Product (business)

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Products on shelves at a Fred Meyer hypermarket superstore Fredmeyer edit 1.jpg
Products on shelves at a Fred Meyer hypermarket superstore

In marketing, a product is an object, or system, or service made available for consumer use as of the consumer demand; it is anything that can be offered to a market to satisfy the desire or need of a customer. [1] In retailing, products are often referred to as merchandise , and in manufacturing, products are bought as raw materials and then sold as finished goods. A service is also regarded as a type of product.


In project management, products are the formal definition of the project deliverables that make up or contribute to delivering the objectives of the project.

A related concept is that of a sub-product, a secondary but useful result of a production process.

Dangerous products, particularly physical ones, that cause injuries to consumers or bystanders may be subject to product liability.

Product classification

A product can be classified as tangible or intangible. A tangible product is an actual physical object that can be perceived by touch such as a building, vehicle, gadget, or clothing. An intangible product is a product that can only be perceived indirectly such as an insurance policy. Services can be broadly classified under intangible products, which can be durable or nondurable.

By use

In its online product catalog, retailer Sears, Roebuck and Company divides its products into "departments", then presents products to potential shoppers according to (1) function or (2) brand. [2] Each product has a Sears item number and a manufacturer's model number. Sears uses the departments and product groupings with the intention of helping customers browse products by function or brand within a traditional department-store structure. [3]

By association

A product line is "a group of products that are closely related, either because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges." [4] Many businesses offer a range of product lines which may be unique to a single organisation or may be common across the business's industry. In 2002 the US Census compiled revenue figures for the finance and insurance industry by various product lines such as "accident, health and medical insurance premiums" and "income from secured consumer loans". [5] Within the insurance industry, product lines are indicated by the type of risk coverage, such as auto insurance, commercial insurance and life insurance. [6]

National and international product classifications

Various classification systems for products have been developed for economic statistical purposes. The NAFTA signatories are working on a system that classifies products called NAPCS as a companion to the North American Industry Classification System (NAICS). [7] The European Union uses a "Classification of Products by Activity" among other product classifications. [8] The United Nations also classifies products for international economic activity reporting. [9]

The Aspinwall Classification System [10] [11] classifies and rates products based on five variables:

  1. Replacement rate (How frequently is the product repurchased?)
  2. Gross margin (How much profit is obtained from each product?)
  3. Buyer goal adjustment (How flexible are the buyers' purchasing habits with regard to this product?)
  4. Duration of product satisfaction (How long will the product produce benefits for the user?)
  5. Duration of buyer search behavior (How long will consumers shop for the product?)

The National Institute of Governmental Purchasing (NIGP) [12] developed a commodity and services classification system for use by state and local governments, the NIGP Code. [13] The NIGP Code is used by 33 states within the United States as well as thousands of cities, counties and political subdivisions. The NIGP Code is a hierarchical schema consisting of a 3 digit class, 5 digit class-item, 7 digit class-item-group, and an 11 digit class-item-group-detail. [14] Applications of the NIGP Code include vendor registration, inventory item identification, contract item management, spend analysis, and strategic sourcing.

Product model

A manufacturer usually provides an identifier for each particular type of product they make, known as a model, model variant, or model number (often abbreviated as MN, M/N or model no., and sometimes as M- or Mk). For example, Dyson Ltd, a manufacturer of appliances (mainly vacuum cleaners), requires customers to identify their model in the support section of the website. [15] Brand and model can be used together to identify products in the market. The model number is not necessarily the same as the manufacturer part number (MPN). [16]

Because of the huge amount of similar products in the automotive industry, there is a special kind of defining a car with options (marks, attributes) that represent the characteristics features of the vehicle. A model of a car is defined by some basic options like body, engine, gearbox, and axles. The variants of a model (often called the trim levels) are built by some additional options like color, seats, wheels, mirrors, other trims, entertainment and assistant systems, etc. Options, that exclude each other (pairwise) build an option family. That means that you can choose only one option for each family and you have to choose exactly one option.

In addition, a specific unit of a product is often (and in some contexts must be) identified by a serial number, which is necessary to distinguish products with the same product definition. In the case of automotive products, it is called the vehicle identification number (VIN), an internationally standardised format.

Product information

Product information, beyond currency price information, can include: [17] [ additional citation(s) needed ]

Many of these types of product information are regulated to some degree, such as to some degree prohibiting false or misleading product information or requiring sellers or manufacturers to specify various information such as ingredients of food-, pharmaceutical- and hygiene-products. There also is standardization. Marketing to entice the shopper [17] is often prioritized over accurate, high-quality or extensive and relevant information.

Product information is often a key element in the buyer decision process. Relevant factors include trust in the accuracy of the information and social normative pressure. [22] [23] Easily accessible and up-to-date medicinal product information can contribute to the health literacy. [24] Online shopping is usually more informationally rich than shopping at physical stores traveled to and usually has higher comparability and customizability. [17]

Production information-related developments can be useful for enabling, facilitating, or shifting towards sustainable consumption and support more sustainable products. Environmental life-cycle assessment (LCA) has been widely used for to assess environmental impacts across the life cycle of products. [25] There are LCA datasets that assess all products in some supermarkets in a standardized way. [26] [27] Consumers may seek reliable information to evaluate relevant characteristics of products such as durability and reliability. [28] Development of 'transparency by design' scenarios have been suggested to "complement the physical product with layers of digital information", improving transparency and traceability (T&T). [29] The app CodeCheck gives some smartphone users some capability to scan products for assessed ingredients. [30] [31] Many labels are considered to be flawed and few have the time to "study the true environmental impact of every purchase". Full product transparency is a concept of making the full life-cycle impacts public. [32] An important element that is required for various product information is supply chain transparency, which relates to human rights and supply chain sustainability. [33] [34]

Produce traceability

Produce traceability makes it possible to track produce from its point of origin to a retail location where it is purchased by consumers.

Produce traceability is an important link in protecting public health since it allows health agencies to more quickly and accurately identify the source of contaminated fruit or vegetables believed to be the cause of an outbreak of foodborne illness, remove them from the marketplace, and communicate to the supply chain.

Product passports

In the EU, under the renewed Sustainable Product Policy Initiative, the inclusion of a Digital Product Passport has been proposed. [35] [36] A material passport is a document consisting of all the materials that are included in a product or construction. It consists of a set of data describing defined characteristics of materials in products, useful for recovery, recycling, re-use and various evaluations. They may contribute to a more circular economy.

Product information management

Product information management (PIM) is the process of managing all the information required to market and sell products through distribution channels. This product data is created by an internal organization to support a multichannel marketing strategy. A central hub of product data can be used to distribute information to sales channels such as e-commerce websites, print catalogues, marketplaces such as Amazon and Google Shopping, social media platforms like Instagram and electronic data feeds to trading partners. Moreover, the significant role that PIM plays is reducing the abandonment rate by giving better product information. [37]

  • wide array of products and/or complex product data set
  • frequently changing product characteristics
  • increasing number of sales channels
  • non-uniform information technology infrastructure (plethora of data sources and formats)
  • online business and electronic ordering
  • various locales and localization requirements
  • support SEO strategies of business

See also

Related Research Articles

<span class="mw-page-title-main">Supermarket</span> Large format of grocery store

A supermarket is a self-service shop offering a wide variety of food, beverages and household products, organized into sections. This kind of store is larger and has a wider selection than earlier grocery stores, but is smaller and more limited in the range of merchandise than a hypermarket or big-box market. In everyday U.S. usage, however, "grocery store" is often used to mean "supermarket".

<span class="mw-page-title-main">Logistics</span> Management of the flow of resources

Logistics is a part of supply chain management that deals with the efficient forward and reverse flow of goods, services, and related information from the point of origin to the point of consumption according to the needs of customers. Logistics management is a component that holds the supply chain together. The resources managed in logistics may include tangible goods such as materials, equipment, and supplies, as well as food and other consumable items.

<span class="mw-page-title-main">Retail</span> Sale of goods and services from individuals or businesses to the end-user

Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and then sells in smaller quantities to consumers for a profit. Retailers are the final link in the supply chain from producers to consumers.

<span class="mw-page-title-main">Supply chain</span> System involved in supplying a product or service to a consumer

A supply chain is a complex logistics system that consists of facilities that convert raw materials into finished products which are later distributed to end consumers or end customers. Meanwhile, supply chain management deals with the flow of goods within the supply chain in the most efficient manner.

<span class="mw-page-title-main">Distribution (marketing)</span> Making products available to customers

Distribution is the process of making a product or service available for the consumer or business user who needs it, and a distributor is a business involved in the distribution stage of the value chain. Distribution can be done directly by the producer or service provider, or using indirect channels with distributors or intermediaries. Distribution is one of the four elements of the marketing mix: the other three elements being product, pricing, and promotion.

<span class="mw-page-title-main">Disintermediation</span> Eliminating middlemen from a supply chain

Disintermediation is the removal of intermediaries in economics from a supply chain, or "cutting out the middlemen" in connection with a transaction or a series of transactions. Instead of going through traditional distribution channels, which had some type of intermediary, companies may now deal with customers directly, for example via the Internet.

Ethical consumerism is a type of consumer activism based on the concept of dollar voting. People practice it by buying ethically made products that support small-scale manufacturers or local artisans and protect animals and the environment, while boycotting products that exploit children as workers, are tested on animals, or damage the environment.

<span class="mw-page-title-main">Trader Joe's</span> American grocery chain

Trader Joe's is an American chain of grocery stores headquartered in Monrovia, California. The chain has 560 stores across the United States.

<span class="mw-page-title-main">Online shopping</span> Form of electronic commerce

Online shopping is a form of electronic commerce which allows consumers to directly buy goods or services from a seller over the Internet using a web browser or a mobile app. Consumers find a product of interest by visiting the website of the retailer directly or by searching among alternative vendors using a shopping search engine, which displays the same product's availability and pricing at different e-retailers. As of 2020, customers can shop online using a range of different computers and devices, including desktop computers, laptops, tablet computers and smartphones.

Drop shipping is a form of retail business in which the seller accepts customer orders without keeping stock on hand. Instead, in a form of supply chain management, the seller transfers the orders and their shipment details either to the manufacturer, a wholesaler, another retailer, or a fulfillment house, which then ships the goods directly to the customer.

A rebate is a form of buying discount and is an amount paid by way of reduction, return, or refund that is paid retrospectively. It is a type of sales promotion that marketers use primarily as incentives or supplements to product sales. Rebates are also used as a means of enticing price-sensitive consumers into purchasing a product. The mail-in rebate (MIR) is the most common. A MIR entitles the buyer to mail in a coupon, receipt, and barcode in order to receive a check for a particular amount, depending on the particular product, time, and often place of purchase. Rebates are offered by either the retailer or the product manufacturer. Large stores often work in conjunction with manufacturers, usually requiring two or sometimes three separate rebates for each item, and sometimes are valid only at a single store. Rebate forms and special receipts are sometimes printed by the cash register at time of purchase on a separate receipt or available online for download. In some cases, the rebate may be available immediately, in which case it is referred to as an instant rebate. Some rebate programs offer several payout options to consumers, including a paper check, a prepaid card that can be spent immediately without a trip to the bank, or even as a PayPal payout.

Product finders are information systems that help consumers to identify products within a large palette of similar alternative products. Product finders differ in complexity, the more complex among them being a special case of decision support systems. Conventional decision support systems, however, aim at specialized user groups, e.g. marketing managers, whereas product finders focus on consumers.

<span class="mw-page-title-main">Fast fashion</span> Quick retail copying of catwalk trends

Fast fashion is the business model of replicating recent catwalk trends and high-fashion designs, mass-producing them at a low cost, and bringing them to retail stores quickly, while demand is at its highest. The term fast fashion is also used generically to describe the products of the fast fashion business model.

Sustainable consumption is the use of products and services in ways that minimize impacts on the environment in order for human needs to be met in the present but also for future generations. Sustainable consumption is often paralleled with sustainable production; consumption refers to use and disposal not just by individuals and households, but also by governments, businesses, and other organizations. Sustainable consumption is closely related to sustainable production and sustainable lifestyles. "A sustainable lifestyle minimizes ecological impacts while enabling a flourishing life for individuals, households, communities, and beyond. It is the product of individual and collective decisions about aspirations and about satisfying needs and adopting practices, which are in turn conditioned, facilitated, and constrained by societal norms, political institutions, public policies, infrastructures, markets, and culture."

The NIGP Commodity/Services Code is an acronym for the National Institute of Governmental Purchasings' Commodity/Services Code. The NIGP Code is a coding taxonomy used primarily to classify products and services procured by state and local governments in North America.

<span class="mw-page-title-main">Disposable food packaging</span>

Disposable food packaging comprises disposable products often found in fast-food restaurants, take-out restaurants and catering establishments. Typical products are foam food containers, plates, bowls, cups, utensils, doilies and tray papers. These products can be made from a number of materials including plastics, paper, bioresins, wood and bamboo.

Customer to customer markets provide a way to allow customers to interact with each other. Traditional markets require business to customer relationships, in which a customer goes to the business in order to purchase a product or service. In customer to customer markets, the business facilitates an environment where customers can sell goods or services to each other. Other types of markets include business to business (B2B) and business to customer (B2C).

Produce traceability makes it possible to track produce from its point of origin to a retail location where it is purchased by consumers.

Sustainable distribution refers to any means of transportation / hauling of goods between vendor and purchaser with lowest possible impact on the ecological and social environment, and includes the whole distribution process from storage, order processing and picking, packaging, improved vehicle loadings, delivery to the customer or purchaser and taking back packaging.

The retail format influences the consumer's store choice and addresses the consumer's expectations. At its most basic level, a retail format is a simple marketplace, that is; a location where goods and services are exchanged. In some parts of the world, the retail sector is still dominated by small family-run stores, but large retail chains are increasingly dominating the sector, because they can exert considerable buying power and pass on the savings in the form of lower prices. Many of these large retail chains also produce their own private labels which compete alongside manufacturer brands. Considerable consolidation of retail stores has changed the retail landscape, transferring power away from wholesalers and into the hands of the large retail chains.


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Further reading