Product Classification: Definition, Types, and Significance

What is a Product in Marketing?

A product is something that is made with the purpose of being sold in the marketplace. The use of products satisfies the needs of customers. All marketing operations centre around the product, which is one of the most important aspects of marketing.

There are two types of products: tangible and intangible. Intangible products are referred to as services, while physical things are referred to as goods.

According to Perreault, Cannon and McCarthy “A product is the need-satisfying offering of a firm.”

According to Grewal and Levy “A product is anything that is of value to a consumer and can be offered through a voluntary marketing exchange.”

According to Kerin, Hartley and Rudelius “A product is a good, service or idea consisting of a bundle or tangible and intangible attributes that satisfies consumers’ needs and is received and exchanged for money or something else of value.”

These definitions have two fundamental components. They are −

Satisfies a Customer's Need Or Adds Value To Their Life

The first similarity is that a product is created to suit a customer's need while also providing value (benefits).

Let us take note of the following comparable phrases in each product definition −

"Valuable to a customer"

"The offering that satisfies a need"

"Meets the needs of customers"

Customers Can Obtain By Exchanging

As underlined in the following extracts from the definitions, the second point of agreement is that a product is made available for clients to get via a marketing exchange (almost always exchanging money, but sometimes exchanging information and time).

"A firm's offering"

"This service is provided as part of a voluntary marketing exchange."

"It is given and received"

Classification of Products in Marketing

Product classification is a marketing and commercial phrase that divides products into categories depending on how and why customers buy them. The organizing of the various sorts of products that consumers purchase is referred to as product classification.

Consumer goods and industrial goods are the two types of products. These can be further divided into the following categories −

Consumer Products

Consumer goods are made for the final consumer's personal use.

Convenience Products

Convenience Products are typically low-cost, readily available items that customers purchase on a regular basis without prior preparation or research, and with minimal comparison and purchasing effort. Customers can obtain such products through a wide range of distribution channels, including all retail shops.

Fast moving consumer goods (FMCG) such as soap, toothpaste, detergents, and food items such as rice, wheat flour, salt, sugar, milk, and so on fall into this category.

Informed or Shopping goods

Shopping items and services are more expensive (in comparison to convenience products) and are less commonly purchased consumer goods and services. When purchasing such products or services, the consumer devotes a significant amount of time and effort to acquiring information about the product before making a purchase based on price, quality, features, style, and suitability.

These products are only available through a few exclusive distribution outlets. Televisions, air conditioners, automobiles, furniture, hotel and airline services, and tourism services are all examples.

Specialty goods

Customers are convinced that this product is superior to all other competing brands in terms of features and quality, and thus are willing to pay a high price for it. Specialty Products are high-priced branded products and services with unique features, and customers are convinced that this product is superior to all other competing brands in terms of features and quality, and thus are willing to pay a high price for it.

These items are rarely acquired, perhaps once or twice in a lifetime, and are supplied through one or a few limited distribution venues. Specialty products are not compared by purchasers.

Mandatory or Unsought goods

Consumers that buy mandatory purchases, often known as unsought goods, do so out of necessity rather than want. Typically, these are items like batteries, smoke detectors, air filters, and cleaning supplies that buyers aren't very enthusiastic to acquire. When advertising these things, marketing teams can concentrate on reminding customers of their need for them and establishing brand familiarity, allowing them to buy a specific brand without hesitation.

A marketing team might, for example, promote a flashlight by showing someone utilizing one during a power outage.

Industrial or Business Products

Industrial goods are basically made for industrial purposes.

Materials and Parts

Agricultural products, crude petroleum, and iron ore are examples of raw materials; produced materials include iron, yarn, cement, and wires; and component parts include small motors, tyres, and castings.

Capital Items

Capital items include installations such as factories and offices, fixed equipment such as generators, computer systems, and elevators, and auxiliary equipment such as tools and office equipment.


Lubricants, coal, paper, pencils, and repair supplies such as paint, nails, and brooms are among the supplies available.

Business Services

Maintenance and repair services, such as computer repair, legal services, consulting services, and advertising services, are all examples of services.

Reasons for Classification of Products

Professionals divide products into categories for a variety of reasons. Product classifications can influence a variety of decisions during a product's life cycle, including how corporations promote it, its pricing, the sort of consumer who buys it, and how high demand is for it.

Other reasons why professionals classify products include the following reasons −

Marketing Strategies

As previously stated, the strategies used by marketing teams to promote a product are typically determined by its classification type. The focus of a campaign and the marketing budget can both be affected by product classification.

For example, a corporation is less likely to invest money on organizing a focus group to test its product while selling a speciality item. They may instead devote their resources to brand management.

Product Pricing

The classification a product receives can have an impact on how merchants and distributors price it. Because consumers value the availability and necessity of convenience items and necessary purchases, they are generally less expensive than specialty items or informed purchases.

Convenience and necessary items are also more regular in nature, and include lower-cost things like meals. Because consumers have a lesser level of brand loyalty for products in these categories, it's even more crucial for companies selling convenience and necessary purchases to assign a lower price to these things in order to compete with other brands.

Product Demand

The demand for a product is frequently affected by its classification. In general, customers choose to buy obligatory and convenience items over speciality and informed purchases. This has an impact on how corporations make these products and how marketing teams promote them.

Companies selling specialist and informed buy products may need to devote more time and money to marketing their products since consumers may require more inducement to make purchases that they need less frequently.


A corporation may consider product classes when determining which products to develop. Because marketing efforts for each sort of product differ, a corporation may choose to specialize in one type of advertisement, limiting the types of items they can produce.

The demand for a product, which influences how specialists form product categories, can also have an impact on a company's decision to develop a product


In conclusion, product classification can help determine product demand, pricing and the primary demographic to which advertisers can target with their marketing campaigns.