Product Levels

For Kotler, the definition of a product goes way beyond being a physical object or a
service. He defines a product as anything that can meet a need or a want. This means
that even a retail store or a customer service representative is considered a product.
The model considers that products are a means to an end to meet the various needs
of customers. The model is based on there being three ways in which customers
attach value to a product:

• Customer Need: the lack of a basic requirement.

• Customer Want: a specific requirement for a product or service to meet a need.
• Customer Demand: a set of wants plus the desire and ability to pay to have them
satisfied.
Customers will choose a product based on their perceived value of it. The customer
is satisfied if the product’s actual value meets or exceeds their expectations. If the
product’s actual value falls below their expectations they will be dissatisfied.

The Five Product Levels are given in the diagram below:

1. Core Benefit

The core benefit is the fundamental need or wants that the customer satisfies when
they buy the product. It is the most fundamental level : the fundamental service or
benefit that the customer is really buying. The more important benefits the product
provides, the more that customers need the product. A key element is the uniqueness
of the core product. This will benefit the product positioning within a market and
effect the possible competition.

A hotel guest is buying “rest and sleep.” The purchaser of a drill is buying “holes”.
Marketers must see themselves benefit providers.

2. Generic Product

The generic product is a basic version of the product made up of only those features
necessary for it to function. The marketer has to turn the core benefit into a basic
product. Thus a hotel room includes a bed, bathroom, towels, desk, etc

3. Expected Product

The expected product is the set of features that the customers expect when they buy
the product. The marketer prepares an expected product, a set of attributes and
conditions buyers normally expect when they purchase this product.
Hotel guests expect a clean bed, fresh towels, working lamps, and a relative degree
of quiet. Because most hotels can meet this minimum expectation, the traveller
normally will settle for whichever hotel is most convenient or least expensive.

4. Augmented Product
The augmented product refers to any product variations, extra features, or services
that help differentiate the product from its competitors. The marketer prepares an
augmented product that exceeds customer expectations. A hotel can include a
remote-control television set, fresh flowers, rapid check-in, express checkout, and
fine dining and room services.
Today’s competition essentially takes place at the product augmentation level. (In
less developed countries, competition takes place mostly at the expected product
level). Product augmentation leads the marketer to look at the user’s total
consumption system: the way the user performs the tasks of getting and using
products and related services. New competition is not between what companies
produce in their factories, but between what they add to their factory output in the
“form of packaging, services, advertising, customer advice, financing, delivery
arrangements, warehousing, and other things that people value.” However some
important features of this level must be noted. First, each augmentation adds cost.
Second, augmented benefits soon become expected benefits. Today’s hotel guests
expect a remote-control television set. This means competitors will have to search
for still other features and benefits. Third, as companies raise the price of their
augmented product, some competitors offer a “stripped down” version at a much
lower price.

5. Potential Product
The potential product includes all augmentations and transformations the product
might undergo in the future. At this level stands the product, which encompasses all
the possible augmentations and transformations the product or offering might
undergo in the future. Here is where companies search for new ways to satisfy
customers and distinguish their offer.
For example, it could be some chocolates on one occasion, and some luxury water
on another. By continuing to augment its product in this way the hotel will continue
to delight and surprise the customer.

Richard Branson of Virgin Atlantic is thinking of adding a casino and a shopping

mall in the 600-passenger planes that his company will acquire in the next few years
and consider the customization platforms new ecommerce sites are offering, from
which companies can learn by seeing what different customers prefer.

Successful companies add benefits to their offering that not only satisfy customers
but also surprise and delight them. Delighting customers is a matter of exceeding
expectations.