Products are tangible goods that businesses produce or manufacture to sell it to individuals. Levels of Product is the theory that describes how a product delivers value in addition to its fundamental purpose. Philip Kotler says a product consists of five levels: Core Benefit, Generic Product, Expected Product, Augmented Product, and Potential Product. The levels assist firms in knowing the needs of consumers, enhancing product offerings, and creating powerful brands. Firms apply this framework to design, develop, and market products efficiently. Recognising these levels enables companies to fulfil customer demands and differentiate their products in a competitive environment.
What is Product?
Product describes any physical or non-physical item or service produced, developed, and offered for sale or use in the marketplace. It covers a broad spectrum of products, from physical products such as electronics, apparel, and furniture to digital products such as software, e-books, and internet services.
Products can be formulated to satisfy individual consumer’s needs and desires or businesses’ needs and desires, and they are available in numerous forms and are suitable for different preferences and needs. Ultimately, products are very important to commerce and are integral to the economic system by offering value and satisfaction to those who consume or buy them.
Levels of Product
Product levels, or product hierarchy, capture the complete panorama of the varying levels of a product that clients come across. Marketing expert Philip Kotler first suggested these levels, which comprise five key components:
Core Benefit
The core benefit is what a customer is buying. It is something that fulfils a basic need or solves a problem. Each product aims to deliver this core value. What we sell is not just a product but access to a product, which gives the customers certain capabilities. This is where businesses must focus to win customers and achieve customer satisfaction. Once a core benefit has been determined, it is easier for companies to develop powerful marketing strategies that showcase the real value of their offering.
Generic Product
A generic product includes the minimum functionality required for it to operate effectively. It is a simplified version of a product that delivers the value proposition. For example, the critical components (Display, Battery, Processor, and Basic communication functions) must be part of a smartphone. These features make the product usable but may not provide additional value. No product can be useful to customers without this minimum quality. If a product does not have either of these essentials, it will not be able to answer customers’ questions about what they want and, thus, becomes irrelevant to the market.
Expected Product
An expected product has features that customers expect it to have. Buyers should be provided with standard features to assist in product choice. These features are not available, and customers may be disappointed. To illustrate, buyers now expect a smartphone with a good camera, internet access, app compatibility, and a smooth touchscreen. However, companies must improve their game to ensure their products meet these expectations and keep their customers happy. This can result in negative reviews and decrease customer trust if these expectations are unmet.
Augmented Product
An augmented product consists of added features that exceed customer expectations. These extra benefits differentiate a product from the competition and enhance the customer experience. Augmented products include customer support, warranties, free accessories, packaging, loyalty programs, etc. For instance, a smartphone company can provide free cloud storage, guarantee extension, and offer exclusive apps for additional value, as well as attract more buyers. These features provide a competitive advantage that allows customers to prefer one brand from the other.
Potential Product
A potential product includes future options and innovations for enhancement. It is dedicated to long-term improvements that make the product even better. Businesses need to look into the future and innovate features according to the changing customer needs. For instance, if we take a smartphone, the possible product could be a built-in gaming kit, foldable screens, or AI-based personal assistants. Innovative companies maintain excitement and interest among their user base. Market leadership comes through anticipating trends ahead of time and adapting.
Product Management and Operations
Product management and operations entail planning, creating, marketing, and managing a product during its life cycle. It demands a thorough knowledge of the product levels to develop a product that satisfies the needs and expectations of the customers and is competitive in the market.
Product management begins with the identification of the core benefit and the creation of the basic product. It entails knowledge of customer requirements, market trends, and competition to create a product that effectively delivers the core benefit. After making the basic product, attention is given to fulfilling the customer expectations and enriching the product to increase its value and attractiveness. Lastly, the potential product is determined for future development and expansion.
Product Level Examples
Let’s look at real-world examples to understand how the Levels of Product apply to different industries.
Mobile Phone Features: The core benefits of a mobile phone are its communication and connectivity. The generic product level includes a basic keypad, a small screen, and simple calling functions. The expected product includes a touchscreen, internet access, and battery life. Moving to the augmented product level, features like an AI camera, fast charging, and a waterproof design enhance user experience. The potential product includes innovations such as a foldable screen and wireless charging from the air, making future devices more advanced and convenient.
Fast Food Restaurant: The core benefit of a fast food restaurant is to satisfy hunger. The generic product level includes basic food and drinks. Customers at the expected product level look for clean seating, quick service, and affordable prices. The augmented product level offers extra benefits like loyalty programs, free Wi-Fi, and mobile app ordering. The potential product includes futuristic features like robot-served food and AI-based personalized meal recommendations, making dining more efficient and enjoyable.
Levels of Product FAQs
1. What are the product levels with example?
The five levels of the product are Core Benefit, Generic Product, Expected Product, Augmented Product, and Potential Product. For instance, the Core Benefit in a smartphone is communication and the Augmented Product is AI cameras and fast charging.
2. What are the advantages of Kotler’s Model?
Kotler’s model assists businesses in recognizing customer needs, differentiating products, and enhancing marketing. It also directs firms in product innovation and customer satisfaction.
3. In what way does product management assist businesses?
Product management assists businesses in ensuring a product fulfils customers’ requirements, stays competitive, and earns profits. It includes research, development, pricing, and marketing.
4. Why is Augmented Product crucial?
An Augmented Product provides additional value to make a product stand out. It encompasses features such as warranties, customer support, and special offers.
5. What is the difference between Expected Product and Potential Product?
An Expected Product contains features that customers expect to have, whereas a Potential Product contains future developments and innovations.
