Product Classification by Philip Kotler – Three levels of Product Classification

Product classification

Product is a key element in different market offerings. To achieve the market leadership, firm should offer superior quality product and services which satisfy customer needs and wants and provide value to them. Many people think that product is a tangible thing but product is anything offered by marketer to satisfy needs and wants of customers. It includes Physical goods, services, experience, events, person, place, properties,organization,information,and ideas.

Marketers classify their product on different basis which are Durability,Tangibility and Use. They use different marketing mix strategies to facilitate their products to customers.


(1) On the Basis of Durability and Tangibility: According to durability and tangibility product can be classified in further three groups which are:

(i)  Non-Durable Goods: It include those tangible goods which we consume normally in one or few uses like Shampoo, Biscuits,Pencil,etc.

Strategies for non-durable goods are:

– Easily available in many location

-Lesser markup(Margin) Charge

-Heavy investment on advertisement which increase customers information level.

(ii)Durable Goods: These goods are opposite to non-durable goods. These are tangible goods which normally survive many uses and doesn’t purchased frequently. These goods are not available easily at all outlets.For example: Refrigerators, Machine tools,etc.

Strategies for Durable Goods are:

-Personal selling and services are required here.

-High Margin on durable goods

-Less advertisement required.

-Not available at all outlets, available in special.

-Require more sellers guarantee.

(iii)Services: These are intangible in nature and these are inseparable, variable and perishable product in which production and consumption simultaneously. There are some features on which services provider focus like Quality- here quality control required by service provider.Supplier Credibility- Here trust factors of service provider required.Adaptability- means there should be flexibility. For example: Haircut, Legal advice and Restaurant quality etc.

Strategies for services are:

-Quality services required

-Trust factor of service provider

-Easily available

-advertisement is required to aware customers.


(2) On the basis of Use:According to use the product are classified into two Consumer goods and Industrial goods.

(1) Consumer Goods Classification: In consumer goods, products are classified on the basis of Convenience, Shopping, Specialty and unsought goods.

   (i)Convenience goods:Convenience goods are those which are frequently purchased bu consumer, minimum efforts required in this.These goods are non-durable goods and easily available at all outlets. For example; Soft drinks, Soap, shampoo,etc.Convenience goods are further classified in three types which are:

 *  Staple goods: Those product which consumer purchase on routine or regular basis.Foe example- Ketchup, Toothpaste,etc.

 *Impulse goods: Those product which consumer purchase without planning and search efforts.For example-Candy bars,Magazine,etc.

 *Emergency Goods:Those goods which are purchased on emergency. For example- Recharge,Umbrella during rainstorm,etc.

  (ii)Shopping goods:Shopping goods are expensive product people think before purchase. These goods are compared bu consumer on such basis as suitability,Quality,Price and Style.For example- Furniture,Clothing,etc.

These goods are further classified into two Homogeneous shopping goods and Heterogeneous shopping goods.

 Homogeneous shopping goods are similar in quality but different in price.Heterogeneous shopping goods are different in product features and different in services which are most important then price.

Strategy for shopping goods- For heterogeneous goods sellers has to carry wide assortment to satisfy individual taste

– Trained sales person to explain features to customers in better way so they are attracted and motivated to buy our product.

  (iii)Specialty Goods:Those goods which have unique characteristics or unique brand identification and for those buyer make special efforts to purchase. For example- Mercedes is special good because interested customers buy without any comparison.

Strategy for special goods-

 personal selling

(iv)Unsought Goods:Those goods which are not known to customer,normally they think to purchase it. We need to aware through advertisement.For example- Smoke detector.

Strategy for unsought goods are:

– Heavy investment on advertisement to aware customer

-Personal selling support to increase customer knowledge.


(2) Industrial Goods classification: It include those goods which we use in entire production process and relative cost. It includes Material and parts, Capital items and Suppliers and Business services.

(i)Material and Parts:Material which we use for further production and parts which we assemble to use.

Raw material- Which we use for further production.It includes perishable and seasonal goods. For example: Cotton, Wheat,Fruits,Vegetables,etc.

Natural products- These products are limited. For example: Iron,Mines and oil, Natural gas,etc.

 Manufacturing products and material- Those which need for further manufacturing. These are consumed by the business for further production.These are categorized into two Component material and component parts. Component material used to manufacture other like iron into steel. Component parts are usually assemble to use like Tires into cars.

Strategies for Material and Parts are:

  • Raw material- Quality, easily available with less advertisement.
  • Natural product- Limited supply,Low unit value,Few but target producers.
  • Manufacturing products and material- Personal selling,Negotiation,Long term relationship.

(ii)Capital items:These items are long-lasting and we use it in product development and management of goods.These are further categories into two, Installation and Equipment.

  • Installation: These items need installation after purchase. Only purchase is not sufficient.For example: Generator,Aqua-guard,etc. Strategy for this is to Personal selling
  • Equipment: It include any portable machinery or tools. Strategy for it Direct buying.

(iii)Supplier and Business services: It includes short term goods and services which facilitates development and management of finish goods. It include Maintenance & Repair and Operating suppliers. Maintenance & Repair include those who maintain and repair along with  equipment we need to maintain.Operating suppliers include those machines required for running business operations.

Strategies for supplier and business services are

– Straight re-buy

-Maintenance and Repair.


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