what is a product hierarchy and why is it important

A product hierarchy, or taxonomy, is a way to organize your products to help customers and staff easily find them. Product trees can also be useful for creating standardized product titles. For example, a grocery store might put milk in the dairy aisle. But an online store might put a lamp under ‘Furniture’, ‘Office Furniture’, or ‘Accessories’.

Product hierarchies help businesses classify their products and brand portfolio on a range of brand touchpoints, all the way from websites and stores to even a warehouse. While product hierarchy is an important part of your business’s strategy, it’s important to remember that it must be user-friendly and intuitive.

Product hierarchies help companies organize their stock and make it more accessible to find, track, and sell. You can use this approach to structure your business well if you understand the fundamental principles and how to put them into practice. In this article, we will explain what product hierarchy is, why it is important, and what kinds of businesses might benefit from it. We also talk about the different levels that are often used in product hierarchies.

What exactly are Product Hierarchies?

A product hierarchy is a way for businesses to organize their inventory so that keeping track of it becomes easier. For example, a store that sells printers might divide the entire stock into the following groups: printers and scanners, computer hardware, laser jet printers, and model number.

A product hierarchy can also be used for your primary best-selling product or service, or more than one product or service. In the long run, it helps both the client and the organization to understand how its products and services are grouped and organized, alongside how they all fit together under one cohesive product portfolio or brand umbrella.

Why are Product Hierarchies Important?

why are product hierarchies important

A product hierarchy is vital to your business because it helps you keep track of your inventories and improve the overall customer experience. A more organized shopping pipeline helps customers find the products they need. It also means that they can quickly make a decision based on product features, pricing, and packaging when your products are placed alongside competing products in the aisles. A company can also use product hierarchy to help with internal audits to make sure that each product is manufactured within the appropriate parameters.

Setting up Product Hierarchies

A product hierarchy can be thought of as a family of products, with a common core product at the top and various variants of that core. These sub-groups could then be further grouped under a single umbrella. But the core need of a product family, or its core, is the common problem it’s trying to solve. It should be grouped by logical categories, and marketing teams should make it easier for customers to find and use products by class or type.

Here are the most important approaches for you to sort out your product hierarchy for your brand.

1. Need

The basic reason a product exists in the first place is the need for which it was created. This definition covers various product categories, such as fashion, beauty, and personal hygiene. Each of these categories can encompass thousands of individual products.

The first approach to organizing products in a hierarchy is by the ‘need’ they satisfy, which may include more than one class or type of product. Even though these kinds of products can have thousands of different options, they all have the same purpose, which makes it easier for customers to find and compare them.

2. Product Attributes

A product hierarchy contains attributes, such as price, weight, aesthetics, ingredients, and country of origin. It is a classification of products with similar attributes. The highest level of a product hierarchy contains categories, and each one has a set of subcategories. The subcategories are groups of products that make up the complete product hierarchy. At the highest level, the parent is a brand. Subsequent levels are products within the same brand.

3. Class

A product class is a group of products or a subset of the services offered by a company. For example, a phone company might make low-end or higher-end phone services to meet the basic need for communication, but each one will be classified in a different class. Again, Apple’s miniseries iPhones and their mainline phone sets represent different classes of a product that essentially fulfils the same need.

A product class makes it easier for a customer to choose between different specifications, features, and benefits. A customer can satisfy her communication needs with any phone, but she might desire technical features that are only available in a certain class of smartphones.

4. Category / Line

Products in the same line usually have the same price range or product features. These products belong to a group of similar products and seek to give customers a wide range of choices. For instance, a car company manufactures a line of sedans with similar prices and features but different names. The product line gives customers more choices for similar features and price ranges, so they can cater to their specific needs.

5. Type

Each individual product in a product line is called a “product type.” This makes it easier for customers to choose between products that are similar but still sufficiently different. For example, a laptop is a type of personal computer, but it comes in different types, such as 360-degree convertibles, ultrabooks, and professional-grade workbooks.

Many different kinds of products have different parts and models that change the price between product types. Personal computers might have different storage specifications or better graphics cards within the same category.

6. Unit

A unit is an individual product in a product lineup that represents the separate items of the inventory which cannot be subdivided. This is also called the SKU, which stands for “stock keeping unit.” A unit is given an identification number to distinguish individual items in the coding system.

The prices and features of each SKU are the same as those of the other SKUs in the same product type. They are especially helpful in optimizing product catalogues, tracking inventory movements, real-time analysis of sales, and perhaps most importantly, understanding and applying buyer behaviour analytics.

Creating Product Hierarchies: 6 Key Takeaways

creating product hierarchies 6 key takeaways

1. Better User Experience

Product hierarchies conveniently sort out items and services so customers can easily access the items they’re looking for according to the desired features, pricing, benefits, or model.

2. You Can Grow in Each Product Category

Product hierarchies can help the company organize its products and services in a way that is easier to scale business. This means that even though the company expands in new categories, it will not impact their existing product categories.

3. Improved Inventory Management

The product hierarchy is useful for businesses because it helps them improve their inventory control and customer experience. Customers can easily find a product they need and explore competing options, and it can be useful for internal audits.

4. Better Optimization for Search Engines

Using a product hierarchy to organize products helps e-commerce businesses to optimize their platforms and make them more search engine friendly. By getting their web pages in the top results for certain keywords, better optimization will increase site traffic and sales.

Read also: 6 Tips on Improving Search Engine Positioning of Website

5. Improves the Internal Company Workflow

A product hierarchy helps an organization divide its products into different groups and find the key features that set them apart from each other. Effective organizations can cut down on the need for audits, quality checks, and reorganizations, which saves both time and money.

6. Effective Marketing Strategies

A product hierarchy improves a company’s marketing efforts by making it easier for customers to find and use products by class or type. It also helps create a competitive advantage in individual markets by focusing on the benefits and features of each product. The higher the level of customer awareness of a product, the greater the chances of a sale.

Read also: 8Ps Of Marketing Work Together in The Marketing Mix

The Bottom Line

Product hierarchies are an important part of doing business. They help your staff understand how your product fits into your overall vision, and they encourage positive user experiences.

A well-designed product hierarchy is easier for customers to navigate. This helps them remember and recall your products when they need them. It also makes your website look more professional. When used correctly, product hierarchies will help you build an effective SEO strategy.

In a competitive world, product hierarchies are important for business success. Do you need a website content partner to help you with the content on category pages and the titles of your products so they fit into your product hierarchy? We can assist!

Get customer-focused, fast, and high-quality content for all your business needs from One Content Pro, convey your brand’s message, and remain relevant to your audience.

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