Prof. Nankin - Page 1PRODUCT LECTURESI.TYPES OF PRODUCTS (Remember, a product can be a GOOD, SERVICE, orIDEA):A.Consumer Goods Classification– Convenience, Shopping, Specialty,and Unsought.Remember the focus is on how the consumerperceivesthe product as to whether it is a Convenience, Shopping,Specialty or Unsought good.B.5 Categories of Organizational Goods1)Raw materials— Agricultural products and Natural products.Natural products (coal, iron, oil, aluminum, etc.) are used in producingthe final good.Purchase is usually direct and on a contractual basis.2)Fabricating Materials(undergo further processing - flour tobakeries, sheet metal to auto manufacturers) andFabricating Parts(sold as is - batteries, tires for cars) are industrial goods that becomepart of the final product.Normally purchased directly formmanufacturers on a contractual basis.Branding, while not typical inthis category, has increased in recent years as the competitiveadvantage branding can bring to a producthas become moreapparent to fabricated goods manufacturers (e.g., Intel Insideadvertising campaign for its microprocessors).It has been a part ofsome astute manufacturers’ strategies for decades (DuPont’s Teflonand Stainmaster carpets and 3M’s Scotchguard for stain protection).3)Installations —Capital equipment with a long life and affectingthe scale of operations of an organization.Usually sold directly frommanufacturer to user. [Ex. Steel mill, printing press, buses, aircraft,etc.]4)Accessory equipment— Capital items (tangible goods such asPCs, small lathes or hand drills, small photocopiers, etc.) that are usedin an organization’s operations but that have a shorter life and are lessexpensive than installations.Normally purchases are made frommiddlemen, but large scale orders can be negotiated directly with themanufacturer.5)Operating Supplies— Low per-unit-value items of short life thatare purchased frequently and do not become part of the final product.Typically considered as expense items for accounting purposes, theseitems are usually purchased from wholesalers.(Examples: Officesupplies, light bulbs, cleaning and maintenance supplies) They aresimilar to consumer convenience goods (low involvement in purchase)and typically are purchased using the straight rebuy method).
