Product (business)
Encyclopedia
In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", 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. Since 1695, the word has referred to "thing or things produced".
In economics
and commerce
, products belong to a broader category of goods. The economic meaning of product was first used by political economist Adam Smith
.
In marketing
, a product is anything that can be offered to a market
that might satisfy a want or need. In retailing
, products are called merchandise. In manufacturing
, products are purchased as raw material
s 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 insurance, the policies are considered products offered for sale by the insurance company that created the contract.
A related concept is subproduct, 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
.
or intangible. A tangible product is a physical object that can be perceived by touch such as a house, automobile, computer, pencil. An intangible product is a product that can only be perceived indirectly such as an insurance policy.
divides its products into "departments", then presents products to potential shoppers according to (1) function or (2) brand. 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.
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". Within the insurance
industry, product lines are indicated by the type of risk coverage, such as auto insurance, commercial insurance
and life insurance
.
The Aspinwall Classification System classifies and rates products based on five variables:
The National Institute of Governmental Purchasing
(NIGP) developed a commodity and services classification system for use by state and local governments, the NIGP Code
. 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. Applications of the NIGP Code include vendor registration, inventory item identification, contract item management, spend analysis and strategic sourcing.
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).
A specific unit of a product is usually identified by a serial number
.
Bestseller Reviews Product.
In economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
and commerce
Commerce
While business refers to the value-creating activities of an organization for profit, commerce means the whole system of an economy that constitutes an environment for business. The system includes legal, economic, political, social, cultural, and technological systems that are in operation in any...
, products belong to a broader category of goods. The economic meaning of product was first used by political economist Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...
.
In marketing
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
, a product is anything that can be offered to a market
Market
A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers...
that might satisfy a want or need. In retailing
Retailing
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
, products are called merchandise. In manufacturing
Manufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...
, products are purchased as raw material
Raw material
A raw material or feedstock is the basic material from which a product is manufactured or made, frequently used with an extended meaning. For example, the term is used to denote material that came from nature and is in an unprocessed or minimally processed state. Latex, iron ore, logs, and crude...
s and sold as finished goods. Commodities
Commodity
In economics, a commodity is the generic term for any marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services....
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
Project management
Project management is the discipline of planning, organizing, securing, and managing resources to achieve specific goals. A project is a temporary endeavor with a defined beginning and end , undertaken to meet unique goals and objectives, typically to bring about beneficial change or added value...
, products are the formal definition of the project deliverables
Product breakdown structure
In project management, a product breakdown structure is a tool for analysing, documenting and communicating the outcomes of a project, and forms part of the product based planning technique....
that make up or contribute to delivering the objectives of the project. In insurance, the policies are considered products offered for sale by the insurance company that created the contract.
A related concept is subproduct, a secondary but useful result of a production
Production (economics)
In economics, production is the act of creating 'use' value or 'utility' that can satisfy a want or need. The act may or may not include factors of production other than labor...
process.
Dangerous products, particularly physical ones, that cause injuries to consumers or bystanders may be subject to product liability
Product liability
Product liability is the area of law in which manufacturers, distributors, suppliers, retailers, and others who make products available to the public are held responsible for the injuries those products cause...
.
By properties
Products can be classified as tangibleTangibility
Tangibility is the attribute of being easily detectable with the senses.In criminal law, one of the elements of an offense of larceny is that the stolen property must be tangible....
or intangible. A tangible product is a physical object that can be perceived by touch such as a house, automobile, computer, pencil. An intangible product is a product that can only be perceived indirectly such as an insurance policy.
By use
In its online product catalog, retailer Sears, Roebuck and CompanySears, Roebuck and Company
Sears, officially named Sears, Roebuck and Co., is an American chain of department stores which was founded by Richard Warren Sears and Alvah Curtis Roebuck in the late 19th century...
divides its products into "departments", then presents products to potential shoppers according to (1) function or (2) brand. 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
Department store
A department store is a retail establishment which satisfies a wide range of the consumer's personal and residential durable goods product needs; and at the same time offering the consumer a choice of multiple merchandise lines, at variable price points, in all product categories...
structure.
By association
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."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". Within the insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
industry, product lines are indicated by the type of risk coverage, such as auto insurance, commercial insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
and life insurance
Life insurance
Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger...
.
National and international product classifications
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 North American Industry Classification System (NAICS). The European Union uses a "Classification of Products by Activity" among other product classifications. The United Nations also classifies products for international economic activity reporting.The Aspinwall Classification System classifies and rates products based on five variables:
- Replacement rate (How frequently is the product repurchased?)
- Gross margin (How much profit is obtained from each product?)
- Buyer goal adjustment (How flexible are the buyers' purchasing habits with regard to this product?)
- Duration of product satisfaction (How long will the product produce benefits for the user?)
- Duration of buyer search behavior (How long will consumers shop for the product?)
The National Institute of Governmental Purchasing
National Institute of Governmental Purchasing
The is a national, membership-based non-profit organization providing support to professionals in the public sector purchasing profession. NIGP provides its members with many services, including education, professional networking, research, and technical assistance.Organized in 1944, NIGP is an...
(NIGP) developed a commodity and services classification system for use by state and local governments, the NIGP Code
NIGP Code
The NIGP Commodity/Services Code is an acronym for the National Institute of Governmental Purchasings Commodity Services Code. The NIGP Code is a coding taxonomy used primarily to classify products and services procured by state and local governments in the United States.The classification system...
. 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. Applications of the NIGP Code include vendor registration, inventory item identification, contract item management, spend analysis and strategic sourcing.
Model
A manufacturer usually provides an identifier for each particular type of product they make, known as a model, model variant, or model number. For example, Dyson Ltd, a manufacturer of appliances (mainly vacuum cleaners), requires customers to identify their model in the support section of the website.http://www.english.dysoncanada.ca/support/help.asp?article=32 BrandBrand
The American Marketing Association defines a brand as a "Name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers."...
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).
A specific unit of a product is usually identified by a serial number
Serial number
A serial number is a unique number assigned for identification which varies from its successor or predecessor by a fixed discrete integer value...
.
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