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Classifying Products Strategically

Author(s): Patrick E. Murphy and Ben M. Enis


Source: Journal of Marketing, Vol. 50, No. 3 (Jul., 1986), pp. 24-42
Published by: American Marketing Association
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PatrickE. Murphy& Ben M. Enis

Products
Classifying

Strategically

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:

Marketingis the processof planningand executing


the conception,pricing,promotion,and distribution
of ideas, goods, andservicesto createexchangesthat
satisfyindividualandorganizational
objectives("AMA
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,
NotreDame.BenM.Enisis Professor
University
G.Dunn,Michael
wouldliketo thankMark
Theauthors
ernCalifornia.
KentB.
P. Mokwa,
Michael
GeneR.Laczniak,
J. Etzel,GaryL.Frazier,
on
fortheirhelpfulcomments
JMreviewers
andanonymous
Monroe,
draftsof thisarticle.
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 / Journalof Marketing,
July1986

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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 expectedto providesatisfaction(Enis and Roering 1980).
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 marketing, it seems appropriateto develop one producttaxonomy 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

FIGURE1
A Strategic Classification of Products
Risk

Effort

Low

>

Widening arrow indicates


mix differentiating
factors

broadened

scope

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
of distributionand pricing modificationsmay be used
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
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Strategically
Classifying

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ping goods, however, and are often the subject of intense buyer/seller negotiation,particularlyover 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
advertisingappealsor 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
Fortune) or particularbrandsof typewriterribbonsor
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 differentiatedthem, 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,

TABLE1
to
Classifying Products
Approaches
Authorand
Year
Goods
Copeland1923

Classification

Dimensions

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,

Generalizability
Buyer or
Benefit
Seller
Orientationa Useb Sector' Typed Bundle'
Buyer

shoe polish, . . . and toothpaste.

. . .The unit price for most articles


in this class is too small to justify
the consumer's going far out of his
way or incurringthe expense of a
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
have some particularattractionfor

of Marketing,
26 / Journal
July1986

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no

TABLE1 (continued)
Approachesto ClassifyingProducts
Author and
Year

Classification

Dimensions

Generalizability
Buyer or
Benefit
Seller
Orientation' Useb Sectorc Typed Bundle"

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).
Seller

no

Degree of social and brand conspicuousness

Buyer

no

Convenience, shopping

Distinction between convenience &


shopping, gain resulting from price
and quality comparisons relative to
searching costs of individual consumer

Buyer

no

Specialty

Necessity of making special purchase effort due to limited market


demand

Luck 1959

Convenience, shopping, specialty

Article directed at Holton (1958)


and specialty good argument, consumer is willing to make special
purchase effort for special brand

Buyer

no

Aspinwall 1961

Red goods, orange goods, yellow


goods (continuous scale)

Replacement rate, gross margin,


adjustment, time of consumption,
searching time

Buyer

no

Bucklin 1963

Convenience, shopping, specialty


(shopping-nonshopping)

Degree of shopping effort, degree


of prepurchase preference formation

Buyer

no

Dommermuth
1965

Number of retail outlets shopped,


number of brands examined (shopping matrix)

Allows detection of differences


within product classifications

Buyer

no

Miracle 1965

Group I-candy bars


Group II-groceries
Group Ill-TVs
Group IV--cars
Group V-electronic office equipment

Buyer

no

Kaish 1967

Convenience, shopping, specialty

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

Buyer

no

Mayer, Mason,
and Gee 1971

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

Locational convenience, merchandise suitability, value for price,


sales effort and store service, congenialty of store, post-transaction
satisfaction

Buyer

no

How they enter the production process, cost structure of the producers

Seller

G,S

no

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.

Bourne 1956

Product-plus, brand-minus (instant


coffee); product-minus, brand-plus
(clothes); product-minus, brand-minus (soup) (reference group influence)

Holton 1958

Kotler 1972b

Products
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TABLE1 (continued)
Author and
Year

Classification

Dimensions

Buyer or
Generalizability
Benefit
Seller
Orientationa Useb Sectorc Typed Bundlee

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).
Buyer

no

Degree of brand similarity, degree


of consumer uncertainty in making
a choice

Buyer

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

Related to consumer's product


awareness, comprehension, product
importance, standard of taste

Buyer

no

Uniqueness of the good, whether it


is part of finished product

Seller

G,S

no

Holbrook and
Howard 1977

Product characteristics (magnitude


of purchase and clarity of characteristics), consumer characteristics
(ego involvement and specific selfconfidence), consumer responses
(physical shopping and mental effort)

Buyer

no

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

Buyer

G,S

yes

People-things, tangibility
Formal-informal, continuous-discrete delivery
High-low
Wide-narrow fluctuations, constraints on supply
Multiple-single site, interaction

Seller

no

Tangible product, service, idea, issue (cause)

Tangibility, profit-nonprofit

Buyer

P,N

G,S,I

no

Physical goods, services, social behaviors

Tangibility, marketer characteristics,


customer characteristics

Buyer

G,S,I

no

Raymond and
Assael 1974

Number of rewards product provides, our knowledge of how to deliver these rewards

Psychophysical

Distributive velocity, mental velocity Consumer: stimulus, intervening


variables, response. Product: market, distributive
Bucklin 1976

Convenience, specialty, shopping


(low intensity), shopping (high intensity)

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

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

apartmentrental. Industrialshopping services include


the accountingaudit. Shoppingideas are educationfor
individualsand conductingmarketingresearchstudies
for industrialbuyers.

28 / Journalof Marketing,
July1986

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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 monetarypriceis 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
illustrationof 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

status. Furthermore,it is possible for a few products


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 examinedand evaluatedto demonstratethe value of one
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
degreeof prepurchasepreferenceformation.In an update, Bucklin (1976) divided 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
shoppingeffortand low ego involvementbut high brand
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 increasinglylarge numberof consumernondurablesare falling into this categoryand
that a great deal of advertisingeffort is invested in
attemptingto move a good fromone side of this preferencedistinctionto another(p. 214).

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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 approachesto 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 understanding the characteristicsof the services product, that is,
the extent to which equipment/facility-basedvs. 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
classificationliteratureis 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.

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
to the marketingof ideas. He proposeda "broadened"
typology of 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-

mote or advocate ideas and social causes" (p. 283),


by the marketerand customercharacteristicsas earlier
proposedby Lovelock (1979). These social behaviors
are recognizedas being difficult to define but a major
growtharea for marketing.Marketingof ideas by industrialfinns, such as those popularizedby Mobil Oil's
"advertorials,"is being practicedbut is more likely to
be discussedin an advertising(Heathand Nelson 1985;
Sethi 1979) ratherthan a productcontext.

EvaluatingEarlierClassificationApproaches
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 evaluation of the price to be surrenderedin orderto consume
a given product. As the following section demonstrates, price is conceptualizedin two dimensions.

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

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 supview of marketing.Kotlerand
portingthe "broadened"
Zaltman(1971) statedthat "Priceincludesmoney costs,

30 / Journalof Marketing,
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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

Dimensions

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

Monetary:

Nonmonetary:

Risk
Financial
personal
organizational
Consequences
social
psychological
physical
functional

Definitions
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)
bBerry(1979)
'Jacoby,Szybillo,and Berning(1976)
dFox (1980)

eJacobyand Kaplan(1972)

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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.
In a majorreview of the literature,Zeithaml(1984)
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
(e.g., MasterCardor VISA) than income or a product's monetaryprice. Countertradeis also growing in
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-

TABLE3
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).

32 / Journalof Marketing,
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thermore,Schary (1971) stated that the value of time


could be ascertainedfrom a study of opportunitycosts
and that marketersshould recognize consumers' time
limitationsin productdevelopment.MorerecentlyBerry
(1979)examinedthe "time-buyingconsumer"who lacks
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 expenditures). Settle (1980) summarizedthe statusof research
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 statementparallelsthe notion that consumersalso


place different values on objectively measured monetary prices.
Traveltime has been the subjectof much research
in the transportationfield. 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 especiallypertinentto social marketers.Performancetime
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 making an appointmentwith the dentistor physician.These
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
foreignmanufacturershas requiredU.S. firms to shop
throughoutthe world. The introductionof the just-intime 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
objective, and rememberingto orderinexpensive supplies 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 attentionhas 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;

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Locanderand Hermann 1979; Sheth and Venkatesan


1968), comprehensivestudiesof the types of risk listed
in Table2 were made by relativelyfew scholars.Bauer
(1960) only mentioned in passing the types of risk.
Cunningham(1967) identified the risk resulting from
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 predictedfrom
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 importanceto a largergroupof consumers(Morris1985).
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 laundrydetergent.Moreover,social andpsychologicalriskis often
heightenedbecause of the conspicuousnatureof many
shoppingproducts. Bettman (1973) called this higher
"inherent"risk.
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,
waiting, and performancetimes are likely to be much
higher for the individual or organizational buyer.
Monitoringtime may be an exceptionbecausethe buyer
will probably remember to purchase this preferred
product.Furthermore,the financial price is often another differentiatorbetween shopping and specialty
productsbecause the aforementionedprice-qualityrelationshipis strong for many buyers.
Thereare many sophisticatedtools availableto the
managerfor determiningthe financial price of products (see Gould and Sen 1984; Rao 1984). However,

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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.

ManagerialImplications
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

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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 operationsstrategy,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.
Hence,if the marketerhas a high price, he may wish
to emphasizethe riskinessof the productclass by
stressingimportanceand a small numberof acceptable brands,while at the same time promotingthe
qualityof his own brand(Bettman1973, p. 189).

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.

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.
Developinga strongpreferenceoftenhingeson a strong,
distinctive, and benefit-orientedname (i.e., L'eggs,
LectricShave, and Watchmanprotectiveservices). The
range of differentiatingfactors is considerably wider
for shopping products, since the higher unit cost affords greateropportunitiesfor productdifferentiation.
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
monetarypricebut 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 acknowledging a riskwhen purchasing,and then assuringthe buyer
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
purchase.The value the buyerplaces upon time is also
a significantdeterminant.

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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 distributionof preferenceproducts,selective distributionof
shoppingproducts, and exclusive distributionof specialty 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 preference product(Krugman1965), and significantresources
are also devoted to sales promotion and POP. Also,
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
informationbecause of the shoppingstatusand loyalty

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
publicitysurroundingthese events and subsequenttestimonyby patientsis an excellent example of the bundle of 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
Hunt's (1976) three-dichotomiesmodel of the domain
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
done. Five areaswhereadditionalresearchwould prove
especially fruitful are: operationalizationof the dimensions, 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.

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

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of productsthat appear to fall into each of the four


categories. Furthermore,the student samples used in
these earlierstudies were appropriatefor the products
they examined but would not be 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
an initialattemptat operationalizationof relevanttime
prices. In fact, there may be other equally important
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.

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 shoppingtime while realizingthatthis meansmonetaryprice
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-

erence products?In fact, is risk quantifiedby the purchasing agent or organizationalconsumer? How do
nonprofitconsumersquantifythe high time prices often
associated with these products?
Products
This productclassificationscheme appearsto have face
validity. More investigation of goods, services, and
ideas that possess the characteristicsassociated with
the four categoriesof productsis necessary.One study
(Guseman1981) foundthatconsumersperceivedhigher
levels of risk for services than goods. Whether this
relationshipholds for goods and services both in preference 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
by marketersof these products.Large-scaleempirical
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
attemptingto make their productseither preferenceor
specialty ones. Work by academics in studying strategic implications of marketing decision making is
needed.

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

38 / Journalof Marketing,
July1986

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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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ADVERTISERS' INDEX
Burke Marketing Services, Inc .......................................................
The Ehrhart-Babic G roup .................................................................
N am elab Inc . ........................................................................
The Salinon Corp ......................................

......................

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Back Cover
F-I
Page 12
nside Back Cover