Basics of Marketing - Kotler Philip

Decisions on the Commodity Nomenclature

If the organization has several product groups of goods, they talk about the commodity nomenclature. We define the commodity nomenclature as follows17:

Commodity Nomenclature is the aggregate of all assortment groups of goods and commodity units offered to buyers by a specific seller.

The list of "Avon" nomenclature includes goods of three main assortment groups: cosmetics, jewelry, household goods. The assortment of each of them is composed of several subgroups of goods. For example, the range of cosmetic products can be divided into the following product subgroups: lipstick, blush, powder, etc. The assortment as a whole and each subgroup consists of a variety of separate products. All in all, the product range of Avon includes 1300 different products. The large supermarket deals with about 10 thousand goods, the typical shopping center "K-Mart" - from 15 thousand, and the corporation "General Electric" produces about 250 thousand different products.

The commodity nomenclature of a firm can be described from the point of view of its breadth, saturation, depth and harmony. The concepts are illustrated in Fig. 53 on the example of sampling of consumer goods produced by the corporation Procter and Gamble.

Under the breadth of the commodity nomenclature of the corporation "Procter and Gamble" we mean the total number of assortment groups of goods produced by the firm. In Fig. 53 the latitude of the commodity nomenclature is represented by six assortment groups of tops. (Actually, the corporation also produces a lot of goods from other assortment groups, including dental elixirs, toilet paper, etc.)

Under the saturation of the commodity nomenclature of the corporation "Procter and Gamble" we mean the total number of its individual products. In Fig. 53 exhibited 31 goods.

Under the depth of the commodity nomenclature, corporations have in mind the options for each individual product within the assortment group. So, if toothpaste "Cross" is offered in three different packages and with two flavors (normal and menthol), this means that the depth of its offer is six.

The harmony of the commodity nomenclature implies the degree of proximity between the goods of different assortment groups in terms of their end use, requirements for the organization of production, distribution channels or some other indicators. Assortment groups of goods of the corporation "Procter and Gamble" are harmonious, as all these are consumer goods passing through the same distribution channels. At the same time, they are less harmonious in terms of differences in the functions performed by goods for buyers.

These four parameters, which characterize the commodity nomenclature, help the firm to determine its commodity policy. The firm can expand its activities in four ways. It can expand the commodity nomenclature by including new product groups in it. It can increase the saturation of existing product groups, approaching the position of the company with an exhaustive assortment. It can offer more options for each of the available products, i.e., deepen its commodity nomenclature. And finally, depending on whether it seeks to gain a solid reputation in one area or act in several areas at once, the firm can purposely aim for greater or, on the contrary, less harmony between the goods of different assortment groups.

Thus, we see that the commodity policy is a multidimensional and complex sphere of activity that requires a decision on specific features of the commodity nomenclature, product range, use of brand names, packaging and services. These decisions should be made not only on the basis of a full understanding of the needs of customers and Strategic approaches used by competitors, but also with the ever-increasing attention to public opinion and legislative acts affecting the sphere of commodity production (see box 19).

Box 19. Decisions on the production of goods and public policy

When deciding on the production of goods, marketing managers must necessarily take into account all applicable laws and regulations. Here are the main points to which you should pay special attention.

Adding new products and removing old ones. Implementation of decisions on replenishment of the nomenclature with new assortment groups of goods, especially through the acquisition of other firms, which threatens to cause a decrease in the level of competition, may prevent the Law of Kefauver-Seller from 1950. Decisions to remove old products should take into account those legal obligations established in Written or implied, which the firm has before its suppliers, dealers or customers, in one way or another related to the product being removed from production.

Protection of patent rights. When developing new products, the firm must comply with the provisions of US patent law. She is not allowed to create a product that is "unlawfully similar" to an existing product of another firm. An example of this is the lawsuit filed by Polaroid, which tried to prevent the sale of a new Kodak camera to receive instant snapshots on the grounds that the appearance of this camera was associated with a violation of the corresponding patents available from Polaroid.

Quality and safety of goods. Manufacturers of food, medicines, cosmetics and certain fibers are required to strictly adhere to the provisions of specific laws regarding the quality and safety of their products. The Federal Law on Foodstuffs, Medicines and Cosmetics protects consumers from unsafe and inferior food, medicinal and cosmetic products. A number of laws provide for checking the sanitary status of meat and poultry processing enterprises. Laws have been passed on safety standards relating to the production of such goods as textiles, chemicals, automobiles, toys, medicines and poisons. The Consumer Goods Safety Law, adopted in 1972, established the Commission on Consumer Product Safety, which has the right to prohibit or confiscate dangerous goods and subject violators of the law to severe penalties. A consumer who suffers as a result of using a product with a constructive flaw can bring a lawsuit against the manufacturer or dealer. Annually, more than 1 million suits are brought against the quality of products. As a result, cases of seizure of goods from sale have become much more frequent. General Motors Corporation spent 3.5 million dollars on postage alone, when it had to notify 6.5 million car owners of defects in the engine mount.

Guarantee of the quality of products. In an effort to convince consumers of the good quality of their products, many manufacturers offer appropriate written guarantees. However, these guarantees often contain reservations, and the guarantees themselves are written in a language incomprehensible to the average consumer. Often it turns out that he has no right to services, repairs and replacements, which, in his opinion, were implied in the guarantee. To protect consumers, the Congress adopted in 1975 the Magnuson-Moss Law on improving the guarantees and work of the Federal Trade Commission. This law requires that full guarantees meet a number of minimum requirements, including provisions for repair "within a reasonable period of time without charging a fee," or to replace the goods, or to fully compensate the consumer for costs if the goods do not work and "after a reasonable number of attempts" Repair it. Otherwise, the firm must clearly state that it provides only a limited warranty. The law has already forced some producers to replace the full guarantees with limited ones, and others - in general, to refuse guarantees as marketing tools.