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Product (business)

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(Redirected from Product (economics))
For other uses, see Product.
Products on shelves at a Fred Meyer hypermarket superstore

In marketing, a product is an object, or system, or service made available for consumer use as of the consumer demand; it is anything that can be offered to a domestic or an international 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 as a type of product.

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

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Eurail, a type of rail pass for multiple journeys by train, an intangible product

A product can be classified as tangible or intangible. A tangible product is an actual 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. These services can be broadly classified under intangible products, which can be durable or nondurable.

By use

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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

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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.[citation needed]

National and international product classifications

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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 the North American Industry Classification System (NAICS).[6] The European Union uses a "Classification of Products by Activity" among other product classifications.[7] The United Nations also classifies products for international economic activity reporting.[8]

The Aspinwall Classification System [9][10] classifies and rates products based on five variables:

  1. Replacement rate (How frequently is the product repurchased?)
  2. Gross margin (How much profit is obtained from each product?)
  3. Buyer goal adjustment (How flexible are the buyers' purchasing habits with regard to this product?)
  4. Duration of product satisfaction (How long will the product produce benefits for the user?)
  5. Duration of buyer search behavior (How long will consumers shop for the product?)

The National Institute of Governmental Purchasing (NIGP)[11] developed a commodity and services classification system for use by state and local governments, the NIGP Code.[12] 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.[13] Applications of the NIGP Code include vendor registration, inventory item identification, contract item management, spend analysis, and strategic sourcing.

Product model

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A manufacturer usually provides an identifier for each particular design 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.[14] 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).[15]

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, gearbox, 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 for 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.

Product information

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See also: Product analysis

Product information, beyond currency price information, can include:[16][additional citation(s) needed]

Many of these types of product information are regulated to some degree, such as to some degree prohibiting false or misleading product information or requiring sellers or manufacturers to specify various information such as ingredients of food-, pharmaceutical- and hygiene-products. There also is standardization. Marketing to entice the shopper[16] is often prioritized over accurate, high-quality or extensive and relevant information.

Product information is often a key element in the buyer decision process. Relevant factors include trust in the accuracy of the information and social normative pressure.[21][22] Easily accessible and up-to-date medicinal product information can contribute to the health literacy.[23] Online shopping is usually more informationally rich than shopping at physical stores traveled to and usually has higher comparability and customizability.[16]

Production information-related developments can be useful for enabling, facilitating, or shifting towards sustainable consumption and support more sustainable products. Environmental life-cycle assessment (LCA) has been widely used for to assess environmental impacts across the life cycle of products.[24] There are LCA datasets that assess all products in some supermarkets in a standardized way.[25][26] Consumers may seek reliable information to evaluate relevant characteristics of products such as durability and reliability.[27] Development of 'transparency by design' scenarios have been suggested to "complement the physical product with layers of digital information", improving transparency and traceability (T&T).[28] The app CodeCheck gives some smartphone users some capability to scan products for assessed ingredients.[29][30] Many labels are considered to be flawed and few have the time to "study the true environmental impact of every purchase". Full product transparency is a concept of making the full life-cycle impacts public.[31] An important element that is required for various product information is supply chain transparency, which relates to human rights and supply chain sustainability.[32][33]

Produce traceability

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This section is an excerpt from Produce traceability.[edit]

Produce traceability makes it possible to track produce from its point of origin to a retail location where it is purchased by consumers.

Produce traceability is an important link in protecting public health since it allows health agencies to more quickly and accurately identify the source of contaminated fruit or vegetables believed to be the cause of an outbreak of foodborne illness, remove them from the marketplace, and communicate to the supply chain.

Product passports

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In the EU, under the renewed Sustainable Product Policy Initiative, the inclusion of a Digital Product Passport has been proposed.[34][35] A material passport is a document consisting of all the materials that are included in a product or construction. It consists of a set of data describing defined characteristics of materials in products, useful for recovery, recycling, re-use and various evaluations. They may contribute to a more circular economy.

Product information management

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This section is an excerpt from Product information management.[edit]

Product information management (PIM) is the process of managing all the information required to market and sell products through distribution channels. This product data is created by an internal organization to support a multichannel marketing strategy. A central hub of product data can be used to distribute information to sales channels such as e-commerce websites, print catalogues, marketplaces such as Amazon and Google Shopping, social media platforms like Instagram and electronic data feeds to trading partners. Moreover, the significant role that PIM plays is reducing the abandonment rate by giving better product information.[36]

  • wide array of products and/or complex product data set
  • frequently changing product characteristics
  • increasing number of sales channels
  • non-uniform information technology infrastructure (plethora of data sources and formats)
  • online business and electronic ordering
  • various locales and localization requirements
  • support SEO strategies of business

See also

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References

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  1. ^ Kotler, P., Armstrong, G., Brown, L., and Adam, S. (2006) Marketing, 7th Ed. Pearson Education Australia/Prentice Hall.
  2. ^ Sears online Archived 2007-02-17 at the Wayback Machine, sears.com.
  3. ^ 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.
  4. ^ 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.
  5. ^ "2002 Economic Census, Finance and Insurance" US Census Bureau, 2002, p.14.
  6. ^ North American Product Classification System, U.S. Census Bureau
  7. ^ Eurostat classifications Archived 2007-10-12 at the Wayback Machine, ec.europa.eu.
  8. ^ United Nations product classifications Archived 2007-07-03 at the Wayback Machine, unstats.un.org.
  9. ^ Leo Aspinwall, 1958 Archived 2013-08-29 at the Wayback Machine, Social Marketing AED Resource p. 45
  10. ^ A history of schools of marketing thought, Eric H. Shaw, D.G. Brian Jones Archived 2010-12-05 at the Wayback Machine, Marketing theory Volume 5(3): 239–281, 2005 SAGE, p. 249
  11. ^ National Institute of Governmental Purchasing Archived 2008-10-26 at the Wayback Machine, nigp.org
  12. ^ NIGP Code Archived 2008-12-09 at the Wayback Machine
  13. ^ NIGP Code sample Archived 2008-10-17 at the Wayback Machine
  14. ^ Dyson: Help with your Dyson Archived 2011-08-27 at the Wayback Machine
  15. ^ SOTW, Celebird, et al. "Model Number Vs. MPN" Archived 2011-09-27 at the Wayback Machine. Google Merchant Center: Help forum. August 31, 2009, accessed September 6, 2011.
  16. ^ a b c Sarokin, David; Schulkin, Jay (26 August 2016). Missed Information: Better Information for Building a Wealthier, More Sustainable Future. MIT Press. p. 100. ISBN 978-0-262-03492-0.
  17. ^ Jahn, Gabriele; Schramm, Matthias; Spiller, Achim (1 March 2005). "The Reliability of Certification: Quality Labels as a Consumer Policy Tool". Journal of Consumer Policy. 28 (1): 53–73. doi:10.1007/s10603-004-7298-6. ISSN 1573-0700. S2CID 154681347.
  18. ^ Horne, Ralph E. (March 2009). "Limits to labels: The role of eco-labels in the assessment of product sustainability and routes to sustainable consumption". International Journal of Consumer Studies. 33 (2): 175–182. doi:10.1111/j.1470-6431.2009.00752.x.
  19. ^ Rubik, Frieder; Frankl, Paolo (29 September 2017). The Future of Eco-labelling: Making Environmental Product Information Systems Effective. Routledge. ISBN 978-1-351-28079-2.
  20. ^ Lusk, Jayson L.; Roosen, Jutta; Shogren, Jason (8 September 2011). The Oxford Handbook of the Economics of Food Consumption and Policy. OUP Oxford. ISBN 978-0-19-956944-1.
  21. ^ Sayogo, Djoko Sigit; Zhang, Jing; Picazo-Vela, Sergio; Bahaddin, Babak; Luna-Reyes, Luis (January 2018). "Understanding the Intention to Trust Product Information and Certifications to Promote Sustainable Consumption: Applying the Theory of Planned Behavior". University of Hawaii at Manoa: 5412–5421. {{cite journal}}: Cite journal requires |journal= (help)
  22. ^ Rupprecht, Christoph D. D.; Fujiyoshi, Lei; McGreevy, Steven R.; Tayasu, Ichiro (1 March 2020). "Trust me? Consumer trust in expert information on food product labels". Food and Chemical Toxicology. 137: 111170. doi:10.1016/j.fct.2020.111170. ISSN 0278-6915. PMID 32014536. S2CID 211025095.
  23. ^ "Electronic product information: From principles to actions". www.efpia.eu. Retrieved 4 November 2022.
  24. ^ Troullaki, Katerina; Rozakis, Stelios; Kostakis, Vasilis (1 June 2021). "Bridging barriers in sustainability research: Α review from sustainability science to life cycle sustainability assessment". Ecological Economics. 184: 107007. doi:10.1016/j.ecolecon.2021.107007. ISSN 0921-8009. S2CID 233550701.
  25. ^ "These are the UK supermarket items with the worst environmental impact". New Scientist. Retrieved 14 September 2022.
  26. ^ Clark, Michael; Springmann, Marco; Rayner, Mike; Scarborough, Peter; Hill, Jason; Tilman, David; Macdiarmid, Jennie I.; Fanzo, Jessica; Bandy, Lauren; Harrington, Richard A. (16 August 2022). "Estimating the environmental impacts of 57,000 food products". Proceedings of the National Academy of Sciences. 119 (33): e2120584119. Bibcode:2022PNAS..11920584C. doi:10.1073/pnas.2120584119. ISSN 0027-8424. PMC 9388151. PMID 35939701.
  27. ^ Levin, Mark A.; Kalal, Ted T. (25 July 2003). Improving Product Reliability: Strategies and Implementation. John Wiley & Sons. ISBN 978-0-470-86449-4.
  28. ^ Barata, João; da Cunha, Paulo Rupino (1 February 2021). "Augmented product information: crafting physical-digital transparency strategies in the materials supply chain". The International Journal of Advanced Manufacturing Technology. 112 (7): 2109–2121. doi:10.1007/s00170-020-06446-9. ISSN 1433-3015. S2CID 234046442.
  29. ^ Mulka, Angela (21 April 2022). "Apps for Earth Day: 5 options to keep your green goals". SFGATE. Retrieved 26 May 2022.
  30. ^ Frangoul, Anmar. "How tech is helping to change the way people think about the food on their plate". CNBC. Retrieved 4 November 2022.
  31. ^ Arratia, Ramon (18 December 2012). "Full product transparency gives consumers more informed choices". The Guardian. Retrieved 4 November 2022.
  32. ^ Mollenkopf, Diane A.; Peinkofer, Simone T.; Chu, Yu ( Jade) (June 2022). "Supply chain transparency: Consumer reactions to incongruent signals". Journal of Operations Management. 68 (4): 306–327. doi:10.1002/joom.1180. ISSN 0272-6963. S2CID 248198930.
  33. ^ "Supply chain transparency, explained". MIT Sloan. Retrieved 4 November 2022.
  34. ^ "Leading the way in the global circular economy" (PDF). European Commission. Retrieved 14 March 2022.
  35. ^ "Digitalisation for a circular economy". European Policy Centre. Retrieved 14 March 2022.
  36. ^ Latt, Aung (2019-03-11). "Why PIM is crucial to every distributor's ecommerce strategy". Digital Commerce 360. Retrieved 2020-05-10.

Further reading

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