Industrial Products

The products used by the organisations as inputs for the production of other products are known as Industrial Products. For example, lubricants, tools, equipment, machines, etc.

Features of Industrial Products

1. Number of Buyers

The number of buyers of industrial products is limited as compared to the buyers of consumer products. For example, buyers of wheat are less as compared to flour. 

2. Channels Level

The channel of distribution for industrial products is usually shorter, as the number of buyers is limited for these products. 

3. Geographic Concentration

As industries are usually located in specific regions, the demand for industrial products is concentrated in one geographical location. 

4. Derived Demand

The demand for industrial products is derived from the demand for consumer products. For example, industries will have a demand for fur, if people demand fur jackets or other products. 

5. Reciprocal Purchasing

A common case of industrial product purchasers, in which one organisation buys from another company, on one condition that the latter will buy from the former is known as Reciprocal Purchasing. For example, a shoe company purchases leather from a leather company, only if it buys the manufactured shoes from the shoe company. 

6. Role of Technical Considerations

Industrial Products are complex in nature; therefore, they require higher technical considerations in their purchase. 

7. Leasing Out

As the cost of industrial products is high, organisations usually lease out these products instead of purchasing them. For example, a road construction company may hire or lease out a road-roller instead of purchasing it. 

Classification of Industrial Products

Industrial Products can be classified into three categories; namely, Materials and Parts, Capital Items, and Supplies and Business Services.

i) Materials and Parts

The goods which enter the products of a manufacturer completely are known as Materials and Parts. These goods are of two types; namely, Raw Material and Manufactured Material and Parts. 

• Raw Material: It consists of farm products such as sugarcane, cotton, etc. 
• Manufactured Material and Parts: It consists of component materials such as iron, glass, etc., and other components parts, such as batteries, tyres, etc. 

ii) Capital Items

The fixed assets which are used by an organisation for the production of finished goods are known as Capital Items. For example, fax machines, laptops, etc.

iii) Supplies and Business Services

The goods and services which are used by organisations to facilitate the development and management of the finished products are known as Supplies and Business Services. For example, maintenance items such as paint, nails, etc., and operating supplies, such as writing paper, lubricants, etc. 

Anything of value offered by an organisation to the market for satisfying their want or need is known as a Product. The concept of product not only relates to the physical product, but also the benefits offered by the product. For example, while purchasing a washing machine, a consumer does not only look for its physical qualities but also some intangible factors such as its brand name, guarantee offered, company’s image, status symbol, etc. Hence, it can be said that a product is a mixture of tangible and intangible features, a consumer can exchange for a value in return to satisfy their needs.

The three types of benefits provided by a product to the customers are; namely, Psychological benefits, Functional benefits, and Social benefits. For instance, Sayeba purchased a wall painting from an art gallery arranged by an NGO. After making the purchase the functional benefits gained by her will be the decoration of her living room. Similarly, she will get psychological benefits in the form of satisfaction with her interest in art and creativity. However, as she has purchased the painting from an NGO’s art gallery, the money will be used as a donation which provides her social benefits in the form of acceptance and a good image in the eyes of people.