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Friday, January 21, 2011

Product (business)

The noun 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". The economic or commercial 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 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, 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.
Dangerous products, particularly physical ones, that cause injuries to consumers or bystanders may be subject to product liability.

Product groups


Tangible and intangible products
Products can be classified as tangible or intangible.A tangible product is any physical product that can be touched like a computer, automobile, etc. An intangible product is a non-physical product like an insurance policy.
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. 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.

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 .

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."
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". 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 (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.



(source:wikipedia)

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