What is Product and Service classification?

Classification of goods and services categorized between industry and customer goods is known as Product and Service classification. It is based on brands, quality, and quantity which companies deliver to the concerned client. Industrial goods are produced for industrial work, whereas consumer goods are produced for personal consumption by the customers. Marketing and sales need technological methods, a healthy environment, proper market strategies, marketing environment in terms of productivity and profit.

Companies need to analyze customer needs and classify products and services for smooth business operations and marketing. In the microenvironment, the market size is small, and hence, marketers have to understand the requirements of the consumers. It helps companies effectively promote their brand. The best possible way to promote a brand is to emphasize a product's characteristics more effectively. Marketing strategy and planning play a vital role in macro and microenvironments' social, cultural, and demographic populations.

An image of three persons providing different services
Figure 1: An image of three persons providing different services
CC-BY | Image Credits: https://pixabay.com/ | Pixabay

Measures for effective product and service classification

  • Development of vision and strategy are critical before classifying goods and services.
  • Management should be clear about the classification of goods and services before advertising a product and its characteristics to eliminate uncertain future risks.
  • 24 hours availability of customer services.
  • Ensure on-time delivery of goods and services to reflect the company’s commitment to its promise.
  • All-time availability of customer service representatives to address customer queries and grievances quickly.
  • Update products with new trends as per the tastes and preferences of customers.
  • Companies need to examine whether a particular product or service is safe to use before providing them to the customers.
  • After an effective classification, the marketing team needs to choose effective social media to promote a brand and its characteristics.
  • Marketing campaigns should be loud and clear for B2B (business-to-business) in terms of e-commerce.
  • Marketers should have a clear picture of the requirements for digital and general marketing in terms of internal and external market environments.
  • Market research should be a priority for product development.
  • When launching a new product, marketers need to be careful regarding classifying industrial goods, consumer goods, and durable and unsought products.
An image of word cloud showing effective marketing
Figure 2: An image of word cloud showing effective
CC-BY | Image Credits: https://commons.wikimedia.org/ | Thomaspeaden005

Types of products and service classification

Product and service classification can be divided into different categories. Some of the common product and service classifications are as follows:

Convenience goods: These are the goods that are required regularly and are consumed frequently. For example, salt, sugar, etc.

Specialty Goods: These are the goods that are not required regularly but are consumed occasionally. For example, cars, furniture, etc.

Unsought Goods: These are the goods that the consumers do not know about, and they do not even think of buying them until and unless they are made aware of them. For example, insurance policies, etc.

Shopping Products: These are the goods that the consumers compare based on price, quality, and other features before making a purchase. For example, clothes, electronic gadgets, etc.

An image showing the classification of consumer products
Figure 3: An image showing the classification of consumer products
CC-BY | Image Credit: https://www.marketingstudyguide.com/ | The Marketing Study Guide

Limitations/Challenges of Product and Service Classification

  • One major challenge of product and service classification is managing customer contact separately.
  • Need for hiring skilled based workers with technical knowledge.
  • Sometimes, it is difficult for companies to satisfy customer requirements due to constant changes in tastes and preferences.
  • Lack of decision-making skills within the management due to less knowledge about a competitive market and opportunities.
  • Political, social, and cultural factors influence the marketing of products and services. Additionally, socio-cultural and political environment factors might impact the internal marketing environment.
  • Lack of market research due to less awareness.
  • Poor productivity due to lack of training.
  • Lack of information regarding the forms of products like unsought products, durable products, industrial products, etc.
  • Managers find it difficult to control team and production if a greater number of salespersons are involved. This is because the issue of word-of-mouth might arise.
  • The marketing mix fails to set an effective action to advertise and promote goods and services from a brand.

Common Mistakes

Students may be aware of this topic, but they confuse specialization between marketing and sales. Generally, students wonder where to record product and service classification—whether under sales or marketing specialization. Often, they are puzzled regarding whether to consider marketing and sales specialization as the same or different. This issue impacts their exam performance directly. Due to this confusion, students find it difficult to attend any industrial training or internship. Therefore, teachers need to conduct counselling sessions and orientation programs regarding course specialization and career opportunities to make them understand. Teachers should take some demo classes regarding career counselling to create a clear image of job profile and position in terms of specialization.

Context and Applications

Product and service classification is a fundamental topic in marketing and is important for other courses of study like Bachelors of Business Administration (General), Post Graduate Program in Marketing, Masters in Business Administration (Marketing), and Diploma Courses in Sales & Marketing.

While studying product and service classification, it is important to read the following topics to understand the concept better:

  • Marketing
  • Marketing mix
  • Product distribution and classification
  • Business strategy
  • Service management

Practice Problems

1. Who quoted the statement, “Every business is a service business”?

  1. F.W Taylor
  2. Elton Mayo
  3. Philip Kotler
  4. Ravi Shankar

  Answer: c

Explanation: Great contributor and the father of marketing, Philip Kotler, stated that every business is a service business.

2. Which of the following product is known as an intangible dominant?

  1. Property
  2. Mining
  3. Loan
  4. Teaching

Answer: d

Explanation: Teaching is a novel profession. In intangible dominant service, education is pure service that students can see or feel but is impossible to touch.

3. Which element of the marketing mix talks about product and service classification?

  1. Promotion
  2. Price
  3. Product
  4. Plan

Answer: c

Explanation: The product element identifies what product or service is to be provided to the customers. It classifies the product from the service.

4. Products or goods can be classified either as _____________.

  1. Industry goods
  2. Consumer goods
  3. Both (a) and (b)
  4. Common goods

Answer: c

Explanation: Both services and goods can be classified into two categories of industrial and consumer goods.

5. Which of the following is a type of consumer product?

  1. Shopping product
  2. Industry product
  3. External asset
  4. Internal asset

Answer: a

Explanation: A shopping product is a product that is meant for final consumption by the customers.

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