Entering goods and services: These are products and services that become part of other products. We are referring to raw materials, component parts and materials. Examples of this type of B2B product include steering wheels for an automobile, lumber or metallic ores, formed parts or electronic products like integrated circuits. From the accounting perspective, entering goods and services are usually expensed rather than capitalized.
Foundation goods and services: These are products that are used to make other products. This includes installations and accessory equipment. The former are items like offices and buildings and the latter are machine tools. In contrast to entering goods and services, foundation goods do not become part of the end product. While the majority of them are capital items, some foundation goods can also be expensed.
Facilitating goods and services: These are products and services that help an organization achieve its objectives. In other words, they assist and support. Facilitating goods also do not enter the product or even the production process. Generally speaking, facilitating goods and services are expensed rather than capitalized. Examples include market research services, cleaning supplies and copiers. Facilitating goods can be divided into supplies and business services.
Consumer products are products purchased for personal, family, or household use. They are often grouped into four subcategories on the basis of consumer buying habits: convenience products, shopping products, specialty products and unsought products.
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 Non-durable products are those that are quickly used up or worn out, or that become outdated, such as food, school supplies, and disposable cameras.
Shopping products are purchased only after the buyer compares the various products and brands available through different retailers before making a deliberate buying decision. These products are usually of higher value than convenience goods, bought less frequently, and are durable. Price, quality, style, and color are typically factors in the buying decision. Televisions, computers, lawn mowers, bedding, and appliances are all examples of shopping products.
Because customers are going to shop for these products, a fundamental strategy in establishing stores that specialize in shopping products is to locate near similar stores in active shopping areas. Promotion for shopping products is often done cooperatively with the manufacturers and frequently includes the heavy use of advertising in local media, including newspapers, radio, and television.
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.
Staple convenience products are basic items that buyers plan to buy before they enter a store, and include milk, bread, and toilet paper. Impulse items are other convenience products that are purchased without prior planning, such as candy bars, soft drinks, and tabloid newspapers. Emergency products are those that are purchased in response to an immediate, unexpected need such as ambulance service or a fuel pump for the car.
Since convenience products are not actually sought out by consumers, producers attempt to get as wide a distribution as possible through various marketing channels which may include different types of wholesale and retail vendors. Convenience stores, vending machines, and fast food are examples of retailer focus on convenience products. Within stores, they are placed at checkout stands and other high-traffic areas.
Specialty products are items that consumers seek out because of their unique characteristics or brand identification. Buyers know exactly what they want and are willing to exert considerable effort to obtain it. These products are usually, but not necessarily, of high value. This category includes both durable and non-durable products. Specialty products differ from shopping products primarily because price is not the chief consideration. Often the attributes that make them unique are brand preference (e.g., a certain make of automobile) or personal preference (e.g., a food dish prepared in a specific way). Other items that fall into this category are wedding dresses, antiques, fine jewelry, and golf clubs.
Producers and distributors of specialty products prefer to place their products only in selected retail outlets. These outlets are chosen on the basis of their willingness and ability to provide an image of status, targeted advertising, and personal selling for the product. Consistency of image between the product and the store is also important.
Unsought products are those products that consumers are either unaware of or have little interest in actively pursuing. Examples are new innovations, life insurance, and preplanned funeral services. Because of the lack of awareness of these products or the need for them, heavy promotion is often required.
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.