Classification Of Products II – Industrial Goods SS1 Marketing Lesson Note

INDUSTRIAL GOODS

Industrial goods are products that companies purchase to make other products, which they then sell. Some are used directly in the production of the products for resale, and some are used indirectly.

Unlike consumer goods, industrial goods are classified based on their use rather than the customer’s buying habits. These goods are divided into five subcategories: installations, accessory equipment, raw materials, fabricated parts and materials, and industrial supplies. Industrial goods also carry designations related to their durability. 

Durable industrial goods that cost large sums of money are referred to as capital items. Non-durable industrial goods that are used up within a year are called expense items.

1. Installations: Installations are capital items that are typically used directly in the production of goods. Some installations, such as conveyor systems, robotic equipment and machine tools, are designed and built for specialized situations. Other installations such as stamping machines, large commercial ovens, and computerized axial tomography (CAT) scan machines are built to a standard design but can be modified to meet individual requirements.
2. Accessory Equipment: Goods that fall into the subcategory of accessory equipment are capital items that are less expensive and have shorter lives than installations. Examples include hand tools, computers, desk calculators, and forklifts. While some types of accessory equipment, such as hand tools, are involved directly in the production process, most are only indirectly involved.
3. Raw Materials: Raw materials are products that are purchased in their raw state to process them into consumer or industrial goods.

Examples are iron ore, crude oil, diamond, copper, timber, wheat and leather. Some (e.g. wheat) may be converted directly into another consumer product (cereal). Others (e.g. timber) may be converted into an intermediate product (lumber) to be resold for use in another industry (construction).

Most raw materials are graded according to quality so that there is some assurance of consistency within each grade.

4. Fabricated Parts And Materials: Fabricated parts are items that are purchased to be placed in the final product without further processing. Fabricated materials, on the other hand, require additional processing before being placed in the end product. 

Many industries, including the auto industry, rely heavily on fabricated parts. Automakers use such fabricated parts as batteries, sunroofs, windshields, and spark plugs. They also use several fabricated materials, including steel and upholstery fabric. Many industries buy more fabricated items than raw materials.

5. Industrial Supplies: Industrial supplies are frequently purchased expense items. They contribute indirectly to the production of final products or the administration of the production process. Supplies include computer paper, light bulbs, lubrication oil, cleaning supplies and office supplies.

Buyers of industrial supplies do not spend a great deal of time on their purchasing decisions unless they are ordering large quantities. As a result, companies’ marketing supplies emphasize advertising, particularly in the form of catalogues for business buyers. When large orders are at stake, sales representatives may be used.

CAUSES OF CUSTOMER DISSATISFACTION WITH A PRODUCT

1. Poor service delivery by the company leads to customer dissatisfaction
2. Fraudulent practices by staff can lead to customer dissatisfaction
3. Inadequate parking space can lead to poor customer dissatisfaction.
4. Slow response to customers’ requests will bring about dissatisfaction of customers.
5. Poor product quality which cannot meet the needs of customers will lead to customers’ dissatisfaction.
6. Bad behaviours of staff can lead to customer dissatisfaction