Welcome to the SmallBusiness.com WIKI
The free sourcebook of small business knowledge from SmallBusiness.com
Currently with 28,399 entries and growing.

WIKI Welcome Page
Local | Glossaries | How-to's | Guides | Start-up | Links | Technology | All Hubs
About · Help Hub · Register to Edit · Editing Help
Twitter: @smallbusiness | Facebook | Pinterest | Google+

Product (business)

SmallBusiness.com: The free small business resource
Jump to: navigation, search

The noun product is defined as a "thing produced by labor or effort"[1] or the "result of an act or a process"[2], and stems from the verb produce, from the Latin prōdūce(re) '(to) lead or bring forth'. Since 1575, the word "product" has referred to anything produced[3]. Since 1695, the word has referred to "thing or things produced". The economic or commercial meaning of product was first used by political economist Adam Smith[4].

In marketing, a product is anything that can be offered to a market that might satisfy a want or need[5]. In retailing, products are called merchandise. In manufacturing, products are purchased as raw materials and sold as finished goods. Commodities are usually raw materials such as metals and agricultural products, but a commodity can also be anything widely available in the open market. In project management, products are the formal definition of the project deliverables that make up or contribute to delivering the objectives of the project.

In general usage, product may refer to a single item or unit, a group of equivalent products, a grouping of goods or services, or an industrial classification for the goods or services.

A related concept is subproduct, a secondary but useful result of a production process.

Contents

[edit] Product groups

[edit] Tangible and Intangible Products

Products can be classified as tangible or intangible. [6] A tangible product is any physical product like a computer, automobile, etc. An intangible product is a non-physical product like an insurance policy.

[edit] Categories

In its online product catalog, retailer Sears, Roebuck and Company divides its products into departments, then presents products to shoppers according to (1) function or (2) brand.[7] Each product has a Sears item number and a manufacturer's model number. The departments and product groupings that Sears uses are intended to help customers browse products by function or brand within a traditional department store structure.[8]

[edit] Sizes and colors

A catalog number, especially for clothing, may group sizes and colors. When ordering the product, the customer specifies size, color and other variables.[9] example: you walk into a store and see a group of shoes and in that group are sections of different colors of that type of shoe and sizes for that shoe to satisfy your need.

[edit] Product line

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."[10]

Many businesses offer a range of product lines which may be unique to a single organization 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".[11] Within the insurance industry, product lines are indicated by the type of risk coverage, such as auto insurance, commercial insurance and life insurance.[12]

[edit] National and international product classifications

Various classification systems for products have been developed for economic statistical purposes. The North American Industry Classification System (NAICS) classifies companies by their primary product [this is not even close to true, NAICS is a production-oriented classification system, not a product-oriented classification system --- the NAFTA signatories are working on a system that classifies products called NAPCS as a companion to NAICS http://www.census.gov/eos/www/napcs/napcs.htm.]. The European Union uses a "Classification of Products by Activity" among other product classifications.[13] The United Nations also classifies products for international economic activity reporting.[14]

The Aspinwall Classification System (Leo Aspinwall, 1958) 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)[15] developed a commodity and services classification system for use by state and local governments, the NIGP Code. [16] 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. [17] Applications of the NIGP Code include vendor registration, inventory item identification, contract item management, spend analysis and strategic sourcing.

i love me neicy==See also==

[edit] Notes and references

  1. Random House Dictionary, 1975
  2. Glossary of the terms related to quality assurance from the Tempus Joint European Project for the Development of Quality Assurance
  3. Etymology of product, etymonline.com.
  4. Etymology of produce, etymonline.com.
  5. Kotler, P., Armstrong, G., Brown, L., and Adam, S. (2006) Marketing, 7th Ed. Pearson Education Australia/Prentice Hall.
  6. upenn.edu
  7. Sears online, sears.com.
  8. 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.
  9. L.L. Beans webpage for ordering men's "Dress Chinos, Classic Fit Pleated", catalog number TA55203. llbean.com. Accessed 2007-07-01.
  10. Kotler, Philip; Gary Armstrong (1989). Principles of Marketing, fourth edition (Annotated Instructor's Edition). Prentice-Hall, Inc.. pp. 639 (glossary definition). Template:Citation/identifier. 
  11. "2002 Economic Census, Finance and Insurance" US Census Bureau, 2002, p.14.
  12. Insurance carrier product lines at the Open Directory Project
  13. Eurostat classifications, ec.europa.eu.
  14. United Nations product classifications, unstats.un.org.
  15. National Institute of Governmental Purchasing,nigp.org
  16. NIGP Code,nigp.com
  17. NIGP Code sample,