Finance:Product (business)
In marketing, a product is an object or system made available for consumer use; 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 to as a type of product.
Commodities are usually raw materials such as metals and agricultural products, but a commodity can also be anything widely available in the open market. 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 a 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 non durable.
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 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:
- Replacement rate (How frequently is the product repurchased?)
- Gross margin (How much profit is obtained from each product?)
- Buyer goal adjustment (How flexible are the buyers' purchasing habits with regard to this product?)
- Duration of product satisfaction (How long will the product produce benefits for the user?)
- 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, gear box 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 by 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.
See also
- Builder's plate
- List of fastest-selling products
- Manufacturer part number
- Product teardown
References
- ↑ Kotler, P., Armstrong, G., Brown, L., and Adam, S. (2006) Marketing, 7th Ed. Pearson Education Australia/Prentice Hall.
- ↑ Sears online , sears.com.
- ↑ 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.
- ↑ 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.
- ↑ "2002 Economic Census, Finance and Insurance" US Census Bureau, 2002, p.14.
- ↑ Insurance carrier product lines at Curlie
- ↑ North American Product Classification System, U.S. Census Bureau
- ↑ Eurostat classifications , ec.europa.eu.
- ↑ United Nations product classifications , unstats.un.org.
- ↑ Leo Aspinwall, 1958 , Social Marketing AED Resource p. 45
- ↑ A history of schools of marketing thought, Eric H. Shaw, D.G. Brian Jones , Marketing theory Volume 5(3): 239–281, 2005 SAGE, p. 249
- ↑ National Institute of Governmental Purchasing , nigp.org
- ↑ NIGP Code
- ↑ NIGP Code sample
- ↑ Dyson: Help with your Dyson
- ↑ SOTW, Celebird, et al. "Model Number Vs. MPN" . Google Merchant Center: Help forum. August 31, 2009, accessed September 6, 2011.
Further reading
- Stark, John (2015). Product Lifecycle Management: Volume 1: 21st Century Paradigm for Product Realisation. Springer. ISBN 978-3-319-17439-6.
External links
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