. On the other hand, firms may want to consciously move up the strategy arrow by to make their productseither preferenceor attempting specialty ones. Work by academics in studying strategic implications of marketing decision making is needed.

Relative Importance
The relative importanceof nonmonetaryand monetary aspects of these two dimensions of price needs furtherstudy. Buyers implicitly make trade-offs between the dollar price and the types of risk they perceive and the time they expect to spend. To date, these relationshipsare not well understood. For example, do consumers expect to make time expendituresfor shopping products commensuratewith the monetary price they are willing to pay? Or do they look to familiarbrandsand outlets to minimize travel and shopprice pingtime while realizingthatthis meansmonetary is higher? Withinthe types of time and risk shown in Table 2, what happensas one moves from a convenience to a specialty product?Do all risks increase, or, as posited earlier,are social and psychologicalrisks the most relevant for some preference products, while functional and physical risks are more pertinent at the shoppingand specialty end? The relationshipsamong the time prices also need more thoroughstudy. Waiting time would usually be high for specialty products, but what about the other time prices? Does shopping time decrease as waiting time increases? Markets One of the values of this taxonomy is that it seems relevantfor consumer, industrial,and nonprofitproducts. This should be empiricallyverified by researchers studyingmarketingby these organizations.While much researchhas been conducted on the consumer marketregardingtime and risk issues, we know relatively little about the industrialmarketplace. What risks are most importantfor industrialusers of pref-

Classificationschemes have contributedmuch to the study and practice of marketing. This article offers one unified productclassification notion. The classiacrossall users ficationis buyeroriented,generalizable and sectors (profit-nonprofit), (consumer-industrial), recand and services, ideas), producttypes (goods,

of Marketing, 38 / Journal July1986

ognizes the central role of the benefit/cost bundle. The value of this classification lies in its integration of marketing mix decisions for strategy formulation and the founding of this strategy upon consistent

notions of buyer behavior with respect to different types of products. The classification should aid both the manager in formulating marketing strategy and the researcher in identifying areas for further study.

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Burke Marketing Services, Inc ....................................................... The Ehrhart-Babic G roup ................................................................. N am elab Inc . ........................................................................ The Salinon Corp ...................................... Back Cover F-I Page 12 nside Back Cover


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