Product is basic knowledge that should be known by someone who worked or studied in the field of retail business. With good product knowledge will be able to develop a retail business and can serve a target market that has been targeted in this case fulfilling the needs and desires of customers.
There are so many products on the market, one of the retailers task is to create value-added products to consumers. For example, to limit or sort regarding product grouping. According to Nielsen (1992, in GJ. Verra, 2002) mentioned four steps in determining boundaries goods categories, as follows:
1 Determination of categories based on information from the manufacturing, marketing research agencies, and the general trend of opinion or consumers. For example, the division of assortment in the category of groups of fresh food stuff, groceries, non-food, house hold, and so on. For each category of the item specified limits that can distinguish it from the other group categories.
2 Determination of sub-categories, as part of the category in question, based on the tendency of consumers of the general characteristics of the goods in the category. For example, in a group of fresh goods specified categories include categories of vegetables and fruits, in which, among others, there are sub-categories of fruits tropical, sub-tropical fruits, leaf vegetables, vegetables fruits, vegetables, tubers, and so on.
3 Consideration of usability approach between categories or sub-categories in the grouping and in the display. For example, grouping margarine as part of the sub-categories of breakfast items as commonly used as a bread dauber or grouped as part of the sub-categories of cake-making material.
4 Consideration of the intensity of consumption tendency. For example, with consideration of the intensity of consumption, sugar grouped into sub-categories of wheat flour, corn starch, corn flour, and sebaginya. Of categories of goods can be seen that in the determination of categories and sub-categories, and further grouping is to follow a hierarchical or structural classification.
This category structure is a composition framework hierarchical grouping categories of goods which is made up of groups with the largest category to the smallest group. Each rating category groups defined by boundaries that distinguish it from other groups and make it included in a particular category group. Thus, there are two important functions in the structure of the category of goods, namely classification and identification.
The identification functions include identification of items of goods and identification of suppliers. In the classification of goods no specific provisions governing how the level of classification of goods that must be created and associated with the naming of the top class goods. In addition, the structure of the category of goods act as a language to communicate the mix of goods or a whole assortment of goods in the internal business processes of a retailer.
Language indicated by coding items of goods, category of items, and suppliers. Category structure strived to be a language that can be perceived exactly the same by the entire chain involved in the internal business processes.