The classification of products and services is essential to business because it

provides one of the factors for determining the strategies needed to move them
through the marketing system. The two major classes are consumer products and
business products.

CONSUMER PRODUCT
Consumer products can also be differentiated on the basis of durability. Durable
products are products that have a long life, such as furniture and garden tools.
Non-durable products are those that are quickly used up or worn out, or that become
outdated, such as food, school supplies, and disposable cameras.

Convenience Products
Convenience products are items that buyers want to purchase with the least amount
of effort, that is, as conveniently as possible. Most are non-durable products of
low value that are frequently purchased in small quantities. These products can be
further divided into three subcategories: staple, impulse, and emergency items.

The distinction among convenience, shopping, specialty, and unsought products is

not always clear. As noted earlier, these classifications are based on consumers'
buying habits. Consequently, a given item may be a convenience good for one person,
a shopping good for another, and a specialty good for a third, depending on the
situation and the demographics and attitudes of the consumer.

BUSINESS PRODUCTS
Business products are products and services that companies purchase to produce
their own products or to operate their business. Unlike consumer products, business
products are classified on the basis of their use rather than customer buying
habits. These products are divided into six subcategories: installations; accessory
equipment; raw materials; component parts and processed materials; maintenance,
repair, and operating supplies; and business services.

Business products also carry designations related to their durability. Durable

business products that cost large sums of money are referred to as capital items.
Nondurable products that are used up within a year are called expense items.

Installations
Installations are major capital items that are typically used directly in the
production process of products. Some installations, such as conveyor systems,
robotics equipment, and machine tools, are designed and built for specialized
situations. Other installations, such as stamping machines, large commercial ovens,
and computerized axial tomography scan machines, are built to a standard design but
can be modified to meet individual requirements.

The purchase of installations requires extensive research and careful decision

making on the part of the buyer. Manufacturers of installations can make their
availability known through advertising. Actual sale of installations, however,
requires the technical knowledge and assistance that can best be provided by
personal selling.

Accessory Equipment
Products that fall into the subcategory of accessory equipment are less expensive
and have shorter lives than installations. Examples include hand tools, computers,
desk calculators, and forklifts. While some types of accessory equipment, such as
hand tools, are involved directly in the production process, most are only
indirectly involved.
The relatively low unit value of accessory equipment, combined with a market made
up of buyers from several different types of businesses, dictates a broad marketing
strategy. Sellers rely heavily on advertisements in trade publications and mailings
to purchasing agents and other business buyers. When personal selling is needed, it
is usually done by intermediaries, such as wholesalers.

Raw Materials
Raw materials are products that are purchased in their raw state for the purpose of
processing them into consumer or business products. Examples are iron ore, crude
oil, diamonds, copper, timber, wheat, and leather. Some (e.g., wheat) may be
converted directly into another consumer product (cereal). Others (e.g., timber)
may be converted into an intermediate product (lumber) to be resold for use in
another industry (construction).

Most raw materials are graded according to quality so that there is some assurance
of consistency within each grade. There is, however, little difference between
offerings within a grade. Consequently, sales negotiations focus on price,
delivery, and credit terms. This negotiation, and because raw materials are
ordinarily sold in large quantities, makes personal selling the principal marketing
approach for these goods.

Component Parts and Processed Materials

Component parts are items that are purchased to be placed in the final product
without further processing. Processed materials, on the other hand, require
additional processing before being placed in the end product. Many industries,
including the auto industry, rely heavily on component parts. Automakers use such
component parts as batteries, sunroofs, windshields, and spark plugs. They also use
several processed materials, including steel and upholstery fabric.

Buyers of component parts and processed materials have well-defined specifications

for their needs. They may work closely with a company in designing the components
or materials they require, or they may invite bids from several companies. In
either case, in order to be in a position to get the business, personal contact
must be maintained with the buyers over time. Here again, personal selling is a key
component in the marketing strategy.

Maintenance, Repair, and Operating Supplies

Maintenance, repair, and operating (MRO) supplies are frequently purchased expense
items. They contribute indirectly to the production of the end product or to the
operations of the business. MRO supplies include computer paper, light bulbs,
lubrication oil, cleaning supplies, and office supplies.

Buyers of MRO supplies do not spend a great deal of time on their purchasing
decisions unless they are ordering large quantities. As a result, companies
marketing supplies place their emphasis on advertising, particularly in the form of
catalogs, to business buyers. When large orders are at stake, sales representatives
may be used.

Business Services
Business services refer to the services purchased by companies to assist in the
operation of the firm. They include financial, marketing research, promotional,
legal, lawn care, and janitorial services. The decision to hire an outside business
to perform needed services is often predicated on how frequently the service is
needed, the specialized knowledge required, and the relative costs of providing the
service internally versus contracting with an outside firm.
It is not always clear whether a product is a consumer product or a business
product. The key to differentiating them is to identify the use the buyer intends
to make of the product. Products that are in their final form and are ready to be
purchased and consumed by individuals or households for their personal satisfaction
are classified as consumer products. On the other hand, if they are bought by a
business for its own use, they are considered business products. Some items, such
as flour and pickup trucks, can fall into either classification, depending on how
they are used. Flour purchased by a supermarket for resale is classified as a
consumer good, but flour purchased by a bakery to make pastries is classified as a
business product. A pickup truck bought for personal use is a consumer product; if
purchased to transport lawn mowers for a lawn service, it is a business product.

see also Business Marketing

bibliography
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Hoffman, K. Douglass (2006). Marketing principles and best practices (3rd ed.).
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Kotler, Philip, and Armstrong, Gary (2006). Principles of marketing (11th ed.).
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Pride, William M., and Ferrell, O. C. (2006). Marketing concepts and strategies.
Boston: Houghton Mifflin.

Solomon, Michael R., Marshall, Greg W., and Stuart, Elnora W. (2006). Marketing:
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Thomas R. Baird

Earl C. Meyer