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Product classifications and marketing strategy

a
Hume F. Winzar
a
School of Economics and Commerce, Murdoch University, Western Australia
Published online: 06 May 2010.

To cite this article: Hume F. Winzar (1992): Product classifications and marketing strategy, Journal of Marketing Management,
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 Journal of Marketing Management, 1992, 8, 259-268

Hume F. Winzar Product Classifications and

School of Economics
and Commerce,
Murdoch University,
Western Australia
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Marketing Strategy
Marketers have often attempted to use product classification
schemes to provide a "cookery book" for marketing strategy. This
so-called commodity school of thought in marketing is argued, in
this paper, to be less than fruitful in providing such a cookery
book. Product classifications are shown to be contingent upon
marketing mix elements and assumptions about consumer re-
sponse. These lead to four specific problems (1) Ex Post Defi-
nitions and Circular Logic: Products are classified ex post, and
classification theory gives no hint about how to classify new pro-
ducts or to change existing products. (2) The Problem of Induc-

tion: Experiences with similar or existing products give few guides

to appropriate or optimum strategy. (3) Fuzzy Sets: Product
classification of the same product differs according to the nature of
the consumer and at different times for the same consumer. (4)
Generalizability of Schema: Application of a classification scheme
requires the specification of all physical, market and social con-
texts.

Introduction

Convenience goods, shopping goods or speciality goods: how do you classify your
products? Is it sound management to decide marketing strategy based on this type
of definition of your product? A lot of marketing theorists used to think so. But we
shall see that your product classification should be the outcome of strategy, not the
input to strategy.
Researchers in marketing have expended a great deal of effort in attempts to
classify products into various categories so that specific marketing strategies could
be developed for each category. Marketing academics have termed this approach
the "commodity" school of thought in marketing (Sheth et al. 1988). * From the
early work of Copeland (1923), who generally has been credited with introducing
the idea of categorizing goods as either shopping, speciality or convenience goods,
to more recent efforts of Murphy and Enis (1986) for products and Lovelock (1983)
for services, marketers have been using the classification of products as a means of
formulating marketing strategies. Generally we see convenience goods as relatively
inexpensive purchases in which relatively little effort is made to identify and
evaluate purchase alternatives. Shopping goods involve comparing brands, stores
or both on the basis of features such as price, quality and style, typically because
the purchase is considered important. Purchasing a speciality good involves
increased effort by the buyer owing to the product's unique characteristics (exclusi- .
vity, price, etc.). There may be little brand comparison by buyers of speciality
goods because brand loyalty is so strong or because it is difficult to compare brand
"image".
In this paper, we argue that attempts to develop marketing strategy based on
product type are essentially fruitless, since a generic classification is virtually
 260 Hume F. Winzar

impossible given the heterogeneity of products, markets and consumers, as well as

the context-specific nature of consumer response. We first provide a brief outline of
the development of the commodity school and then specifically point out four
problems which lead us to our conclusion.

Origins of the Commodity School

The development of any endeavour with scientific pretensions requires the con-
struction of a commonly understood taxonomy of the objects of research. The
marketing scholars of the early twentieth century clearly had this task in mind.
Through exhaustive description of particular aspects of commercial activities in the
United States, the United Kingdom and Europe, students of business sought to
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develop broad and encompassing categories of objects and activities which, for
scholars, would define the boundaries of research and guide understanding of
phenomena and, for practitioners, would lead to efficient economic activity.
Influenced more by the German historical school of economics than the "classical
economics" of the UK, North American business teachers adopted a philosophy of
strong descriptive research, inductive logic and pragmatic idealism (Jones and
Monieson 1990).
These early theorists can be placed into different camps according to their focus
of study of marketing phenomena: the commodity school focused on the objects of
transactions, the functional school focused on the activities performed, the insti-
tutional school focused on the agents of market transactions, and the regional
school focused on the place of market transactions.
As Sheth et al. (1988) made clear, the explicit objective of the early commodity
theorists was to develop a kind of marketing strategy cookery book based on the
classification of consumer goods. For example, Copeland (1923, p. 282) suggests:
"This preliminary analysis facilitates the determination
of the kind of store through which the market for the
specific product would be sought, the density of distri-
bution required, the methods of wholesale distribution
to be established with dealers, and, in general, the sales
burden which the advertising must carry."
While theory has progressed and analytical tools have been refined, the core
objectives have not changed much for recent researchers:
"One purpose of any product classification scheme is to
guide managerial decision making . . . The product
classification suggested here provides a managerial road
map for strategy development: buyers' perceptions,
marketers' objectives and basic strategy, and specific
strategies for each element of the marketing mix."
(Murphy and Enis 1986, p. 35)
Additional objectives have been suggested. For example, Lovelock (1983) argues
that researchers and practitioners in service industries can benefit from recognizing
similarities in apparently unrelated businesses and learn from their approaches to
marketing problems.
 Product Classifies tions and Marketing Stra tegy 261

Underlying Assumption of Consumer Response

All of the conceptions of the classification of goods reflect some belief about the
nature of consumer decision processes. Copeland (1923) used three implicit cri-
teria: the travel effort involved in getting to a store, the effort of comparing alterna-
tives on price, quality and style at the time of purchase, and the level of brand
commitment.
"Using this classification, one of the initial steps in lay-
ing out a sales or advertising plan is to determine
whether the article to be sold will be purchased by con-
sumers ordinarily with shopping or without shopping,
at points of immediate convenience or in central trading
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districts, with insistence on an individual brand, with

merely brand preference, or with indifference to
brand." (Copeland 1923, p. 282)
Copeland's original classification schema in fact suggested more than three
different categories of consumer goods (convenience, shopping or speciality).
Potential clusters of products were either broadly lumped together because of a
fairly high level of similarity of implications or because Copeland could not see the
possibility of some classifications arising. In those days, for example, it was quite
an event to go into the city, so it did not make sense to buy frequently purchased
products with few important differences (convenience goods) in the central busi-
ness district.
For Copeland the notion of a trade-off between the perceived benefits of making
price/quality comparisons and the effort involved clearly differentiated conve-
nience goods from shopping goods; a distinction that was made clearer by Holton
(1958) a quarter of a century later. The idea of a two dimensional classification
scheme implicitly was rejected by Copeland because the notion of speciality goods
(usually branded and with a high level of brand insistence) which are also conve-
nience goods did not fit his conception of convenience goods, i.e., where con-
sumers have attitudes no higher than brand preference. Speciality goods were seen
as purchases made without shopping, where effort is put not into price/quality
comparison but into the purchase of a specific brand.
Copeland did not provide operational definitions for his criteria. Holton (1959)
did go some way towards this end by offering constitutive definitions based on the
ratio of cost of search to gain from search and volume of demand for the supply of a
certain good. With these two dimensions a 2 by 2 matrix can be derived as shown
in Figure 1.
While maintaining the traditional distinction of convenience, shopping and spe-
ciality goods, Bucklin (1963) redefined the schema according to the degree of which
a consumer, before a need arises, possesses a preference map that indicates will-
ingness to purchase any of a number of known substitutes (convenience goods),
requires a search to construct such a map (shopping goods), or indicates a willing-
ness to expend the effort required to purchase the most preferred items rather than
a more readily accessible substitute (speciality goods). Using the same criteria of
preference formation, Bucklin extended the same definition to cover retail stores,
resulting in a nine-cell classification, i.e., convenience, shopping and speciality
goods against convenience, shopping and speciality stores.
 262 Hume F. Winzar

Low level of demand/supply High level of demand/supply

Low ratio of cost to Speciality Goods Convenience Goods

gain from search

High ratio of cost Shopping Goods

Speciality Goods
to gain from search

Figure 1. Hoi ton's consumer goods typology

Sonne: Holton. K. H. (1(J5H).

Holbrook and Howard (1977) suggested the addition of a "preference goods"

category. The now four-fold classification was based on three sets of criteria:
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product characteristics (magnitude of purchase and clarity of characteristics), con-

sumer characteristics (ego involvement and specific self-confidence) and consumer
responses (physical shopping and mental effort). The resultant 2 by 2 matrix is
represented by Figure 2.
High clarity, high self confidence, Low clarity, low specific self-
mental effort during shopping via confidence, mental effort prior to
brand comparisons shopping via information seeking

Low magnitude, low ego

involvement, slow Convenience Goods Preference Goods
physical shopping effort

High magnitude, high ego

involvement, high Shopping Goods Speciality Goods
physical shopping effort

Figure 2. Holbrook and Howard goods typology

Source: Holbrook, M. U. andj. A. Howard (1977).

Other, more explicit, consumer response product classification schemes have

been suggested over time by writers such as Bourne (1957), Nelson (1970) and
Lovelock (1983). Bourne suggested a product classification scheme based on the
degree to which products and brands are publicly consumed and thus may be
influenced by reference groups. Nelson classified products into search and experi-
ence products, which related to the degree that products could be judged before or
only after purchase and trial. Lovelock has suggested several separate taxonomies
based on different perspectives of the relationship between consumers and pro-
viders of services. Involvement theory in the late 1970s suggested for many writers
the notion of high-involvement products and low-involvement products until
researchers accepted that involvement was a function of the consumer, not of the
product. The same product (category or brand) may be highly involving for some,
but not for others (e.g. Lastovicka 1979; Antil 1984). We can see that the writers
preferred to use an intuitive model of consumer response in order to characterize
products.
From the beginning of work in this area, writers have suggested their taxono-
mies as generalizations based on the behaviours of a significant number of con-
sumers. The problem with this approach is that the classification depends on the
 Product Classifications and Marketing Strategy 263

nature of the consumer. For any one brand there will be some buyers who will
insist on that product and will go to a great deal of effort to buy in preference to any
other brand; some consumers will regard the purchase as personally very import-
ant; some will have a great deal of knowledge about alternatives; some will feel
more confident about making a decision than others; and some buyers will
perceive important differences amongst competitors, whereas some won't notice
or care. Even a single consumer may behave quite differently depending on the
time of day, the time available to make a decision, or the purpose of the buying
decision. To design marketing strategy based on a lowest common denominator or
a most frequent incident runs the risk of ignoring opportunities for niche mar-
keters, for product positioning strategies, and for specialized service, distribution
and pricing combinations.
In partial recognition of this issue, some attempts have been made to remove
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consumers from the classification criteria or to subsume behaviour into some more
objective measure. Aspinwall (1958) suggested a trichotomy of red, orange and
yellow goods (as a rainbow shows continuous rather than categorical graduations),
the colour to be assigned according to the products' marketing characteristics,
length of distribution channel and the nature of promotional media. Miracle (1965)
extended Aspinwall's marketing characteristics and developed five product cate-
gories based on characteristics such as unit value, significance of the individual
purchase to the consumer, rate of technological change, technical complexity,
consumer need for service, frequency of purchase, rapidity of consumption and
extent of usage. Miracle in fact argues that consumer behaviours can be considered
as a product attribute in certain cases: for example, a packet of cigarettes has the
attribute "low search time" because of the short period of time that most consumers
spend deciding what brand to buy. This of course is not separating consumer
behaviour from the classification at all: it is simply making an inductive generaliza-
tion. Sheth et al. (1988) suggested a similar approach in order to overcome the
paucity of theoretical syntax of the commodity school.
It may, therefore, be necessary to specify classifications
with criteria that are invariant or noncontingent. This
may require abandoning the consumer perspective and
utilizing some other perspective such as physical flow of
goods, turnover ratios, store locations, and profit
margins. For example, products that demand a high
degree of shopping effort for consumers will have a low
turnover ratio. At the same time, products with a high
degree of perceived risk will require the retailers to per-
form a high number of value-added services resulting in
high margin ratios. In other words, it may be possible to
classify products into speciality, shopping, conve-
nience, and preference goods based on less contingent
but highly correlated surrogates such as turnover and
margin ratios (Sheth et al. 1988, p. 49).
To achieve consistent and objective criteria for a construct is an admirable objec-
tive, but one feels that the proposed approach is grasping at straws. Sheth et al.
seem to be bolstering a paradigm for the sake of the paradigm rather than for its
academic or managerial usefulness. The idea of a preference good which is defined
 264 Hume F. Winzar

without regard to consumer preferences does not make sense; moreover, if we are
to abandon the consumer perspective in our classification of goods then we already
have several well-researched paradigms from which to draw.
Alternative approaches to product classification and strategy have included the
insights a"nd marketing strategies prescribed by the share/growth matrix of the
Boston Consulting Group and the product development/sales growth pattern of
the product life cycle. Variations on analysis of competitors and technology advo-
cated by Porter also may be considered. For a short review of competitive market-
ing strategy concepts, see Brown (1990).

Extensions of the Commodity School

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Despite the problems with consumer response, the commodity school has shown
potential for application beyond its original focus on consumer goods. While the
early writers made their classifications specific to goods sold at retail establish-
ments for household consumption, more recently the notion of a generalized
taxonomy applicable to all objects of exchange has been explored. For example,
Enis and Roering (1980) expanded the Holbrook and Howard (1977) model to
include both the marketer's perspective and the buyer's perspective, arguing that
analysis of the degree of concordance between the two perspectives should help to
define and explain marketing strategy. Without defining operational criteria they
explicitly included consumer goods, industrial goods, services desired by house-
hold consumers and industrial buyers, products that are legally exchanged, and
those marketed outside the law. Following this, Murphy and Enis (1986) reviewed
more than 20 articles which used different classification criteria for consumer or
industrial applications, profit or non-profit organizations, goods, services or ideas.
They suggested a generalized taxonomy based on the two dimensions of risk and
effort and-adopting the traditional terminology of convenience, shopping, speciality
and preference goods. The operational criteria for risk and effort were contingent
on the natures of the product, the organization and the market.
Herein lies one of the basic difficulties with the commodity school: as classifi-
cation criteria becomes more generalizable, the ability to operationalize the classifi-
cations becomes more problematic. Conversely, as product, market and industry
definitions are more specific, then operational definitions can be applied. Even
within a product category, specification is important. For example, Lovelock (1983)
suggested five separate taxonomies just for services, contingent on the perspective
taken by the researcher and the questions being asked.

Problems with the Commodity School

The problem of specification and the assumptions of consumer response style form
the basis of a list of problems associated with the commodity school approach.
They include: (1) ex post definitions and circular logic, (2) the problem of induction,
(3) fuzzy sets and (4) generalizability of schema. These issues lead to the conclusion
that classifications are the outcome, rather than the input, of strategy.
 Product Classifications and Marketing Strategy 265

1. Ex Post Definitions and Circular Logic

Product classification schémas presented in the literature require observation of the

product in the field before classification. The "product" is much more than its
objective physical attributes. It comes with a particular combination of distribution
channel arrangements, promotion induced psychological and contextual attri-
butes, and pricing with respect to perceived competition. It is only within this
context that the determination of product classification is made. From this taxono-
mic valuation is implied an optimum combination of product, price, promotion and
distribution arrangements. The logic may be something like the following:
Jacko's Grisps are purchased frequently with relatively
low levels of brand commitment by consumers from
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readily accessible retailers. Therefore, Jacko's Crisps is a

"convenience" good. What is the appropriate strategy
for "convenience" goods? We should make them
always available at readily accessible retail outlets.
This is not very helpful in itself, but the logic becomes even less helpful when we
say:
All crisps are "convenience" goods. What is the appro-
priate strategy for our new brand Jacko's Crisps? We
should make them always available at readily accessible
retail outlets.
This approach ignores the fact that we seem to buy some brands mostly for enter-
taining, some only at football matches, some mostly for the children, and so on. It
ignores brand image, positioning and purchase and usage occasion. The circularity
is broken only when we decide to transform a brand from one classification into
another classification: from a convenience good into a preference good for
example. Strategies to achieve this do not readily follow from the taxonomy.

2. The Problem of Induction

This is the problem of generalization based on frequent observation first outlined

by the philosopher David Hume (1939), in which it is recognized that no matter
how consistent are our observations of a class of phenomena and their results,
there is no guarantee that all or any future similar phenomena will have the same
results. Taken to the extreme we might arrive at some very unproductive and
erroneous conclusions. But at a realistic level we must conclude that descriptive
statements are not normative statements: to describe what "is" is not to prescribe
what "should be". It would be difficult to say, for example, that all "preference"
goods will have, or should have, frequent mass media promotions. Prescriptions of
marketing strategy based on broad generalizations of observed behaviour of com-
petitors and"similar" products is unlikely to lead to an innovative and potentially
"optimum" marketing mix. Again we must look to the contingencies of variations
in product, market and industry. Within the context of new products, strategic
implications may be even more difficult.
In the case of new products and new product development we are faced with the
 266 Hume F. Winzar

problem of generalizability of marketing principles based on the study of one or a

few specific commodities. Can new products benefit from these studies or from
commodity "theory" in general? Certainly authors of texts on product develop-
ment and new product marketing do not think so (e.g. Urban and Häuser 1980;
Crawford 1987). Product classification theory is briefly reviewed in one product
management text (Wind 1982), concluding that the approach is severely limited
and that
" . . . a growing number of marketing scholars and prac-
titioners accept the dual premise that marketing strategy
(a) cannot be based on the manufacturer's classification
of products and (b) requires detailed information on
how various market segments perceive the firm's
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brands; i.e., the brand positioning" (Wind, p. 74).

This leads to the conclusion that marketing strategies for discontinuous inno-
vations, new products that fundamentally change behaviour, cannot be derived
from models of product taxonomy. There simply may be nothing on which to hang
the new product.

3. Fuzzy Sets
It is rarely clear into which category a product may fall because different consumers
behave differently, and the same consumers can change at different times. This
issue is canvassed in the overview above and in Sheth et al. (1988, p. 51) where it is
recognized that the nature of a classification scheme is contingent upon circum-
stances and type of consumer. Myers and Shocker (1981) explicitly acknowledged
the problem of fuzzy sets in a discussion on measuring consumers' perceptions of
product attributes. They claimed that it was not a serious problem when the
product, its attributes and the segments are clearly defined. Variability among
consumers, variability of any one consumer over time or in different circumstances
automatically changes the product category.

4. Generalizability of Schema

Generalizability of classifications to products outside the traditional consumer

goods, i.e. industrial goods, services and social goods has been shown to be
possible but at the cost of loss of specific operational criteria. For a schema to be
useful we must specify all of the physical, market and social contexts.

Conclusion
Our examination of the Commodity School has shown that attempts to derive a
"cookery book" for marketing strategy based on product classification are undone
by product/market contingencies and the assumption (implicit or explicit) of a
particular style of consumer response. The paradigm is certainly not dead, how-
ever. The traditional classes of convenience, shopping, speciality and preference
 Product Classifications and Marketing Strategy 267

goods are a part of everyday marketing jargon. Some research continues in the
area, but the commodity school can be given credit for fostering other, more
productive, paradigms: the study of buyer behaviour in general, for example, and
models of product positioning in particular.
Let us not put the cart before the horse, however. The product classification we
use is the outcome of our strategy. And that outcome applies only to a particular
group of consumers in a particular frame of mind. Change the product and its
communication, change the consumer or change the circumstances and you could
have quite a different classification.

Note
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1
Although this terminology is probably too narrow in the sense that it does not describe the wide range
of classification schemes that have been proposed (e.g. Lovelock's (1983) classification of services
which can hardly be considered "commodities'), it is nevertheless used throughout this paper as a
generic description of classification schemes in general.

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