Product Definition, Illustrative Instances, and Significance
In the world of business, understanding the intricacies of a product and how it meets customer needs is crucial. One framework that helps companies create an effective strategy is Philip Kotler's five main levels of a product. These levels represent the layers of value a product offers from the customer's perspective.
The Five Product Levels
- Core Benefit (also known as the core product or core customer value) is the fundamental need or benefit that the customer is seeking. It represents the basic problem-solving service or value the product provides. For example, a smartphone’s core benefit is communication and connectivity.
- Actual Product is the tangible, physical product that delivers the core benefit. It includes features such as design, brand name, quality level, and packaging. For the smartphone, this includes the hardware, operating system, look, and brand.
- Expected Product refers to the set of attributes or conditions the customer expects when buying this product based on standard industry norms or prior experiences. This includes minimum acceptable features, quality, and service. For example, customers expect a phone to come with a battery, a charger, some form of warranty, and a responsive interface.
- Augmented Product includes additional services or benefits that go beyond the core and expected product to differentiate the offer and provide extra value. This might be installation, after-sales service, free updates, guarantees, or customer support that exceed basic expectations.
- Potential Product refers to all the possible augmentations and transformations the product might undergo in the future. It represents future innovations or improvements that could attract customers or create new value. For a smartphone, it could mean future software upgrades, new hardware capabilities, or expanded ecosystem services.
Examples of Actual Products
An actual product is a tangible item that consumers purchase for its core benefits. Examples of actual products include the iPhone, Nike Air Jordan sneakers, Tesla Car, Sony PlayStation, Samsung TV, Apple MacBook, Fitbit, Nest Learning Thermostat, Coca-Cola soft drink, Amazon Alexa Speakers, GoPro Cameras, Dyson Vacuum cleaners, Bose QuietComfort 35 II headphones, Instant Pot Duo Nova pressure cooker, and LEGO Star Wars Millennium Falcon set.
The Importance of Actual Products
Actual products are one of the levels of Philip Kotler's five main levels of a product. They are crucial elements of the marketing mix, as they provide customers with a tangible product they can use. Companies leverage these qualities to differentiate their products in the market. The marketing mix relies heavily on the actual product, and without it, the whole marketing process is futile. Consumers find satisfaction in receiving the actual product that meets their needs and wants.
Businesses generate income primarily by selling actual products to consumers. However, it's important to note that there can be a small number of product levels within each level that provide even more specialized benefits. For instance, within the actual product level, a DVD or Blu-ray disc is an example if the core benefit sought is watching a movie. The quality levels of actual products can be categorized into low-end, mid-level, and high-end.
This framework helps marketers understand how to build and position a product by addressing multi-level customer needs and differentiating the offer effectively. By understanding the actual and augmented levels of products, companies can create an effective strategy for their core product and augmented level of services.
- A smartphone, such as an iPhone, can be considered an actual product, delivering the core benefit of communication and connectivity while also incorporating features like design, brand name, quality level, and packaging.
- The potential product of smartphones could include future software upgrades, new hardware capabilities, or expanded ecosystem services, representing the promise of future innovations and improved value for customers.
