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.

Contents

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. These 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 design 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

This section is an excerpt from Produce traceability.[ edit ]

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

This section is an excerpt from Product information management.[ edit ]

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 United States usage, however, "grocery store" is often used to mean "supermarket".

<span class="mw-page-title-main">Retail</span> Sale of goods and services

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, sometimes expressed as a "supply-chain", is a complex logistics system that consists of facilities that convert raw materials into finished products and distribute them 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 by 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">Pricing</span> Process of determining what a company will receive in exchange for its products

Pricing is the process whereby a business sets the price at which it will sell its products and services, and may be part of the business's marketing plan. In setting prices, the business will take into account the price at which it could acquire the goods, the manufacturing cost, the marketplace, competition, market condition, brand, and quality of product.

<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.

<span class="mw-page-title-main">Merchandising</span> Promotion of product sales

Merchandising is any practice which contributes to the sale of products to a retail consumer. At a retail in-store level, merchandising refers to displaying products that are for sale in a creative way that entices customers to purchase more items or products.

<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.

In marketing, 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 quickly while demand is at its highest. The term fast fashion is also used generically to describe the products of this business model, particularly clothing and footwear. Retailers who employ the fast fashion strategy include Primark, H&M, Shein, and Zara, all of which have become large multinationals by driving high turnover of inexpensive seasonal and trendy clothing that appeals to fashion-conscious consumers.

<span class="mw-page-title-main">Food marketing</span> Promotion of food for sale

Food marketing is the marketing of food products. It brings together the food producer and the consumer through a chain of marketing activities.

<span class="mw-page-title-main">Sustainable fashion</span>

Sustainable fashion is a term describing efforts within the fashion industry to reduce its environmental impacts, protect workers producing garments, and uphold animal welfare. Sustainability in fashion encompasses a wide range of factors, including cutting CO2 emissions, addressing overproduction, reducing pollution and waste, supporting biodiversity, and ensuring that garment workers are paid a fair wage and have safe working conditions.

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.

Supply-chain sustainability is the management of environmental, social and economic impacts and the encouragement of good governance practices, throughout the lifecycles of goods and services. There is a growing need for integrating sustainable choices into supply-chain management. An increasing concern for sustainability is transforming how companies approach business. Whether motivated by their customers, corporate values or business opportunity, traditional priorities such as quality, efficiency and cost regularly compete for attention with concerns such as working conditions and environmental impact. A sustainable supply chain seizes value chain opportunities and offers significant competitive advantages for early adopters and process innovators.

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.

References

  1. ↑ Kotler, P., Armstrong, G., Brown, L., and Adam, S. (2006) Marketing, 7th Ed. Pearson Education Australia/Prentice Hall.
  2. ↑ Sears online Archived 2007-02-17 at the Wayback Machine , sears.com.
  3. ↑ When an online Sears customer goes to the "Parts and accessories" section of the website to find parts for a particular Sears item, the "model number" field actually requires a Sears item number, not a manufacturer's model number. This is a typical problem with product codes or item codes that are internally assigned by a company but do not conform to an external standard.
  4. ↑ Kotler, Philip; Gary Armstrong (1989). Principles of Marketing, fourth edition (Annotated Instructor's ed.). Prentice-Hall, Inc. pp. 639 (glossary definition). ISBN   0-13-706129-3.
  5. ↑ "2002 Economic Census, Finance and Insurance" US Census Bureau, 2002, p.14.
  6. ↑ Insurance carrier product lines at Curlie
  7. ↑ North American Product Classification System, U.S. Census Bureau
  8. ↑ Eurostat classifications Archived 2007-10-12 at the Wayback Machine , ec.europa.eu.
  9. ↑ United Nations product classifications Archived 2007-07-03 at the Wayback Machine , unstats.un.org.
  10. ↑ Leo Aspinwall, 1958 Archived 2013-08-29 at the Wayback Machine , Social Marketing AED Resource p. 45
  11. ↑ A history of schools of marketing thought, Eric H. Shaw, D.G. Brian Jones Archived 2010-12-05 at the Wayback Machine , Marketing theory Volume 5(3): 239–281, 2005 SAGE, p. 249
  12. ↑ National Institute of Governmental Purchasing Archived 2008-10-26 at the Wayback Machine , nigp.org
  13. ↑ NIGP Code Archived 2008-12-09 at the Wayback Machine
  14. ↑ NIGP Code sample Archived 2008-10-17 at the Wayback Machine
  15. ↑ Dyson: Help with your Dyson Archived 2011-08-27 at the Wayback Machine
  16. ↑ SOTW, Celebird, et al. "Model Number Vs. MPN" Archived 2011-09-27 at the Wayback Machine . Google Merchant Center: Help forum. August 31, 2009, accessed September 6, 2011.
  17. 1 2 3 Sarokin, David; Schulkin, Jay (26 August 2016). Missed Information: Better Information for Building a Wealthier, More Sustainable Future. MIT Press. p. 100. ISBN   978-0-262-03492-0.
  18. ↑ Jahn, Gabriele; Schramm, Matthias; Spiller, Achim (1 March 2005). "The Reliability of Certification: Quality Labels as a Consumer Policy Tool". Journal of Consumer Policy. 28 (1): 53–73. doi:10.1007/s10603-004-7298-6. ISSN   1573-0700. S2CID   154681347.
  19. ↑ Horne, Ralph E. (March 2009). "Limits to labels: The role of eco-labels in the assessment of product sustainability and routes to sustainable consumption". International Journal of Consumer Studies. 33 (2): 175–182. doi:10.1111/j.1470-6431.2009.00752.x.
  20. ↑ Rubik, Frieder; Frankl, Paolo (29 September 2017). The Future of Eco-labelling: Making Environmental Product Information Systems Effective. Routledge. ISBN   978-1-351-28079-2.
  21. ↑ Lusk, Jayson L.; Roosen, Jutta; Shogren, Jason (8 September 2011). The Oxford Handbook of the Economics of Food Consumption and Policy. OUP Oxford. ISBN   978-0-19-956944-1.
  22. ↑ Sayogo, Djoko Sigit; Zhang, Jing; Picazo-Vela, Sergio; Bahaddin, Babak; Luna-Reyes, Luis (January 2018). "Understanding the Intention to Trust Product Information and Certifications to Promote Sustainable Consumption: Applying the Theory of Planned Behavior". University of Hawaii at Manoa: 5412–5421.{{cite journal}}: Cite journal requires |journal= (help)
  23. ↑ Rupprecht, Christoph D. D.; Fujiyoshi, Lei; McGreevy, Steven R.; Tayasu, Ichiro (1 March 2020). "Trust me? Consumer trust in expert information on food product labels". Food and Chemical Toxicology. 137: 111170. doi: 10.1016/j.fct.2020.111170 . ISSN   0278-6915. PMID   32014536. S2CID   211025095.
  24. ↑ "Electronic product information: From principles to actions". www.efpia.eu. Retrieved 4 November 2022.
  25. ↑ Troullaki, Katerina; Rozakis, Stelios; Kostakis, Vasilis (1 June 2021). "Bridging barriers in sustainability research: Α review from sustainability science to life cycle sustainability assessment". Ecological Economics. 184: 107007. doi:10.1016/j.ecolecon.2021.107007. ISSN   0921-8009. S2CID   233550701.
  26. ↑ "These are the UK supermarket items with the worst environmental impact". New Scientist. Retrieved 14 September 2022.
  27. ↑ Clark, Michael; Springmann, Marco; Rayner, Mike; Scarborough, Peter; Hill, Jason; Tilman, David; Macdiarmid, Jennie I.; Fanzo, Jessica; Bandy, Lauren; Harrington, Richard A. (16 August 2022). "Estimating the environmental impacts of 57,000 food products". Proceedings of the National Academy of Sciences. 119 (33): e2120584119. Bibcode:2022PNAS..11920584C. doi: 10.1073/pnas.2120584119 . ISSN   0027-8424. PMC   9388151 . PMID   35939701.
  28. ↑ Levin, Mark A.; Kalal, Ted T. (25 July 2003). Improving Product Reliability: Strategies and Implementation. John Wiley & Sons. ISBN   978-0-470-86449-4.
  29. ↑ Barata, João; da Cunha, Paulo Rupino (1 February 2021). "Augmented product information: crafting physical-digital transparency strategies in the materials supply chain". The International Journal of Advanced Manufacturing Technology. 112 (7): 2109–2121. doi:10.1007/s00170-020-06446-9. ISSN   1433-3015. S2CID   234046442.
  30. ↑ Mulka, Angela (21 April 2022). "Apps for Earth Day: 5 options to keep your green goals". SFGATE. Retrieved 26 May 2022.
  31. ↑ Frangoul, Anmar. "How tech is helping to change the way people think about the food on their plate". CNBC. Retrieved 4 November 2022.
  32. ↑ Arratia, Ramon (18 December 2012). "Full product transparency gives consumers more informed choices". The Guardian. Retrieved 4 November 2022.
  33. ↑ Mollenkopf, Diane A.; Peinkofer, Simone T.; Chu, Yu ( Jade) (June 2022). "Supply chain transparency: Consumer reactions to incongruent signals". Journal of Operations Management. 68 (4): 306–327. doi:10.1002/joom.1180. ISSN   0272-6963. S2CID   248198930.
  34. ↑ "Supply chain transparency, explained". MIT Sloan. Retrieved 4 November 2022.
  35. ↑ "Leading the way in the global circular economy" (PDF). European Commission . Retrieved 14 March 2022.
  36. ↑ "Digitalisation for a circular economy". European Policy Centre. Retrieved 14 March 2022.
  37. ↑ Latt, Aung (2019-03-11). "Why PIM is crucial to every distributor's ecommerce strategy". Digital Commerce 360. Retrieved 2020-05-10.

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