Page 297 - Foundations of Marketing

264 Part 4 | Product and Price Decisions

Business Products

Business products are usually purchased on the basis of an organization’s goals and
objectives. Generally, the functional aspects of the product are more important than the
psychological rewards sometimes associated with consumer products. Business products
can be classified into seven categories according to their characteristics and intended uses:
installations; accessory equipment; raw materials; component parts; process materials;
maintenance, repair, and operating (MRO) supplies; and business services.

Installations
Installations include facilities, such as office buildings, factories, and warehouses, and major
equipment that is nonportable, such as production lines and very large machines. Normally,
installations are expensive and intended to be used for a considerable length of time. Because
they are so expensive and typically involve a long-term investment of capital, purchase deci-
sions often are made by high-level management. Marketers of installations frequently must
provide a variety of services, including training, repairs, maintenance assistance, and even aid
in financing such purchases.

Accessory Equipment

Accessory equipment does not become part of the final physical product but is used in
production or office activities. Examples include file cabinets, fractional-horsepower motors,
installations Facilities and calculators, and tools. Compared with major equipment, accessory items usually are much
nonportable major equipment
cheaper, purchased routinely with less negotiation, and treated as expense items rather than
accessory equipment capital items because they are not expected to last as long. More outlets are required for
Equipment that does not distributing accessory equipment than for installations, but sellers do not have to provide the
become part of the final multitude of services expected of installations marketers.
physical product but is used in
production or office activities
Raw Materials
raw materials Basic natural
materials that become part of a Raw materials are the basic natural materials that actually become part of a physical product.
physical product They include minerals, chemicals, agricultural products, and materials from forests and oceans.

Going Green

What Makes a Green Product?

Is a chainsaw “green” when it runs on electricity instead of stakeholders have differing opinions on what makes a
gasoline? What about cigarettes that use organic tobacco? product green.
This is a red-hot issue as sales of green products rise Companies must also make tradeoffs when creating
and both marketers and consumers try to determine what green products. Some of these tradeoffs are problematic.
makes a product green. For instance, when SunChips introduced its bioplastic bag,
Consider what happened when Home Depot invited the bag was so noisy that the company discontinued it.
suppliers to nominate green products for its Eco Options Compact fluorescent light bulbs save energy, but they also
promotional campaign. Of the 176,000 items carried in contain mercury that could harm consumers if they break.
its stores, suppliers believed more than 60,000 to be The truth of the matter is that all products have some effect
worthy of the “green” designation. After screening the on the environment. Rather than making a 100 percent
products using the Environmental Protection Agency’s green product, marketers could instead look for ways to
Energy Star designation, Home Depot allowed only 2,500 increase sustainability throughout the business’s opera-
a
of them into the Eco Option program. Obviously, different tions to decrease its negative environmental impact.

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