Intro to Business
Table of Contents
Products are the lifeblood of business, coming in many forms to meet diverse needs. From everyday items like toothpaste to big-ticket purchases like machinery, products fuel economic activity and shape consumer experiences.
Understanding product types helps businesses target the right markets and develop effective strategies. Consumer products cater to personal use, while business products support operations. Each category requires unique approaches to marketing, pricing, and distribution to maximize success.
Types of Products
Consumer vs business products
- Consumer products purchased by final consumer for personal consumption
- Clothing, food and beverages, electronics, personal care items
- Business products purchased by businesses, government agencies, or institutions for use in operations or resale
- Raw materials, machinery and equipment, office supplies, professional services
Classifications of consumer products
- Convenience products frequently purchased with minimal comparison shopping at low prices
- Toothpaste, snacks, newspapers
- Shopping products less frequently purchased with more comparison shopping at higher prices than convenience products
- Clothing, furniture, appliances
- Specialty products have unique characteristics or brand identification requiring significant purchasing effort where price is not primary concern
- Luxury cars, designer clothing, high-end electronics
- Unsought products consumers are unaware of or do not normally think of buying requiring advertising and personal selling
- Life insurance, funeral services, fire extinguishers
Categories of business products
- Raw materials are basic inputs used in production of other goods
- Lumber, crude oil, minerals
- Major equipment includes long-lasting, expensive items used in production or operations
- Machinery, heavy-duty vehicles, computer systems
- Accessory equipment refers to less expensive, shorter-lived items used in production or operations
- Hand tools, office equipment, computers
- Component parts are finished items ready for assembly into final products
- Tires, batteries, computer chips
- Process materials are used directly in production process
- Lubricants, paint, cleaning supplies
- Supplies and services are short-term or consumable items that facilitate operations
- Office supplies, maintenance and repair services, consulting services
Product Strategy and Management
- Product line: A group of related products offered by a company
- Product mix: The complete set of all products offered by a company
- Branding: Creating a unique name and image for a product in consumers' minds
- Packaging: The design and materials used to contain and protect a product
- Product lifecycle: The stages a product goes through from introduction to decline
- Value proposition: The unique benefit a product offers to customers
- Product differentiation: Distinguishing a product from competitors' offerings
Key Terms to Review (32)
U.S. Navy: The U.S. Navy is a branch of the United States Armed Forces responsible for conducting naval operations, which includes maintaining, training, and equipping combat-ready naval forces for winning wars, deterring aggression, and maintaining freedom of the seas. It plays a crucial role in national defense and international security by protecting America's interests at sea, supporting allies, and providing humanitarian aid during disasters.
Neiman-Marcus: Neiman-Marcus is a high-end department store chain in the United States known for offering luxury goods, including clothing, accessories, and home products. It serves as an example of a premium retail brand that focuses on quality, exclusivity, and customer experience to meet the needs of affluent consumers.
Shopping products: Shopping products are a category of consumer goods that are usually purchased less frequently and involve more planning and comparison among brands based on quality, price, and style. Consumers spend considerable time and effort in selecting these products due to their higher price or personal significance.
Specialty products: Specialty products are unique and high-value items that consumers purchase less frequently, putting significant effort into comparing brands and quality before making a buying decision. These products often carry a higher price tag and are associated with luxury, exclusivity, or specific high-end features.
Unsought products: Unsought products are goods and services that consumers do not typically think about buying or are unaware of until a specific need arises. These items require significant advertising, personal selling, or other marketing efforts because customers do not actively seek them out.
Black & Decker: Black & Decker is a renowned manufacturer of power tools, accessories, hardware, home improvement products, and technology-based fastening systems. It exemplifies a company that has diversified its product line to meet a wide range of consumer needs and preferences.
Capital products: Capital products are long-lasting goods used by businesses to produce other goods or services, rather than being sold directly to consumers. They include machinery, buildings, and equipment that facilitate production processes.
Porsche: Porsche is a German automobile manufacturer specializing in high-performance sports cars, SUVs, and sedans. It represents a premium brand that emphasizes luxury, quality, and advanced technological features in its products.
Convenience products: Convenience products are everyday items that consumers purchase frequently and with minimal effort, such as groceries or personal care items. They are typically low-cost and readily available at multiple locations.
Minolta: Minolta was a Japanese company known for its cameras, camera accessories, photocopiers, fax machines, and laser printers. It merged with Konica Corporation in 2003 to form Konica Minolta, focusing on business imaging products.
Expense items: Expense items are costs incurred by a company in the process of creating its products or services. These can include materials, labor, marketing, and overhead costs related to product development and distribution.
Product Differentiation: Product differentiation is the process of distinguishing a product or service from others in the market to make it more appealing to a target audience. It involves identifying and emphasizing the unique features, qualities, or benefits that set a product apart from its competitors, allowing a company to charge a premium price and build customer loyalty.
Value Proposition: A value proposition is a clear, concise statement that describes the unique benefits a product or service offers to customers, highlighting how it solves their problems or improves their situation. It is a key element in business strategy, marketing, and product development, as it helps a company differentiate itself from competitors and communicate the value it provides to its target audience.
Raw Materials: Raw materials are the basic, unprocessed inputs used in the production of goods or services. They are the fundamental components that are transformed through various manufacturing processes into finished products for consumption or further use.
Component Parts: Component parts refer to the individual elements or sub-assemblies that make up a larger product or system. These parts work together to create the overall functionality and form of the final product.
Convenience Products: Convenience products are consumer goods that are easily accessible, require minimal effort to purchase or use, and are designed to save time and simplify everyday tasks. These products are typically low-cost, frequently purchased, and have a high turnover rate.
Business Products: Business products refer to the goods and services that a company offers to its customers or clients. These products are designed to meet the specific needs and requirements of other businesses, rather than individual consumers. Business products can range from raw materials and components to finished goods and specialized services that help other organizations operate more efficiently and effectively.
Unsought Products: Unsought products are goods or services that consumers do not actively seek out or think about purchasing. These are products that consumers are unaware of or do not recognize a need for until they are brought to their attention through marketing or advertising efforts.
Major Equipment: Major equipment refers to the large, expensive, and critical machinery or apparatus used in the production or delivery of a product. These are the core, essential components that enable the manufacturing or provision of the final product.
Supplies: Supplies refer to the materials, resources, or items that are necessary for the production, operation, or maintenance of a product. They are the essential components, parts, or consumables required to create and support a product throughout its lifecycle.
Services: Services refer to intangible products or activities that are provided to customers or clients, rather than physical goods. Services are a crucial component of the economy and can encompass a wide range of industries, including healthcare, education, finance, transportation, and more.
Product Line: A product line is a group of related products that are marketed under a common brand name and share similar characteristics, features, or target markets. It represents a collection of products that a company offers to meet the diverse needs and preferences of its customers.
Packaging: Packaging refers to the container or wrapping used to hold, protect, and present a product. It serves as a crucial element in the overall product design and marketing strategy, influencing consumer perceptions and experiences.
Consumer Products: Consumer products are goods and services that are purchased and used by individual consumers rather than businesses or other organizations. These products are designed to meet the needs and preferences of the general public and are typically available through retail channels.
Shopping Products: Shopping products are consumer goods that a customer typically compares, examines, and selects based on factors such as quality, price, and style before making a purchase. These products are generally more expensive and infrequently purchased compared to convenience goods.
Accessory Equipment: Accessory equipment refers to supplementary items or tools that enhance the functionality or performance of a primary product. These additional components are not essential for the core operation of the product but can provide added benefits or features to the user.
Process Materials: Process materials refer to the raw materials, components, and supplies used in the production or manufacturing of a product. These materials undergo various transformation processes to create the final product that is delivered to the customer or consumer.
Specialty Products: Specialty products are unique, high-quality goods that cater to the specific needs or preferences of a particular target market. These products are often differentiated from mass-produced, generic items and command a premium price due to their specialized features, craftsmanship, or exclusivity.
Product Mix: A product mix, also known as a product assortment, refers to the total number of product lines and items a business offers to its customers. It encompasses the variety, depth, and breadth of products a company provides to meet the diverse needs and preferences of its target market.
Product Lifecycle: The product lifecycle is the series of stages a product goes through from its initial development to its eventual retirement from the market. It describes the lifespan of a product and the different phases it experiences over time.
Branding: Branding is the process of creating a unique identity for a product or company through the use of names, symbols, designs, and messaging that differentiate it from competitors. It plays a crucial role in establishing customer loyalty and recognition, as a strong brand can evoke positive feelings and perceptions, ultimately influencing consumer choices.
Product: A product is any item or service offered to the market to satisfy customer needs and wants. It encompasses not only physical goods but also services, ideas, or experiences that can be marketed to consumers. Understanding the concept of a product is essential for crafting effective marketing strategies, developing a balanced marketing mix, and ensuring that offerings meet the demands of target customers.