Successful businesses can credit outstanding customer service, welcoming brick-and-mortar locations, intuitive digital storefronts, effective marketing strategies, and much more. Yet, the cornerstone of a company’s success is its product. Without a compelling, quality product, even the most expertly managed business will struggle to attract and retain customers.
This article explores the role a product plays in a business and digs into the various product categories that product managers, businessowners, and entrepreneurs need to understand.
Table of contents
What is a product?
A product is anything sold to satisfy a market want or need, whether a physical item, a digital item, or a service.
Physical products are tangible items that can be touched, like clothing, furniture, or food. Digital products (or virtual products) are intangible items that exist in electronic form, like ebooks, social media platforms, software, or online courses. Hybrid products combine both physical and digital elements, like a smartwatch that integrates hardware (tangible) with software applications (intangible).
Services are activities performed by individuals or businesses to benefit customers, such as consulting, landscaping, haircuts, or financial advice.
Durable goods vs. nondurable goods
How long a product lasts is another way products are categorized. Durable goods, such as appliances and furniture, have a longer lifespan, typically three years or more. Non-durable goods, such as food and personal-care products, have a limited shelf life and are consumed quickly.
Types of products
Various types of products meet different market and customer needs. Understanding categories and product characteristics is crucial for creating and marketing offerings effectively, and choosing the correct pricing strategy.
Here are the major categories of products:
Consumer products
Consumer products are goods and services purchased for personal or household use. The various types of consumer goods include:
Convenience goods
These are products that consumers purchase frequently and without much thought—think snacks, household goods, toiletries, and cleaning supplies.
Shopping goods
These products typically require more time and effort from consumers, as they compare features, prices, and quality before making a purchase. Clothing, electronics, and home furnishings are classic examples of shopping goods buyers often spend time researching, weighing benefits, and comparing options.
Specialty goods
These are unique, high-end products with specific characteristics or brand identities that appeal to a niche market. From luxury watches to designer handbags to high-performance sports cars, specialty goods cater to discerning customers willing to pay a premium for quality and exclusivity.
Unsought goods
These are products that consumers do not actively seek out or are unaware of until they need them. A life insurance policy, fire extinguishers, and cemetery plots are examples of unsought goods that people often only consider when a specific need arises.
Industrial products
Unlike consumer products, industrial goods are made to produce other goods or provide services. They include raw materials, machinery, and goods not typically sold directly to consumers. Industry products—or vertical market products—serve broad business sectors, such as energy, health care, financial services, or information technology, and are tailored to meet the specific needs of these industries.
Here are various categories of industrial products:
Raw materials
Raw materials are unprocessed materials used to create other products, such as lumber, crude oil, and minerals. Timber is a raw material used in construction and homebuilding, crude oil is refined into gasoline, and iron ore is used to make steel.
Component parts
These are manufactured items incorporated into other products during the assembly process. Computer chips are essential in smartphones, engines power cars, and buttons are used to fasten clothing.
Major equipment
These are large, expensive machines used in the production process, such as factory machinery, construction equipment, and commercial vehicles. Assembly line robots streamline manufacturing processes, excavators move earth on construction sites, and delivery trucks carry goods to customers.
Operating supplies
These are consumable items used to support business operations but are not part of the final product. For instance, businesses rely on office supplies to keep things running smoothly and safety gear to protect employees.
Business products
Business products, or business-to-business (B2B) products, are goods and services that help companies operate. These products support various business functions, such as marketing, sales, human resources, and finance.
Business products include customer relationship management (CRM) software, project management tools, and employee training programs. They’re often subscription-based or offered as software-as-a-service (SaaS) models, allowing companies to try a new product and access the latest features and updates without significant upfront investment.
Service products
Service products involve an action, performance, or experience, providing customers with value through intangible means. They can be pure services, like education and consulting, or core services with tangible results, like cleaning and landscaping.
Service products are often personalized to meet individual customer needs and require direct interaction between the service provider and the customer. From legal advice to personal training sessions to home repair services, service products are meant to meet the diverse needs of consumers and businesses.
What is a product FAQ
What is the difference between durable and non-durable products?
Durable products, such as appliances and vehicles, have a longer lifespan, typically more than three years, and do not wear out quickly. Non-durable products, like food and personal-care goods, are consumed quickly and purchased frequently.
What are the types of products?
The main types of products are:
- Consumer products: goods and services purchased by individuals
- Industrial products: goods used by industries for manufacturing or maintenance
- Business products: goods and services that help companies operate
- Service products: offerings that provide value through intangible means
How do you define a product?
A product is anything offered to satisfy a market want or need, whether a physical object, a digital item, a hybrid offering, or a service.
Why is it important to understand what a product is?
Understanding what a product is helps a product manager or entrepreneur create and sell a successful product line that aligns with business goals and meets customer needs.