Classification of Industrial Products

Industries are related to the raising, producing, processing or manufacturing of products. The industrial products can be classified into following:

Major Equipment’s  This category includes large machines or other tools whose net purchase price are so great that expenditures for them are changed to capital account and not the current account. Major equipment is of two types:

  1. Multipurpose or standard machines which can be used by a no. of different industries or by many firms in the same industry.
  2. Single purpose machines are designed to perform one particular operation and no other.

Since the net price of major equipment is sometimes very high, its purchase may involve financial problem for the buyer. Firms marketing such equipment must be prepared to loan for the buyers, to help them float issues of securities, to negotiate with investment concerns, or to lease equipment.

Minor or Accessory Equipment’s: It is machinery used in an auxiliary capacity. Its price is lesser than that of major equipment and its cost is generally charged to the current account. These are purchased in routine manner and involve lesser negotiation. Minor equipment items are standardized and suited to the performance of a function involved in more than one operation of a business. The organisation for marketing them must be more widespread and such items are sold through many outlets and the relation between the buyer and the maker can be less direct and immediate.

Fabricating or Component Part’s: Components are often bought on the basis of specifications prepared by the purchaser, although many items such as batteries of tyres in the automobile industry are standardized according to the specifications of the parts manufacturer. Some components retain their identity in the finished product; this offers the opportunity for the buyer of enhancing the sales appeal of these end products by including in them a component of market acceptance.

Process Material’s: This closely resembles component part in that they usually enter into and form an undistinguished part of the finished product. For example a good manufacturer may buy a variety of ingredients, mix them in proper proportions and sell the resulting material on the market as a cake mix. Suppliers may build repulsion for these material for ensuring high quality and greater purity. The standardization is sufficient to throw considerable emphasis on price and service as a competitive factor in the sale of process material.

Operating supplies: They do not become a part of the finished product, but are continuously worn out or used up in the process of operating or facilitating the operation of an enterprise. Such items are paints, soaps, detergents, etc. They are usually marketed through middleman and maintenance and repair supplies are supplied directly by the firm.

Raw material’s: Raw material is the basic materials of industry and are supplied chiefly by agriculture, lumbering, mining and finishing industries. Farm products like wheat, cotton, fruits which are seasonal, there branding takes lot of time to establish. Natural products like iron ore, crude oil, fish are limited in nature having low unit value but high transport cost. Raw materials are bought in the open market and sold on the basis of recognized standards.