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TYPES OF PRODUCTS

Products can be grouped in different ways (One approach is to distinguish between goods and services. Goods are basically objects, they can be touched, stored, transported and mass-produced. Services, consisting primarily of actions, have opposite characteristics. In general, services require different pricing, distribution and promotion techniques than goods do.).

The most widely spread one to categorize products is to look at who is doing the buying - individual consumers or industrial / organizational buyers. According to that approach all consumer goods can be divided into three subgroup: convenience goods, shopping goods and specialty goods.

Convenience goods are products that are readily available, low prices, and heavily advertised and that consumers buy quickly and often. They are inexpensive items like toothpaste, soda and razor blades. Because the buyer is already familiar with these things, habit is a strong influence in the purchase decision. People buy the same old brand or go to the same old shop because it is easy to do so. To cultivate these strong buying habits, many sellers of convenience goods use advertising and packaging to create an easily recognizable image.

Shopping goods are products for which a consumer spends a lot of time shopping in order to compare prices, quality and style. These are fairly important things that a person doesn't buy every day, like a stereo, a washing machine, a good suit. One reason a purchase requires more thought is the difference among brands in terms of price or features. The existence of these differences prompts comparison shopping. The shopping process is a form of education; the more unusual and expensive the product, the more the buyer checks around to compare models, features and prices. Various sources of information are used advertisements, sales people, friends and relatives.

Specialty goods are products that a consumer will make a special effort to buy. These are things like luxury items, channel perfume, Brooks Brothers suits, cars.

There are two basic types of industrial products: expense items and capital items.

Expense items come in two basic types: support consumables and industrial process consumables.

Support consumables includes inexpensive items used to support business - rubber bands, paper, file folders.

Industrial process consumables includes goods that are used in the basic operations of business, such as raw materials and component parts required in a manufacturing process.

Capital items are relatively expensive industrial goods that have a long life and are used in the operations of a business. They are: trucks, major pieces of equipment. If a capital item is very expensive, the purchase decision is often based on written competitive bids. These bids are evaluated by a team of top managers and technical people.

 


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ECONOMIC SYSTEMS | TEXT 19

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