Three Levels of a Product Explained
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Three Levels of a Product Explained

Hello and welcome to today’s lesson where we’re looking at the three levels of a product now the three product levels model by Philip Kotler provides a way to understand the different levels of need that a customer has for a product and It’s worth noting that According to Cutler the definition of a product goes far beyond just your product or service itself It includes anything that can be offered to the marketplace to capture attention Acquire customers or satisfy a need or I want now? Cutler outlined that there are three ways that customers attach value to a product and those are firstly need And that’s the lack of a basic requirements. So for example, the customer needs to be able to cycle to work So they need a bicycle Next we have want and that’s a specific requirement for a product or service to meet a need So if we take our bike example further the customer also wants a carbon-fiber frame So as the bicycle is lightweight and makes their commute quicker Thirdly we have demand and that’s a set of once plus the desire and ability to pay to have them satisfied So in our example, the customer knows they need a bike They want a carbon fiber frame and they have the means and the willingness to pay for both So in order to understand a product better Cutler proposed Examining each product as though it were actually three separate products. So firstly we have the core benefit Secondly the actual product and thirdly the Augmented product now together these three separate products are known as the three Product levels. So let’s examine each in turn So first we have the core benefit and the core benefit is the fundamental need that the customer satisfied When they buy the product and it’s important to think of the core benefit from the customers Perspective and the easy easiest way to do this is to ask yourself Fundamentally, why is the customer buying this product? so for example the core benefits of a mobile phone or a cell phone is to provide a mechanism to make Telephone calls went away from your home or your office now Note that products are rarely marketed using their core product and that’s because core products offer No competitive advantage Imagine how ridiculous it would seem if a cell phone was advertised these days on its ability to make phone calls It’s ridiculous. So second we have the actual product and the actual product is the products Features and its design now products typically typically have lots of features but very few actual benefits or core benefits to the customer So if we look at our mobile phone example again then the actual product consists of the design and the features of the phone so that includes things like Its dimensions its color its screen size Bluetooth compatibility Etc etc. And Finally we have the Augmented product now the Augmented product is any non-physical parts of the product typically, the Augmented product includes such things as a warranty and customer service and It can be an important way to tailor your product to meet the needs of specific customers so if we return again to our cell phone example The Augmented product could include a 12 month warranty for all customers business customers may additionally receive a 24 hour replacement service for broken phones and It’s important to realize that in just a dusting The Augmented product is a great way to add value to a product and it’s very common to see products advertised and Advertising campaigns which focus on the Augmented product and that’s because it’s one of the areas Where it’s possible to be different from your competitors, which helps you stand out in the marketplace So, let’s take a look at a quick example and the example we’re going to look at is selling a television set If we look at the core product when we’re purchasing a TV The core product is obviously the need to watch television programs and as stated previously the core product is rarely used if ever as the basis of a marketing campaign, so the actual product for a TV is Going to be the TV itself and its features So that’s going to include things like the size of the screen its weight. What apps come pre-installed? How easy it is to set the television up what connectivity options you have etc. And Also included in the actual product is the brand name now whether the brand is perceived as a premium brand or a budget brand will form part of the actual product So in the case of TV’s Sony for example might be considered a premium brand whereas TCL might be considered a budget brand And finally, we have the Augmented product. Now the Augmented product for our TV example might include things like North % financing a three year warranty The company’s reputation for post sales support It could even include things like donating 1% of revenue to plant trees Helping offset the environmental impact of manufacturing televisions Now when it comes to using the model the three product levels are involved whenever you purchase any Product now as we have described a product is more than you can see and touch when you buy it So to use the model marketers must begin by identifying the core product or the core benefit and to do this you can ask yourself questions like what is it that the customer really needs or what problems does the customer have that we can solve and Once you’ve done that the next step is to design the features of the actual product and then the final step Is to augment the product to create customer value and make it a success in the marketplace now there’s a template you can download if you’d like to go with 3 product levels for your own product or your own service and I’ve included a link to that template below this video if you click there you can download it straight away so In summary to better understand a product Kotler proposed Examining every product as though it were actually three separate products Made up of the core benefit the actual product and the Augmented product Now as we’ve discussed the core benefit is the basic customer need that’s fulfilled The actual product is the features of the product and the Augmented product These are the intangible features of the product and it’s here that the real value is added by marketers So together these three separate products are known as the three product levels So that’s it for this video. Really? Hope you enjoyed it and I look forward to speaking to you again soon

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