Goods
Products, Services, and the Product Life Cycle
A good is something that has an economic utility or satisfies an economic want. Goods (the plural form) represents personal property having intrinsic value but usually excluding money, securities, and negotiable instruments.
It is interesting to note that not all goods exist in nature as such. Thus, there are special terms for materials that are transformed by production functions into goods.
- A product is something brought about by intellectual or physical effort.
- An artifact is something created by humans, usually for a practical purpose.
These nuances of meaning are of minor importance. Therefore, one can choose to use artifact synonymously with product.
- Materials are the elements, constituents, or substances of which something is composed.
Beside raw materials, also documents, evidence, certificates, or similar things may serve as materials.
- A component is one of several parts that together make up a whole machine or system.
With regard to a product, components are goods that become part of a product during manufacturing (through installation, for example) or arise from a product during disposal (for example, through dismantling).
These two terms are not completely synonymous. Material generally refers to rather simple initial resources or information, whereas component generally refers to semifinished products as well.
Classification of Goods
Goods may be classified according to several dimensions, such as
- The nature of goods:
- Material goods are produced or traded mainly by companies in the industrial sector.
- Nonmaterial goods (goods of a nonmaterial nature), such as information, tend to be produced, compiled, or traded by companies in the service industry sector, that is, by organizations that essentially produce no material goods.
- The use of goods:
- Consumer goods are intended mainly for direct consumption.
- Investment goods are utilized mainly to develop and manufacture other goods.
In addition to the nature and use of a product, there is thus a further dimension of products based on the above: The degree of comprehensiveness of a product is the way the product is understood. According to the degree of comprehensiveness, the consumer sees and judges the quality of products, processes, and the organization.
- A product, in a broad sense, is a product along with the services provided, where the consumer sees the two as a unit.
- Service is the performance of some useful function. With companies, service is customer service or customer support.
- Customer service or customer support is the ability of a company to address the needs, inquiries, and requests from customers.
In many areas, service itself is more important than the products used to provide the service. For investment goods also, service is becoming increasingly important and often constitutes the key sales argument.
- A product, in the most comprehensive sense, comprises the product, the services provided, and the company itself, with its image and reputation. Here the consumer sees all three as a unit.
An example of product in the most comprehensive sense is the concept of Total Care in the insurance branch. The aim is to give the customer the idea that the company as a whole will provide all-encompassing care.
Products are made, according to the above definition, by converting goods. The use or utilization of products leads to their consumption or usage.
- Consumption of goods (by the consumer) means the amount of goods that are used (up).
Following consumption, a product must be disposed of properly. There is thus a life cycle to products.
Put simply, the product life cycle consists of three time periods:
- Design and manufacturing,
- Use (and ultimately consumption), and
- Disposal, which can be connected with recycling of components.
The life cycle of nonmaterial products begins with an issue about which something is declared. This issue, in a broad sense, can also be seen as ultimately connected to things in nature, whether to objects or at least to human thinking about objects. Disposal ends with the information being erased or deleted. In the broadest sense, then, it is also returned to nature. LogisticsOpens in new window is involved with products over their entire life cycle.
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