Product hierarchy is the classification of a product into its essential components. It is inevitable that a product is related or connected to another. The hierarchy of the products stretches from basic fundamental needs to specific items that satiate the particular needs. Product hierarchy is better understood by viewing the business as a whole as opposed to looking at a specific product. Product hierarchy is usually mentioned in the same sentence with product classification and therefore can be viewed as a way of product classification.
Product hierarchy levels
Product hierarchy is divided into several levels which are best understood using examples. These product hierarchy levels include:
- Product need – the product need is the primary reason for the existence of a product. For example, motor vehicles exist because people have to and want to travel. This is the core product need, for example, Toyota vehicles.
- Product family – in product family, the core need satisfied by a product is the focus. This means that the attention should not be on the individual market but rather the entire business market. For example, if travelling is the core need, then it can be satisfied by planes, trains or ships. In this particular case, the product family is travel and for Toyota, the product family is vehicles.
- Product class – product class occurs when categories are drawn from the same company. It is similar to product family only that product class doesn’t go outside the company, unlike product family. Personal computers constitute an instance of product class.
- Product line – a product line consists of the entire group of products included in a class of products and these products are related because they perform a comparable function, are purchased by the same group of customers or fall within a certain price range. An example of a product line is a laptop, which is a portable and wireless type of personal computer.
- Product type – this refers to the various products within a product line. For example, under Hyundai I20 product line, we have product types such as I20Astana, I20 sportz and I20 Magna.
- Product unit – this is also referred to as the stock keeping unit (SKU) and it is a discrete item within a product type of brand that can distinguish itself by size, price or any other feature. A product becomes an individual product unit if it is independent and no other product type is dependent on it.